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EXHIBIT 10.8
INVESTMENT AGREEMENT
By and Between
CKG ▇▇▇▇▇.▇▇▇, INC.,
GROUP OMNI-NET, INC.,
▇▇▇▇-▇▇▇.▇▇▇ (HOLDINGS), INC.,
ZULU-TEK, INC.,
ENHANCED SERVICES COMPANY, INC.,
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, as trustee
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As of April 2, 1999
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (this "Agreement"), dated as of April 2, 1999,
between CKG ▇▇▇▇▇.▇▇▇, INC., a Delaware corporation, having an address at ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("CKG"), GROUP OMNI-NET,
INC., a Delaware corporation, having an address at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Omni"), ▇▇▇▇-▇▇▇.▇▇▇ (HOLDINGS),
INC., a Delaware corporation having an address at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Holdings"), ZULU-TEK, INC., a Utah
corporation having an address at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Zulu"), ENHANCED SERVICES COMPANY, INC., a Colorado
corporation having an address at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Enhanced" and sometimes referred to collectively
with Omni, Holdings, and Zulu as "Investor"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, an individual
residing at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, as trustee of the
CKG ▇▇▇▇▇.▇▇▇, Inc. Stock Trust (the "Trustee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, CKG is engaged in the internet advertising business;
WHEREAS, simultaneously with the execution hereof, Omni is entering into
that certain CKG Stockholders' Agreement, dated as of the date hereof (the
"Stockholders' Agreement");
WHEREAS, Enhanced is the indirect majority stockholder of Omni, which
together with its predecessors, successors and any "Affiliates" (as that term is
defined in Rule 405 promulgated under the Securities Act of 1933, as amended
(the "Act")) is hereinafter referred to collectively as the "Company"; and
WHEREAS, Investor, through the use of a blind trust (the "Trust"), desires
to purchase from CKG, and CKG desires to issue to the Trustee of the Trust, 55
shares of common stock, par value $0.01 per share (the "Stock"), whereby the
Investor shall be the beneficial owner of, upon the execution and delivery of
this Agreement, one hundred percent (100%) of the issued and outstanding shares
of the Stock on the terms and conditions set forth herein
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and in order to set forth the terms and conditions of the
purchase and sale of the Stock and the manner of carrying the same into effect,
the parties hereto hereby agree as follows:
1. Subscription for Purchase of Stock. 1On the basis of the
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representations, warranties, covenants and agreements contained herein, upon the
Closing hereof (as that term is defined in Section 5 below) CKG agrees to issue,
sell, transfer, convey and deliver to the Trustee, and Investor and/or the
Trustee, as the case may be, agrees to purchase, acquire and accept delivery
from CKG of, the Stock, subject to the terms and conditions set forth herein.
2. Consideration for Purchase of Stock. As full and total consideration
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of the issuance, sale, transfer, conveyance, assignment and delivery of the
Stock at the Closing by CKG to the Trustee, Investor agrees to cause to be
delivered to CKG at the Closing (i) all rights, title and interest to the Omni
Assets (as that term is defined in Section 3(a) hereof) and (ii) One Million
Dollars ($1,000,000) (the "Cash Purchase Price") by wire transfer or certified
or official bank check drawn on a bank which is a member of the New York
Clearing House Association payable to the order of CKG.
3. (a) Assignment of Assets. Subject to and upon the terms and
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conditions set forth in this Agreement, the Company agrees to transfer, convey,
assign and deliver to CKG at the Closing the following assets (collectively, the
"Omni Assets"):
(i) all right, title and interest in and to any and all United
States and foreign: (A) patents (including design patents, industrial
designs and utility models) and patent applications (including
docketed patent disclosures awaiting filing, reissues, divisions,
continuations-in-part and extensions), patent disclosures awaiting
filing determination, inventions and improvements thereto; (B)
trademarks, service marks, trade names (including, without limitation,
any trade names acquired by the Company (as that term is defined in
Section 3(a)(v) hereof) in connection with the acquisition of a
Company's business), trade dress, logos, business and product names,
slogans, and registrations and applications for registration thereof;
(C) copyrights (including software) and registrations thereof; (D)
inventions, processes, designs, formulae, trade secrets, know-how,
industrial models, confidential and technical information,
manufacturing, engineering and technical drawings, product specif
ications and confidential business information; (E) mask work and
other semiconductor chip rights and registrations thereof; (F)
intellectual property rights similar to any of the foregoing; (G)
copies and tangible embodiments thereof (in whatever form or medium,
including electronic media); and (H) all internet related rights,
including but not limited to the ▇▇▇▇-▇▇▇.▇▇▇ URL.
(ii) all rights (including, but not limited to, any and all
Intellectual Property rights, as that term is defined in Section
8(o)(i)) in and to the products and services sold, rented or leased
and in and to any products or other Intellectual Property rights under
research or development prior to or on the Closing Date;
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(iii) all of the rights of Omni under all Contracts (as hereinafter
defined) and, including, without limitation, any right to receive
payment for products sold or services rendered, and to receive goods
and services, pursuant to such Contracts and to assert claims and take
other rightful actions in respect of breaches, defaults and other
violations of such Contracts; provided, however, that Investor shall
not be responsible for obtaining the Consents (as hereinafter defined)
to the assignment of such Contracts;
(iv) all credits, prepaid expenses, deferred charges, return
allowances, advance payments, security deposits and prepaid items;
(v) all books, records, manuals and other materials (in any form
or medium), including, without limitation, all records and materials
maintained by Investor, advertising matter, catalogues, price lists,
correspondence, mailing lists, lists of customers, distribution lists,
photographs, production data, sales and promotional materials and
records, purchasing materials and records, manufacturing and quality
control records and procedures, blueprints, research and development
files, records, data and laboratory books, Intellectual Property
disclosures, media materials and plates, accounting records, and sales
order files;
(vi) to the extent their transfer is permitted by law, all
consents, approvals, authorizations, waivers, permits, grants,
franchises, concessions, agreements, licenses, exemptions or orders of
regulation, certificate, declaration or filing with, or report or
notice to any entity issued, executed, delivered or otherwise made to
or for the benefit of the Omni Assets, including, without limitation,
any consent to any instrument, lease, Contract, permit or other
agreement that requires the consent or approval of a third party, and
including all applications thereof (collectively, the "Consents")
(provided, however, that Omni shall not be responsible for obtaining
any Consents that it does not already possess) including, but not
limited to, the Consent (the "Governmental Approval") of any nation,
or government, any state or other political subdivision thereof, any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including,
without limitation, any government authority, agency, department,
board, commission or instrumentality of the United States, any state
of the United States or any political subdivision thereof, and any
tribunal or arbitrator(s) of competent jurisdiction, and any self-
regulatory organization (collectively, the "Governmental Authority" or
"Governmental Authorities);
(vii) all rights to choose in action, causes of action, claims and
rights of recovery or setoff, lawsuits, judgments, claims and demands
of any nature available to or being pursued by Omni with respect to
Omni's business or the ownership, use, function or value of any of the
Omni Assets whether arising by way of counterclaim or otherwise;
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(viii) all guarantees, warranties, indemnities and similar rights in
favor of the Company with respect to any of the Omni Assets;
(ix) accrued sales (in respect of outstanding proposals or work-in-
process), commitments, proposals, Contracts, understandings or
commitments, whether oral or written, to perform services;
(x) the employment contracts (the "Employment Contracts"), as such
are identified on Schedule A annexed to the Employment Contracts
Assignment (as such term is defined in Section 6(a)(i) hereof)
substantially in the form of Schedule 6(a)(i) annexed hereto; and
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(xi) cash and cash equivalents (including marketable securities)
and accounts and notes receivable of Omni.
(b) Assumed Liabilities.
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(i) The Omni Assets shall be conveyed free and clear of all
liabilities, obligations, liens, claims and encumbrances, excepting
only those liabilities, obligations, liens, claims and encumbrances
which are expressly to be assumed by CKG hereunder, if any, CKG shall
assume at the Closing, and thereafter timely pay, perform or
discharge, when due, the "Assumed Liabilities," except to the extent
that any of such Assumed Liabilities have been paid or satisfied as of
the Closing Date. As used herein, the term "Assumed Liabilities"
shall mean the liabilities set forth on Schedule 3(b) annexed hereto.
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(ii) CKG shall not and does not assume any liabilities, obligations
or commitments of Omni, other than the Assumed Liabilities, and the
Company shall be solely responsible, without limitation, for the
following:
(A) Legal, accounting, brokerage and finder's fees and income,
excise or real estate or other Transfer Taxes (as defined in
Section 6(d) hereof) or other expenses incurred by or Investor
in connection with this Agreement or the consummation of the
transactions contemplated hereby;
(B) Debts, liabilities or obligations of any nature to any
past or present shareholder of Omni;
(C) Any domestic, federal, state or local or foreign income,
franchise, excise, use, property, payroll or similar or other
Taxes (as defined in Section 8(i) hereof) (or penalties and
interest thereon)
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imposed on Omni including, without limitation, those due as a
result of the operation of Omni's business through the Closing
Date; and
(D) Except as CKG shall have otherwise agreed herein,
liabilities and obligations of Omni, if any, accruing prior
to, on or after the Closing Date relating to Omni's employment
of any of Omni's employees, including, without limitation,
compensation, severance payments, if any, contributions to
employee benefit plans, workers' compensation or other
insurance claims.
(c) Excluded Assets. The Omni Assets do not include, and
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specifically exclude, the items set forth on Schedule 3(c) annexed hereto
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(hereinafter referred to as the "Excluded Assets").
(d) Consent of Third Parties. Investor will cooperate with CKG in
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any lawful and economically feasible arrangement to provide that CKG shall
receive the interest of Omni and in the Omni Assets assigned to CKG pursuant to
this Agreement and/or any document executed in connection herewith, in the
benefits under any such instrument, Contract, lease or permit or other agreement
or arrangement, including performance by Omni as agent, if economically
feasible. Nothing in this Section 3(d) shall be deemed a waiver by CKG of its
right to have received on or before the Closing an effective assignment of all
of the Omni Assets nor shall this Section 3(d) be deemed to constitute an
agreement to exclude from the Omni Assets any assets described in Section 3(a)
hereof.
4. Issuance of Stock. As full and total consideration of (i) the sale,
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transfer, conveyance, assignment and delivery of the Omni Assets to CKG, (b) the
delivery of the Cash Purchase Price by Investor to CKG, and (c) in reliance upon
the representations and warranties made herein by Investor, CKG agrees to issue
and deliver to the Trustee 55 shares of Stock.
5. Closing. The closing of the transaction contemplated under this
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Agreement (the "Closing") shall take place with the execution and delivery of
this Agreement at the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇▇, LLP or at such
other location or in such other manner as the parties may mutually agree. The
day on which the Closing actually takes place is herein sometimes referred to as
the "Closing Date."
6. Investor's and the Company's Obligations at Closing;
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(a) At the Closing, Investor, agrees to cause to be delivered to CKG
(and, as applicable, execute):
(i) an Assignment and Assumption of Employment Contracts duly
executed by Omni in substantially the form of Schedule 6(a)(i) hereto
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(the "Employment Contracts Assignment");
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(ii) the Cash Purchase Price as provided in Section 2 hereof;
(iii) a certified copy of resolutions adopted by the Board of
Directors of the Company authorizing the execution, delivery and
performance of this Agreement;
(iv) a certified copy of the certificate of incorporation, as
amended, as appropriate, of Investor, from the appropriate officials
of the jurisdiction in which Investor is incorporated;
(v) certificates (and facsimiles dated as of the Closing Date) as
to the good standing of Investor, from the appropriate officials of
the jurisdiction in which Investor is qualified to transact business;
(vi) an opinion of Omni's counsel substantially in the form of
Schedule 6(a)(vi) annexed hereto;
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(vii) such other good and sufficient deeds, bills of sale,
endorsements, assignments, documents of title and other instruments of
conveyance, assignment and transfer, in form and substance reasonably
satisfactory to CKG's counsel, as shall be effective to vest in CKG
good title to the Omni Assets;
(viii) all contracts, files and other data (including, without
limitation, lists of orders and computer disks and tapes) and
documents pertaining to the Omni Assets;
(ix) a Sublease Agreement for the Lease (as defined in Section
8(y)(i) hereof) in substantially the form of Schedule 6(a)(ix) annexed
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hereto (the "Sublease Agreement");
(x) an Assignment Agreement for the Intellectual Property in
substantially the form of Schedule 6(a)(x) annexed hereto (the
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"Intellectual Property Assignment");
(xi) that certain Stockholders' Agreement, dated as of the date
hereof, to be entered into by Investor (the "Stockholders'
Agreement");
(xii) Governmental Approvals;
(xiii) executed documents with respect to the Trust in substantially
the form of Exhibit 6(a)(xiii) annexed hereto;
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(xiv) customary closing certificates from officers of the Company;
and
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(xv) The Mutual Release in substantially the form of Exhibit
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6(a)(xv) annexed hereto.
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(xvi) a copy of a proposed amendment to articles of incorporation of
Omni and Holdings (and any other corporations within the affiliated
group of corporations of which they are members which contain the work
"Omni"), duly executed by Investor, changing each of Omni's and
Holdings' name (and the name of any other such corporation within the
affiliated group) to a name that does not include any of the words
"Omni-net", "Omni", "omni-net", "▇▇▇▇-▇▇▇.▇▇▇", "CKG", "CKG Media" or
"CKG ▇▇▇▇▇.▇▇▇", no matter what case, capital, lower or otherwise, or
punctuation is used, which Investor agrees to duly file promptly
following the Closing, it being understood that CKG has the present
intent to utilize the name "Omni" and its various derivative forms
described above in connection with its business;
(xvii) all other documents and instruments required to be delivered
to CKG pursuant to the provisions of this Agreement.
(b) Omni agrees that from and after the Closing Date, CKG shall
have the right and authority to ▇▇▇▇ and collect for its own account all
▇▇▇▇▇▇▇▇ in respect of each Omni's accounts receivable and work-in-process, if
any, that are being transferred to CKG as provided herein. Omni agrees that it
will promptly transfer and deliver to CKG any cash or other property which Omni
may receive in respect of such ▇▇▇▇▇▇▇▇.
(c) At any time and from time to time after the Closing, at CKG's
request and expense, without further consideration, Investor, shall execute and
deliver such other additional instruments of sale, transfer, conveyance,
assignment and confirmation and take such other action as CKG may reasonably
deem necessary or desirable in order to transfer, convey and assign to CKG, and
confirm CKG's title to and operating control of all of the business, properties,
assets and goodwill of the Omni Assets thereof and to assist CKG in exercising
all rights with respect thereto.
(d) Investor shall be responsible for the timely payment of all
income, sales (including, without limitation, bulk sales), use, value added,
documentary, stamp, gross receipts, registration, transfer, conveyance, excise,
recording, license and other similar Taxes (as defined in Section 8(i) hereof)
and fees (collectively, "Transfer Taxes"), arising out of or in connection with
or attributable to the transactions effected pursuant to this Agreement. Omni
shall prepare and timely file all tax returns required to be filed in respect of
Transfer Taxes (including, without limitation, all notices required to be given
with respect to bulk sales taxes), provided that CKG shall be permitted to
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prepare any such tax returns that are the primary responsibility of CKG under
Applicable Law. CKG's preparation of any such tax returns shall be subject to
Omni's approval, which approval shall not be unreasonably withheld or delayed.
(e) At any time and from time to time after the Closing, at CKG's
request and expense, without further consideration, Investor shall execute and
deliver such other
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additional instruments of sale, transfer, conveyance, assignment and
confirmation and take such other action as CKG may reasonably deem necessary or
desirable in order to transfer, convey and assign to CKG the Omni Assets and any
and all other assets transferred to CKG pursuant hereto or pursuant to any other
document executed in connection herewith, but subject to this Agreement, to put
CKG in actual possession and operating control thereof and to assist CKG in
exercising all of CKG's rights with respect thereto and to take such action and
execute such documents or instruments as may be reasonably requested by CKG in
connection with any governmental or regulatory matters or filings required to be
made by CKG, including, without limitation, any filings, documents or
instruments to be delivered to the United States Securities and Exchange
Commission or any other Governmental Authority, the New York Stock Exchange,
CKG's lenders, auditors or any other appropriate party.
7. CKG's Obligations at Closing. (a) At the Closing, CKG agrees to
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deliver, or cause to be delivered, as the case may be, to Investor (and, as
applicable, execute):
(i) Stock certificate(s) in the Trustee's name, dated as of the
Closing Date, representing 55 shares of Stock;
(ii) certificate as to the good standing of CKG from the
appropriate officials of the jurisdictions in which CKG is
incorporated or qualified and authorized to do business as a foreign
corporation;
(iii) the opinion of CKG's counsel, substantially in the form of
Schedule 7(a)(iii) annexed hereto;
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(iv) a true and correct copy of CKG's certificate of incorporation,
as certified by the Secretary of State of the State of Delaware and a
true and correct copy of CKG's by-laws, as certified by the secretary
of CKG;
(v) the Stockholders' Agreement;
(vi) the Employment Contracts Assignment;
(vii) the Sublease Agreement; and
(viii) all other documents and instruments required to be delivered
to Investor pursuant to the provision of this Agreement.
(b) At any time and from time to time after the Closing, at
Investor's request and expense, without further consideration, CKG shall execute
and deliver such other additional instruments of sale, transfer, conveyance,
assignment and confirmation and take such other action as Investor may
reasonably deem necessary or desirable in order to transfer, convey and assign
to Investor and/or the Trustee, as the case may be, and confirm Investor's
beneficial
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and the Trustee's legal title to, the Stock, and to assist Investor
and/or the Trustee, as the case may be, in exercising all rights with respect
thereto.
8. Representations and Warranties of the Company and Investor. Investor
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represents and warrants, to CKG, as of the date of this Agreement and as of the
Closing Date, as follows:
(a) Organization, Standing and Qualification. Except as set forth
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on Schedule 8(a) annexed hereto, (i) Investor is a corporation, duly organized,
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validly existing and in good standing under the laws of its state of
incorporation; (ii) Investor has all requisite corporate power and authority and
is entitled to carry on its business a now being conducted and to own, lease or
operate its properties in the places where such business is now conducted and
such properties are now owned, leased or operated; and (iii) Investor is duly
qualified, licensed and in good standing as a foreign corporation authorized to
do business in each state in with it transacts business. Investor has delivered
or has agreed to deliver to CKG true and complete copies of the certificate of
incorporation of each corporation which constitutes Investor and all amendments
thereto, certified as true and correct by the appropriate state agencies, and
the by-laws of each corporation which constitutes Investor, as presently in
effect, certified as true and correct by the secretary of Investor, as the case
may be.
(b) Subsidiaries. Omni has no subsidiaries or divisions. Omni's
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business has not been conducted through any other direct or indirect subsidiary,
division (other than Omni) or any Affiliate or any present or former
shareholder of Investor. Omni has no interest, directly or indirectly, and has
no commitment to purchase any interest, directly or indirectly, in any other
corporation or in any partnership, joint venture or other business enterprise or
entity
(c) Transactions with Certain Persons. Except as set forth on
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Schedule 8(c) annexed hereto, Omni has not directly or indirectly, purchased,
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leased from others or otherwise acquired any property of a material nature or
obtained any services from, or sold, leased to others or otherwise disposed of
any property of a material nature or furnished any services to, or otherwise
dealt with (except with respect to remuneration for services rendered as a
director, officer or employee of Omni), in the ordinary course of business or
otherwise (i) any shareholder of Omni, or (ii) any person, firm, partnership,
corporation or other entity which, directly or indirectly, alone or together
with others, controls, is controlled by or is under common control with Investor
or any shareholder of Investor. Except as set forth on Schedule 8(c) annexed
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hereto, Omni does not owe any amount to, or have any contract with or commitment
to, any of its shareholders, directors, officers, employees or consultants
(other than compensation for current services not yet due and payable and
reimbursement of expenses arising in the ordinary course of business), and none
of such persons owes an amount in excess of $1,000 to Omni.
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(d) Execution, Delivery and Performance of Agreement; Authority.
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Except as set forth on Schedule 8(d) annexed hereto, neither the execution,
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delivery nor performance of this Agreement and all other agreements to which
Investor is a party required to be delivered by Investor pursuant to Section
6(a) hereof (which documents are hereinafter sometimes collectively referred to
as "Investor's Related Agreements") by Investor will, with or without the giving
of notice or the passage of time, or both, conflict with, result in a default,
right to accelerate or loss of rights under, or result in the creation of any
lien, charge or encumbrance pursuant to any provision of Investor's certificate
of incorporation or by-laws or any franchise, mortgage, deed of trust, lease,
license, agreement, Applicable Law, rule or regulation or any order, judgment or
decree to which Investor is a party or by which any of them may be bound or
materially or adversely affected or require any consent, authorization, approval
or any other action by, or any notice to, or filing or registration with, any
Governmental Authority or other third party. No Consent is required to be
obtained or made by Investor in connection with the execution and delivery of
this Agreement or the Investor's Related Agreements and to consummate the
transactions contemplated hereby. Investor has the full power and authority to
enter into this Agreement and, as applicable, Investor's Related Agreements and
to carry out the transactions contemplated hereby, as applicable, all
proceedings required to be taken by it to authorize and approve the execution,
delivery and performance of this Agreement and Investor's Related Agreements
have been properly taken, and this Agreement and Investor's Related Agreements
constitute valid and binding obligations of Investor, enforceable in accordance
with their terms, except that such enforcement may be subject to the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium and similar
law affecting creditors' rights generally. The execution, delivery and
performance of this Agreement and Investor's Related Agreements have been duly
authorized, to the extent required by Applicable Law and by all requisite
corporate and shareholder action of Investor, if necessary.
(e) Capitalization. All of the presently authorized, issued and
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outstanding shares of capital stock of Omni are owned by Investor and have been
duly authorized and validly issued and are fully paid and non-assessable. There
are no outstanding subscriptions, rights, options, warrants, calls, contracts,
demands, commitments, convertible securities or other agreements or arrangements
of any character or nature whatsoever under which Investor is or may become
obligated to issue, assign or transfer any shares of the capital stock of Omni.
(f) Ownership of Omni's Capital Stock. The lawful record and
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beneficial owner of Omni's capital stock is Enhanced, and its ownership is free
and clear of any liens, claims, encumbrances or restrictions of any kind.
Investor is not a party to or otherwise subject to any agreement, understanding
or arrangement regarding the transfer, sale, disposition, purchase, acquisition
or voting of Omni's capital stock.
(g) Financial Statements. Omni has delivered to CKG copies of the
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following financial statements (hereinafter, collectively, the "Financial
Statements"), copies of which are annexed hereto as Schedule 8(g), all of which
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are true, accurate and correct, and have been prepared in good faith from the
books and records of Omni in conformity with generally
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accepted accounting principles consistently applied and fairly present the
financial position of Omni at such dates and for the periods then ended:
(i) Balance sheets and unaudited related statements of income and
retained earnings (including the notes thereto) of Omni, for the ___
month period then ended. (The balance sheets and related statements
of operations for the period ended March 31, 1999 is hereinafter
referred to as the "Balance Sheet" and the date March 31, 1999 is
hereinafter referred to as the "Balance Sheet Date").
Such Financial Statements do not contain any items of special or
nonrecurring income or any other income not earned in the ordinary course of
business except as expressly specified therein.
(h) Absence of Undisclosed Liabilities. As of the Balance Sheet
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Date, except as reflected in the Balance Sheet, Omni had no debts, liabilities
or obligations (whether absolute, accrued, contingent or otherwise) of any
nature whatsoever.
(i) Taxes. All Taxes imposed by the United States or by any
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foreign country or by any state, municipality, subdivision or instrumentality of
the United States or of any foreign country, or by any other taxing authority,
which are due or payable by Omni, and all interest and penalties thereon,
whether disputed or not, have been paid in full; all tax returns required to be
filed in connection therewith have been accurately prepared and duly and timely
filed prior to the expiration of any available extension periods; and all
deposits required by law to be made by Omni with respect to employees'
withholding taxes have been duly made, except for the current reporting period.
Omni is not currently delinquent in the payment of any foreign or domestic tax,
assessment or governmental charge or deposit and has no tax deficiency or claim
outstanding, or proposed or assessed against it, and, to Investor's knowledge,
there is no basis for any such deficiency or claim. There is not now in force
any extension of time with respect to the date on which any tax return was or is
due to be filed by or with respect to Omni. As used in this Agreement, "Taxes"
shall include, without limitation, all federal, state, provincial, local,
foreign or other income, alternative minimum, accumulated earnings, add-on,
personal holding, franchise, capital stock, net worth, capital, profits, gross
receipt, value added, sales, use, goods and services, transaction, excise
customs duties, transfer, conveyance, mortgage, registration, stamp,
documentary, recording, premium, charges, fees, severance, environmental
(including taxes under Section 59A of the Code), real property, gains tax,
personal property, ad valorem, intangibles, rent, occupancy, license,
occupational, employment, unemployment insurance, social security, disability,
workers' compensation, payroll, withholding, estimated or other similar tax,
duty or other governmental charge or assessment or deficiency thereof, including
all interest and penalties thereon and additional thereto whether disputed or
not.
(j) Absence of Changes or Events. Since the Balance Sheet Date,
----------------------------
Omni has conducted its business only in the ordinary course and has not:
11
(i) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except current
liabilities for trade or business obligations in the ordinary course
of business and consistent with its prior practice, none of which
liabilities, in any case or in the aggregate, materially and adversely
affects the business, properties, assets, liabilities or condition,
financial or otherwise, of Omni;
(ii) discharged or satisfied any lien, charge or encumbrance other
than those then required to be discharged or satisfied, or paid any
obligation or liability, absolute, accrued, contingent or otherwise,
whether due or to become due, other than current liabilities shown on
the Balance Sheet and current liabilities incurred since the Balance
Sheet Date in the ordinary course of business and consistent with its
prior practice;
(iii) declared or made any payment of dividends or other
distribution to its shareholders or upon or in respect of any shares
of its capital stock, or purchased, retired or redeemed, or obligated
itself to purchase, retire or redeem, any of its shares of capital
stock or other securities;
(iv) mortgaged, pledged or subjected to lien, charge, security
interest or any other encumbrance or restriction any of its property,
business or assets, tangible or intangible;
(v) sold, transferred, leased to others or otherwise disposed of
any of its assets except in the ordinary course of business, or
canceled or compromised any debt or claim, or waived or released any
right of substantial value;
(vi) received any notice of termination of any contract, lease or
other agreement or suffered any damage, destruction or loss (whether
or not covered by insurance) which, in any case or in the aggregate,
has had a materially adverse effect on its assets, properties,
operations or prospects;
(vii) encountered any labor union organizing activity, had any
actual or threatened employee strikes, work stoppages, slow-downs or
lock-outs or had any material change in its relations with its
employees, agents, customers or suppliers;
(viii) transferred or granted any rights under, or entered into any
settlement regarding the breach or infringement of, any United
12
States or foreign license, patent, copyright, trademark, trade name,
invention or similar rights, or modified any existing rights with
respect thereto;
(ix) made any material change in the rate of compensation,
commission, bonus or other direct or indirect remuneration payable, or
paid or agreed or orally promised to pay conditionally or otherwise,
any material bonus, extra compensation, pension or severance or
vacation pay, to any shareholder, director, officer, employee,
salesman, distributor or agent of Omni;
(x) issued or sold any shares of its capital stock or other
securities, or issued, granted or sold any options, rights or warrants
with respect thereto, or acquired any capital stock or other
securities of any corporation or any interest in any business
enterprise, or otherwise made any loan or advance to or investment in
any person, firm or corporation;
(xi) made any capital expenditures or capital additions or
betterments;
(xii) changed its banking or safe deposit arrangements;
(xiii) instituted, settled or agreed to settle any litigation, action
or proceeding before any court or governmental body relating to Omni
or its property;
(xiv) failed in any material manner to replenish its inventories and
supplies in a normal and customary manner consistent with its prior
practice or made any purchase commitment in excess of the normal,
ordinary and usual requirements of its business or at any price in
excess of the then current market price or upon terms and conditions
more onerous than those usual and customary in the industry, or made
any material change in its selling, pricing, advertising or personnel
practices inconsistent with its prior practice or, if so, consistent
with prudent business practices prevailing in the industry;
(xv) suffered any change, event or condition which, in any case or
in the aggregate, has had or may have a materially adverse affect on
Omni's condition (financial or otherwise), properties, assets,
liabilities, operations or prospects including, without limitation,
any change in Omni's revenues, costs, levels of
13
committed business or relations with its employees, agents, customers
or suppliers;
(xvi) entered into any transaction, contract or commitment other
than in the ordinary course of business or paid or agreed to pay any
legal, accounting, brokerage, finder's fee, taxes or other expenses in
connection with, or incurred any severance pay obligations by reason
of this Agreement or the transactions contemplated hereby; or
(xvii) entered into any agreement or made any commitment, whether
written or oral, to take any of the types of action described in
subparagraphs (i) through (xvi) above.
(k) Litigation. There is no claim, legal action, suit,
----------
arbitration or other legal or administrative proceeding (or governmental
investigation) or any order, decree or judgment in progress, pending or in
effect, or, to the knowledge of Investor, threatened against or relating to
Omni, its officers or directors, its properties, assets or business in
connection with the transactions contemplated by this Agreement, and Investor
does not know or has no reason to be aware of any basis for the same.
(l) Compliance with Laws and Other Instruments. Omni has complied
------------------------------------------
in all material respects with all existing laws, rules, regulations, ordinances,
orders, judgments and decrees applicable to its business, properties or
operations. Neither the ownership nor use of the Omni Assets nor the conduct of
its business by Omni conflicts in any material respect with the rights of any
other person, firm or corporation; or violates, or with or without the giving of
notice or the passage of time, or both, will violate, conflict with or result in
a default, right to accelerate or loss of rights under, any terms or provisions
of Omni's certificate of incorporation or by-laws as presently in effect, or any
lien, encumbrance, mortgage, deed of trust, lease, license, agreement,
understanding, law, ordinance, rule or regulation, or any order, judgment or
decree to which Investor is a party or by which it may be bound or affected.
(m) Title to Properties. Omni has good and marketable title to
-------------------
the Omni Assets. None of the Omni Assets are subject to any loan agreement,
conditional sale or title retention agreement, equipment obligation, lease
purchase agreement, mortgage, indenture, pledge, security agreement, guaranty,
lien, charge, security interest, encumbrance, restriction, lease, license,
easement, liability or adverse claim of any nature whatsoever (excluding trade
and account payables), direct or indirect, whether accrued, absolute, contingent
or otherwise. Omni has not sold, transferred, assigned or otherwise conveyed any
right, title or interest in or to any of Omni's customer lists or any rights
thereto.
(n) Insurance. Set forth on Schedule 8(n) annexed hereto is an
--------- -------------
accurate and complete list of all fire, theft, casualty, liability and other
insurance policies procured by Omni or Investor with respect to Omni's business.
Except as set forth on Schedule 8(n) annexed hereto, all insurance policies
-------------
relating to Omni are in full force and effect, and all premiums due
14
thereon have been paid. Set forth on Schedule 8(n) annexed hereto, is a
-------------
description of all open claims made by Omni under any policy of insurance and
all claims which in the opinion of Investor reasonably formed and held, should
or could be made under any such policy.
(o) Intellectual Property.
---------------------
(i) Title. Schedule 8(o)(i) annexed hereto contains a complete and
----- ----------------
correct list of all United States and foreign: (A) patents (including
design patents, industrial designs and utility models) and patent
applications (including docketed patent disclosures awaiting filing,
reissues, divisions, continuations-in-part and extensions), patent
disclosures awaiting filing determination, inventions and improvements
thereto; (B) trademarks, service marks, trade names, trade dress,
logos, business and product names, slogans, and registrations and
applications for registration thereof; (C) copyrights (including
software) and registrations thereof; (D) inventions, processes,
designs, formulae, trade secrets, know-how, industrial models,
confidential and technical information, manufacturing, engineering and
technical drawings, product specifications and confidential business
information; (E) mask work and other semiconductor chip rights and
registrations thereof; (F) intellectual property rights similar to any
of the foregoing; (G) copies and tangible embodiments thereof (in
whatever form or medium, including electronic media); (H) all internet
related rights, including but not limited to the ▇▇▇▇-▇▇▇.▇▇▇ URL
(collectively, "Intellectual Property") that is owned by Omni (the
"Owned Intellectual Property") other than (1) inventions, trade
secrets, processes, formulas, compositions, designs and confidential
business and technical information and (2) Intellectual Property that
is not registered or subject to application for registration. Omni
owns or has the exclusive right to use pursuant to license,
sublicense, agreement or permission all Owned Intellectual Property,
free from any Encumbrances and free from any requirement of any past,
present or future royalty payments, license fees, charges or other
payments, or conditions or restrictions whatsoever. The Owned
Intellectual Property comprise all of the Intellectual Property
necessary for CKG to conduct and operate Omni's business as now being
conducted.
(ii) Transfer. Immediately after the Closing, CKG will own all of
--------
the Owned Intellectual Property and will have the right to use all
Intellectual Property, free from any liens and on the same terms of
any person in effect prior to the Closing.
(iii) No Infringement. To Investor's knowledge, the conduct of
---------------
Omni's business does not infringe or otherwise conflict with any
rights of any person in respect of any Intellectual Property.
(iv) Licensing Arrangements. Omni is not a party to any material
----------------------
agreements, arrangements or laws (A) pursuant to which Omni has
licensed Intellectual Property to, or the use of Intellectual Property
is otherwise permitted
15
(through non-assertion, settlement or similar agreements or otherwise)
by, any other party and (B) pursuant to which Omni has had
Intellectual Property licensed to it, or has otherwise been permitted
to use Intellectual Property.
(v) No Intellectual Property Litigation. No claim or demand has
-----------------------------------
been made nor is there any proceeding that is pending, or to the
knowledge of Investor, threatened, which (A) challenges the rights of
Omni in respect of any Intellectual Property, or (B) asserts that Omni
is infringing or otherwise in conflict with, or is, required to pay
any royalty, license fee, charge or other amount with regard to, any
Intellectual Property. None of the Intellectual Property is subject to
any outstanding order, ruling, decree, judgment or stipulation by or
with any court, arbitrator, or administrative agency.
(p) [Intentionally omitted.]
(q) Receivables. All accounts and trade receivables of Omni which
-----------
are reflected on the Balance Sheet and which have arisen since the date thereof,
have arisen only from bona fide transactions in the ordinary course of Omni's
business and shall be (or have been) fully collectible when due, without, to
Investor's best knowledge, resort to litigation; and without offset or
counterclaim, in the aggregate face amounts thereof.
(r) Absence of Certain Business Practices. To the knowledge of
-------------------------------------
Investor, Omni has not, nor has any officer, employee or agent of Omni, nor any
other person acting on its behalf, directly or indirectly, given or agreed to
give any gift or similar benefit of a material nature to any customer, supplier,
governmental employee or other person who is or may be in a position to help or
hinder the business of Omni (or assist Omni in connection with any actual or
proposed transaction) which (i) is likely to subject Omni to any damage or
penalty in any civil, criminal or governmental litigation or proceeding, (ii) if
not given in the past, is likely to have had an adverse effect on the assets,
business or operations of Omni as reflected on the Financial Statements or (iii)
if not continued in the future, is likely to adversely affect the assets,
business, operations or prospects or which might subject Omni to suit or penalty
in any private or governmental litigation or proceeding.
(s) Disclosure. No representation or warranty by Investor
----------
contained in this Agreement or in any other document furnished or to be
furnished by Investor in connection herewith or pursuant hereto contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact required to make the statements herein or therein contained
not misleading. The representations and warranties contained in this Section 8
shall not be affected or deemed waived by reason of the fact that CKG and/or its
representatives knew or should have known that any such representation or
warranty is or might be inaccurate in any respect.
(t) Labor Disputes. Omni is not a party to or bound by any
--------------
collective bargaining agreement and there are no labor unions or other
organizations representing or
16
purporting to represent any employees employed by Omni. With respect to Omni's
business (i) no work stoppage by employees of Omni has occurred and is
continuing or is threatened, (ii) Investor does not have any actual knowledge of
any pending or threatened charges or claims against Omni of unfair labor
practices, wage and hour violations, FMLA violations, OSHA violations,
immigration law violations, ERISA violations, or discrimination based on age,
race, sex, religion, national origin or any other basis, which individually or
in the aggregate, would be materially adverse to the business of Omni, (iii)
there are no pending labor negotiations with or union organization efforts by
any employees of Omni or with any union representing or, to Investor's best
knowledge, attempting to represent any employees of Omni and (iv) Investor has
no any actual knowledge of employee grievances or complaints which in the
aggregate would be material and adverse to the business of Omni that has not
been settled or otherwise resolved to the satisfaction of Omni and the
employees.
(u) Advance ▇▇▇▇▇▇▇▇. Omni has not received any advance ▇▇▇▇▇▇▇▇
----------------
from clients in respect of jobs which will be completed following the Closing.
(v) Contracts and Proposals.
-----------------------
(i) Schedule 8(v) annexed hereto contains a complete and correct
-------------
list of all agreements, contracts, licenses, commitments and other
instruments and arrangements (whether written or oral) by which Omni
is bound ("Contracts").
(ii) Omni has delivered to CKG complete and correct copies of all
written Contracts, together with all amendments thereto, including an
accurate description of all material terms of all oral Contracts, set
forth or required to be set forth in Schedule 8(v) hereto.
-------------
(iii) Except as set forth on Schedule 8(v), all Contracts are in
-------------
full force and effect and enforceable against each party thereto. To
the actual knowledge of Investor, there does not exist under any
Contract any event of default or event or condition that, after notice
or lapse of time or both, would constitute a violation, breach or
event of default thereunder on the part of Omni except as set forth in
Schedule 8(v) annexed hereto and except for such events or conditions
-------------
that, individually and in the aggregate, (A) has not had or resulted
in, and will not have or result in a default or an event which, after
notice or lapse of time, or both, would constitute a default or result
in a right to accelerate a loss of right (a "Material Adverse Effect")
and (B) has not and will not materially impair the ability of Omni to
perform its obligations under this Agreement and under the Investor's
Related Agreements. None of the existing or completed Contracts is
subject to renegotiation with any governmental body. Except as set
forth in Schedule 8(v), no consent of any third party is required
-------------
under any Contract as a result of or in connection with, and the
enforceability of any Contract will not be affected in any manner by,
the execution, delivery and performance of this
17
Agreement or any of the Investor's Related Agreements or the
consummation of the transactions contemplated thereby.
(iv) Omni no has any outstanding power of attorney in favor of any
party relating to Omni.
(w) Directors and Officers. Schedule 8(w) annexed hereto contains
---------------------- -------------
a complete and accurate list of the names of all of Omni's directors and
officers.
(x) Inventories. Omni maintains no inventory of equipment held
-----------
for sale or rent, spare parts, replacement and component parts,
(y) Real Property.
-------------
(i) Lease. Schedule 8(y) annexed hereto is the real estate lease
----- -------------
(the "Lease") pursuant to which Omni occupies or uses real property in
connection with its business. Omni has delivered to CKG a correct and complete
copy of the Lease. The Lease is legal, valid, binding, enforceable, and in full
force and effect, except as may be limited by bankruptcy, insolvency,
reorganization and similar Applicable Laws affecting creditors generally and by
the availability of equitable remedies. To the knowledge of Investor, neither
Omni nor the landlord under the Lease is (or upon the consummation of the
transactions contemplated hereby, will be) in default, violation or breach in
any respect under the Lease, and no event has occurred and is continuing that
constitutes or, with notice or the passage of time or both, would constitute a
default, violation or breach in any respect under the Lease. The Lease has not
been pledged, mortgaged, assigned, modified or amended by Omni. The Lease grants
Omni the exclusive right to use and occupy the demised premises thereunder. Omni
has good and valid title to the leasehold estate under the Lease free and clear
of all liens created by Omni. Omni enjoys peaceful and undisturbed possession
under its lease for the leased real property. Except as set forth on Schedule
--------
8(y)(i) annexed hereto, no consent is required by any landlord, lessor, ground
-------
lessor, mortgagee, or other party holding any interest in connection with or in
respect of the Lease, by virtue of the transactions contemplated hereby.
(ii) No Proceedings. There are no eminent domain or other similar
--------------
proceedings pending or, to the knowledge of Investor, threatened affecting any
portion of the leased real property and there is no proceeding pending or, to
the knowledge of Investor, threatened for the taking or condemnation of any
portion of the leased real property. There is no writ, injunction, decree, order
of judgment outstanding, nor any action, claim, suit or proceeding, pending or,
to the knowledge of Investor, threatened, relating to the ownership, lease, use,
occupance or operation by any person of any of the leased real property.
18
(iii) Current Use. To the knowledge of Investor, the use and
-----------
operation of the real property in the conduct of Omni's business does not
violate in any material respect any instrument of record or agreement affecting
the real property. To the knowledge of Investor, there is no violation of any
covenant, condition, restriction, easement or order of any Governmental
Authority having jurisdiction over such property or of any other person entitled
to enforce the same affecting the real property or the use or occupancy hereof.
Except as set forth on Schedule 8(y)(iii) annexed hereto, no damage or
------------------
destruction has occurred with respect to any of the real property.
(z) Investment Intent. In order to induce CKG to issue the Stock
-----------------
to the Trustee, and upon reliance thereof, Investor hereby represents and
warrants to CKG:
(i) Investor has such knowledge and experience in
financial, business, investment and banking matters (including but not
limited to investments in restricted, non-listed and non-registered
securities) such that Investor is capable of evaluating the merits,
risks and advisability of the acquisition of the Stock;
(ii) Investor has adequate means of providing for its
current financial needs and possible contingencies and has no need for
liquidity of its investment in the Stock;
(iii) Investor is able to bear the economic risks inherent in
an investment in the Stock and that an important consideration bearing
on its ability to bear the economic risk of the purchase of the Stock
is whether Investor can afford a complete loss of Investor's
investment in the Stock and the undersigned Investor represents and
warrants that it can afford such a complete loss;
(iv) The Stock is being acquired solely for Investor's own
account, for investment purposes only and not with a view towards the
distribution or resale to others and he has no present commitment or
arrangement providing for the distribution thereof;
(v) Investor is an "accredited investor" as such term is
defined in Rule 501 of Regulation D promulgated under the Act;
(vi) Investor's decision to receive the Stock as partial
consideration hereunder is not based on any promotional, marketing or
sales materials, and Investor and its representatives have been
afforded, prior to the entering into of this Agreement and the receipt
of the Stock by the Trustee, the opportunity to ask questions of, and
to receive answers from, CKG and its management, and has had access to
all documents and information which Investor deems material to a
decision to receive the Stock hereunder.
19
(vii) Investor will not cause the Trustee nor will the
Trustee transfer any Stock unless such Stock is registered under the
Act, and under any applicable state securities or "blue sky" laws
(collectively, the "Securities Laws"), or unless an exemption is
available under such Securities Laws, and that CKG may, if it chooses,
where an exemption from registration is claimed by Investor, condition
any transfer of the Stock out of Trustee's name on an opinion of CKG's
counsel to the effect that the proposed transfer is being effected in
accordance with, and does not violate, an applicable exemption from
registration under the Securities Laws;
(viii) Investor acknowledges, understands and appreciates that
the Stock has not been registered under the Act, by reason of a
claimed exemption under the provisions of such Act and a similar
exemption to the registration provisions of applicable state
securities laws, all of which depends, in large part, upon the
representations as to investment intent and other related matters set
forth herein;
(ix) Investor understands it is the view of the Securities
and Exchange Commission (the "SEC") that, among other things, a
purchase with a present intent to distribute or resell would represent
a purchase and acquisition with an intent inconsistent with the
representations herein made by Investor, and consequently, the SEC
might regard such a transfer as a deferred sale for which the
exemption from registration is not available;
(x) Investor understands, acknowledges, and appreciates
that CKG is relying upon, and it is entitled to rely upon, all of the
representations and warranties contained in this Section 8;
(xi) Investor agrees and consents to the placement of a
legend on the certificate(s) representing the Stock substantially in
the form set forth in Section 13(n) below which shall state that the
Stock has not been registered under the Act or applicable state
securities laws; and
(xii) Investor understands, acknowledges, and agrees that no
return on investment, whether through distributions, appreciation,
transferability or otherwise, and no performance by, through or of
CKG, has been promised, assured, represented or warranted by CKG with
respect to the Stock, or by any director, officer, employee, agent or
representative thereof and the Stock to be received under this
Agreement is not registered under applicable federal or state
securities laws, and thus may not be sold, conveyed, assigned or
transferred unless registered under such laws or unless an exemption
from registration is available under such laws, and therefore, there
is no present public or other market for such Stock, and Investor may
not be able to liquidate its investment in the event of an emergency
or otherwise, the transferability of the Stock is severely limited,
and, as such, Investor could sustain a complete loss with respect to
the Stock.
20
(aa) Subordination of Stock. Investor understand, acknowledges and
----------------------
agrees that this Agreement and Investor's beneficial ownership and the Trustee's
legal ownership of the Stock pursuant to the transaction contemplated herein, is
subject to the terms and conditions of (i) the certificate of incorporation of
CKG and (ii) the Stockholders' Agreement.
21
9. Representations and Warranties of CKG. CKG represents and warrants to
-------------------------------------
Investor as follows:
(a) Organization, Standing and Qualification. CKG is a corporation
----------------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Delaware; has all requisite corporate power and authority and is
entitled to carry on its business as now being conducted and to own, lease or
operate its properties in the places where such business is now conducted and
such properties are now owned, leased or operated; and is duly qualified,
licensed and in good standing as a foreign corporation authorized to do business
in the states listed on Schedule 9(a) annexed hereto, which are the only states
-------------
where the failure to be so qualified would have a material adverse effect on the
condition, financial or otherwise, of CKG. CKG has delivered to Investor true
and complete copies of the certificate of incorporation of CKG, certified as
true and correct by the Office of the Secretary of State of the State of
Delaware, and the by-laws of CKG as presently in effect, certified as true and
correct by CKG's secretary.
(b) Execution, Delivery and Performance of Agreement; Authority.
-----------------------------------------------------------
Except as set forth on Schedule 9(b) hereto, neither the execution, delivery nor
-------------
performance of this Agreement will, with or without the giving of notice or the
passage of time, or both, conflict with, result in a default, right to
accelerate or loss of rights under, or result in the creation of any lien,
charge or encumbrance pursuant to any provision of CKG's certificate of
incorporation or by-laws or any franchise, mortgage, deed of trust, lease,
license, agreement, law, rule or regulation or any order, judgment or decree to
which CKG is a party or by which CKG may be bound or materially or adversely
affected or require any consent, authorization, approval or any other action by,
or any notice to or filing or registration with, any governmental authority or
other third party. Except as set forth on Schedule 9(b) hereto, no other party,
-------------
including, without limitation, any present or former partner, shareholder in
common with, or employee of CKG has, may or will have any right to any of the
proceeds of the sale of the Stock. CKG has the full power and authority to
enter into this Agreement and to carry out the transaction contemplated hereby,
all proceedings required to be taken by CKG to authorize and approve the
execution, delivery and performance of this Agreement have been properly taken,
this Agreement constitutes a valid and binding obligations of CKG, enforceable
in accordance with its terms, except that such enforcement may be subject to the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium and
similar law affecting creditors' rights generally. The execution, delivery and
performance of this Agreement by CKG has been duly authorized, to the extent
required by applicable law and by all requisite corporate and shareholder action
of CKG, if necessary.
(c) Capitalization. All of the shares of capital stock of CKG has
--------------
been duly authorized and validly issued and are fully paid and non-assessable.
Except for the Class A Common Stock which is convertible upon an initial public
offering into common stock of CKG, there are no outstanding subscriptions,
rights, options, warrants, calls, contracts, demands, commitments, convertible
securities or other agreements or arrangements of any character or nature
whatsoever under which CKG is or may become obligated to issue, assign or
transfer any shares of the capital stock of CKG.
22
(d) Ownership of CKG's Capital Stock. CKG is not a party to or
--------------------------------
otherwise subject to any agreement, understanding or arrangement regarding the
transfer, sale, disposition, purchase, acquisition or voting of the Stock. Upon
the delivery thereof to the Trustee at Closing, the Trustee will acquire good,
marketable and valid title to the Stock free and clear of any liens, claims,
encumbrances or restrictions of any kind.
10. Indemnification. (a) Investor, on the one hand, and CKG, on the other
---------------
hand (as the case may be, the "Indemnifying Party") hereby indemnifies and
agrees to defend and hold CKG, its shareholders, officers, directors, members,
employees, counsel, accountants and agents, on the one other hand, and Investor,
its shareholders, officers, directors, members, employees, counsel, accountants
and agents, on the other hand (as the case may be, an "Indemnified Party")
harmless from damages, liabilities, losses, costs or expenses (including,
without limitation, reasonable counsel fees and expenses) suffered or paid,
directly or indirectly, as a result of or arising out of the failure of any
respective representation or warranty made by the Indemnifying Party (but only
to the best of Indemnifying Party's knowledge) in this Agreement or in any
Schedule or Exhibit attached hereto to be true, complete and correct in all
material respects as of the date of this Agreement and as of the Closing Date.
(i) If any action, suit, proceeding or investigation is
commenced, as to which an Indemnified Party proposes to demand indemnification,
it shall notify the Indemnifying Party (the "Indemnity Notice") with reasonable
promptness; provided, however, that any failure by an Indemnified Party to
-------- -------
notify the Indemnifying Party shall not relieve the Indemnifying Party from its
obligations hereunder, except to the extent that the Indemnifying Party shall
have been materially prejudiced in their respective ability to defend the
action, suit, proceedings or investigation for which such indemnification is
sought by reason of such failure. An Indemnified Party shall have the right to
retain counsel of its own choice in its sole discretion, and the Indemnifying
Party shall pay the reasonable fees, reasonable expenses and reasonable
disbursements of such counsel; and such counsel shall to the extent consistent
with its professional responsibilities cooperate with the Indemnifying Party and
any counsel designated by the Indemnifying Party. The Indemnifying Party shall
be liable for any settlement of any claim against an Indemnified Party made with
the Indemnifying Party written consent, which consent shall not be unreasonably
withheld. The Indemnifying Party shall not, without prior written consent of an
Indemnified Party, settle or compromise any claim, or permit a default or
consent to the entry of any judgment in respect thereof, unless such settlement,
compromise or consent includes, as an unconditional term thereof, the giving by
the claimant to an Indemnified Party of an unconditional release from all
liability in respect to such claim.
(ii) In order to provide for just and equitable
contribution, if a claim for indemnification pursuant to these indemnification
provisions is made but it is found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) that such indemnification may not
be enforced in such case, even though the express provisions hereof provide for
indemnification in such case, then the Indemnifying Party, on the one hand, and
an Indemnified Party, on the other, shall contribute to the losses, claims,
damages, obligations, penalties, judgments, awards, liabilities, costs and
expenses to which the indemnified persons
23
may be subject in accordance with the relative benefits received by the
Indemnifying Party, on the one hand, and an Indemnified Party, on the other
hand, in connection with the statements, acts or omissions which resulted in
expenses and the relevant equitable considerations shall also be considered. No
person found liable for a fraudulent misrepresentation shall be entitled to
contribution from any person who is not also found liable for such fraudulent
misrepresentation.
(iii) The obligations to indemnify and hold harmless pursuant
to this Section 10 shall survive the Closing Date.
11. Nature and Survival of Representations and Warranties; Rules Regarding
----------------------------------------------------------------------
Indemnification and Other Actions.
---------------------------------
(a) All statements, representations, warranties and indemnities
made by each of the parties hereto (and in any schedule or exhibit annexed
hereto) are and shall be true and correct as of the date hereof and as of the
Closing Date, and each of them shall survive the Closing as provided in Section
11(b) hereof and shall be subject to Section 10 hereof.
(b) No claim shall be made or enforced against an Indemnifying
Party, whether pursuant to Section 10 hereof or by an action at law or any other
action including, but not limited to, a claim of a breach of a representation
and warranty (collectively, "Other Action") unless and to the extent that the
Indemnity Notice or notice of an Other Action shall have been given by the party
seeking indemnification or instituting an Other Action to the Indemnifying Party
not later than 36 months after the Closing Date or, with respect to Taxes, the
date upon which the applicable period of limitation on assessment or refund of
any relevant tax has expired; provided that claims asserted pursuant to an
Indemnity Notice prior to the expiration of the applicable survival period shall
survive until such claim shall be resolved and payment in respect thereof, if
any is owing, shall be made.
12. Notices. Any and all notices, demands or requests required or
-------
permitted to be given under this Agreement shall be given in writing and sent,
by registered or certified U.S. mail, return receipt requested, by hand, or by
overnight courier, addressed to the parties hereto at their addresses set forth
above or such other addresses as they may from time-to-time designate by written
notice, given in accordance with the terms of this Section, together with copies
thereof as follows:
In the case of CKG, with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇ & Brandeis, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
24
In the case of Investor, with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(In addition, without constituting notice hereunder, the parties shall use
reasonable efforts to send by facsimile to counsel for the party to whom notice
is to be sent copies of all notices sent by such party). Notice given as
provided in this Section shall be deemed effective: (i) on the date hand
delivered, (ii) on the first business day following the sending thereof by
overnight courier, and (iii) on the seventh calendar day (or, if it is not a
business day, then the next succeeding business day thereafter) after the
depositing thereof into the exclusive custody of the U.S. Postal Service.
13. Miscellaneous. (a) This Agreement, including, without limitation,
-------------
the schedules and other documents referred to herein, constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes any and all prior agreements, arrangements or understandings with
respect hereto, and may not be modified or amended except by a written agreement
specifically referring to this Agreement signed by all of the parties hereto.
(b) No waiver of any breach or default hereunder shall be
considered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or default
of the same or similar nature.
(c) This Agreement shall be binding upon and inure to the benefit
of each corporate party hereto, its successors and assigns, and each individual
party hereto and his heirs, personal representatives, successors and assigns.
(d) The section headings contained herein are for the purposes of
convenience only and are not intended to define or limit the contents of said
sections.
(e) Each party hereto shall cooperate, shall take such further
action and shall execute and deliver such further documents as may be reasonably
requested by any other party in order to carry out the provisions and purposes
of this Agreement.
(f) Except as otherwise provided herein or in agreements
delivered in connection with this Agreement, all legal, accounting and other
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party or parties incurring
the same.
(g) This Agreement may be executed in one or more original or
facsimile counterparts, each of which shall be deemed an original but all of
which taken together shall constitute one and the same instrument.
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(h) This Agreement and all amendments hereto shall be governed by,
construed and enforced in accordance with the internal laws of the State of New
York without reference to principles of conflict of laws.
(i) If any provision of this Agreement shall be held invalid or
unenforceable, such invalidity or unenforceability shall attach only to such
provision, only to the extent it is invalid or unenforceable, and shall not in
any manner affect or render invalid or unenforceable any other severable
provision of this Agreement, and this Agreement shall be carried out as if any
such invalid or unenforceable provision were not contained herein.
(j) All schedules attached hereto shall be incorporated by
reference herein as if set forth herein in full.
(k) CKG and Investor, represent and warrant to the other that
there is no obligation to pay any commission, finder's fee, broker's fee or
similar charge in connection with the transactions provided for in this
Agreement, resulting from any agreements or other action of such representing
party.
(l) The parties hereto hereby irrevocably consent to the exclusive
jurisdiction of all Federal and State courts in New York County, New York in
connection with any proceedings brought by CKG the Trustee or Investor, or their
successors or assigns, in connection with this Agreement.
(m) This Agreement is not intended to, and shall not confer any
rights upon, any parties other than the express parties hereto.
(n) Public Announcements. Investor agrees that is shall not
--------------------
release any public announcement which relates to CKG's business without
obtaining the prior written approval of CKG, which approval shall not be
unreasonably withheld or delayed. For purposes of this Agreement the parties
agree that the term "delayed" shall mean a failure by CKG to respond by
telecopier to Investor's beneficial owner within two (2) business days.
Investor's beneficial owner shall first transmit via telecopier to CKG the text
of any proposed public announcement. CKG shall use its best efforts to timely
forward to Investor, via telecopier, CKG's reasonable suggested revisions to the
proposed announcement, provided, however, that in all events CKG shall send its
suggested revisions to the proposed public announcement no later than two (2)
business day from the time such proposed announcement was received by CKG. If
CKG does not respond within two (2) business days of its receipt of the proposed
public announcement, or if the Investor's beneficial owner agrees with CKG's
revisions, the Investor may make the public announcement, as revised,
immediately. In the event that Investor shall be unwilling to accept CKG's
revisions, the Trustee who is the legal owner of Investor's interest in CKG and
counsel for CKG, and/or CKG's President shall immediately confer with respect to
the text of the proposed public announcement and seek to reach an agreement in
connection with the proposed public announcement. In the event that Investor
shall be unwilling to accept CKG's proposed revisions or if the Trustee and
counsel for CKG and/or CKG's President shall fail to
26
reach an agreement, as the case may be, and should Investor release the proposed
public announcement without obtaining CKG's prior written approval, Investor
shall, each time it issues any public announcement in violation of the
provisions of this Section 13(n) shall pay to CKG an amount equal to $10,000,
which amount shall be considered as and for liquidated damages for such
violation of this Section 13(n) and not as a penalty.
(o) Use of Name. Except as provided for pursuant to the terms and
-----------
conditions of Section 13(n) hereof, Investor shall make no use of any of the
words "Omni-net", "Omni", "omni-net", "▇▇▇▇-▇▇▇.▇▇▇", "CKG", "CKG Media" or "CKG
▇▇▇▇▇.▇▇▇", no matter what case, capital, lower or otherwise, or punctuation is
used. Investor shall, each time it makes use of any such word in violation of
the provisions of the immediately preceding sentence, pay to CKG an amount equal
to $10,000, which amount shall be considered as and for liquidated damages for
such violation of this Section 13(o) and not as a penalty.
(p) Life Insurance. The Investor may, at Investor's sole cost and
--------------
expense, obtain life insurance (whether by purchasing one or more policies,
collectively, the "Policy") on the life of CKG's President, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
(the "Insured Stockholder") in the face amount not to exceed $5,000,000, and the
Investor shall be the beneficiary of such Policy. The Insured Stockholder agrees
to cooperate in good faith in connection with the application for such policy,
including, submitting to the necessary examinations for and making the necessary
disclosures for, and otherwise cooperate in obtaining a Policy.
(q) Each certificate representing the Stock shall contain a
restrictive legend on their reverse side substantially in the following form:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. THE COMMON
STOCK REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED, SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED (I) IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AND QUALIFICATION IN EFFECT WITH RESPECT THERETO
UNDER THE SECURITIES ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAW OR
(II) UNLESS AN OPINION OF CKG ▇▇▇▇▇.▇▇▇, INC.'S COUNSEL THAT SUCH
REGISTRATION AND QUALIFICATION IS NOT REQUIRED UNDER APPLICABLE FEDERAL AND
STATE SECURITIES LAWS AND THERE IS AN EXEMPTION THEREFROM.
27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CKG ▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
_____________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
▇▇▇▇-▇▇▇.▇▇▇ (HOLDINGS), INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
_____________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: VP & General Counsel
GROUP OMNI-NET, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
______________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: VP & General Counsel
ZULU-TEK, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
_______________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: VP & General Counsel
For Purposes of Sections 7(b), 8(z)(vii), ENHANCED SERVICES COMPANY, INC.
13(n) and 13(o):
Agreed to and Accepted By:
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
The CKG ▇▇▇▇▇.▇▇▇, _______________________________
Inc. Stock Trust Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: VP & General Counsel
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Trustee
__________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Trustee
28
