EXHIBIT 10.1
CHEQUEMATE INTERNATIONAL, INC.
d/b/a C3D Digital
000 Xxxxxxxxxx Xxxx. Xxxxx 000
Xxxxxx xxx Xxx, Xx. 00000-0000
(000) 000-0000
(000) 000-0000 fax
Xxxx Xxxxxx, CEO
Cinema Internet Networks, Inc.
000-0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
Re: Exclusive Agent Agreement for the Canadian PPV Assets
August 3, 2000
Dear Xxxx:
This is an Exclusive Agent Agreement between our two companies, and we
have agreed that:
2. CinemaWorks (CWK) has the exclusive right to sell the Canadian PPV
assets specified in the PPV Asset Purchase Agreement signed by the
Parties on or about March 1, 2000.
3. Because CWK has title to the Canadian PPV assets, it is CWK's
responsibility to provide clear title to the assets to the buyer.
4. The term of this Exclusive Agent Agreement is one year.
5. CWK shall retain all costs and stock proceeds from the sale of these
assets, and the sale price and terms will be the sole responsibility
and decision of CWK. If the proceeds from the sale are in the form of
publicly traded stock, it shall be valued at the average market price
for the previous five working days. If not publicly traded, Chequemate
and CWK must agree on its value prior to the sale.
6. CWK will use its best efforts to maximize the sale price of the PPV
assets on behalf of CWK and Chequemate.
Very truly yours,
/s/ Xxxx Xxxxxx
------------------------------
Xxxx Xxxxxx
General Counsel
Chequemate International, Inc.
Cinema Internet Networks, Inc. agrees to the above provisions.
/s/ Xxxxxxx Xxxxxx August 3, 2000
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Xxxxxxx Xxxxxx, CEO Dated
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Chequemate International Inc. August 3, 2000
330 Washington Ste. 330
Marina Del Rey, Ca. 90292
Attn: Xxxxxxx Xxxx CEO
cc: Xxxx Xxxxxx and Xxxx XxXxxxx
This letter is to confirm our phone conversation today between myself, Xxxx
XxXxxxx and Xxxx Xxxxxx. We have agreed on the following in order to close the
purchase of the CinemaWorks ("CWK") assets by Chequemate ("C-3D"). The following
amendments were agreed to by the parties. All dollars are US$ unless otherwise
noted.
1. a) The new agreed net purchase price of the PPV assets is $251,000. At
this price, CWK still retains the Integra lease obligation until the
lease is paid by CWK or assigned to a purchaser of the Canadian PPV
assets.
b) To purchase the PPV assets, Chequemate will immediately deliver to
the escrow agent a certificate for 55,000 restricted shares and
immediately file a registration statement (S-3) with respect to those
shares to be released when shareholder approval is obtained by
CinemaWorks.
c) In addition, Chequemate will immediately place 40,000 restricted
C-3D Shares (144 stock) in escrow with Xxxxx Xxxxxx. The holding period
for these shares will begin on the date of this Agreement between the
parties.
2. Cinema Works will immediately (within 1 working day of Xxxxx Xxxxxx
receiving the Shares in #1 in escrow) call an extraordinary shareholder
meeting to approve the disposition of the PPV assets, a fait accompli.
This step is anticipated to be completed in approximately 30 days.
3. CWK and Chequemate will sign a separate "Exclusive Agent Agreement"
allowing CinemaWorks exclusive right to sell the Canadian PPV assets
for an amount solely determined by CinemaWorks. However, CWK will use
its best efforts to maximize the sale price of the assets.
4. Title to the PPV assets in Canada will remain with CWK until such time
as the assets are sold by CWK and title is transferred to a new buyer.
All cash and/or stock proceeds from the purchase will be retained by
CWK.
5. Until, the PPV assets in Canada are sold or until the restricted Shares
are released from escrow as per #7 below, Chequemate and its
subsidiary, Hotel Movie Network (HMN), will provide monthly new movies
and perform service calls for the Canadian hotel PPV systems in the
same professional manner as they do for the USA-based PPV assets. At
the same time, all monthly PPV movie revenues collected from the
Canadian PPV assets will continue to be sent to CWK. CinamaWorks will
also continue to invoice the Canadian PPV assets until the assets are
sold or until the 144 Shares are saleable under Rule 144 and released
from escrow as per #7 below.
6. CinemaWorks will continue to be liable for-and pay the Integra lease
payment each month from revenues collected in #5. And, the balance of
collected revenues will be sent to Chequemate on a quarterly basis
until such time as the Canadian PPV assets are sold to another company.
7. a) If CWK for any reason is unable to sell the Canadian PPV assets,
then the restricted stock will be transferred to CWK from escrow after
one (1) year and the Shares become saleable under Rule 144.
a) However, simultaneous with those Shares being released from
escrow to CWK, CinemaWorks will assign free and clear title of
the Canadian PPV assets to Chequemate.
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b) If there is money still owed on the Integra lease by CWK at
this time, then it will be CWK's sole obligation to pay the
remainder of the Integra lease.
8. CWK will see shareholder approval for the disposition of its PPV
assets, with the understanding that the lease obligation to Xxxxx
Xxxxxxxxx must be removed from Xxxx Xxxxxx and CinemaWorks either
directly by Applegate or by Chequemate after taking assignment of
this obligation from Applegate. This may be accomplished by any
documents suitable to protect Xxxx Xxxxxx and CWK from any and all
legal actions related to what is now the Applegate lease obligation.
9. Should CWK successfully sell the Canadian PPV assets before the
Chequemate restricted Shares become saleable under Rule 144, then the
total proceeds amount shall be credited to Chequemate in the form of
restricted Shares to be released to CWK and Chequemate from escrow. The
value per restricted Share credited to Chequemate will be $3.00. For
example: if the total proceeds from the sale of the Canadian PPV assets
are $75,000, then Chequemate will receive 25,000 shares from escrow
with the remaining 15,000 shares going to CWK.
Signed: Signed:
/s/ Xxx Xxxx /s/ J. Xxxxxxx Xxxx
----------------------------------- ----------------------------------
Xxx Xxxx Xxxxxxx X. Xxxx
CFO, Cinema Internet Networks, Inc. CEO, Chequemate International Inc.
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CINEMAWORKS
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") dated this _____day May, 2000,
between CHEQUEMATE INTERNATIONAL, INC., a Utah corporation ("Buyer") doing
business as C-3D Digital, whose office is located at 000 Xxxxxxxxxx Xxxx., Xxxxx
000, Xxxxxx xxx Xxx, XX 00000, and Cinema Internet Networks Inc., a British
Columbia, Canada corporation doing business as CinemaWorks, whose office is
located at 000-0000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX X0X 0X0 ("Seller");
WITNESSETH:
WHEREAS, Buyer desires to purchase from Seller and Seller desires to sell to
Buyer, on the terms and subject to the conditions of this Agreement, certain
assets and business of Seller;
THEREFORE, in consideration of the mutual covenants, agreements, representations
and warranties contained in this Agreement, the parties agree as follows:
ARTICLE 1. TRANSFER OF ASSETS
Subject to the terms and conditions set forth in this Agreement, Seller agrees
to sell, convey, transfer, assign and deliver to Buyer, and Buyer agrees to
purchase from Seller at the Closing described in Article 3 hereof, all of the
assets, properties and business of Seller relating to pay-per-view and cable
services to hotel/lodging rooms, of every character and description, whether
tangible, intangible, real, personal or mixed, and wherever located but
excluding any assets specifically excluded in the following Sections of this
Article 1, all of which are sometimes collectively referred to in this Agreement
as the "Assets," including, but without limitation to, the following:
1.1 Contracts. All of the contracts and contract rights related to the
agreements for pay-per-view and cable services to hotel/lodging rooms, which
agreements are listed in SCHEDULE 1.1 attached hereto (hereinafter referred to
as the "Contracts").
1.2 Equipment. All the equipment (including essential replacement parts)
and other tangible personal property of every kind and description wherever they
may be located that are owned or leased by Seller, and are utilized in
connection with Seller's pay-per-view operations, a current list of which is
attached hereto as Schedule 1.2 (hereinafter referred to collectively as the
"Equipment"). At the Closing, Seller shall deliver to Buyer the equipment as set
forth in Schedule 1.2, or appropriate documents transferring the ownership of
the Equipment, free of any claim or encumbrance. Good and marketable title to
all such equipment shall be transferred on delivery, free and clear of any
encumbrances. Prior to the Closing, Seller will make a good faith effort to
supplement Schedule 1.2 with serial numbers of the equipment located at the
hotels which are subject to the contracts listed in Schedule 1.1.
1.3 Intangibles. All trade names (excluding "CinemaWorks"), trademarks,
service marks, copyrights, patents, patent rights, trade secrets, technical
know-how, goodwill and other intangibles including (i) tort claims or insurance
proceeds arising out of any damage or destruction of any of the Assets between
the date of this Agreement and the Closing Date (as hereinafter defined); and
(ii) all contracts to be assumed by Buyer pursuant to Article 4 used by Seller
in (or owned by Seller and useful in) the operation of the business.
1.4 Books and records. All papers and records in Seller's care, custody or
control relating to any or all of the above-described Assets and the operation
thereof, including, but not limited to, all blueprints and specifications,
personnel and labor relations records, environmental control records, sales
records, accounting and financial records, maintenance and production records;
and
1.5 Other Assets. All product rights in the Equipment and all improvements
thereon, and all prepaid expenses relating to any of the Assets, or to the
operation of Seller's business sold pursuant to this Agreement.
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ARTICLE 2. PURCHASE PRICE
2.1 Purchase Price and Payment. In consideration for the transfer and
assignment by Seller of the Assets, and in consideration of the representations,
warranties and covenants of the Seller set forth herein, Buyer on the conditions
set forth herein and subject to the provisions in Article 9 states that:
(a) Buyer will pay to Seller a purchase price to Seller of $510,600 (US $200 per
room) for 2,553 operating pay-per-view rooms as listed in SCHEDULE 1.1.
(b) The Buyer shall pay to the Seller the sum of $40,000 in cash as soon as
practicable after execution. Buyer shall use its best efforts to pay this
amount, as well as money necessary to keep the equipment lease payments to Xxxxx
Xxxxxxxxx/CapitalPlus and Integra current until closing. .
(c) Buyer shall issue sufficient shares of Buyer's common stock (hereinafter
referred to as the "Shares") to the Seller, to be registered and free-trading at
the time of Closing of escrow based upon a value of closing price over the
previous five (5) days of trading for the balance due at closing or $6.00 per
share whichever is greater.
(d) Buyer agrees to assume the outstanding leases now obligating Seller. Leases
involve hotels listed under Schedule 1.1 also see Lease obligations in Schedule
1.3 (Lease Obligations) all obligations will be deducted from the stock portion
of the purchase price as described in 2.1(c).
(e) Buyer has assumed management of Hotels listed in Schedule 1.1 as of
September 1, 1999. All costs incurred by Buyer in the management, and operations
for the properties will be deducted from the purchase price. Buyer will also
provide a royalty report to Seller with amounts being applied against Buyers
operational cost. See Schedule 1.4 (Costs of Operations).
ARTICLE 2.5. CONTINGENCY.
This Agreement is contingent upon Buyer obtaining the written consent of Crooks
Hollow Road, LLC, an investor in Buyer who has certain rights with regard to the
registration by Buyer of shares of its stock.
ARTICLE 3. THE CLOSING
The closing, in escrow, of the purchase and sale of the Assets by Seller to
Buyer (the "Closing") shall take place as soon as both parties fulfill all their
Obligations at the Closing and all Conditions Precedent are met. All documents
and funds to be delivered shall be delivered to the Escrow Agent who shall then
deliver them to the appropriate parties when escrow closes.
Buyer shall perform as part of its due diligence, such inspection of Sellers
equipment, properties, contracts and all other items as Buyer reasonably deems
necessary, and shall complete such inspection on or before the closing of
escrow.
3.1 Seller's Obligations at the Closing. Seller shall deliver or cause to
be delivered to the escrow agent:
(a) (i) instruments of assignment and transfer of all of the Assets of Seller to
be transferred hereunder, in form and substance satisfactory to Buyer's counsel;
and
(ii) instruments of assignment and transfer of all contracts being transferred
by Seller to Buyer as outlined in SCHEDULE 1.1; and
(iii) the certificate of the President or Secretary of the Seller
confirming that proper minutes and resolutions of the Seller's Board of
Directors have been secured prior to the Closing whereby the sale of
the Assets has been approved.
Simultaneously with the closing of escrow, Seller, through its officers, agents,
and employees, shall put Buyer into full possession and enjoyment of all the
Assets to be conveyed and transferred by this Agreement. Seller, at any time
before or after the closing Date, shall execute, acknowledge, and deliver any
further assignments, conveyances and other assurances, documents and instruments
of transfer, reasonably requested by Buyer and shall take any other action
consistent with the terms of this Agreement that may
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reasonably be requested by Buyer for the purpose of assigning, transferring,
granting, conveying and confirming to Buyer, or reducing to possession, any or
all property and assets to be conveyed and transferred by this Agreement. If
requested by Buyer, Seller further agrees to prosecute or otherwise enforce in
their own names for the benefit of Buyer any claims, rights, or benefits that
are transferred to Buyer by this Agreement and that require prosecution or
enforcement in either of the Sellers name. Any prosecution or enforcement of
claims, rights, or benefits under this Section shall be solely at Buyer's
expense, unless Seller makes the prosecution or enforcement necessary by breach
of this Agreement.
3.2 Buyer's Obligations at Closing. Subject to the provisions of Article 9,
Buyer shall deliver to the escrow agent the following instruments and documents
against delivery of the items specified in Section 3.1:
(a) Chequemate Stock Certificates issued in the name of Seller for a sufficient
number of shares of restricted common stock to constitute the balance described
in Section 2.1; and
(b) the certificate of the President or Secretary of the Buyer confirming that
proper minutes and resolutions of the Buyer's Board of Directors have been
secured prior to the Closing whereby the purchase of the Assets has been
approved.
(c) $40,000 cash in accordance to sec 2.1[b]
3.3 The escrow shall remain in affect until such time as:
(i) Seller obtains shareholder and regulatory approval; and
(ii) Buyer registers its shares such that the shares to be issued to the Seller
under this agreement shall be fully (and freely) tradeable.
3.4 If the conditions of escrow set out in this Section 3.3 are not fulfilled by
July 31, 2000 then depending on whether Buyer or Seller is at fault, the
following remedies shall be applied:
(i) If Seller is at fault and cannot obtain shareholder and
regulatory approval by July 31, 2000, then Seller agrees that Buyer shall
operate and collect all revenues from the hotels under this agreement. Buyer
agrees to pay Seller 10% of any remaining net revenue (after direct costs,
including equipment lease payments, field maintenance expenses, and movie
royalties) generated each month by the hotel pay per view movie systems, until
such time as shareholder and regulatory approval is obtained by Seller and final
closing may be completed.
(ii) If Buyer is at fault and has not registered the shares so as to be
free-trading by July 31, 2000, then the $40,000 cash deposited by Buyer at the
escrow closing shall be forfeited to Seller and Buyer shall pay Seller an
additional 1% per month on the net amount due to be paid in free trading stock
to Seller. If by October 30, 2000, Buyer has not registered the shares sp as to
be free trading, then at Sellers sole option this agreement may be terminated or
continued. (iii) Buyer will continue to remain current on the equipment lease
payments owed to Xxxxx Xxxxxxxxx/CapitalPlus and Integra . If for any reason
under (i) and (ii) above, these payments are not kept current and Seller
receives a written notice of delinquency from either Xxxxx Xxxxxxxxx,
CapitalPlus or Integra, then this agreement shall be immediately terminated.
ARTICLE 4. ASSUMPTION OF LIABILITIES
Buyer is not assuming any debt, liability or obligation of Seller, whether known
or unknown, fixed or contingent except as herein specifically otherwise
provided. Seller agrees to indemnify Buyer against and hold Buyer harmless from
all debts, claims, liabilities and obligations of Seller not expressly assumed
by Buyer hereunder, and to pay any and all attorneys fees and legal costs
incurred by Buyer, its successors and assigns in connection therewith. Buyer
shall have the benefit of and shall perform all contracts and commitments if any
specifically disclosed in SCHEDULE 1.3, in accordance with the terms and
conditions thereof, except to the extent modifications are specifically
disclosed on such SCHEDULE 1.3.
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ARTICLE 5. EXCISE AND PROPERTY TAXES
Buyer shall pay all sales, use and transfer taxes arising out of the transfer of
the Assets and Buyer shall pay its portion, prorated as of the Closing Date, of
state and local personal property taxes of the business. Buyer shall not be
responsible for any business, occupation, withholding or similar tax, or for any
taxes of any kind related to any period before the Closing Date.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that the following facts and
circumstances are, and except as contemplated hereby, at all times up to the
Closing Date will be , true and correct, and hereby acknowledges that such facts
and circumstances constitute the basis upon which Buyer is induced to enter into
and perform this Agreement. Each warranty set forth in this Article 6 shall
survive the Closing and any investigation made by or on behalf of Buyer.
6.1 Organization. Good Standing and Qualification. Seller is a corporation
duly organized, validly existing, and in good standing under the laws of Canada,
has all necessary corporate powers to own its properties and to carry on its
business as now owned and operated by it, and is duly qualified to transact
interstate business and is in good standing in all jurisdictions in which the
nature of its business or of its properties makes such qualification necessary.
6.2 Tax Returns and Audits. Within the times and in the manner prescribed
by law, Seller has filed all domestic and foreign, federal, state and local tax
returns required by law, and has paid all taxes, assessments and penalties which
would otherwise be due and payable. There are no present disputes as to taxes of
any nature payable by Seller.
6.3 Inventories. Except as otherwise listed in this agreement none of the
Assets have been pledged as collateral or are held by the Seller on consignment
from others.
6.4 Other Tangible Personal Property. The Equipment described in Section
1.2 and SCHEDULE 1.2 of this Agreement constitutes all the items of tangible
personal property owned by, in the possession of, or used by Seller in
connection with the business sold pursuant to this Agreement. The Equipment
listed in SCHEDULE 1.2 constitutes all tangible personal property necessary for
the conduct by Seller of the business as now conducted.
The equipment inventory listed in SCHEDULE 1.2 is used equipment, as is, where
is, and is stored in Round Rock, Texas. Seller has additional, supplemental, and
replacement equipment in its Vancouver offices related to providing pay-per-view
services and Buyer may have that equipment free and clear as an integral part of
this agreement. Buyer may instruct Seller to ship (at Buyer's expense) the
Vancouver equipment to a location of Buyer's choosing in the USA or Canada. If
Buyer wishes Seller to store the Vancouver equipment, Buyer will pay for
storage. If Buyer decides to not pay for storage or for shipment of the
warehoused equipment, then Seller may dispose of the equipment in any manner of
Seller's choosing. Seller will provide Buyer with an inventory and the storage
(if applicable) location of all Vancouver equipment (See Schedule 1.2).
6.5 Trade Names Trademarks and Copyrights. Seller does not use any
trademark, service xxxx, trade name or copyright in its business to be sold
pursuant to this Agreement, or own any trademarks, trademark registrations or
applications, trade names, service marks, copyrights, or copyright registrations
or applications. No person (other than Seller) owns any trademark, trademark
registration or application, service xxxx, trade name, copyright, or copyright
registration or application, the use of which is necessary or contemplated in
connection with the performance of any of the Contracts.
6.6 Title to Assets. Seller has good and marketable title to all of the
Assets and interests in Assets, whether personal, tangible, and intangible,
which constitute all the Assets and interests in assets that are used in the
business of Seller to be sold pursuant to this Agreement. Except as specifically
listed in this agreement, all the Assets are free and clear of mortgages, liens,
pledges, charges, encumbrances, equities, claims, easements, rights of way,
covenants, conditions, or restrictions, EXCEPT (i) the lien of current taxes not
yet due and payable; and (ii) possible minor matters that, in the aggregate, are
not substantial in amount and do not materially detract from or interfere with
the present or intended use of any of the Assets, nor materially impair business
operations. All tangible personal property of Seller is accepted by the Buyer as
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is and where is. Except as set forth on the appropriate SCHEDULE listing such
Assets, neither any officer, nor any director or employee of Seller, nor any
spouse, child or other relative of any of these persons, owns, or has any
interest, directly or indirectly, in any of the personal property owned by or
leased to Seller or any copyrights, patents, trademarks, trade names or trade
secrets licensed by Seller for use in the business to be sold pursuant to this
Agreement. Seller does not occupy any real property in violation of any law,
regulation or decree.
6.7 Customers and Sales. SCHEDULE 1.1 to this Agreement is a correct and
current list of all customers of Seller for the business to be sold pursuant to
this Agreement. Seller has no information and is not aware of any facts
indicating that any of these customers intend to cease doing business with
Seller or materially alter the amount of the business that they are presently
doing with Seller.
6.8 Indemnification. Seller shall indemnify Buyer against and hold Buyer
harmless from any and all claims related to the Seller's pay-per-view business
which accrue up to and until the date of closing.
6.9 Other Contracts. Except as set forth in SCHEDULE 1.2, the Assets are
not bound by any distributor's or manufacturer's representative or agency
agreement, any agreement not entered into in the ordinary course of business,
any indenture, mortgage, deed of trust, lease or any agreement that is unusual
in nature, duration or amount. The performance by Buyer of any of the agreements
described on SCHEDULE 1.1 will not result in Buyer becoming bound or liable
under any distributor or manufacturer's representative or agency agreement. All
contracts, which will be assigned to or assumed by Buyer under this Agreement,
are valid and binding upon the parties thereto. There is no default or event
that with notice or lapse of time, or both, would constitute default by any
party to any of the agreements listed in SCHEDULE 1.1. Seller has not received
notice that any party to any of the agreements listed in SCHEDULE 1.1 intends to
cancel or terminate any of these agreements or to exercise or not exercise any
options under any of these agreements. Seller is not a party to, nor is Seller
or the Assets bound by, any agreement that is materially adverse to the
business, property, or financial condition of Seller.
6.10 Compliance with Laws. To the best of Seller's knowledge, Seller has
complied with, and is not in violation of, applicable federal, state or local
statutes, laws and regulations (including, without limitation, any applicable
environmental, health, building, zoning or other law, ordinance or regulation)
affecting the Assets or the operation of its business to be sold pursuant to
this Agreement.
6.11 Litigation. There is no suit, action, arbitration or legal,
administrative or other proceeding, or governmental investigation pending, or to
the best knowledge of Seller, threatened, against or affecting Seller, or any of
its business, assets or financial condition. Seller is not in default with
respect to any order, writ, injunction or decree of any federal, state, local or
foreign court, department, agency or instrumentality. Seller is not presently
engaged in any legal action to recover moneys due to it or damages sustained by
it.
6.12 Assets Sufficient for Conduct of Business. The Assets constitute all of
the assets required for Buyer to conduct the business of Seller as it is
presently conducted.
6.13 Agreement will Not Cause Breach or Violation. Neither the entry into
this Agreement nor the consummation of the transactions contemplated hereby will
result in or constitute any of the following: (i) a breach of any term or
provision of this Agreement; (ii) a default or an event that, with notice or
lapse of time, or both, would be a default, breach or violation of the Articles
of Incorporation or Bylaws of Seller or any lease, license, promissory note,
conditional sales contract, commitment, indenture, mortgage, deed of trust or
other agreement, instrument or arrangement to which Seller is a party or by
which Seller or the Assets are bound; (iii) an event that would permit any party
to terminate any agreement or to accelerate the maturity of any indebtedness or
other obligation of Seller; (iv) the creation or imposition of any lien, charge
or encumbrance on any of the Assets; or (v) the violation of any law,
regulation, ordinance, judgment, order or decree applicable to or affecting
Seller or the Assets.
6.14 Authority and Consents. Seller has the right, power, legal capacity and
authority to enter into, and perform its obligations under this Agreement, and
no approvals or consents of any persons or entity other than Seller are
necessary in connection with it. The execution and delivery of this Agreement by
Seller has been duly authorized by all necessary corporate action of Seller save
and except shareholder and regulatory approval (including any necessary action
by Seller's security holders), and on receipt of shareholder and regulatory
approval this Agreement will constitute a legal, valid and binding obligation of
Seller enforceable
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in accordance with its terms.
6.15 Interest in Customers, Suppliers and Competitors. Neither the Seller,
nor any officer, director or employee of any of the Seller, nor any spouse or
child of any of them will compete with the Buyer in the payperview and cable
services to hotel/lodging rooms business to be sold pursuant to this Agreement.
6.16 Documents Delivered. Each copy or original of any agreement, contract
or other instrument which is identified in any exhibit delivered by Seller or
their counsel to Buyer (or its counsel or representatives), whether before or
after the execution hereof, is in fact what it is purported to be by the Seller
and has not been amended, canceled or otherwise modified.
6.17 Full Disclosure. None of the representations and warranties made by
Seller or made in any letter, certificate or memorandum furnished or to be
furnished by Seller, or on its behalf, contains or will contain any untrue
statement of a material fact, or omits any material fact the omission of which
would make the statements made misleading. There is no fact known to Seller
which materially adversely affects, or in the future may (so far as Seller can
now reasonably foresee) materially adversely affect the condition, Assets,
liabilities, business operations or prospects of Seller that has not been set
forth herein or heretofore communicated to Buyer in writing pursuant hereto.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to the Seller as follows:
7.1 Organization and Qualification. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Utah. All
subsidiaries of Buyer are legal entities that are duly organized, validly
existing and in good standing under the laws of their respective jurisdictions
of incorporation. Buyer has all requisite power and authority to own or operate
its properties and conduct its business as it is now being conducted. Buyer is
duly qualified and in good standing as a foreign corporation or entity
authorized to do business in each of the jurisdictions in which the character of
the properties owned or held under lease by it or the nature of the business
transacted by it makes such qualification necessary.
7.2 Authority Relative to this Agreement. Buyer has all requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Buyer, and no other corporate
proceedings on the part of Buyer are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by Buyer and, assuming this Agreement constitutes
a valid and binding obligation of the Seller, this Agreement constitutes a valid
and binding agreement of Buyer, enforceable against Buyer in accordance with its
terms.
7.3 SEC Reports. Since January 1, 2000, to the best of its knowledge Buyer
has filed all required forms, reports and documents ("Buyer SEC Reports") with
the Securities and Exchange Commission (the "SEC") required to be filed by it
pursuant to the federal securities laws and the SEC rules and regulations
thereunder, all of which have complied in all material respects with all
applicable requirements of the Securities Act of 1933 (the "Securities Act") and
the Securities Exchange Act of 1934 (the "Exchange Act"), and the rules and
interpretive releases promulgated thereunder. None of such Buyer SEC Reports,
including without limitation any financial statements, notes, or schedules
included therein, at the time filed, contained any untrue statement of a
material fact, or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Each of the consolidated balance sheets in or incorporated by reference into the
Buyer SEC Reports fairly presents or will fairly present the financial position
of the entity or entities to which it relates as of its date, and each of the
related consolidated statements of operations and retained earnings and cash
flows or equivalent statements in the Buyer SEC Reports (including any related
notes and schedules) fairly presents or will fairly present the results of
operations, retained earnings and cash flows, as the case may be, of the entity
or entities to which it relates for the period set forth therein (subject in the
case of unaudited interim statements, to normal yearend audit adjustments) in
each case in accordance with generally-accepted accounting principles applicable
to the particular entity consistently applied throughout the periods involved,
except as may be noted therein; and independent certified public accountants for
Buyer have rendered or will render an unqualified opinion with respect to each
audited financial statement included in the Buyer SEC
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Reports. The consolidated financial statements included in the Buyer SEC Reports
are hereinafter sometimes collectively referred to as the "Buyer Financial
Statements."
7.4 Consents and Approvals: No Violation. Neither the execution and
delivery of this Agreement by Buyer nor the consummation of the transactions
contemplated hereby nor compliance by Buyer with any of the provisions hereof
will conflict with or result in any breach of any provision of the Articles of
Incorporation or by-laws of Buyer or any Subsidiary, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Authority, except pursuant to the Securities Act and the Exchange
Act, such filings and approvals as may be required under the "blue sky",
takeover or securities laws of various states, or result in a default (with or
without due notice or lapse of time or both) (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, contract, license, agreement
or other instrument or obligation to which Buyer is a party or by which Buyer,
any of its Subsidiaries or any of their respective assets, may be bound, or
result in the creation or imposition of any lien, charge or other encumbrance on
the assets of Buyer or violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Buyer or any of its respective assets.
7.5 Litigation. Etc. Except as disclosed in the Buyer SEC Reports there is
no action, claim, or proceeding pending or, to the knowledge of Buyer,
threatened, to which Buyer is or would be a party before any court or
Governmental Authority acting in an adjudicative capacity or any arbitrator or
arbitration tribunal with respect to which there is a reasonable likelihood of a
determination having, or which, insofar as reasonably can be foreseen in the
future would have, a material adverse effect on Buyer and since December 31,
1999, there have been no claims made or actions or proceedings brought against
any officer or director of Buyer arising out of or pertaining to any action or
omission within the scope of his employment or position with Buyer, which claim,
action or proceeding would involve a material adverse effect on Buyer taken as a
whole. All material litigation and other material administrative, judicial or
quasi-judicial proceedings to which Buyer is a party or to which it has been
threatened to be made a party are described in the Buyer SEC Reports.
7.6 Compliance with Law and Permits. Buyer has owned and operated its
properties and assets in substantial compliance with the provisions and
requirements of all laws, orders, regulations, rules and ordinances issued or
promulgated by all Governmental Authorities having jurisdiction with respect
thereto. All necessary governmental certificates, consents, permits, licenses or
other authorizations with regard to the ownership or operation by Buyer of their
respective properties and assets have been obtained and no violation exists in
respect of such licenses, permits or authorizations. None of the documents and
materials filed with or furnished to any Governmental Authority with respect to
the properties, assets or businesses of Buyer contains any untrue statement of a
material fact or fails to state a material fact necessary to make the statements
therein not misleading.
7.7 Buyer Common Stock. The shares to be issued by Buyer pursuant to this
Agreement have been duly authorized and, when delivered from escrow to Seller in
accordance with the terms of this Agreement, will be validly authorized and
issued and fully paid and nonassessable, free-trading shares and no shareholder
of Buyer will have any preemptive rights or dissenter's right with respect
thereto.
ARTICLE 8. SELLER'S OBLIGATIONS BEFORE CLOSING.
Seller covenants that, except as otherwise agreed in writing by Buyer, from the
date of this Agreement until the Closing of escrow:
8.1 Buyer's Access to Premises and Information. Buyer and its counsel,
accountants and other representatives shall be entitled to have full access
during normal business hours to all Seller's properties, books, accounts,
records, contracts and documents of or relating to the Assets. Seller shall
furnish or cause to be furnished to Buyer and its representatives all data and
information concerning the business, finances and properties of Seller that may
reasonably be requested.
8.2 Conduct of Business in Normal Course. Seller shall carry on its
business and activities diligently and in substantially the same manner as it
previously has been carried on, and shall not make or institute any unusual or
novel methods of purchase, sale, lease, management, accounting or operation that
will vary materially from the methods used by Seller as of the date of this
Agreement.
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8.3 Preservation of Business Relationships. Seller shall use its best
efforts, without making any commitments on behalf of Buyer, to preserve its
business organization intact, to keep available to Buyer its present employees,
and to preserve its present relationships with suppliers, customers and others
having business relationships with it.
8.4 Maintenance of Insurance. Seller shall continue to carry its existing
insurance, subject to variations in amounts required by the ordinary operations
of its business. At the request of Buyer and at Buyer's sole expense, the amount
of insurance against fire and other casualties which, at the date of this
Agreement, Seller carries on any of the Assets or in respect of its operations
shall be increased by such amount or amounts as Buyer shall specify. Seller
shall cause Buyer to be named as an additional insured on each existing
insurance policy carried by Seller.
8.5 New Transactions. Seller shall not do, or agree to do without the prior
written consent of the Buyer, any of the following acts, if such acts could
affect the Assets being purchased:
(a) enter into any contract, commitment or transaction not in the usual and
ordinary course of its business; or
(b) enter into any contract, commitment or transaction in the usual and ordinary
course of business involving an amount exceeding $1,000.00, individually, or
$10,000.00 in the aggregate; or
(c) make any capital expenditures in excess of $5,000.00 for any single item or
$10,000.00 in the aggregate, or enter into any leases of capital equipment or
property under which the annual lease charge is in excess of $5,000.00; or
(d) sell or dispose of any capital assets with a net book value in excess of
$1,000.00 individually, or $10,000.00 in the aggregate.
8.7 Existing Agreements. Seller shall not modify, amend, cancel or
terminate any of its existing contracts or agreements, or agree to do any of
those acts, without the written consent of Buyer, which consent shall not be
unreasonably withheld or delayed.
8.8 Consent of Others. As soon as reasonably practical after the execution
and delivery of this Agreement, and in any event on or before the final Closing
Date, Seller shall obtain shareholder and regulatory approval to this Agreement
and will furnish to Buyer copies of these consents. Further, Seller agrees to
use its best efforts to obtain new contracts between the Buyer and the customers
described in SCHEDULE 1.1 to this Agreement.
8.9 Representations and Warranties True at Closing. Seller shall use its
best efforts to assure that all representations and warranties of Seller set
forth in this Agreement and in any written statements delivered to Buyer by
Seller under this Agreement will also be true and correct as of the Closing Date
as if made on that date and that all conditions precedent to Closing shall have
been met.
8.10 Statutory Filings. Seller shall cooperate fully with Buyer in preparing
and filing all information and documents deemed necessary or desirable by Buyer
under any statutes or governmental rules or regulations pertaining to the
transactions contemplated by this Agreement.
ARTICLE 9. CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
The obligations of Buyer to purchase the Assets under this Agreement are subject
to the satisfaction, at or before the Closing, of all the conditions set out
below in this Article 9. Buyer may waive any or all of these conditions in
accordance with Section 15.2 hereof, provided however, that no such waiver of a
condition shall constitute a waiver by Buyer of any of its other rights or
remedies, at law or in equity, if Seller shall be in default of any of its
representations, warranties or covenants under this Agreement.
9.1 Accuracy of Sellers Representations and Warranties. All representations
and warranties by Seller in this Agreement or in any written statement that
shall be delivered to Buyer by Seller under this Agreement shall be true on and
as of the Closing Date as though made at that time.
9.2 Absence of Liens. At or prior to the Closing, Buyer shall have received
UCC search reports dated
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as of a date not more than five days before the Closing Date issued by the
Secretaries of each State where assets are located, indicating that there are no
filings under the Uniform Commercial Code on file with such Secretary of State
which name T.E.N. Private Cable, CinemaWorks, Cinema Internet Networks Inc.,
Xxxxxxx Xxxxxx or any other name used by the Seller as debtor other than the
liens otherwise disclosed in the Schedules hereto.
9.3 Seller Performance. Seller shall have performed, satisfied, and
complied with all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by Seller on or before the Closing
Date.
9.4 Certification by Seller. Buyer shall have received a certificate, dated
the Closing Date, signed and verified by Seller's president or vice president
and its treasurer or assistant treasurer, certifying, in such detail as Buyer
and its counsel may reasonably request, that the conditions specified in
Sections 9.1 and 9.3 have been fulfilled.
9.5 Absence of Litigation. No action, suit or proceeding before any court
or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened on or before the Closing Date.
9.6 Corporate Approval. The execution and delivery of this Agreement by
Seller, and the performance of its covenants and obligations under it, shall
have been duly authorized by all necessary corporate action, and Buyer shall
have received copies of all resolutions pertaining to that authorization,
certified by the secretary of Seller.
9.7 Certificate Regarding Employment Tax Obligations. Buyer shall have
received a Certificate of the President and Secretary of the Seller stating
that, as of the Closing Date, no contributions, interest, or penalties are
unpaid by Seller with regard to any payroll taxes, or unemployment or workers'
compensation contributions for periods prior to most recent filing deadlines.
9.8 Consents. All necessary agreements and consents of any parties to the
consummation of the transaction contemplated by this Agreement, or otherwise
pertaining to the matters covered by it, shall have been obtained by Seller and
delivered to Buyer.
9.9 Approval of Documentation. The form and substance of all certificates,
instruments and other documents delivered to Buyer under this Agreement shall be
satisfactory in all reasonable respects to Buyer and its counsel.
9.10 Condition of Assets. The Assets shall not have been materially or
adversely affected in any way as a result of any fire, accident, storm, or other
casualty or labor or civil disturbance or act of God or the public enemy.
9.11 Valuation of Assets. Buyer shall have accepted the Assets, as set
forth on the schedules attached hereto (as adjusted as of the Closing Date).
9.12 Completion of Due Diligence. All due diligence reasonably required by
the Buyer has been completed, and the results of such due diligence are
satisfactory to the Buyer in its sole discretion and judgment with regard to all
aspects of the transaction, including by not limited to matters relating to the
Assets, or the intellectual property or financial prospects of the business to
be sold pursuant to this Agreement.
9.13 Compliance with Bulk Sales Laws. The parties have complied with all
applicable Bulk Sales Laws or similar provisions.
9.14 Simultaneous Closing The final closing of this transaction shall be
contingent upon the prior or simultaneous closing of the lease purchase from
Xxxxx Xxxxxxxxx and CapitalPlus plus the assumption of the Integra lease.
ARTICLE 10. CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
The obligations of Seller to sell and transfer the Assets under this Agreement
are subject to the satisfaction,
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at or before the Closing, of all the following conditions:
10.1 Accuracy of Buyer's Representations and Warranties. All representations
and warranties by Buyer contained in this Agreement or in any written statement
delivered by Buyer under this Agreement shall be true on and as of the Closing
as though such representations and warranties were made on and as of that date.
10.2 Buyer's Performance. Buyer shall have performed and complied with all
covenants and agreements, and satisfied all conditions that it is required by
this Agreement to perform, comply with, or satisfy, before or at the Closing.
10.3 Buyer's Corporate Approval. Buyer shall have received corporate
authorization and approval for the execution and delivery of this Agreement and
all corporate action necessary or proper to fulfill the obligations of Buyer to
be performed under this Agreement on or before the Closing Date.
10.4 Buyer shall have received all approvals allowing it to issue freely
tradeable shares of the Buyer to the Seller.
ARTICLE 11. EMPLOYEE PLANS
Seller represents that the Seller has no Employee Plan in effect or to which the
Seller is subject. For purposes of this Agreement, the term "Employee Plan"
includes all pension, retirement, disability, medical, dental or other health
insurance plans, life insurance or other death benefit plans, profit sharing,
deferred compensation, stock option, bonus or other incentive plans, vacation
benefit plans, severance plans, or other employee benefit plans or arrangements
including, without limitation, any pension plan as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974 ("ERISA") and any welfare
plan as defined in Section 3(1) of ERISA, whether or not funded, covering any
employee or to which Seller is a party or bound or makes or has made any
contribution or by which Seller may have any liability to any employee
(including any such plan formerly maintained by or in connection with which
Seller may have any liability to any employee, and any such plan which is a
multi employer plan as defined in Section 3(37) (A) of ERISA, or any comparable
Canadian laws.
ARTICLE 12. SELLERS OBLIGATIONS AFTER THE CLOSING
12.1 Preservation of Goodwill. Following the Closing, Seller will restrict
its activities so that Buyer's reasonable expectations with respect to the
goodwill, business reputation, employee relations and prospects connected with
the Assets will not be materially impaired. In furtherance, but not in
limitation of, this general obligation, Seller agrees that, for a period of
three (3) years following the Closing Date:
(a) Seller will not compete with the Buyer as a hospitality payperview
owner/operator and will not engage in any activity with the hotels named in this
agreement without the prior written consent of the Buyer.
The parties intend that the covenant contained in the preceding portion of this
Section shall be construed as a series of separate covenants, one for each
state. Each separate covenant shall be deemed identical in terms to the covenant
contained in this Section. If, in any judicial proceeding, a court shall refuse
to enforce any of the separate covenants deemed included in this Section, then
such unenforceable covenant shall be deemed eliminated from these provisions for
the purpose of those proceedings to the extent necessary to permit the remaining
separate covenants to be enforced.
(b) Seller will not disclose to any person or use for its own benefit any price
lists, pricing data, customer lists, or similar matters possessed by it relating
to the Assets or the business transferred to Buyer unless it first clearly
demonstrates to Buyer that such matters are, at the time of the proposed
disclosure or use, of common knowledge within the trade.
12.2 Seller Indemnities. Seller shall indemnify, defend and hold harmless Buyer
and its officers, directors, and agents against and in respect of any and all
claims, demands, losses, costs, expenses, obligations, liabilities, damages,
recoveries and deficiencies, including interest, penalties and reasonable
attorneys fees, that Buyer, or its officers, directors, or agents shall incur or
suffer, which arise, result from or relate to any breach of, or failure by
Seller to perform, any of its representations, warranties, covenants or
agreements
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in this Agreement or in any schedule, certificate, exhibit or other instrument
furnished or to be furnished by Seller under this Agreement. Notwithstanding any
other provision of this Agreement, Seller shall not be liable to Buyer, or its
officers, directors, or agents on any warranty, representation or covenant made
by Seller in this Agreement, regarding any single claim, loss, expense,
obligation or other liability that does not exceed $10,000; provided, however,
that when the aggregate amount of all such claims, losses, expenses, obligations
and liabilities not exceeding $10,000 each reaches $10,000, Seller shall
thereafter be liable in full for all such breaches and indemnities, and
regarding all those claims, losses, expenses, obligations, and liabilities.
12.3 Buyer Indemnities. Buyer shall indemnify, defend and hold harmless
Seller and its officers, directors, and agents against and in respect of any and
all claims, demands, losses, costs, expenses, obligations, liabilities, damages,
recoveries and deficiencies, including interest, penalties and reasonable
attorneys fees, that Seller, or its officers, directors, or agents shall incur
or suffer, which arise, result from or relate to any breach of, or failure by
Buyer to perform, any of its representations, warranties, covenants or
agreements in this Agreement or in any schedule, certificate, exhibit or other
instrument furnished or to be furnished by Buyer under this Agreement.
Notwithstanding any other provision of this Agreement, Buyer shall not be liable
to Seller, or its officers, directors, or agents on any warranty, representation
or covenant made by Buyer in this Agreement, regarding any single claim, loss,
expense, obligation or other liability that does not exceed $10,000; provided,
however, that when the aggregate amount of all such claims, losses, expenses,
obligations and liabilities not exceeding $10,000 each reaches $10,000, Buyer
shall thereafter be liable in full for all such breaches and indemnities, and
regarding all those claims, losses, expenses, obligations, and liabilities.
12.4 Access to Records. From and after the Closing, Seller shall allow
Buyer, and its counsel, accountants and other representatives, such access to
records which after the Closing are in the custody or control of Seller as Buyer
reasonably requires in order to comply with its obligations under the law or
under contracts assumed by Buyer pursuant to this Agreement.
ARTICLE 13. COSTS
13.1 Finder's or Broker's Fees. Each of the parties represents and warrants
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 of these transactions.
13.2 Expenses. Each of the parties shall pay all costs and expenses incurred
or to be incurred by it in negotiating and preparing this Agreement and in
closing and carrying out the transactions contemplated by this Agreement.
ARTICLE 14. SECURITIES ASPECTS OF AGREEMENT
14.1 All parties to this Agreement mutually understand, agree and covenant that
any referenced sale or other disposition of any security under this Agreement
shall be controlled and governed by this section. Specifically should there
arise any conflict of application or interpretation under this section and any
other provision or section of this Agreement; this section shall be given
primary definition and control. The term "securities" for the purposes of this
Agreement shall mean and include all shares of Chequemate, and any warrants to
acquire those shares as well as any other instrument or obligation customary or
commonly described as a security. Each of the following terms and conditions of
the issuance and distribution of the securities shall be fully applicable unless
otherwise specifically waived or treated in the following paragraphs.
14.2 Each security issued pursuant to the terms of this Agreement shall be a
"restricted" security unless otherwise specifically referenced as being issued
pursuant to a registration or offering.
14.3 Seller understands and agrees that a restricted security for the purposes
of this Agreement is one, which is issued without meeting registration
requirements under both federal and state law within the United States. Each
party to this Agreement further agrees and acknowledges that the nature of
restricted security is that it is not freely tradable. That is, the holder of
such security cannot immediately market or further distribute such security in
the open market, or through private transactions without the express written
consent of the issuer, primarily Chequemate under the terms of this Agreement.
34
14.4 Any entity acquiring securities pursuant to this Agreement with the intent
to divide such securities among its principal shareholders as part of the
acquisition process, will be responsible for obtaining the knowledgeable consent
and agreement of such actual shareholder to the terms of this Agreement,
specifically referencing this paragraph.
14.5 Seller represents that it is acquiring the Shares for its own account, for
investment and not with a view to the distribution or resale thereof. The Seller
further represents that its financial and other circumstances are such that it
has adequate means of providing for its current and anticipated future needs
without having to sell or otherwise dispose of the Shares, and that the Seller
is able to bear the economic risks of this investment and consequently is able
to hold the Shares for an indefinite period of time and to sustain the loss of
its entire investment in the Shares, in the event such a loss should occur.
14.6 Seller acknowledges and represents that, due to its knowledge and
experience in financial and business matters, its investment experience
generally and its experience with investments similar to the Shares in
particular, Seller, either alone or together with its advisors, if any, is able
to understand and merits of, and the risks involved in, its proposed investment
in the Shares. Seller, either alone or together with its advisors, if any, has
the capacity to protect its own interests in connection with this transaction.
Seller represents and acknowledges that it and its principals have been
engaged in the business of providing pay-per-view and cable services in the
hotel/lodging industry, which is intended area of business for which the Assets
are being acquired by the Buyer. In this regard, Seller has been acquainted with
the Chief Executive Officer of Buyer. Seller further represents and acknowledges
that it has had full opportunity to obtain additional information from Buyer to
verify the accuracy of the information supplied by it and to evaluate the merits
of its investment decision, including, without limitation, full opportunity to
ask questions of and receive satisfactory answers and other information from
Buyer, its officers, directors and other persons acting on its behalf, and all
such questions have been answered, and such other information supplied, to
Seller's full satisfaction. Seller is aware of, and has thoroughly evaluated, to
its own satisfaction, the high degree of risk associated with investing in
Buyer, including but not limited to, the specific risks associated with Buyer's
business and the risks associated with the ownership of common stock.
14.7 Seller hereby represents and warrants to Buyer that Seller is not a U.S.
person, as defined in Regulation S. Regulation S defines "a U.S. person" as:
"(i) Any natural person resident in the United States;
(ii) Any partnership or corporation organized or incorporated under the laws of
the United States;
(iii) Any estate of which any executor or administrator is a U.S. person;
(iv) Any trust of which any trustee is a U.S. person;
(v) Any agency or branch of a foreign entity located in the United States;
(vi) Any non-discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary for the benefit or account of a U.S.
person;
(vii) Any discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary organized, incorporated, or (if an
individual) resident in the United States; and
(viii) Any partnership or corporation if:
(A) Organized or incorporated under the laws of
any foreign jurisdiction; and
(B) Formed by a U.S. person principally for the
purpose of investing in securities not registered under the Act, unless it is
organized or incorporated, and owned, by accredited investors who are not
natural persons, estates or trusts."
B. The Seller represents, warrants and certifies that it is not acquiring
the securities for the account or benefit of any U.S. person or is a U.S. person
who purchased securities in a transaction that did not require registration
under the Act.
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C. Seller represents and warrants that the offer and sale of the Shares is
taking place outside the United States, because an offer or sale of securities
is made in an "offshore transaction" if:
(i) the offer is not made to a person in the United States; and at the time the
buy order is originated;
(ii) the buyer is outside the United States and the buyer is not a member of a
targeted identifiable group of U.S. citizens abroad, such as members of the U.S.
armed forces serving overseas; and
(iii) no directed selling efforts were made in the United States by Chequemate,
a distributor, any of their respective affiliates, or any person acting on
behalf of any of the foregoing and
(iv) offering restrictions have been implemented
D. Seller acknowledges that the shares have not been registered under the
Securities Act of 1933, as amended, and therefore cannot be offered, sold or
otherwise transferred, directly or indirectly, in the United States or for the
account or benefit of any U.S. person, at any time prior to expiration of a one
year distribution compliance period, which begins on the later of the date the
securities were first offered to persons other than distributors in reliance
upon this Regulation S or the date of closing of the offering, unless first
registered under the Act, unless another exemption from registration under the
Act is available.
If Seller is a distributor and sells during the one year restricted period,
Seller agrees to resell such securities only in accordance with the provisions
of this Regulation S, pursuant to registration under the Act, or pursuant to an
available exemption from registration; and agrees not to engage in hedging
transactions with regard to such securities unless in compliance with the Act.
Any "restricted securities", as defined in Section 230.144, that are equity
securities of a domestic issuer will continue to be deemed to be restricted
securities, notwithstanding that they were acquired in a resale transaction made
pursuant to Section 230.901 or Section 230.904.
E. Seller represents and warrants that it is acquiring the Shares for
investment purposes, and in the event of any subsequent sale or transfer of any
of the shares prior to the end of the Regulation S Restrictive Period (not being
presently contemplated), it will obtain similar representations from the
subsequent purchaser or transferee as are contained in this Subscription
Agreement, and the same disclosures will be made.
F. Undersigned acknowledges and agrees that the certificates
evidencing the Shares will bear the following Regulation S legend:
THESE SECURITIES ARE NOT REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER REGULATION S PROMULGATED
UNDER THE ACT.
TRANSFER IS PROHIBITED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THIS
REGULATION S, PURSUANT TO REGISTRATION UNDER THE ACT, OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION; AND THAT HEDGING TRANSACTIONS INVOLVING
THOSE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.
THESE SECURITIES MAY NOT BE RESOLD OR TRANSFERRED TO ANY U.S. PERSON (AS SUCH
TERM IS DEFINED IN THE REGULATIONS) FOR A PERIOD OF ONE YEAR AFTER COMPLETION OF
ANY OFFERING OF WHICH IT IS A PART, UNLESS REGISTERED UNDER THE ACT. THEREAFTER,
THESE SECURITIES MAY NOT BE RESOLD OR TRANSFERRED TO ANY U.S. PERSON (AS SUCH
PERSON IS DEFINED IN THE REGULATIONS) UNLESS (i) PERMITTED UNDER THE ACT, UNDER
REGULATION S, AND/OR UNDER THE OTHER RULES AND REGULATIONS PROMULGATED UNDER THE
ACT; AND (ii) AN ACCEPTABLE LEGAL OPINION IS RENDERED TO THE ISSUER, TO THE
EFFECT THAT SUCH TRANSACTION IS PERMISSIBLE AND/OR THAT RESTRICTIONS ON TRANSFER
MAY BE REMOVED UNDER THE ACT.
14.8. Additional Representations by Seller. Seller represents and
warrants as follows:
(a) It has obtained copies of the most recent financial statements
of Chequemate, and has
36
reviewed same with its investment counselors and advisers. It has relied only on
the information contained therein or otherwise provided to it in writing by
Chequemate.
(b) It understands that it is acquiring Shares of Chequemate
Common Stock without being furnished any offering literature or prospectus other
than as described above, and that this transaction has not been scrutinized by
the Securities and Exchange Commission because it constitutes an exempt
transaction under Regulation S.
(c) It understands that the Shares have not been registered under
the Securities Act of 1933, as amended.
(d) The Shares are being purchased for its own account for
investment, and not with a view to or for sale in connection with any
"Distribution" of the security. It and its investment advisers have such
knowledge and experience in financial and business matters so as to be able to
utilize the information made available to it in connection with the offering of
the Shares to evaluate the risks of the investment and to make an informed
investment decision.
(e) All information which it has provided to Chequemate concerning
itself, its non-U.S. person status, its financial position and its knowledge of
financial and business matters, is correct and complete as of the date set forth
at the end hereof.
(f) Available information.
(i) Chequemate has made available to it the opportunity to ask
questions and receive answers concerning Chequemate, its business, and the terms
and conditions of this Regulation S offering and to obtain any additional
information which it might request, and which Chequemate possesses, or can
acquire without unreasonable effort or expense.
(ii) Seller may request and receive any additional information
about Chequemate that it may wish that is not confidential prior to execution
hereof. By executing this agreement, Seller acknowledges that it has received
all information it believes necessary to make an informed decision. If it has
not requested additional information, Seller acknowledges that it has obtained
through its own resources, and examined or caused its financial advisers to
examine copies of Chequemate's current Financial Statements, and recent press
releases, and that it is satisfied with their content.
(iv) No steps have been taken or will be taken in any jurisdiction
outside of the United States that will permit the issuance of a prospectus,
notice, circular or other invitation offering these securities to the general
public for subscription or purchase. This document may not be used for or in
connection with an offer or solicitation by anyone in any jurisdiction in which
such offer or solicitation is not authorized or to any person to whom it is
unlawful to make such offer or solicitation. In connection with this offering,
no person has been authorized to give any information or to make any
representations, other than those set forth in this Agreement, and, if given or
made, such information or representations must not be relied upon as having been
authorized by Chequemate.
Seller further agrees that it will defer the delivery of the Securities to the
escrow agent until such time as the Additional Listing Application related to
the Securities is approved by AMEX. Buyer agrees to promptly file the Additional
Listing Application and pursue its approval with reasonable diligence.
14.9 Registration Rights.
The Company shall, subject to the provisions of this paragraph, use its
reasonable efforts to cause to be registered under the Securities Act of 1933
all of the Shares that Buyer shall deliver to the escrow agent under this
Agreement. It shall be a condition precedent to the obligations of the Company
to take any action pursuant to this paragraph that Seller shall furnish to the
Company such information regarding Seller, the Shares held by Seller, and the
intended method of disposition of such Shares as shall be required to effect the
registration of its Shares.
37
ARTICLE 15. FORM OF AGREEMENT
15.1 Headings. The subject headings of the Articles and Sections of this
Agreement are included for purposes of convenience only, and shall not affect
the construction or interpretation of any of its provisions.
15.2 Entire Agreement: Modification: Waiver. This Agreement constitutes the
entire agreement between the parties pertaining to the subject matter 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 waiver of any other provision, whether or not similar, nor shall
any waiver constitute a continuing waiver. No waiver shall be binding unless
executed in writing by the party making the waiver.
15.3 Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of, which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
ARTICLE 16. PARTIES
16.1 Parties in Interest. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provisions give any third persons any right of
subrogation or action over against any party to this Agreement.
16.2 Assignment. This Agreement shall be binding on and shall inure to the
benefit of the parties to it and their respective heirs, legal representatives,
successors and assigns. This agreement is not assignable without the prior
written consent of Seller, which shall not be unreasonably withheld or delayed.
ARTICLE 17. REMEDIES
17.1 Recovery of Litigation Costs. If any legal action or any arbitration or
other proceeding so brought for the enforcement of this Agreement, or because of
an alleged dispute, breach, default or misrepresentation in connection with any
of the provisions of this Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorneys' fees and other costs incurred in that
action or proceeding, in addition to any other relief to which it may be
entitled.
17.2 Conditions Permitting Termination. Subject to the provisions of Article
3 relating to the postponement of the Closing Date, either party may on or prior
to the Closing Date terminate this Agreement by written notice to the other,
without liability to the other, if any bona fide action or proceeding shall be
pending against either party on the Closing Date that could result in an
unfavorable judgment, decree or order that would prevent or make unlawful the
carrying out of this Agreement.
17.3 Defaults Permitting Termination. If either Buyer or Seller materially
defaults in the due and timely performance of any of its warranties, covenants,
or agreements under this Agreement, the non-defaulting party or parties may on
the Closing Date give notice of termination of this Agreement, in the manner
provided in Article 19. The notice shall specify with particularity the default
or defaults on which the notice is based. The termination shall be effective
five days after the Closing Date, unless the specified default or defaults have
been cured on or before this effective date for termination.
ARTICLE 18. NATURE AND SURVIVAL OF REPRESENTIONS AND WARRANTIES
All representations, warranties, covenants and agreements of the parties
contained in this Agreement, or in any instrument, certificate, opinion or other
writing provided for in it, shall survive the Closing.
ARTICLE 19. NOTICES
All notices, requests, demands and other communications 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 third 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 as follows:
38
Seller:
Cinema Internet Networks, Inc.
Xxxxxxx (Xxxx) Xxxxxx
000-0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX X0X0X0
with copy to:
Xxxxx Xxxx, Esq.
Xxxxx, Xxxxxx & Associates
0000-0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
Buyer:
C-3D Digital c/o Xxxx Xxxxxx
000 Xxxxxxxxxx Xxxx., Xxxxx 000
Xxxxxx xxx Xxx, XX 00000
with copy to:
Xxxx X.X. XxXxxxx
Hotel Movie Network
000 X. XxXxxxx Xxxxx 0
Xxxxxxx, XX 00000
Any party may change its address for purposes of this Article by giving the
other party written notice of the new address in the manner set forth above.
ARTICLE 20. GOVERNING LAW
This Agreement shall be construed in accordance with, and governed by the laws
of the State of California
ARTICLE 21. MISCELLANEOUS
21.1 Announcements. Seller will not make any announcements to the public or to
employees of Seller concerning this Agreement or the transactions contemplated
hereby without the prior approval of Buyer, which will not be unreasonably
withheld. Notwithstanding any failure of Buyer to approve it, Seller may make an
announcement of substantially the same information as theretofore announced to
the public by Buyer or any announcement required by applicable law, but Seller
shall in either case notify Buyer of the contents thereof reasonably promptly in
advance of its issuance.
21.2 References. Unless otherwise specified, references to Sections or
Articles are to Sections or Articles in this Agreement.
21.3 Further Assurances. The parties agree to execute any and all further
documents reasonably necessary to give full effect to the intentions of the
parties as set forth herein.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it as of
the day and year first above written.
CHEQUEMATE INTERNATIONAL, INC.,
a Utah corporation
By Its:
----------------------------------------------
SELLER
Cinema Internet Networks, Inc., a Canadian corporation
By Its: C.E.O.
----------------------------------------------
39
Schedule 1.1
Hotel Information
Room Count
Days Inn Scottsdale
0000 X. Xxxxxxxxxx Xxxx.
Xxxxxxxxxx, XX 00000
175
Comfort Inn Airport
0000 X. 0 Xxxx
Xxxxxxxxx, XX X0x000
000
Xxxxxxxx Xxx
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx, XX X0X000
94
Days Inn Metro
0000 Xxxxxxxx
Xxxxxxxxx, XX X0X0X0
66
Executive Inn Express
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx, XX VX151
81
The Atrium Inn
0000 X. Xxxxxxx
Xxxxxxxxx, XX X0X0X0
105
The Bedford Regency
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX X0X0x0
40
The Biltmore Hotel
000 Xxxxxxxx
Xxxxxxxxx, XX X0X0X0
96
The Blue Horizon
0000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX X0X0X0
000
Xxxxxxx Xxxxx
000 Xxxxxxxx
Xxxxxxxxxxx, XX 00000
122
Ramada Resort
0000 X. Xxxx Xxxxxx
Xxxx Xxxxxxx, XX 00000
40
255
Ramada Denver Airport
0000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
148
Baymeadows Holiday Inn
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
000
Xxxxxx Xxxxx Xxxxxx
00000 Xxxx Xxxx.
Xxxxxxxx Xxxxxx, XX 00000
000
Xx. Xxxxxxxxxx Holiday Inn
0000 Xxxx Xxxx.
Xx. Xxxxxxxxxx, XX. 00000
189
Holiday Inn South Savanna
X-00 & XX Xxxxxxx
Xxxxxxx, XX 000000
177
Xxxxxx World Hotel & Suites
0000 Xxxxxxxx Xxxxxxx
Xxxxxx, XX 00000
240
Room Count Total
2553
Schedule 1.2
Equipment
See attached Spreadsheet Titled: "Schedule 1.2"
Schedule 1.3
Hotel with Lease Obligations
Hotel Information
Lease Payment
Days Inn Scottsdale
0000 X. Xxxxxxxxxx Xxxx.
00
Xxxxxxxxxx, XX 00000
$484.99 Capital
Xxxxxxx Xxx Xxxxxxx
0000 X. 0 Xxxx
Xxxxxxxxx, XX X0x000
$614.60 Integra
Ramada Resort
0000 X. Xxxx Xxxxxx
Xxxx Xxxxxxx, XX 00000
$487.94 Capital
Baymeadows Holiday Inn
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
$482.26 Capital
Bilmar Beach Resort
00000 Xxxx Xxxx.
Xxxxxxxx Xxxxxx, XX 00000
$484.53 Capital
St. Petersburg Holiday Inn
0000 Xxxx Xxxx.
Xx. Xxxxxxxxxx, XX. 00000
$484.83 Capital
Xxxxxx World Hotel & Suites
0000 Xxxxxxxx Xxxxxxx
Xxxxxx, XX 00000
$490.19 Capital
Lease Payment Total
$3529.34
Schedule 1.4
Cost of Operations of CinemaWorks Hotels from September 1, 1999
1. Corporate Information
Legal Name: Cinema Internet Networks Inc. (d.b.a. CinemaWorks)
Symbol: CWK
Stock Exchange: Canadian Exchange Venture (CDNX Exchange)
Incorporated: 0000 Xxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx
Tax ID Number: 000000000 RT
Business Number: 000-000-0 R
Address: 0000 Xxxxxx Xxx. - Xxxxxxxx #0
Xxxxxxxxx, XX, X0X 0X0
Phone: (000) 000-0000
Fax: (000) 000-0000
42
President: Xxxxxxx (Xxxx) Xxxxxx
Phone (000) 000-0000
State of Washington:
Incorporated: 000-000-000
Fed Tax ID #: 00-000-0000
2. Liabilities (PPV assets)
Leases: $116,000 (approx.) Capital Plus, Salt Lake City UT $ 26,000
(approx.) Integra, Calgary Alberta
Tax Liabilities (States): None
43
