EXCHANGE AGREEMENT
BY AND AMONG
CENTURY PACIFIC FINANCIAL CORPORATION,
XXXXX XXXX, LLC,
EACH MEMBER OF XXXXX XXXX, LLC,
VERSATILE ENTERTAINMENT, INC.,
AND EACH STOCKHOLDER OF VERSATILE ENTERTAINMENT, INC.
DATED AS OF OCTOBER 28, 2005
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EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (the "Agreement") is made and entered into as of
October 28, 2005, by and among Century Pacific Financial Corporation, a Delaware
corporation ("Century"), Xxxxx Xxxx, LLC, a California limited liability company
("Bella"), all of the members of Bella listed under the caption "Members" on the
signature page hereof, Versatile Entertainment, Inc., a California corporation
("Versatile"), and all of the stockholders of Versatile listed under the caption
"Stockholders" on the signature page hereof, together with each person becoming
a Member or Stockholder prior to the closing of the transactions contemplated
hereunder who shall execute a counterpart signature of this Agreement. Bella and
Versatile may be referred to herein collectively as the "Companies" and
individually as the "Company." The Members shall be referred to herein
collectively as the "Members" and individually as the "Member." The Stockholders
shall be referred to herein collectively as the "Stockholders" and individually
as the "Stockholder."
RECITALS
A. The Members own all of the Interests (as defined in Section 1.1) of
Bella, and the Stockholders own all of the Versatile Shares (as defined in
Section 1.1).
X. Xxxxxxx Reverse Merger Fund, LLC, a Delaware limited liability company
("KRM Fund") owns the majority of the outstanding shares of common stock of
Century.
C. Century desires to acquire all of the Interests from the Members and
all of the Versatile Shares from the Stockholders in exchange for shares of
Century's preferred stock, and the Members and Stockholders desire to contribute
all of the Interests and Versatile Shares, respectively, to Century in exchange
for shares of Century's preferred stock, on the terms and conditions hereinafter
set forth.
D. As a condition and inducement to the parties' willingness to enter into
this Agreement, at or prior to Closing (as defined in Section 1.2), KRM Fund,
Xxxxx Xxxx and Xxxxxx X. Xxxx will enter into a voting agreement in
substantially the form attached hereto as Exhibit A (the "Voting Agreement").
E. The parties intend, by executing this Agreement, to implement a
tax-deferred exchange of property governed by Section 351 of the Internal
Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
EXCHANGE
1.1 Exchange. At the Closing and subject to and upon the terms and
conditions of this Agreement, the Members agree to contribute, transfer, assign
and deliver to Century, and Century agrees to acquire from the Members, all of
the outstanding membership interests of Bella ("Interests") owned by the Members
as specifically set forth on Schedule 1.1 hereto. As of Closing, the Interests
shall constitute all of the issued and outstanding Interests of Bella.
At the Closing and subject to and upon the terms and conditions of this
Agreement, the Stockholders agree to contribute, transfer, assign and deliver to
Century, and Century agrees to acquire from the Stockholders, all of the
outstanding shares of capital stock of Versatile ("Versatile Shares") owned by
the Stockholders as specifically set forth on Schedule 1.1 hereto. As of
Closing, the Versatile Shares shall constitute all of the issued and outstanding
Versatile Shares.
The exchange of Interests and Versatile Shares contemplated hereunder and
the other transactions contemplated hereunder shall be referred to herein as the
"Transaction" or the "Transactions." Notwithstanding anything contained herein
to the contrary, the exchange of the Interests and the Versatile Shares shall be
deemed to occur simultaneously at Closing.
1.2 Closing. Unless this Agreement shall have been terminated pursuant to
Article IX hereof, the closing of the Transaction (the "Closing") shall take
place at the offices of Xxxxxx Xxxxxxxx & Markiles, LLP, 00000 Xxxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxx, XX 00000 at a time and date to be specified by the
parties, which shall be no later than the third business day after the
satisfaction or waiver of the conditions set forth in Article VII, or at such
other time, date and location as the parties hereto agree in writing (the
"Closing Date").
1.3 Exchange Consideration. In exchange for the Interests, Century shall
issue to the Members 492,021.29 shares of Series A Convertible Preferred Stock,
par value $0.001 per share, of Century ("Preferred Stock") in accordance with
Schedule 1.1 hereto. In exchange for the Versatile Shares, Century shall issue
to the Stockholders 1,968,085.05 shares of Preferred Stock in accordance with
Schedule 1.1 hereto. The aggregate shares of Preferred Stock to be issued to the
Members and Stockholders hereunder shall be 2,460,106.34 shares of Preferred
Stock ("Century's Preferred Shares"), which shall be convertible into
246,010,634 shares of Century's common stock ("Conversion Shares"), subject to
Stockholder Approval as defined in Section 4.3(a) hereof. The Conversion Shares
shall represent 94.7% of the issued and outstanding shares of common stock of
Century, on an as converted basis and fully diluted basis immediately following
the Closing, prior to giving effect to any issuance of any interests, ownership
interests, equity securities, convertible securities, warrants, options, or
other derivative securities by Bella, Versatile or Century in connection with
the Equity Financing (as defined in Section 7.1(k) hereof) and prior to giving
effect to any adjustment in the following paragraph.
Notwithstanding the immediately preceding paragraph to the contrary, if
the number of shares of Century's common stock that may be acquired upon
conversion of the Preferred Stock to be acquired by the investors in
consideration of the first $4,500,000 in the Equity Financing exceeds 33,300,000
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shares on a pre-Reverse Split basis (i.e., the common stock equivalent purchase
price per share of Century's common stock underlying the Preferred Stock is less
than approximately $0.135 on a pre-Reverse Split basis), then the aggregate
number of shares of Preferred Stock issued to the Members and the Stockholders
at the Closing shall be reduced by the number of shares of Preferred Stock
determined by dividing (i) the number of shares of Century's common stock in
excess of 33,300,000 underlying the Preferred Stock issued to investors for such
$4.5 million in the Equity Financing, by (ii) 100. Such reduction shall be
allocated among the Members and Stockholders in proportion to the number of
Preferred Shares such Members and Stockholders would have received prior to any
such reduction.
1.4 Delivery of Certificates Representing the Versatile Shares. At
Closing, each Stockholder shall deliver the certificate(s) representing the
Versatile Shares owned by such Stockholder, duly endorsed for transfer to
Century or accompanied by stock powers duly endorsed for transfer to Century,
with (i) all such other documents as may be required to vest in Century good and
marketable title to the Versatile Shares free and clear of any and all Liens (as
defined in Section 2.3 hereof) and (ii) all necessary documentary stamps.
Versatile shall recognize and record the transfers described in this Section 1.4
on its transfer books.
1.5 Delivery of Assignment of Interests. At Closing, Bella shall deliver
to Century a certificate duly executed and authorized by each of its managers
and/or managing members certifying to the ownership of the Interests by each
Member as set forth on Schedule 1.1 hereof, and each Member shall deliver an
assignment or other acceptable instrument of transfer of the Interests owned by
such Member, duly executed by the Member with (i) all such other documents as
may be reasonably requested to vest in Century good and marketable title to the
Interests free and clear of any and all Liens, and (ii) all necessary
documentary stamps. Bella shall record the transfer of the Interests described
in this Section 1.5 on its transfer books.
1.6 Issuance of Certificates Representing Century's Preferred Shares. At
Closing, Century will issue Century's Preferred Shares to the Members and
Stockholders as provided in Schedule 1.1 hereto. Century's Preferred Shares,
when issued, shall be restricted shares and may not be sold, transferred or
otherwise disposed of by the Members or Stockholders without registration under
the Securities Act of 1933, as amended ("Securities Act") or an available
exemption from registration under the Securities Act. The certificates
representing Century's Preferred Shares will contain the appropriate restrictive
legends.
1.7 Tax Consequences. It is intended by the parties hereto that the Members' and
Stockholders' contribution and transfer of the Interests and Versatile Shares,
respectively, to Century in exchange for Century's Preferred Shares constitutes
a tax-deferred exchange within the meaning of Section 351 of the Code.
1.8 Taking of Necessary Action; Further Action. If, at any time after the
Closing, any further action is necessary or desirable to carry out the purposes
of this Agreement, including qualifying the Transaction as a tax-deferred
exchange within the meaning of Section 351 of the Code, and to vest Century with
full right, title and possession to the Interests or Versatile Shares, the
Members, Stockholders and Century will take all such lawful and necessary
action.
1.9 Transaction Deposit. Century, Versatile and Bella hereby acknowledge
Versatile's prior payment to Century of a $50,000 deposit ("Deposit").
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF MEMBER AND STOCKHOLDERS
Each Member and Stockholder for himself only, and not with respect to any
other Member or Stockholder, hereby severally represents and warrants to, and
covenants with, Century with respect to such Member or Stockholder as follows:
2.1 Ownership of Interests. Each Member and Stockholder is both the record
and beneficial owner of the Interests and Versatile Shares, respectively, set
forth beside such Member's and Stockholder's name on Schedule 1.1 hereto. Each
Member and Stockholder is not the record or beneficial owner of any other
Interests or Versatile Shares, respectively. The information set forth on
Schedule 1.1 with respect to each Member and Stockholder is accurate and
complete.
2.2 Authority of Members. Each Member and Stockholder that is a natural
person has full power and authority and is competent to (i) execute, deliver and
perform this Agreement, and each ancillary document which each such Member or
Stockholder has executed or delivered or is to execute or deliver pursuant to
this Agreement (including the Voting Agreement), and (ii) carry out each such
Member's and Stockholder's obligations hereunder and thereunder, without the
need for any Governmental Action/Filing (as defined herein). Each Member and
Stockholder that is a corporate or other entity has obtained all due
authorization and has full power for the execution, delivery and performance of
this Agreement and each ancillary document which each such Member or Stockholder
has executed or delivered or is to execute or deliver pursuant to this Agreement
(including the Voting Agreement) and to carry out each such Member's and
Stockholder's obligations hereunder and thereunder without the need for any
Governmental Action/Filing. The execution, delivery and performance by each
Member and Stockholder of this Agreement and each ancillary document does not
and will not conflict with, result in a breach of, or constitute a default or
require a consent or action under, any agreement or other instrument to or by
which such Member or Stockholder is a party or is bound or to which any of the
Interests or Versatile Shares are subject, or, to such Member's or Stockholder's
knowledge, any Legal Requirement (as defined herein) to which such Member or
Stockholder is subject, or result in the creation of any Lien (as defined in
Section 2.3) on the Interests or Versatile Shares. This Agreement, and each
Member's and Stockholder's ancillary documents to be executed and delivered by
such Member or Stockholder at the Closing, has been duly executed and delivered
by such Member or Stockholder (and each ancillary document to be executed and
delivered by such Member or Stockholder at or after the Closing will be duly
executed and delivered by such Member or Stockholder), and this Agreement
constitutes, and each ancillary document, when executed and delivered by such
Member or Stockholder will constitute, and assuming the due authorization,
execution and delivery thereof by the other parties hereto and thereto, as
applicable, such Member's or Stockholder's legal, valid and binding obligation,
enforceable against such Member or Stockholder in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity and public policy. For purposes of this Agreement,
(x) the term "Governmental Action/Filing" shall mean any franchise, license,
certificate of compliance, authorization, consent, order, permit, approval,
consent or other action of, or any filing, registration or qualification with,
any federal, state, municipal, foreign or other governmental, administrative or
judicial body, agency or authority, and (y) the term "Legal Requirements" means
any federal, state, local, municipal, foreign or other law, statute,
constitution, principle of common law, resolution, ordinance, code, edict,
decree, rule, regulation, ruling or requirement issued, enacted, adopted,
promulgated, implemented or otherwise put into effect by or under the authority
of any Governmental Entity (as defined in Section 3.5(b)), and all requirements
set forth in applicable Contracts (as defined in Section 3.19(a)).
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2.3 Title To Interests. Each Member and Stockholder has and shall transfer
to Century at the Closing, good and marketable title to the Interests and
Versatile Shares shown as owned of record by such Member and Stockholder on
Schedule 1.1 to this Agreement, free and clear of all liens, claims, charges,
encumbrances, pledges, mortgages, security interests, options, rights to
acquire, proxies, voting trusts or similar agreements, restrictions on transfer
or adverse claims of any nature whatsoever ("Liens").
2.4 Pre-emptive and Conversion Rights. At Closing, no Member or
Stockholder has any pre-emptive rights or rights to acquire any Interests or
Versatile Shares that have not been waived or exercised.
2.5 Acquisition of Century's Preferred Shares for Investment.
(a) Each Member and Stockholder is acquiring Century's Preferred
Shares for investment for Member's or Stockholder's own account and not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof, and each Member and Stockholder has no present intention of selling,
granting any participation in, or otherwise distributing the same. Each Member
and Stockholder further represents that he does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of
Century's Preferred Shares.
(b) Each Member and Stockholder understands that Century's Preferred
Shares are not registered under the Securities Act, that the issuance of
Century's Preferred Shares is intended to be exempt from registration under the
Securities Act pursuant to Section 4(2) thereof, and that Century's reliance on
such exemption is predicated on the Member's and Stockholder's representations
set forth herein. Each Member and Stockholder represents and warrants that: (i)
he is an "accredited investor" as that term is defined in Rule 501(a) of
Regulation D under the Act, (ii) he can bear the economic risk of his respective
investments, and (iii) he possesses such knowledge and experience in financial
and business matters that he is capable of evaluating the merits and risks of
the investment in Century's Preferred Shares.
(c) Each Member and Stockholder acknowledges that neither the U.S.
Securities and Exchange Commission ("SEC"), nor the securities regulatory body
of any state or other jurisdiction, has received, considered or passed upon the
accuracy or adequacy of the information and representations made in this
Agreement.
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(d) Each Member and Stockholder acknowledges that he has carefully
reviewed such information as he has deemed necessary to evaluate an investment
in Century's Preferred Shares. To the full satisfaction of each Member and
Stockholder, he has been furnished all materials that he has requested relating
to Century and the issuance of Century's Preferred Shares hereunder, and each
Member and Stockholder has been afforded the opportunity to ask questions of
Century's representatives to obtain any information necessary to verify the
accuracy of any representations or information made or given to the Members or
Stockholders. Notwithstanding the foregoing, nothing herein shall derogate from
or otherwise modify the representations and warranties of Century set forth in
this Agreement, on which each Member and Stockholder have relied in making an
exchange of his Interests and Versatile Shares for Century's Preferred Shares.
(e) Each Member and Stockholder understands that Century's Preferred
Shares, and the Conversion Shares in the event of conversion, may not be sold,
transferred, or otherwise disposed of without registration under the Securities
Act or an exemption therefrom, and that in the absence of an effective
registration statement covering Century's Preferred Shares, or the Conversion
Shares in the event of conversion, or any available exemption from registration
under the Securities Act, Century's Preferred Shares and the Conversion Shares
may have to be held indefinitely. Each Member and Stockholder further
acknowledges that Century's Preferred Shares, and the Conversion Shares in the
event of conversion, may not be sold pursuant to Rule 144 promulgated under the
Securities Act unless all of the conditions of Rule 144 are satisfied
(including, without limitation, Century's compliance with the reporting
requirements under the Securities Exchange Act of 1934, as amended ("Exchange
Act")).
ARTICLE III
REPRESENTATIONS AND WARRANTIES BY BELLA AND VERSATILE
Each of Bella and Versatile for itself only, and not with respect to the
other party, hereby severally represents and warrants to, and covenants with,
Century as follows:
3.1 Organization and Qualification.
(a) Bella is a limited liability company duly formed or organized,
validly existing and in good standing under the laws of the State of California
and has the requisite power and authority to own, lease and operate its assets
and properties and to carry on its business as it is now being or currently
planned by Bella to be conducted. To its knowledge, Bella is in possession of
all franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders ("Approvals") necessary to own, lease and
operate the properties it purports to own, operate or lease and to carry on its
business as it is now being conducted, except where the failure to have such
Approvals could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect (as defined in Section 11.2(b)) on Bella.
Complete and correct copies of the articles of organization and operating
agreement (collectively referred to herein as "Bella's Charter Documents") of
Bella, as amended and currently in effect, have been heretofore delivered to
Century. Bella is not in violation of any of the provisions of Bella's Charter
Documents.
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(b) Versatile is a corporation duly formed or organized, validly
existing and in good standing under the laws of the State of California and has
the requisite power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being or currently planned
by Versatile to be conducted. To its knowledge, Versatile is in possession of
all Approvals necessary to own, lease and operate the properties it purports to
own, operate or lease and to carry on its business as it is now being conducted,
except where the failure to have such Approvals could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Versatile. Complete and correct copies of the articles of incorporation and
bylaws (collectively referred to herein as "Versatile's Charter Documents") of
Versatile, as amended and currently in effect, have been heretofore delivered to
Century. Versatile is not in violation of any of the provisions of Versatile's
Charter Documents
(c) Each Company is duly qualified or licensed to do business as a
foreign company and is in good standing in each jurisdiction where the character
of the properties owned, leased or operated by it or the nature of its
activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on either Company.
(d) The minute books or the equivalent of each Company to the extent
of their existence contain true and accurate records of meetings and true,
complete and accurate records of consents in lieu of meetings of its managers,
managing members, directors (and any committees thereof), similar governing
bodies, members and stockholders ("Corporate Records"), since the time of each
Company's organization. Copies of such Corporate Records of each Company have
been heretofore delivered to Century.
3.2 Subsidiaries. Neither Company has any subsidiaries.
3.3 Capitalization.
(a) At the close of business on the business day prior to the date
hereof, Schedule 1.1 hereto contains all of the outstanding Interests of Bella.
All Interests on Schedule 1.1 have been validly issued, fully paid and are
nonassessable. Except as set forth in Schedule 1.1 and Schedule 3.3, there are
no outstanding securities, convertible securities, options, warrants or
derivative securities of Bella, and there are no agreements or commitments
obligating Bella to issue or grant any of the foregoing, including any
pre-emptive or similar rights. All outstanding Interests, options, warrants and
other securities of Bella have been issued in compliance with (i) all applicable
securities laws and (in all material respects) other applicable laws and
regulations, and (ii) all requirements set forth in any applicable contracts.
Except as described in Schedule 3.3 hereto, there are no commitments or
agreements of any character to which Bella is bound obligating Bella to
accelerate the vesting of any options or warrants as a result of the
Transactions. Bella has heretofore delivered to Century true, complete and
accurate copies of all options, warrants and other securities of Bella, if any,
including any and all documents and agreements relating thereto.
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(b) The authorized capital stock of Versatile consists of 100 shares
of common stock, no par value ("Versatile Common Stock"). At the close of
business on the business day prior to the date hereof, (i) 90 shares of
Versatile Common Stock were issued and outstanding, all of which are validly
issued, fully paid and nonassessable, (ii) no shares of Versatile Common Stock
were reserved for issuance upon the exercise of outstanding options to purchase
Versatile Common Stock granted to employees of Versatile or other Persons, (iii)
no shares of Versatile Common Stock were reserved for issuance upon the exercise
of outstanding warrants to purchase Versatile Common Stock, and (iv) no shares
of Versatile Common Stock were reserved for issuance upon the conversion of
outstanding convertible securities of Versatile. Except as set forth in Schedule
1.1 and Schedule 3.3, there are no outstanding securities, convertible
securities, options, warrants or derivative securities of Versatile, and there
are no agreements or commitments obligating Versatile to issue or grant any of
the foregoing, including any pre-emptive or similar rights. All outstanding
Versatile Shares, options, warrants and other securities of Versatile have been
issued in compliance with (i) all applicable securities laws and (in all
material respects) other applicable laws and regulations, and (ii) all
requirements set forth in any applicable contracts.
(c) Except as set forth in Schedule 3.3 hereto, there are no equity
securities, partnership interests or similar ownership interests of any class of
any equity security of either Company, or any securities exchangeable or
convertible into or exercisable for such equity securities, partnership
interests or similar ownership interests, issued, reserved for issuance or
outstanding. Except as set forth in Schedule 3.3 hereof, there are no
subscriptions, options, warrants, equity securities, partnership interests or
similar ownership interests, calls, rights (including preemptive rights),
commitments or agreements of any character to which either Company is a party or
by which it is bound obligating either Company to issue, deliver or sell, or
cause to be issued, delivered or sold, or repurchase, redeem or otherwise
acquire, or cause the repurchase, redemption or acquisition of, any interests,
shares of capital stock, partnership interests or similar ownership interests of
either Company or obligating either Company to grant, extend, accelerate the
vesting of or enter into any such subscription, option, warrant, equity
security, call, right, commitment or agreement.
(d) Except as contemplated by this Agreement and except as set forth
in Schedule 3.3 hereto, there are no registration rights, and there is no voting
trust, proxy, rights plan, anti-takeover plan or other agreement or
understanding to which either Company is a party or by which either Company is
bound with respect to any interests, equity securities, partnership interests or
similar ownership interests of any class of either Company, and there are no
agreements to which either Company is a party, or which either Company has
knowledge of, which conflict with this Agreement or the transactions
contemplated herein or otherwise prohibit the consummation of the transactions
contemplated hereunder.
3.4 Authority Relative to this Agreement. Each Company has all necessary
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder and, to consummate the transactions contemplated hereby
(including the Transaction). The execution and delivery of this Agreement and
the consummation by each Company of the transactions contemplated hereby
(including the Transaction) have been duly and validly authorized by all
necessary action on the part of each Company (including the approval by its
managers, managing members, members, directors and stockholders), and no other
proceedings on the part of Company are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each Company and, assuming the due
authorization, execution and delivery thereof by the other parties hereto,
constitutes the legal and binding obligation of each Company, enforceable
against each Company in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
and public policy.
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3.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by each Company
does not, and the performance of this Agreement by each Company shall not, (i)
conflict with or violate either Company's Charter Documents, (ii) to its
knowledge, conflict with or violate any Legal Requirements, or (iii) result in
any breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or materially impair either
Company's rights or alter the rights or obligations of any third party under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of either Company pursuant to, any Material Contracts
(as defined below), except, with respect to clauses (ii) or (iii), for any such
conflicts, violations, breaches, defaults or other occurrences that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on either Company.
(b) The execution and delivery of this Agreement by each Company
does not, and the performance of each Company's obligations hereunder will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any court, administrative agency, commission, governmental or
regulatory authority, domestic or foreign (a "Governmental Entity"), except (i)
for applicable requirements, if any, of the Securities Act, the Exchange Act,
state securities laws ("Blue Sky Laws"), and the rules and regulations
thereunder, and appropriate documents with the relevant authorities of other
jurisdictions in which each Company is qualified to do business, and (ii) where
the failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on either Company or,
after the Closing, Century, or prevent consummation of the Transaction or
otherwise prevent the parties hereto from performing their obligations under
this Agreement.
3.6 Compliance. To the knowledge of each Company, it has complied with and
is not in violation of any Legal Requirements with respect to the conduct of its
business, or the ownership or operation of its business, except for failures to
comply or violations which, individually or in the aggregate, have not had and
are not reasonably likely to have a Material Adverse Effect on either Company.
To each Company's knowledge, the businesses and activities of each Company have
not been and are not being conducted in violation of any Legal Requirements.
Neither Company is in default or violation of any term, condition or provision
of any applicable Charter Documents or Contracts. Except as set forth on
Schedule 3.6, to each Company's knowledge, no written notice of non-compliance
with any Legal Requirements relating or with respect to the business of each
Company has been received by each such Company (and each Company has no
knowledge of any material such notice delivered to any other Person). To each
Company's knowledge, it is not in violation of any material term of any contract
or covenant relating to employment, patents, proprietary information disclosure,
non-competition or non-solicitation.
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3.7 Financial Statements.
(a) The audited financial statements to be provided by Versatile to
Century prior to the Closing will be a complete copy of the audited financial
statements (including, in each case, any related notes thereto) of Versatile for
the fiscal years ended December 31, 2004 and 2003, which statements will be
prepared in accordance with generally accepted accounting principles of the
United States ("U.S. GAAP") applied on a consistent basis throughout the period
involved (except as may be indicated in the notes thereto), will be audited in
accordance with the auditing standards of the Public Company Accounting
Oversight Board ("PCAOB") by an independent accountant registered with PCAOB,
and such statements will fairly present in all material respects the financial
position of Versatile at the dates thereof and the results of its operations and
cash flows for the periods indicated, and will not contain any untrue statement
of a material fact or omit 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.
(b) The unaudited financial statements to be provided by each
Company to Century prior to the Closing will be a complete copy of the unaudited
financial statements (including, in each case, any related notes thereto) of
each Company for the three-month and nine-month periods ended September 30, 2005
and 2004, which statements will be prepared in accordance with U.S. GAAP applied
on a consistent basis throughout the period involved (except as may be indicated
in the notes thereto), will be reviewed by an independent accountant registered
with PCAOB, and such statements will fairly present in all material respects the
financial position of each at the dates thereof and the results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements will be subject to normal adjustments which are not
expected to have a Material Adverse Effect on the Company. Notwithstanding the
foregoing, Bella's financial statements shall be for the period from inception
(May 13, 2005) through September 30, 2005. The audited financial statements
described in Section 3.7(a) and the unaudited financial statements described in
this Section 3.7(b) are collectively referred to herein as the "U.S. GAAP
Financial Statements."
(c) To each Company's knowledge, the books of account and other
financial records of each Company have been maintained in accordance with good
business practice.
3.8 No Undisclosed Liabilities. Except as set forth in Schedule 3.8
hereto, neither Company has any liabilities individually in excess of $25,000
and in the aggregate in excess of $50,000 (absolute, accrued, contingent or
otherwise) of a nature required to be disclosed on a balance sheet or in the
related notes to the financial statements prepared in accordance with U.S. GAAP
which are, individually or in the aggregate, material to the business, results
of operations or financial condition of Company, except: (i) liabilities
provided for in or otherwise disclosed in the balance sheets of each Company as
of September 30, 2005 prepared in accordance with U.S. GAAP, which have been
delivered to Century, and (ii) such liabilities arising in the ordinary course
of each Company's business since September 30, 2005, none of which would have a
Material Adverse Effect on the Company.
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3.9 Absence of Certain Changes or Events. Except as set forth in Schedule
3.9 hereto or in the interim balance sheets of each Company as of September 30,
2005, since September 30, 2005, there has not been: (i) any Material Adverse
Effect on either Company, (ii) any declaration, setting aside or payment of any
dividend on, or other distribution (whether in cash, securities or property) in
respect of, either Company's equity or other securities, or any purchase,
redemption or other acquisition by either Company of any of equity or other
securities or any options, warrants, calls or rights to acquire any such equity
or other securities, (iii) any split, combination or reclassification of either
Company's capital, (iv) any granting by either Company of any increase in
compensation or fringe benefits, except for normal increases of cash
compensation in the ordinary course of business consistent with past practice,
or any payment by either Company of any bonus, except for bonuses made in the
ordinary course of business consistent with past practice, or any granting by
either Company of any increase in severance or termination pay or any entry by
either Company into any currently effective employment, severance, termination
or indemnification agreement or any agreement the benefits of which are
contingent or the terms of which are materially altered upon the occurrence of a
transaction involving either Company of the nature contemplated hereby, (v)
entry by either Company into any licensing or other agreement with regard to the
acquisition or disposition of any Intellectual Property (as defined in Section
3.18 hereof) other than licenses in the ordinary course of business consistent
with past practice or any amendment or consent with respect to any licensing
agreement filed or required to be filed by either Company with respect to any
Governmental Entity, (vi) any material change by either Company in its
accounting methods, principles or practices, (vii) any change in the auditors of
either Company, (vii) any issuance of equity or other securities of either
Company, or (viii) any revaluation by either Company of any of their respective
assets, including, without limitation, writing down the value of capitalized
inventory or writing off notes or accounts receivable or any sale of assets of
either Company other than in the ordinary course of business.
3.10 Litigation. Except as disclosed in Schedule 3.10 hereto, there are no
claims, suits, actions or proceedings pending, or to the knowledge of either
Company threatened against them, before any court, governmental department,
commission, agency, instrumentality or authority, or any arbitrator that seeks
to restrain or enjoin the consummation of the transactions contemplated by this
Agreement or which could reasonably be expected, either individually or in the
aggregate with all such claims, actions or proceedings, to have a Material
Adverse Effect on either Company or have a Material Adverse Effect on the
ability of the parties hereto to consummate the Transaction.
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3.11 Employee Benefit Plans. Except as disclosed in Schedule 3.11 hereto,
neither Company has any written employee compensation, incentive, fringe or
benefit plans, programs, policies, commitments or other arrangements covering
any active or former employee, director or consultant of either Company, or any
trade or business (whether or not incorporated) which is under common control
with either Company (collectively, the "Plans").
3.12 Labor Matters. Except as disclosed in Schedule 3.12 hereto, neither
Company is a party to any collective bargaining agreement or other labor union
contract applicable to persons employed by either Company nor does either
Company know of any activities or proceedings of any labor union to organize any
such employees.
3.13 Restrictions on Business Activities. Except as disclosed on Schedule
3.13 hereto, to each Company's knowledge there is no agreement, commitment,
judgment, injunction, order or decree binding upon either Company or to which
either Company is a party which has or could reasonably be expected to have the
effect of prohibiting or materially impairing any business practice of either
Company, any acquisition of property by either Company or the conduct of
business by either Company as currently conducted other than such effects,
individually or in the aggregate, which have not had and could not reasonably be
expected to have a Material Adverse Effect on either Company.
3.14 Title to Property.
(a) All leases of real property held by each Company and all
personal property and other property and assets of each Company (other than real
property) owned, used or held for use in connection with the business of each
Company (the "Personal Property") obligating each Company to make annual
payments in excess of $15,000 are shown or reflected on the balance sheets of
each Company prepared in accordance with U.S. GAAP or in Schedule 3.14. To each
Company's knowledge, each Company owns and has good and marketable title to the
Personal Property, and all such assets and properties are in each case held free
and clear of all Liens, except for Liens disclosed in the financial statements
of each Company prepared in accordance with U.S. GAAP or in Schedule 3.14
hereto, none of which Liens has or will have, individually or in the aggregate,
a Material Adverse Effect on such property or on the present or contemplated use
of such property in the businesses of each Company.
(b) To each Company's knowledge, all leases pursuant to which each
Company leases from others material real or personal property are valid and
effective in accordance with their respective terms, and there is not, under any
of such leases, any existing material default or event of default of the Company
or, to each Company's knowledge, any other party (or any event which with notice
or lapse of time, or both, would constitute a material default), except where
the lack of such validity and effectiveness or the existence of such default or
event of default could not reasonably be expected to have a Material Adverse
Effect on each Company.
3.15 Taxes.
(a) Definition of Taxes. For the purposes of this Agreement, "Tax"
or "Taxes" refers to any and all federal, state, local and foreign taxes,
including, without limitation, gross receipts, income, profits, sales, use,
occupation, value added, ad valorem, transfer, franchise, withholding, payroll,
recapture, employment, excise and property taxes, assessments, governmental
charges and duties together with all interest, penalties and additions imposed
with respect to any such amounts and any obligations under any agreements or
arrangements with any other person with respect to any such amounts and
including any liability of a predecessor entity for any such amounts.
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(b) Tax Returns and Audits. Except as set forth in Schedule 3.15
hereto, to each Company's knowledge:
(i) Each Company has timely filed all federal, state, local and
foreign returns, estimates, information statements and reports relating to Taxes
("Returns") required to be filed by each Company with any Tax authority prior to
the date hereof, except such Returns which are not material to each Company. All
such Returns are true, correct and complete in all material respects. Each
Company has paid all Taxes shown to be due on such Returns.
(ii) All Taxes that each Company is required by law to withhold
or collect have been duly withheld or collected, and have been timely paid over
to the proper governmental authorities to the extent due and payable.
(iii) No audit or other examination of any Return of either
Company by any Tax authority is presently in progress, nor has either Company
been notified of any request for such an audit or other examination.
(iv) Neither Company has taken any action nor knows of any fact,
agreement, plan or other circumstance that is reasonably likely to prevent the
Transaction from qualifying as a tax-deferred exchange within the meaning of
Section 351 of the Code.
3.16 Environmental Matters. Except as disclosed in Schedule 3.16 hereto
and except for such matters that, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect, to each Company's
knowledge: (i) each Company has complied with all applicable Environmental Laws;
(ii) the properties currently owned or operated by each Company (including
soils, groundwater, surface water, buildings or other structures) are not
contaminated with any Hazardous Substances; (iii) the properties formerly owned
or operated by each Company were not contaminated with Hazardous Substances
during the period of ownership or operation by each Company; (iv) neither
Company is subject to liability for any Hazardous Substance disposal or
contamination on any third party property; (v) neither Company has been
associated with any release or threat of release of any Hazardous Substance;
(vi) neither Company has received any notice, demand, letter, claim or request
for information alleging that either Company may be in violation of or liable
under any Environmental Law; and (vii) neither Company is subject to any orders,
decrees, injunctions or other arrangements with any Governmental Entity or
subject to any indemnity or other agreement with any third party relating to
liability under any Environmental Law or relating to Hazardous Substances.
As used in this Agreement, the term "Environmental Law" means any
federal, state, local or foreign law, regulation, order, decree, permit,
authorization, opinion, common law or agency requirement relating to: (A) the
protection, investigation or restoration of the environment, health and safety,
or natural resources; (B) the handling, use, presence, disposal, release or
threatened release of any Hazardous Substance or (C) noise, odor, wetlands,
pollution, contamination or any injury or threat of injury to persons or
property.
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As used in this Agreement, the term "Hazardous Substance" means any
substance that is: (i) listed, classified or regulated pursuant to any
Environmental Law; (ii) any petroleum product or by-product, asbestos-containing
material, lead-containing paint or plumbing, polychlorinated biphenyls,
radioactive materials or radon; or (iii) any other substance which is the
subject of regulatory action by any Governmental Entity pursuant to any
Environmental Law
3.17 Brokers; Third Party Expenses. Neither Company nor, to each Company's
knowledge, any Member or Stockholder has incurred, nor will they incur, directly
or indirectly, any liability for brokerage, finders' fees, agent's commissions
or any similar charges in connection with this Agreement or any transactions
contemplated hereby. Except as disclosed on Schedule 3.17, no membership
interests, ownership interests, equity securities, convertible securities,
warrants, options, or other derivative securities of either Company or Century
are payable to any third party by either Company or any Member or Stockholder as
a result of this Transaction.
3.18 Intellectual Property. For the purposes of this Agreement, the
----------------------
following terms have the following definitions:
"Intellectual Property" shall mean any or all of the following: (i)
patents and applications therefor and all reissues, divisions, renewals,
extensions, provisionals, continuations and continuations-in-part thereof
("Patents") worldwide; (ii) inventions (whether patentable or not), invention
disclosures, improvements, trade secrets, proprietary information, know how,
technology, technical data and customer lists, and all documentation relating to
any of the foregoing; (iii) registered copyrights and applications therefor, and
all other rights corresponding thereto, worldwide; (iv) material domain names,
uniform resource locators ("URLs") and other names and locators associated with
the Internet ("Domain Names"); (v) registered industrial designs and
applications therefor, worldwide; (vi) registered trade names, logos, trademarks
and service marks, and any applications therefor (collectively, "Trademarks"),
worldwide; (vii) all databases and data collections and all rights therein; and
(viii) all moral and economic rights of authors and inventors, however
denominated.
"Company Intellectual Property" shall mean any Intellectual Property
that is owned by, or licensed to, either Company.
"Company Products" means all current versions of products of either
Company.
(a) Except as disclosed on Schedule 3.18, to each Company's
knowledge, the Company Intellectual Property and Company Products are not
subject to any material proceeding or outstanding decree, order, judgment,
contract, license, agreement or stipulation restricting in any manner the use,
transfer or licensing thereof by either Company, or which may affect the
validity, use or enforceability of such Company Intellectual Property or Company
Product, which in any such case could reasonably be expected to have a Material
Adverse Effect on either Company.
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(b) Except as disclosed on Schedule 3.18 hereto, to each Company's
knowledge, each Company either owns and has good and marketable title to each
material item of Company Intellectual Property owned by it free and clear of any
Liens (excluding licenses and related restrictions granted in the ordinary
course) or has one or more licenses sufficient for each Company's use of Company
Intellectual Property; and each Company is the owner or licensee of all
Trademarks used in connection with the operation or conduct of the business of
each Company including the sale of any products by either Company.
(c) The operation of the business of each Company as such business
currently is conducted, including (i) the design, development, manufacture,
distribution, reproduction, marketing or sale of the products of each Company
(including Company Products) and (ii) each Company's use of any product, device
or process, to each Company's knowledge and except as could not reasonably be
expected to have a Material Adverse Effect, has not and does not infringe or
misappropriate the Intellectual Property of any third party or constitute unfair
competition or trade practices under the laws of any jurisdiction.
(d) Except as set forth on Schedule 3.18 hereto, Versatile owns all
right, title and interest in and to the Trademark "People's Liberation" and
"Xxxxxxx Xxxx" in the jurisdictions set forth on Schedule 3.18 hereto.
3.19 Agreements, Contracts and Commitments.
(a) Schedule 3.19 hereto sets forth a complete and accurate list of
all Material Contracts (as hereinafter defined), specifying the parties thereto.
For purposes of this Agreement, (i) the term "Contracts" shall mean all written
contracts, agreements, leases, mortgages, indentures, notes, bonds, liens,
licenses, arbitration awards, judgments, decrees, orders, documents,
instruments, understandings and commitments to which either Company is a party
or by or to which any of the properties or assets of either Company may be
bound, subject or affected (including without limitation notes or other
instruments payable by or to either Company), and (ii) the term "Material
Contracts" shall mean (x) each Contract (I) providing for payments (present or
future) to either Company in excess of $25,000 in the aggregate, or (II) under
which or in respect of which either Company presently has any liability or
obligation of any nature whatsoever (absolute, contingent or otherwise) in
excess of $25,000, and (y) without limitation of subclause (x), each of the
following Contracts:
(i) any mortgage, indenture, note, installment obligation or
other instrument, agreement or arrangement for or relating to any borrowing of
money by or from either Company;
(ii) any guaranty, direct or indirect, by either Company or
any officer, director or 5% or more stockholder ("Insider") of either Company of
any obligation of either Company for borrowings, or otherwise, excluding
endorsements made for collection in the ordinary course of business;
15
(iii) any Contract made other than in the ordinary course of
business or (x) providing for the grant of any preferential rights to purchase
or lease any asset of either Company or (y) providing for any right (exclusive
or non-exclusive) to sell or distribute, or otherwise relating to the sale or
distribution of, any product or service of either Company;
(iv) any obligation to register any shares of the capital
stock or other securities of either Company with any Governmental Entity;
(v) any obligation to make payments, contingent or otherwise,
arising out of the prior acquisition of the business, assets or stock of other
Persons;
(vi) any collective bargaining agreement with any labor union;
(vii) any lease or similar arrangement for the use by either
Company of personal property;
(viii) any Contract granting or purporting to grant, or
otherwise in any way relating to, any mineral rights or any other interest
(including, without limitation, a leasehold interest) in real property; and
(ix) any Contract with either Company to which any Insider of
either Company is a party.
(b) Each Material Contract was entered into at arms' length and in
the ordinary course, is in full force and effect and, to each Company's
knowledge, is valid and binding upon and enforceable against each of the parties
thereto. True, correct and complete copies of all Material Contracts have been
heretofore delivered to Century.
(c) Except as set forth in Schedule 3.19, neither Company nor, to
each Company's knowledge, any other party thereto, is in breach of or in default
under, and no event has occurred which with notice or lapse of time or both
would become a breach of or default under, any Material Contract, which breach,
individually or in the aggregate, could be reasonably likely to have a Material
Adverse Effect on either Company, and no party to any Material Contract has
given any written notice of any claim of any such breach, default or event,
which, individually or in the aggregate, are reasonably likely to have a
Material Adverse Effect on either Company. Each Material Contract to which
either Company is a party or by which it is bound that has not expired by its
terms is in full force and effect, except where such failure to be in full force
and effect is not reasonably likely to have a Material Adverse Effect on either
Company.
3.20 Insurance. Schedule 3.20 sets forth each Company's insurance policies
covering the assets, business, equipment, properties, operations, employees,
officers, directors, managers and managing members (collectively, the "Insurance
Policies") of each Company which each Company reasonably believes are adequate
in amount and scope for the business in which it is engaged.
16
3.21 Governmental Actions/Filings. To the knowledge of each Company, each
Company holds, and has made, all Governmental Actions/Filings reasonably
necessary to the conduct by each Company of its business (as presently
conducted), except with respect to any Governmental Actions/Filings the failure
of which to hold or make would not reasonably be likely to have a Material
Adverse Effect on either Company.
For purposes of this Agreement, the term "Governmental Action/Filing"
shall mean any franchise, license, certificate of compliance, authorization,
consent, order, permit, approval, consent or other action of, or any filing,
registration or qualification with, any federal, state, municipal, foreign or
other governmental, administrative or judicial body, agency or authority.
3.22 Intentionally Omitted.
3.23 Intentionally Omitted.
3.24 Management. During the past five year period, to each Company's
knowledge, no current or former manager, managing member, member, director,
executive officer or stockholder of either Company has been the subject of:
(a) a petition under the Federal bankruptcy laws or any other
insolvency or moratorium law or has a receiver, fiscal agent or similar officer
been appointed by a court for such person, or any partnership in which such
person was a general partner at or within two years before the time of such
filing, or any corporation or business association of which such person was an
executive officer at or within two years before the time of such filing;
(b) a conviction in a criminal proceeding or a named subject of a
pending criminal proceeding (excluding traffic violations that do not relate to
driving while intoxicated or driving under the influence);
(c) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining any such person from, or otherwise limiting, the following
activities:
(i) Acting as a futures commission merchant, introducing
broker, commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the United
States Commodity Futures Trading Commission or an associated person of any
of the foregoing, or as an investment adviser, underwriter, broker or
dealer in securities, or as an affiliated person, director or employee of
any investment company, bank, savings and loan association or insurance
company, or engaging in or continuing any conduct or practice in
connection with such activity;
(ii)Engaging in any type of business practice; or
(iii) Engaging in any activity in connection with the
purchase or sale of any security or commodity or in connection with any
violation of Federal, state or other securities laws or commodities laws;
17
(d) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any Federal, state or local authority barring,
suspending or otherwise limiting for more than 60 days the right of any such
person to engage in any activity described in the preceding sub-paragraph, or to
be associated with persons engaged in any such activity;
(e) a finding by a court of competent jurisdiction in a civil action
or by the U.S. Securities and Exchange Commission ("SEC") to have violated any
securities law, regulation or decree and the judgment in such civil action or
finding by the SEC has not been subsequently reversed, suspended or vacated; or
(f) a finding by a court of competent jurisdiction in a civil action
or by the Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding has not been
subsequently reversed, suspended or vacated.
3.25 Representations and Warranties Complete. The representations and
warranties of each Company included in this Agreement and any Schedule provided
pursuant to this Agreement, are true and complete in all material respects and
do not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein not misleading, under the circumstance under which they were
made. Any disclosure on one schedule will be deemed notice of and disclosure by
each Company in respect of any other representation and warranty of such
Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CENTURY
Century represents and warrants to, and covenants with, each Company, as
follows:
4.1 Organization and Qualification.
(a) Century is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware and has the requisite
corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being or currently planned
by Century to be conducted. To its knowledge, Century is in possession of all
Approvals necessary to own, lease and operate the properties it purports to own,
operate or lease and to carry on its business as it is now being or currently
planned by Century to be conducted, except where the failure to have such
Approvals could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on Century. Complete and correct copies of the
Charter Documents of Century, as amended and currently in effect, have been
heretofore delivered to Company. Century is not in violation of any of the
provisions of Century's Charter Documents.
(b) Century is duly qualified or licensed to do business as a
foreign corporation and is in good standing, in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Century.
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4.2 Subsidiaries. As of the date of this Agreement, Century has no
Subsidiaries and does not own, directly or indirectly, any ownership, equity,
profits or voting interest in any Person and, other than this Agreement, has no
agreement or commitment to purchase any such interest, and Century has not
agreed and is not obligated to make nor is bound by any written, oral or other
agreement, contract, subcontract, lease, binding understanding, instrument,
note, option, warranty, purchase order, license, sublicense, insurance policy,
benefit plan, commitment or undertaking of any nature, as of the date hereof or
as may hereafter be in effect under which it may become obligated to make, any
future investment in or capital contribution to any other entity.
4.3 Capitalization.
(a) The authorized capital stock of Century consists of 150,000,000
shares of common stock, par value $0.001 per share ("Century Common Stock") and
10,000,000 shares of preferred stock, par value $0.001 per share ("Preferred
Stock"), of which 3,500,000 shares will be designated as Series A Convertible
Preferred Stock pursuant to the Certificate of Designations of Series A
Convertible Preferred Stock attached hereto as Exhibit B ("Certificate of
Designations"). At the close of business on the business day prior to the date
hereof, (i) 13,775,021 shares of Century Common Stock were issued and
outstanding, all of which are validly issued, fully paid and nonassessable; (ii)
no shares of Preferred Stock were issued and outstanding; (iii) no shares of
Century Common Stock were reserved for issuance upon the exercise of outstanding
options to purchase Century Common Stock granted to certain employees of Century
or other parties ("Century Stock Options"); (iv) no shares of Century Common
Stock were reserved for issuance upon the exercise of outstanding warrants to
purchase Century Common Stock ("Century Warrants"); (v) no shares of Preferred
Stock were reserved for issuance to any party (other than the Members and
Stockholders in accordance with this Agreement); and (vi) no shares of Century
Common Stock were reserved for issuance upon the conversion of Preferred Stock
or any outstanding convertible notes, debentures or securities ("Convertible
Securities"). All outstanding shares of Century Common Stock have been issued
and granted in compliance with (i) all applicable securities laws and (in all
material respects) other applicable laws and regulations, and (ii) all
requirements set forth in any applicable Contracts. Prior to Closing, there will
be an aggregate of 3,500,000 shares of authorized but unissued shares of Series
A Convertible Preferred Stock, par value $0.001 per share ("Series A Preferred
Stock"), which, subject to the approval of Century's stockholders to effect the
Reverse Split, which in any case shall be required to have occurred subsequent
to the Closing ("Stockholder Approval"): (i) shall be convertible into
350,000,000 shares of Common Stock on a pre-Reverse Split basis, based on a
conversion rate of 100 shares of Common Stock on a pre-Reverse Split basis for
each share of Series A Preferred Stock, and (ii) shall be convertible into
37,837,838 shares of Common Stock on a post-Reverse Split basis. Upon the
issuance of the shares of the Series A Preferred Stock, and, subject to the
Stockholder Approval, the Conversion Shares issuable upon conversion thereof,
when issued, will be validly issued, fully paid and non-assessable. The term
"Reverse Split" is defined in Section 6.16(a) hereof. Immediately following the
Transaction, and assuming no adjustment to the number of Preferred Shares as
contemplated by Section 1.3, prior to giving effect to any issuance of
securities in connection with the Equity Financing, the Members and Stockholders
will own 94.7% of the total combined voting power of all classes of Century
stock entitled to vote.
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(b) There are no equity securities, partnership interests or similar
ownership interests of any class of any equity security of Century, or any
securities exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests, issued,
reserved for issuance or outstanding. Except for this Agreement or as set forth
in Schedule 4.3, there are no subscriptions, options, warrants, equity
securities, partnership interests or similar ownership interests, calls, rights
(including preemptive rights), commitments or agreements of any character to
which Century is a party or by which it is bound obligating Century to issue,
deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem
or otherwise acquire, or cause the repurchase, redemption or acquisition of, any
shares of capital stock, partnership interests or similar ownership interests of
Century or obligating Century to grant, extend, accelerate the vesting of or
enter into any such subscription, option, warrant, equity security, call, right,
commitment or agreement. To Century's knowledge, there is no plan or arrangement
to issue Century Common Stock or Preferred Stock except as set forth in this
Agreement. Except as contemplated by this Agreement and except as set forth in
Schedule 4.3 hereto, there are no registration rights, and there is no voting
trust, proxy, rights plan, anti-takeover plan or other agreement or
understanding to which Century is a party or by which it is bound with respect
to any equity security of any class of Century.
4.4 Authority Relative to this Agreement. Century has full corporate power
and authority to: (i) execute, deliver and perform this Agreement, and each
ancillary document which Century has executed or delivered or is to execute or
deliver pursuant to this Agreement, and (ii) carry out Century's obligations
hereunder and thereunder and, to consummate the transactions contemplated hereby
(including the Transaction). The execution and delivery of this Agreement and
the consummation by Century of the transactions contemplated hereby (including
the Transaction) have been duly and validly authorized by all necessary
corporate action on the part of Century (including the approval by its Board of
Directors), and no other corporate proceedings on the part of Century are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Century and, assuming the due authorization, execution and delivery
thereof by the other parties hereto, constitutes the legal and binding
obligation of Century, enforceable against Century in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity and public policy. Upon the Stockholder Approval,
which in any case shall be required to have occurred subsequent to the Closing,
the Series A Preferred Stock will be convertible into duly authorized, validly
issued, fully paid and nonassessable shares of Century's Common Stock.
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4.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Century and the
execution and delivery of each ancillary document to be delivered by Century
hereunder do not, and the performance of this Agreement and each such ancillary
document by Century shall not: (i) conflict with or violate Century's Charter
Documents, (ii) conflict with or violate any Legal Requirements, or (iii) result
in any breach of or constitute a default (or an event that with notice or lapse
of time or both would become a default) under, or materially impair Century's
rights or alter the rights or obligations of any third party under, or give to
others any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or encumbrance on any of the properties or
assets of Century pursuant to, any Contracts, except, with respect to clauses
(ii) or (iii), for any such conflicts, violations, breaches, defaults or other
occurrences that would not, individually or in the aggregate, have a Material
Adverse Effect on Century.
(b) Except for: (i) the filing of the Certificate of Designations
for the Series A Preferred Stock ("Certificate of Designations") with the
appropriate authorities and pursuant to the laws of the State of Delaware, and
(ii) the requirement to obtain the Stockholder Approval which in any case shall
be required to have occurred subsequent to the Closing, the execution and
delivery of this Agreement by Century does not, and the performance of its
obligations hereunder will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Entity, except
(i) for applicable requirements, if any, of the Securities Act, the Exchange
Act, Blue Sky Laws, and the rules and regulations thereunder, and appropriate
documents with the relevant authorities of other jurisdictions in which Century
is qualified to do business, and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Century, or prevent consummation of the Transaction
or otherwise prevent the parties hereto from performing their obligations under
this Agreement.
4.6 Compliance. To Century's knowledge, Century has complied with, and is
not in violation of, any Legal Requirements with respect to the conduct of its
business, or the ownership or operation of its business, except for failures to
comply or violations which, individually or in the aggregate, have not had and
are not reasonably likely to have a Material Adverse Effect on Century. To
Century's knowledge, the businesses and activities of Century have not been and
are not being conducted in violation of any Legal Requirements. Century is not
in default or violation of any material term, condition or provision of its
Charter Documents. Except as set forth on Schedule 4.6, to Century's knowledge,
no written notice of non-compliance with any Legal Requirements has been
received by Century.
4.7 SEC Filings; Financial Statements.
(a) Century has made available to Company a correct and complete
copy, or there has been available on XXXXX copies, of each report, registration
statement and definitive proxy statement filed by Century with the SEC for the
36 months prior to the date of this Agreement (the "Century SEC Reports"), which
are all the forms, reports and documents required to be filed by Century with
the SEC for the 36 months prior to the date of this Agreement. As of their
respective dates, the Century SEC Reports: (i) were prepared in accordance and
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Century SEC Reports, and (ii) did not at the time
they were filed (and if amended or superseded by a filing prior to the date of
this Agreement then on the date of such filing and as so amended or superceded)
contain any untrue statement of a material fact or omit 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. Except to the extent set forth in the preceding sentence, Century
makes no representation or warranty whatsoever concerning the Century SEC
Reports as of any time other than the time they were filed.
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(b) The financial statements (including, in each case, any related
notes thereto) contained in the Century SEC Reports for the 12 month period
ended September 30, 2004 and any prior periods, comply as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with U.S. GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited statements, do not contain
footnotes as permitted by Form 10-QSB of the Exchange Act) and each fairly
presents in all material respects the financial position of Century at the
respective dates thereof and the results of its operations and cash flows for
the periods indicated, except that the unaudited interim financial statements
were or are subject to normal adjustments which were not or are not expected to
have a Material Adverse Effect on Century taken as a whole. The financial
statements (including, in each case, any related notes thereto) contained in the
Century SEC Reports for the 12 month period ended September 30, 2005, and in
each Century SEC Report filed after the date hereof until the Closing, comply,
or shall comply, as applicable, as to form in all material respects with the
published rules and regulations of the SEC with respect thereto, were prepared,
or will be prepared, as applicable, in accordance with U.S. GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited statements, do not contain
footnotes as permitted by Form 10-QSB of the Exchange Act) and each fairly
presents, or will present, as applicable, in all material respects the financial
position of Century at the respective dates thereof and the results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal adjustments which
were not or are not expected to have a Material Adverse Effect on Century taken
as a whole.
(c) Century has previously furnished to Company a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Century with the SEC
pursuant to the Securities Act or the Exchange Act.
4.8 No Undisclosed Liabilities. Except as set forth in Schedule 4.8
hereto, Century has no liabilities (absolute, accrued, contingent or otherwise)
of a nature required to be disclosed on a balance sheet or in the related notes
to the financial statements prepared in accordance with U.S. GAAP which are,
individually or in the aggregate, material to the business, results of
operations or financial condition of Century, except (i) liabilities provided
for in or otherwise disclosed in Century SEC Reports filed on or before the date
hereof, (ii) liabilities incurred since June 30, 2005 in the ordinary course of
business, none of which would have a Material Adverse Effect on Century, and
(iii) those liabilities and obligations specifically set forth in Section 6.11.
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4.9 Absence of Certain Changes or Events. Except as set forth in Schedule
4.9 hereto or in Century SEC Reports filed prior to the date of this Agreement,
and except as contemplated by this Agreement, since June 30, 2005, there has not
been: (i) any Material Adverse Effect on Century, (ii) any declaration, setting
aside or payment of any dividend on, or other distribution (whether in cash,
stock or property) in respect of, any of Century's capital stock, or any
purchase, redemption or other acquisition by Century of any of Century's capital
stock or any other securities of Century or any options, warrants, calls or
rights to acquire any such shares or other securities, (iii) except for the
designation of the Series A Preferred Stock, any split, combination or
reclassification of any of Century's capital stock, (iv) any granting by Century
of any increase in compensation or fringe benefits, except for normal increases
of cash compensation in the ordinary course of business consistent with past
practice, or any payment by Century of any bonus, except for bonuses made in the
ordinary course of business consistent with past practice, or any granting by
Century of any increase in severance or termination pay or any entry by Century
into any currently effective employment, severance, termination or
indemnification agreement or any agreement the benefits of which are contingent
or the terms of which are materially altered upon the occurrence of a
transaction involving Century of the nature contemplated hereby, (v) entry by
Century into any licensing or other agreement with regard to the acquisition or
disposition of any Intellectual Property other than licenses in the ordinary
course of business consistent with past practice or any amendment or consent
with respect to any licensing agreement filed or required to be filed by Century
with respect to any Governmental Entity, (vi) any material change by Century in
its accounting methods, principles or practices, except as required by
concurrent changes in U.S. GAAP, (vii) any change in the auditors of Century,
(vii) any issuance of capital stock of Century, or (viii) any revaluation by
Century of any of their respective assets, including, without limitation,
writing down the value of, or any sale of, assets of Century other than in the
ordinary course of business.
4.10 Litigation. Except as set forth on Schedule 4.10 hereto or in Century
SEC Reports, there are no claims, suits, actions or proceedings pending or to
Century's knowledge, threatened against Century, before any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator
that seeks to restrain or enjoin the consummation of the transactions
contemplated by this Agreement or which could reasonably be expected, either
individually or in the aggregate with all such claims, actions or proceedings,
to have a Material Adverse Effect on Century or have a Material Adverse Effect
on the ability of the parties hereto to consummate the Transaction.
4.11 Employee Benefit Plans. Except as disclosed on Schedule 4.11 hereto,
Century does not maintain, and has no liability under, any Plan, and neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including
severance, unemployment compensation, golden parachute, bonus or otherwise)
becoming due to any stockholder, director or employee of Century, or (ii) result
in the acceleration of the time of payment or vesting of any such benefits.
4.12 Labor Matters. Century is not a party to any collective bargaining
agreement or other labor union contract applicable to persons employed by
Century, nor does Century know of any activities or proceedings of any labor
union to organize any such employees.
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4.13 Restrictions on Business Activities. To Century's knowledge, there is
no agreement, commitment, judgment, injunction, order or decree binding upon
Century or to which Century is a party which has or could reasonably be expected
to have the effect of prohibiting or materially impairing any business practice
of Century, any acquisition of property by Century or the conduct of business by
Century as currently conducted other than such effects, individually or in the
aggregate, which have not had and could not reasonably be expected to have, a
Material Adverse Effect on Century.
4.14 Title to Property. Century does not own or lease any Real Property or
Personal Property. There are no options or other contracts under which Century
has a right or obligation to acquire or lease any interest in Real Property or
Personal Property.
4.15 Taxes. Except as set forth in Schedule 4.15 hereto, to Century's
knowledge:
(a) Century has timely filed all Returns required to be filed by
Century with any Tax authority prior to the date hereof, except such Returns
which are not material to Century. All such Returns are true, correct and
complete in all material respects. Century has paid all Taxes shown to be due on
such Returns.
(b) All Taxes that Century is required by law to withhold or collect
have been duly withheld or collected, and have been timely paid over to the
proper governmental authorities to the extent due and payable.
(c) Century has not been delinquent in the payment of any material
Tax nor is there any material Tax deficiency outstanding, proposed or assessed
against Century, nor has Century executed any unexpired waiver of any statute of
limitations on or extending the period for the assessment or collection of any
Tax.
(d) No audit or other examination of any Return of Century by any
Tax authority is presently in progress, nor has Century been notified of any
request for such an audit or other examination.
(e) No adjustment relating to any Returns filed by Century has been
proposed in writing, formally or informally, by any Tax authority to Century or
any representative thereof.
(f) Century has no liability for any material unpaid Taxes which
have not been accrued for or reserved on Century's balance sheets included in
the audited financial statements for the most recent fiscal year ended, whether
asserted or unasserted, contingent or otherwise, other than any liability for
unpaid Taxes that may have accrued since the end of the most recent fiscal year
in connection with the operation of the business of Century in the ordinary
course of business.
(g) Century has not taken any action and does not know of any fact,
agreement, plan or other circumstance that is reasonably likely to prevent the
Transaction from qualifying as a tax-deferred exchange within the meaning of
Section 351 of the Code. Century is not an investment company within the meaning
of Section 351(e) of the Code.
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4.16 Environmental Matters. Except as disclosed in Schedule 4.16 hereto
and except for such matters that, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect, to Century's knowledge: (i)
Century has complied with all applicable Environmental Laws; (ii) the properties
currently owned or operated by Century (including soils, groundwater, surface
water, buildings or other structures) are not contaminated with any Hazardous
Substances; (iii) the properties formerly owned or operated by Century were not
contaminated with Hazardous Substances during the period of ownership or
operation by Century; (iv) Century is not subject to liability for any Hazardous
Substance disposal or contamination on any third party property; (v) Century has
not been associated with any release or threat of release of any Hazardous
Substance; (vi) Century has not received any notice, demand, letter, claim or
request for information alleging that Century may be in violation of or liable
under any Environmental Law; and (vii) Century is not subject to any orders,
decrees, injunctions or other arrangements with any Governmental Entity or
subject to any indemnity or other agreement with any third party relating to
liability under any Environmental Law or relating to Hazardous Substances.
4.17 Brokers. Except for Century's obligations under the Financial
Advisory Agreement (as defined in Section 6.11), Century has not incurred, nor
will it incur, directly or indirectly, any liability for brokerage or finders'
fees or agent's commissions or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
4.18 Intellectual Property. Century does not own, license or otherwise
have any right, title or interest in any Intellectual Property.
4.19 Agreements, Contracts and Commitments.
-------------------------------------
(a) Except for the Financial Advisory Agreement, any agreement with
Stalt, Inc. ("Transfer Agent"), the agreement with Vero Management, LLC which
will be terminated prior to Closing, or as set forth on Schedule 4.19 or in
Century SEC Reports, to Century's knowledge, there are no contracts, agreements,
leases, mortgages, indentures, note, bond, liens, license, arbitration awards,
judgments, decrees, orders, documents, instruments, understandings and
commitments, to which Century is a party or by or to which any of the properties
or assets of Century may be bound, subject or affected ("Century Contracts").
(b) To Century's knowledge, each Century Contract was entered into
at arms' length and in the ordinary course, is in full force and effect and is
valid and binding upon and enforceable against each of the parties thereto.
True, correct and complete copies of all Century Contracts (or written summaries
in the case of oral Century Contracts) and of all outstanding offers or
proposals of Century have been heretofore delivered to Company.
(c) Neither Century nor, to the knowledge of Century, any other
party thereto is in breach of or in default under, and no event has occurred
which with notice or lapse of time or both would become a breach of or default
under, any Century Contract, and no party to any Century Contract has given any
written notice of any claim of any such breach, default or event, which,
individually or in the aggregate, are reasonably likely to have a Material
Adverse Effect on Century. Each agreement, contract or commitment to which
Century is a party or by which it is bound that has not expired by its terms is
in full force and effect, except where such failure to be in full force and
effect is not reasonably likely to have a Material Adverse Effect on Century.
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4.20 Insurance. Century does not maintain any Insurance Policies.
4.21 Governmental Actions/Filings. To its knowledge, Century has been
granted and holds, and has made, all Governmental Actions/Filings necessary to
the conduct by Century of its businesses (as presently conducted) or used or
held for use by Century, all of which are listed in Schedule 4.21 hereto, and
true, complete and correct copies of which have heretofore been delivered to
Company. Each such Governmental Action/Filing is in full force and effect and,
expect as disclosed in Schedule 4.21 hereto, will not expire prior to December
31, 2005, and Century is in compliance with all of its obligations with respect
thereto. To Century's knowledge, no event has occurred and is continuing which
requires or permits, or after notice or lapse of time or both would require or
permit, and consummation of the transactions contemplated by this Agreement or
the ancillary documents will not require or permit (with or without notice or
lapse of time, or both), any modification or termination of any such
Governmental Actions/Filings. Except as set forth in Schedule 4.21, to Century's
knowledge, no Governmental Action/Filing is necessary to be obtained, secured or
made by Century to enable it to continue to conduct its businesses and
operations and use its properties after the Closing in a manner which is
consistent with current practice.
4.22 Interested Party Transactions. Except as set forth in the Schedule
4.22 hereto or in Century's SEC Reports, no employee, officer, director or
stockholder of Century or a member of his or her immediate family is indebted to
Century, nor is Century indebted (or committed to make loans or extend or
guarantee credit) to any of them, other than (i) for payment of salary for
services rendered, (ii) reimbursement for reasonable expenses incurred on behalf
of Century, and (iii) for other employee benefits made generally available to
all employees. Except as set forth in Schedule 4.22, to Century's knowledge,
none of such individuals has any direct or indirect ownership interest in any
Person with whom Century is affiliated or with whom Century has a material
contractual relationship, or any Person that competes with Century, except that
each employee, stockholder, officer or director of Century and members of their
respective immediate families may own less than 5% of the outstanding stock in
publicly traded companies that may compete with Century. Except as set forth in
Schedule 4.22, to Century's knowledge, no officer, director or stockholder or
any member of their immediate families is, directly or indirectly, interested in
any material contract with Century (other than such contracts as relate to any
such individual ownership of capital stock or other securities of Century).
4.23 Indebtedness; Century Assets. Except as set forth on Schedule 4.23,
Century has no indebtedness for borrowed money. Immediately prior to the
Closing, Century will have no assets, except for cash reserves earmarked for the
payment of certain accounts payable and accrued expenses of Century with respect
to the period prior to Closing which remain unpaid, which Century shall be
responsible for payment following the Closing pursuant to Section 6.11 hereof
("Cash Reserve").
4.24 Over-the-Counter Bulletin Board Quotation. Century Common Stock is
quoted on the Over-the-Counter Bulletin Board ("OTC BB"). There is no action or
proceeding pending or, to Century's knowledge, threatened against Century by
NASDAQ or NASD, Inc. ("NASD") with respect to any intention by such entities to
prohibit or terminate the quotation of Century Common Stock on the OTC BB.
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4.25 Exchange Act Compliance. The Company is in compliance with, and
current in, all of the reporting, filing and other requirements under the
Exchange Act, the shares of the Company's common stock have been duly and
properly registered under Section 12(g) of the Exchange Act, and the Company is
in compliance with all of the requirements under, and imposed by, Section 12(g)
of the Exchange Act, except where a failure to so comply is not reasonably
likely to have a Material Adverse Effect on Century.
4.26 Board Approval. The Board of Directors of Century (including any
required committee or subgroup of the Board of Directors of Century) has, as of
the date of this Agreement, unanimously approved this Agreement and the
transactions contemplated hereby.
4.27 Representations and Warranties Complete. The representations and
warranties of Century included in this Agreement and any Schedule provided
pursuant to this Agreement or delivered hereunder, are true and complete in all
material respects and do not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements contained therein not misleading, under the circumstance under
which they were made. Any disclosure on one schedule will be deemed notice of
and disclosure by Century in respect of any other representation and warranty of
Century.
ARTICLE V
CONDUCT PRIOR TO THE EFFECTIVE TIME
5.1 Conduct of Business by Company and Century. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement pursuant to its terms or the Closing, the Companies and Century
shall, except to the extent that the other party shall otherwise consent in
writing, carry on its business in the usual, regular and ordinary course
consistent with past practices, in substantially the same manner as heretofore
conducted and in compliance with all applicable laws and regulations (except
where noncompliance would not have a Material Adverse Effect), pay its debts and
taxes when due subject to good faith disputes over such debts or taxes, pay or
perform other material obligations when due, and use its commercially reasonable
efforts consistent with past practices and policies to (i) preserve
substantially intact its present business organization, (ii) keep available the
services of its present officers, managers and employees, and (iii) preserve its
relationships with customers, suppliers, distributors, licensors, licensees, and
others with which it has significant business dealings. In addition, except as
permitted or required by the terms of this Agreement or set forth on the
Schedule 5.1 hereto, without the prior written consent of the other party,
during the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement pursuant to its terms or the
Closing, none of the Companies or Century shall do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or (except
as specifically provided for herein) change the period of exercisability of
options or restricted stock, or reprice options granted under any employee,
consultant, director or other stock plans or authorize cash payments in exchange
for any options granted under any of such plans;
27
(b) Grant any severance or termination pay to any officer, manager
or employee except pursuant to applicable law, written agreements outstanding,
or policies existing on the date hereof and as previously or concurrently
disclosed in writing or made available to the other party, or adopt any new
severance plan, or amend or modify or alter in any manner any severance plan,
agreement or arrangement existing on the date hereof;
(c) Transfer or license to any person or otherwise extend, amend or
modify any material rights to any Intellectual Property of either Company or
Century, as applicable, or enter into grants to transfer or license to any
person future patent rights, other than in the ordinary course of business
consistent with past practices provided that in no event shall either Company or
Century license on an exclusive basis or sell any Intellectual Property of
Company or Century, as applicable;
(d) Except for employment agreements in the ordinary course or
otherwise scheduled or set forth in this Agreement, declare, set aside or pay
any dividends on or make any other distributions (whether in cash, stock, equity
securities or property) in respect of any capital stock, membership interests or
ownership interests, or split, combine or reclassify any capital stock,
membership interests or ownership interests, or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution for any
capital stock, membership interests or ownership interests;
(e) Purchase, redeem or otherwise acquire, directly or indirectly,
any shares of capital stock, membership interests or ownership interests of
either Company or Century, as applicable, except repurchases of unvested shares,
membership interests or ownership interests at cost in connection with the
termination of the employment relationship with any employee pursuant to stock
option or purchase agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber,
or agree to any of the foregoing with respect to, any shares of capital stock,
membership interests or ownership interests or any securities convertible into
or exchangeable for shares of capital stock, membership interests or ownership
interests, or subscriptions, rights, warrants or options to acquire any shares
of capital stock, membership interests or ownership interests or any securities
convertible into or exchangeable for shares of capital stock, membership
interests or ownership interests, or enter into other agreements or commitments
of any character obligating it to issue any such shares, membership interests,
ownership interests or convertible or exchangeable securities (except relating
to employment and similar agreements);
(g) Amend its Charter Documents, except for the filing of the
Certificate of Designations by Century;
(h) Acquire or agree to acquire by merging or consolidating with, or
by purchasing any equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to the
business of Century or either Company, as applicable, or enter into any joint
ventures, strategic partnerships or alliances or other arrangements that provide
for exclusivity of territory or otherwise restrict such party's ability to
compete or to offer or sell any products or services;
28
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets, except sales of inventory in the ordinary course of
business consistent with past practice and, except for the sale, lease or
disposition (other than through licensing) of property or assets which are not
material, individually or in the aggregate, to the business of such party;
(j) Incur any indebtedness for borrowed money in excess of $100,000
in the aggregate or guarantee any such indebtedness of another person, issue or
sell any debt securities or options, warrants, calls or other rights to acquire
any debt securities of Century or either Company, as applicable, enter into any
"keep well" or other agreement to maintain any financial statement condition or
enter into any arrangement having the economic effect of any of the foregoing
other than purchase agreements relating to preparing for production, marketing
and selling products and services;
(k) Adopt or amend any employee benefit plan, policy or arrangement,
any employee stock purchase or employee stock option plan, or enter into any
employment contract or collective bargaining agreement (other than offer letters
and agreements entered into in the ordinary course of business consistent with
past practice), pay any special bonus or special remuneration to any director or
employee, or increase the salaries or wage rates or fringe benefits (including
rights to severance or indemnification) of its directors, officers, employees or
consultants, except in the ordinary course of business consistent with past
practices and other than for new hires in the ordinary course;
(l) Pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), or litigation (whether or not commenced prior to the date of this
Agreement) other than the payment, discharge, settlement or satisfaction, in the
ordinary course of business consistent with past practices or in accordance with
their terms, or liabilities recognized or disclosed in the most recent financial
statements (or the notes thereto) of either Company or of Century, as
applicable, or incurred since the date of such financial statements, or waive
the benefits of, agree to modify in any manner, terminate, release any person
from or knowingly fail to enforce any confidentiality or similar agreement to
which either Company is a party or of which either Company is a beneficiary or
to which Century is a party or of which Century is a beneficiary, as applicable;
(m) Except in the ordinary course of business consistent with past
practices, modify, amend or terminate any Material Contract of either Company or
Century, as applicable, or waive, delay the exercise of, release or assign any
material rights or claims thereunder;
(n) Except as required by U.S. GAAP, revalue any of its assets or
make any change in accounting methods, principles or practices;
(o) Incur or enter into any agreement, contract or commitment
requiring such party to pay in excess of $100,000 in any 12 month period, other
than in the ordinary course or otherwise provided in this Agreement and
employment agreements which may be entered into by the Company;
29
(p) Engage in any action that could reasonably be expected to cause
the Transaction to fail to qualify as a tax-deferred exchange under Section 351
of the Code;
(q) Settle any litigation;
(r) Make or rescind any Tax elections that, individually or in the
aggregate, could be reasonably likely to adversely affect in any material
respect the Tax liability or Tax attributes of such party, settle or compromise
any material income tax liability or, except as required by applicable law,
materially change any method of accounting for Tax purposes or prepare or file
any Return in a manner inconsistent with past practice;
(s) Form, establish or acquire any Subsidiary;
(t) Permit any Person to exercise any of its discretionary rights
under any Plan to provide for the automatic acceleration of any outstanding
options, the termination of any outstanding repurchase rights or the termination
of any cancellation rights issued pursuant to such plans; or
(u) Agree in writing or otherwise agree, commit or resolve to take
any of the actions described in Section 5.1 (a) through (t) above.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Board of Directors of Century. At Closing, the current board of
directors of Century shall deliver duly adopted resolutions to: (a) set the size
of Century's board of directors to between three (3) and five (5) members
effective as of the Closing, the actual number to be determined by resolution of
Century's board of directors and to initially equal three (3) members effective
as of the Closing; and (b) appoint the following persons to Century's board of
directors effective as of the Closing: (i) Xxxxxx X. Xxxx ("Guez"); (ii) one
member designated by Guez, who shall be Xxxx Xxxxx, and (iii) one member
selected KRM Fund, who shall be Xxxxx X. Xxxxxxx, a current director of Century
("KRM Designated Member"); and (c) accepting the resignations of the current
officers of Century and the directors of Century (other than Xxxxx X. Xxxxxxx)
effective as of the Closing ("Resolutions"). At Closing, the current officers of
Century and the directors of Century (other than Xxxxx X. Xxxxxxx) shall deliver
their resignations, as appropriate, as officers and directors of Century to be
effective upon the Closing (the "Resignations"). Prior to Closing, the Companies
shall deliver or cause to be delivered to Century completed and signed director
and officer questionnaires ("Questionnaires") in the English language for the
new directors and each officer to be appointed by Century following Closing. The
foregoing designations of the new directors (and the officers to be appointed by
Century following Closing) shall be subject to Century's receipt of the
completed and signed Questionnaires ("D&O Information"). Guez, Xxxxx Xxxx and
KRM Fund shall execute and deliver at Closing the Voting Agreement which shall
provide, among other things, that Guez and Xxxxx Xxxx will vote their Century's
Preferred Shares (or in the event of conversion, the Conversion Shares) to elect
the KRM Designated Member to Century's board of directors for a period of one
year following the Closing.
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6.2 Undertaking by Company Accountant. On or before the Closing, the
Companies shall obtain, and deliver to Century, an undertaking from Grobstein,
Xxxxxxx & Co. ("Accountant"), in a form and substance satisfactory to Century,
providing that: (i) the Accountant has agreed to an engagement with Century to
serve as its certified public accountants following the Closing for purposes of
auditing and reviewing the financial statements of Century and each Company to
comply with Century's ongoing reporting requirements under the Exchange Act
including, without limitation, the filing of Forms 10-Q, 10-K, and 8-K, (ii) the
transaction contemplated hereunder will not disqualify or otherwise prohibit the
Accountant from rendering the foregoing engagement services or from undertaking
such services in a timely manner, (iii) the Accountant is duly registered with
the PCAOB, (iv) the Accountant shall provide its consent to the use of their
audited financial statements and accompanying reports for Century and each
Company, as applicable, in any regulatory filing by Century prior to or
following the Closing, and (v) consenting to the use of its name and the
disclosure of its engagement by Century in the Change of Accountant Form 8-K (as
defined in Section 6.3) ("Accountant Undertaking"). A signed copy of the
engagement letter between Century and Accountant shall be attached to the
Accountant Undertaking.
6.3 Change of Accountants. At Closing, Century shall prepare the Form 8-K
announcing the change in Century's certifying accountants from Xxxxxxx
International ("Century's Accountant") to the Accountant effective as of the
Closing ("Change of Accountant Form 8-K"), in a form acceptable to the Companies
and in a format acceptable for XXXXX filing. The Change of Accountant Form 8-K
shall be filed with the SEC at or within four (4) business days following
Closing, and prior to the filing thereof, Century's Accountant shall have issued
its resignation letter to Century resigning from the engagement and consenting
to the use of its name and the disclosure of its resignation in the Change of
Accountant Form 8-K ("Resignation Letter").
6.4 Other Actions.
(a) At least ten (10) days prior to Closing, Century shall prepare
the information statement required by Rule 14f-1 promulgated under the Exchange
Act ("14f-1 Information Statement"), and Century shall file the 14f-1
Information Statement with the SEC and mail the same to each of Century's
stockholders.
(b) At least five (5) days prior to Closing, the Companies shall
prepare the Form 8-K announcing the Closing, which shall include all information
required by such form, including the information required by Form 10-SB with
respect to the Companies, any other information required in connection with
Century ceasing to be a shell company as a result of the Transactions, the U.S.
GAAP Financial Statements and the Company Pro Forma Financial Statements (as
defined below) ("Transaction Form 8-K"), which shall be in a form reasonably
acceptable to Century and in a format acceptable for XXXXX filing. Prior to
Closing, the Companies shall prepare the press release announcing the
consummation of the Transaction hereunder ("Press Release"). At the Closing,
Century shall file the Transaction Form 8-K with the SEC and distribute the
Press Release.
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(c) At least ten (10) days prior to the Closing, the Companies shall
deliver to Century pro forma consolidated financial statements for the
Companies, and pro forma consolidated financial statements for the Companies and
Century giving effect to the Transaction, for such periods as required by the
SEC to be included in a Form 8-K or any other report or form required to be
filed with the SEC at or after Closing with respect to the Transaction, all
prepared in all material respects with the published rules and regulations of
the SEC and in accordance with U.S. GAAP applied on a consistent basis
throughout the periods involved (the "Pro Forma Financial Statements"). The Pro
Forma Financial Statements shall have been reviewed by, the Accountant and shall
be in a format acceptable for inclusion on the Transaction 8-K.
Each Company and Century shall cooperate with each other and use their
respective commercially reasonable efforts to take or cause to be taken all
actions, and do or cause to be done all things, necessary, proper or advisable
on its part under this Agreement and applicable laws to consummate the
Transaction and the other transactions contemplated hereby as soon as
practicable, including preparing and filing as soon as practicable all
documentation to effect all necessary notices, reports and other filings and to
obtain as soon as practicable all consents, registrations, approvals, permits
and authorizations necessary or advisable to be obtained from any third party
and/or any Governmental Entity in order to consummate the Transaction or any of
the other transactions contemplated hereby. Subject to applicable laws relating
to the exchange of information and the preservation of any applicable
attorney-client privilege, work-product doctrine, self-audit privilege or other
similar privilege, each Company and Century shall have the right to review and
comment on in advance, and to the extent practicable each will consult the other
on, all the information relating to such party, that appear in any filing made
with, or written materials submitted to, any third party and/or any Governmental
Entity in connection with the Transaction and the other transactions
contemplated hereby. In exercising the foregoing right, each Company and Century
shall act reasonably and as promptly as practicable.
6.5 Required Information. In connection with the preparation of the
Transaction Form 8-K, 14f-1 Information Statement, and Press Release, and for
such other reasonable purposes, each Company and Century shall, upon request by
the other, furnish the other with all information concerning themselves, their
respective subsidiaries, directors, officers, managers, managing members,
stockholders and members (including the directors and officers of Century to be
elected effective as of the Closing pursuant to Section 6.1 hereof) and such
other matters as may be reasonably necessary or advisable in connection with the
Transaction, or any other statement, filing, notice or application made by or on
behalf of each Company and Century to any third party and/or any Governmental
Entity in connection with the Transaction and the other transactions
contemplated hereby. Each party warrants and represents to the other party that
all such information shall be true and correct in all material respects and will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
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6.6 Confidentiality; Access to Information.
(a) Any confidentiality agreement or letter of intent previously
executed by the parties shall be superseded in its entirety by the provisions of
this Agreement. Each party agrees to maintain in confidence any non-public
information received from the other party, and to use such non-public
information only for purposes of consummating the transactions contemplated by
this Agreement. Such confidentiality obligations will not apply to (i)
information which was known to the one party or their respective agents prior to
receipt from the other party; (ii) information which is or becomes generally
known; (iii) information acquired by a party or their respective agents from a
third party who was not bound to an obligation of confidentiality; and (iv)
disclosure required by law. In the event this Agreement is terminated as
provided in Article IX hereof, each party will return or cause to be returned to
the other all documents and other material obtained from the other in connection
with the Transaction contemplated hereby.
(b) Access to Information.
(i) Each Company will afford Century and its financial advisors,
accountants, counsel and other representatives reasonable access during normal
business hours, upon reasonable notice, to the properties, books, records and
personnel of each Company during the period prior to the Closing to obtain all
information concerning the business, including the status of product development
efforts, properties, results of operations and personnel of each Company, as
Century may reasonably request. No information or knowledge obtained by Century
in any investigation pursuant to this Section 6.6 will affect or be deemed to
modify any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Transaction.
(ii) Century will afford each Company and its financial advisors,
underwriters, accountants, counsel and other representatives reasonable access
during normal business hours, upon reasonable notice, to the properties, books,
records and personnel of Century during the period prior to the Closing to
obtain all information concerning the business, including the status of product
development efforts, properties, results of operations and personnel of Century,
as each Company may reasonably request. No information or knowledge obtained by
each Company in any investigation pursuant to this Section 6.6 will affect or be
deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the parties to consummate the Transaction.
6.7 No Solicitation. Other than with respect to the Transaction, each
Company and Century agree that neither of them nor any of their officers,
directors, managers, or managing members shall, and that they shall direct and
use their reasonable best efforts to cause their agents and other
representatives (including any investment banker, attorney or accountant
retained by it) not to, directly or indirectly, initiate, solicit, encourage or
otherwise facilitate any inquiries or the making of any proposal or offer with
respect to (i) a merger, reorganization, share exchange, consolidation or
similar transaction involving them, (ii) any sale, lease, exchange, mortgage,
pledge, transfer or purchase of all or substantially all of the assets or equity
securities of them, taken as a whole, in a single transaction or series of
related transactions or (iii) any tender offer or exchange offer for 20% or more
of the outstanding shares of Century Common Stock, Bella's Interests or
Versatile's capital stock (any such proposal or offer being hereinafter referred
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to as an "Acquisition Proposal"). Each Company and Century further agree that
neither of them nor any of their officers, directors, managers, or managing
members shall, and that they shall direct and use their reasonable best efforts
to cause their agents and representatives not to, directly or indirectly, engage
in any negotiations concerning, or provide any confidential information or data
to, or have any discussions with, any person relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal. Each Company and Century agree that they will immediately
cease and cause to be terminated any existing discussions or negotiations with
any parties conducted heretofore with respect to any Acquisition Proposal. Each
Company and Century agrees that they will take the necessary steps to promptly
inform the individuals or entities referred to in the first sentence hereof of
the obligations undertaken in this Section 6.7.
Notwithstanding anything contained in this Agreement to the contrary,
nothing contained in this Agreement shall prevent the board of directors of
Century, or their respective representatives from, prior to the Closing (A)
complying with Rule 14e-2 promulgated under the Exchange Act with regard to an
Acquisition Proposal, if applicable, or otherwise complying with the Exchange
Act; (B) providing information in response to a request therefore by a person
who has made a bona fide unsolicited Acquisition Proposal; (C) engaging in any
negotiations or discussions with any person who has made a bona fide unsolicited
Acquisition Proposal or otherwise facilitating any effort or attempt to
implement an Acquisition Proposal; or (D) withdrawing or modifying the approval
or recommendation by Century's board of directors of this Agreement, approving
or recommending any Acquisition Proposal or causing the applicable party to
enter into any letter of intent, agreement in principle, acquisition agreement
or other similar agreement relating to any Acquisition Proposal, if, and only to
the extent that in each such case referred to in clause (B), (C) or (D) above,
Century's board of directors determines in good faith, after consultation with
outside legal counsel that such action is necessary to act in a manner
consistent with the directors' fiduciary duties under applicable law and
determines in good faith after consultation with its financial advisors that the
person or group making such Acquisition Proposal has adequate sources of
financing to consummate such Acquisition Proposal and that such Acquisition
Proposal, if consummated as proposed, is materially more favorable to the
stockholders of Century from a financial point of view (any such more favorable
Acquisition Proposal being referred to as a "Superior Proposal") and determines
in good faith that such Superior Proposal is reasonably capable of being
consummated, taking into account legal, financial, regulatory and other aspects
of the proposal and the person making the proposal.
6.8 Public Disclosure. Except to the extent previously disclosed or to the
extent the parties believe that they are required by applicable law or
regulation to make disclosure, prior to Closing, no party shall issue any
statement or communication to the public regarding the Transaction without the
consent of the other party, which consent shall not be unreasonably withheld. To
the extent a party hereto believes it is required by law or regulation to make
disclosure regarding the Transaction, it shall, if possible, immediately notify
the other party prior to such disclosure. Notwithstanding the foregoing, the
parties hereto agree that Century will prepare and file a Current Report on Form
8-K pursuant to the Exchange Act reasonably acceptable to each Company to report
the execution of this Agreement and that any party hereto may file any reports
as required by the Exchange Act including, without limitation, any reports on
Schedule 13D.
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6.9 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use its commercially reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, and
to assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Transaction and the other transactions contemplated by
this Agreement, including using commercially reasonable efforts to accomplish
the following: (i) the taking of all reasonable acts necessary to cause the
conditions precedent set forth in Article VII to be satisfied, (ii) the
obtaining of all necessary actions or nonactions, waivers, consents, approvals,
orders and authorizations from Governmental Entities and the making of all
necessary registrations, declarations and filings (including registrations,
declarations and filings with Governmental Entities, if any) and the taking of
all reasonable steps as may be necessary to avoid any suit, claim, action,
investigation or proceeding by any Governmental Entity, (iii) the obtaining of
all consents, approvals or waivers from third parties required as a result of
the transactions contemplated in this Agreement, (iv) the defending of any
suits, claims, actions, investigations or proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, and (v) the execution or delivery of any additional
instruments reasonably necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, this Agreement. In connection with and
without limiting the foregoing, Century and its board of directors and each
Company and its managers, members, directors, officers and stockholders shall,
if any state takeover statute or similar statute or regulation is or becomes
applicable to the Transaction, this Agreement or any of the transactions
contemplated by this Agreement, use their commercially reasonable efforts to
enable the Transaction and the other transactions contemplated by this Agreement
to be consummated as promptly as practicable on the terms contemplated by this
Agreement. Notwithstanding anything herein to the contrary, nothing in this
Agreement shall be deemed to require Century or any Company to agree to any
divestiture by itself or any of its affiliates of shares of capital stock,
membership interests or ownership interest or of any business, assets or
property, or the imposition of any material limitation on the ability of any of
them to conduct their business or to own or exercise control of such assets,
properties and stock.
(b) Each Company, the Members and Stockholders shall give prompt
notice to Century upon becoming aware that any representation or warranty made
by them contained in this Agreement has become untrue or inaccurate, or of any
failure of any Company, the Members or Stockholders to comply with or satisfy in
any material respect any covenant, condition or agreement to be complied with or
satisfied by them under this Agreement, in each case, such that the conditions
set forth in Article VII would not be satisfied; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
(c) Century shall give prompt notice to each Company, the Members
and Stockholders upon becoming aware that any representation or warranty made by
it contained in this Agreement has become untrue or inaccurate, or of any
failure of Century to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement, in each case, such that the conditions set forth in Article VII
would not be satisfied; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the parties
or the conditions to the obligations of the parties under this Agreement.
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6.10 Treatment as a Tax-Deferred Exchange. Century, the Companies, the
Members and the Stockholders shall not take any action prior to or following the
Transaction that could reasonably be expected to cause the Transaction to fail
to qualify as a tax-deferred exchange within the meaning of Section 351 of the
Code. Each party hereto agrees to report the Transaction as a tax-deferred
exchange within the meaning of section 351 of the Code for Federal income tax
purposes.
6.11 Absence of Material Liabilities. Immediately prior to Closing,
Century shall have no liabilities or obligations requiring the payment of
monies, other than obligations under or with respect to: (i) a certain Financial
Advisory Agreement, in the form attached hereto as Exhibit C ("Financial
Advisory Agreement"), (ii) any agreement with the Transfer Agent, (iii) Century
Contracts disclosed under Section 4.19 hereto, and (iv) accounts payable and
accrued expenses of Century with respect to the period prior to Closing. Century
will establish the Cash Reserve provided for in Section 4.23 in an amount equal
to the monetary obligations of Century prior to Closing due to the Transfer
Agent, pursuant to Century Contracts disclosed under Section 4.19 (other than
the Financial Advisory Agreement) and in respect of all unpaid accounts payable
and accrued expenses of Century as of Closing (collectively, the "Pre-Closing
Cash Obligations"). Upon Closing, to the extent not satisfied by Century prior
to or at Closing, the Pre-Closing Cash Obligations will be paid in full from the
Cash Reserve. Following the Closing, the Companies shall pay and satisfy
Century's obligations under the agreement with the Transfer Agent, and the
remaining Century Contracts shall be terminated.
6.12 Cash Payments at Closing for Financial Advisory Agreement. At
Closing, the Companies shall pay the reverse merger fees of $350,000 under the
Financial Advisory Agreement less the amount of the Deposit made under Section
1.9 (such sum being referred to herein, as the "Company Closing Payment"). At
Closing, the Deposit made under Section 1.9 shall be paid to Xxxxxxx Securities,
LLC ("Xxxxxxx Securities") by Century in partial payment of the reverse merger
fees under the Financial Advisory Agreement ("Century Closing Payment").
6.13 Business Records. At Closing, Century shall cause to be delivered to
the Companies all records and documents relating to Century, which Century
possesses, including, without limitation, books, records, government filings,
Returns, Charter Documents, Corporate Records, Stock Records, consent decrees,
orders, and correspondence, director and stockholder minutes and resolutions,
stock ownership records, financial information and records, electronic files
containing any financial information and records, and other documents used in or
associated with Century ("Business Records").
6.14 Registration Statements; Registration Rights. Century shall,
following the Closing, register for resale the shares of its common stock
underlying the shares of Century's Preferred Stock (or, in the event of
conversion, the shares of common stock) issued to the investors (the
"Investors") in the Equity Financing (as defined herein) on a registration
36
statement ("Registration Statement") to be filed by Century with the within the
time frame and otherwise in accordance with the agreement of Century and the
Investors. The Registration Statement shall include 5,850,000 shares of
Century's common stock (on a pre-Reverse Split basis) which are currently
outstanding and have been granted piggyback registration rights, provided,
however, that all such shares with registration rights will be junior with
respect to cutbacks to any registration rights granted to the Investors in the
Equity Financing, and will be subject to any restrictions on transfer reasonably
requested by the Investors in the Equity Financing as a condition to the Equity
Financing.
6.15 Information Statement. As soon as practicable after the Closing,
Century shall prepare an information statement pursuant to Rule 14(c)
promulgated under Section 14A of the Exchange Act (together with any amendments
or supplements thereto, the "Information Statement") in connection with the
approval and adoption of the following matters (the "Stockholder Matters"):
(a) To approve a 1 for 9.25 reverse stock split with special
treatment for certain of Century's stockholders to preserve round lot
stockholders ("Reverse Split");
(b) To approve the change of the name of Century to a name selected
by Xxxxxx Xxxx;
(c) To approve the adoption of a stock incentive plan ("Stock
Plan"); and
(d) All such other actions as shall be necessary or desirable in
connection with or related to the foregoing actions in (a) through (c) above.
Following Closing, KRM Fund shall reasonably cooperate with Century and
provide such information available to it as may be necessary or required, in the
reasonable determination of counsel to the Companies and to Century, for Century
to prepare the Information Statement.
As soon as practicable following the Closing, Century shall obtain the
written consent of holders of the requisite number of voting securities of
Century approving the Stockholder Matters, such consent to be effective twenty
(20) days following the filing of the definitive Information Statement with the
SEC. Upon receipt of such written consent, Century will file the Information
Statement with the SEC and shall cause such Information Statement to become
definitive and to be mailed to the holders of Century's securities entitled to
vote at a meeting of stockholders.
In the event the Information Statement is reviewed by the SEC, Century
shall respond promptly to any comments of the SEC or its staff with respect to
the Information Statement and use its reasonable best efforts to have the
Information Statement cleared by the SEC as soon as practicable after its
filing, provided, however, in the event that the substance of any review by the
SEC involves or inquires with respect to information, filings, reports,
financial statements or other circumstances of Century occurring, reported or
filed prior to the Closing (the "Pre-Closing Period"), KRM Fund shall, upon the
reasonable request of the Companies or Century, use its reasonable best efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, and
to assist and cooperate with the Companies and Century in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Information Statement, including, without
limitation, providing such information, addressing such comments, and otherwise
resolving such matters as may relate to the Pre-Closing Period and any SEC
comments relating thereto or any SEC inquiry thereof.
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ARTICLE VII
CONDITIONS TO THE TRANSACTION
7.1 Conditions to Obligations of Each Party to Effect the Transaction. The
respective obligations of each party to this Agreement to effect the Transaction
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) No Order. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
which is in effect and which has the effect of making the Transaction illegal or
otherwise prohibiting consummation of the Transaction, substantially on the
terms contemplated by this Agreement. All waiting periods, if any, under any law
in any jurisdiction in which the Companies or Century has material operations
relating to the transactions contemplated hereby has expired or terminated early
and all material approvals required to be obtained prior to the Transaction in
connection with the transactions contemplated hereby shall have been obtained.
(b) Debt Holder Consents. The lenders under any credit facilities,
secured loans, mortgages and other indebtedness of the Companies for borrowed
money shall have consented in writing to the Transaction (if such consent is
required in connection with this Transaction).
(c) Required Approvals. This Agreement and the Transaction have been
duly approved and adopted, by the requisite vote, if any, of the Members and the
Stockholders and by the requisite actions of the Board of Directors of Versatile
under the laws of the State of California and the Charter Documents, and by the
requisite actions of the Board of Directors of Century under the laws of the
State of Delaware and Century Charter Documents.
(d) Certificate of Designations. Prior to Closing, the Board of
Directors of Century shall have adopted, and Century shall have filed with, and
had accepted by, the Secretary of State of the State of Delaware, the
Certificate of Designations attached hereto as Exhibit B.
(e) 14f-1 Information Statement. At least ten (10) days prior to
Closing, Century shall have filed the 14f-1 Information Statement with the SEC,
and Century shall have mailed the 14f-1 Information Statement to each of the
stockholders of Century, and Century shall have otherwise complied with all of
the provisions under Rule 14f-1 under the Exchange Act.
(f) Simultaneous Exchange. The exchange of the Interests by the
Members and the exchange of Versatile Shares by the Stockholders shall each have
been consummated. To the extent applicable, each Company shall have obtained
modification agreements to all options, warrants, and other agreements
eliminating any and all rights to acquire securities of the Companies and
terminating all pre-emptive rights.
38
(g) Financial Statements; Transaction Form 8-K. The Companies shall
have delivered to Century the U.S. GAAP Financial Statements, the Pro Forma
Financial Statements and the Transaction Form 8-K, each in a form acceptable to
Century, which acceptance shall not be unreasonably withheld. Century shall have
filed the Transaction Form 8-K with the SEC at Closing.
(h) Vero Termination Agreement. Century shall have terminated its
agreement with Vero Management, LLC, effective at Closing.
(i) Voting Agreement. KRM Fund, Xxxxx Xxxx and Xxxxxx Xxxx shall
have executed and delivered the Voting Agreement, in the form attached hereto as
Exhibit A.
(j) Blue Sky Laws. The issuance of Century's Preferred Stock to be
issued under this Agreement shall be exempt from, or have been qualified under,
the Blue Sky Laws of each appropriate jurisdiction to the satisfaction of
Century and the Companies and their respective counsels.
(k) Equity Financing. Signed subscriptions shall have been received
to purchase shares of Century's Series A Preferred Stock in a private placement
offering exempt from registration under the Securities Act pursuant to
Regulation D promulgated thereunder ("Equity Financing"), which subscriptions
shall represent gross proceeds of not less than $4,500,000, with such gross
proceeds having been fully funded into an escrow account established for the
Equity Financing the release of which to Century is conditioned only upon the
Closing of the Transaction, Century's acceptance of such subscriptions after the
Closing and approval of the Equity Financing by Century's board of directors
following the Closing. The funds under the Equity Financing shall have been
raised on a pre-money valuation of the combined Companies of not less than
$20,000,000. The Equity Financing shall not include the issuance of any
warrants, whether to the Investors or the placement agents, which have a common
stock equivalent exercise price of less than $0.135 (on pre-Reverse Split
basis). Each Investor shall in writing release and covenant not to xxx the
exiting officers and directors of Century for any matter respecting the Equity
Financing.
7.2 Additional Conditions to Obligations of Members, Stockholders and
Companies. The obligations of the Companies, the Members and the Stockholders to
consummate and effect the Transaction shall be subject to the satisfaction at or
prior to the Closing Date of each of the following conditions, any of which may
be waived, in writing, exclusively and only by the Companies:
(a) Representations and Warranties. Each representation and warranty
of Century contained in this Agreement (i) shall have been true and correct as
of the date of this Agreement and (ii) shall be true and correct on and as of
the Closing Date with the same force and effect as if made on the Closing Date.
The Companies shall have received a certificate with respect to the foregoing
signed on behalf of Century by an authorized officer of Century ("Century
Closing Certificate").
39
(b) Agreements and Covenants. Century shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date.
(c) Director and Officer Resignations and Appointments. Century
shall have delivered to the Companies the Resignations and Resolutions in a form
satisfactory to the Companies, effective as of the Closing. Century shall also
have delivered to the Companies evidence satisfactory to the Companies of the
appointment of new directors of Century in accordance with Section 6.1 hereof.
(d) Consents. Century shall have obtained all consents, waivers and
approvals required in connection with the consummation of the transactions
contemplated hereby, other than consents, waivers and approvals the absence of
which, either alone or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect on Century taken as a whole.
(e) Material Adverse Effect. No Material Adverse Effect with respect
to Century shall have occurred since the date of this Agreement.
(f) No Financial Obligations. Immediately prior to the Closing,
Century shall have no liabilities or obligations, other than as set forth in
Section 6.11 hereof.
(g) SEC Compliance; OTC BB Quotation. Immediately prior to Closing,
Century shall be in compliance with the reporting requirements under the
Exchange Act and shall be quoted on the OTC BB.
(h) Business Records; Resignation Letter. Century shall have
delivered to the Companies the Business Records and the Resignation Letter from
Century's Accountants.
(i) Tax Opinion. Prior to the Closing, the Companies shall have
received a written opinion from its tax counsel, in form and substance
reasonably satisfactory to the Companies, to the effect that the Transaction
will constitute a tax-deferred exchange within the meaning of Section 351 of the
Code and such opinions shall not have been withdrawn prior to the implementation
of the Transaction. The parties to this Agreement agree to make such reasonable
representations as requested by such counsel for the purpose of rendering such
opinions.
(j) Other Deliveries. At Closing, Century shall have delivered to
the Companies, Members and Stockholders: (i) certificates representing Century's
Preferred Shares to Members and Stockholders as set forth in Schedule 1.1 hereof
and in accordance with Section 1.6, (ii) copies of resolutions and actions taken
by Century's board of directors in connection with the approval of this
Agreement and the transactions contemplated hereunder, and (iii) such other
documents or certificates as shall reasonably be required by the Companies and
their counsel in order to consummate the transactions contemplated hereunder.
(k) Form 10-KSB. Prior to Closing, Century shall have filed its
Annual Report on Form 10-KSB for the fiscal year ended September 30, 2005, which
report shall include Part III information at the time of filing and not
incorporate such information by reference and shall be acceptable to the
Companies, which acceptance shall not be unreasonably withheld.
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7.3 Additional Conditions to the Obligations of Century. The obligations
of Century to consummate and effect the Transaction shall be subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by Century:
(a) Representations and Warranties. Each representation and warranty
of Company, the Members and the Stockholders contained in this Agreement (i)
shall have been true and correct as of the date of this Agreement and (ii) shall
be true and correct on and as of the Closing Date with the same force and effect
as if made on and as of the Closing. Century shall have received a certificate
with respect to the foregoing signed on behalf of the Companies by an authorized
officer of Companies, by the Members and by the Stockholders with respect to the
foregoing ("Closing Certificate")
(b) Agreements and Covenants. The Companies, the Members and the
Stockholders shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or complied
with by them at or prior to the Closing Date.
(c) Consents. The Companies shall have obtained all consents,
waivers and approvals required in connection with the consummation of the
transactions contemplated hereby, other than consents, waivers and approvals the
absence of which, either alone or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on Company.
(d) Material Adverse Effect. No Material Adverse Effect with respect
to the Companies shall have occurred since the date of this Agreement.
(e) Accountant Undertaking. The Companies shall have delivered to
Century in a timely manner the Accountant Undertaking, in a form satisfactory to
Century.
(f) Closing Payments. The Companies shall have made the Company
Closing Payment required by Section 6.12, and Century shall have made the
Century Closing Payment required by Section 6.12 hereof.
(g) D&O Information. The Companies shall have delivered the
Questionnaires in a timely manner, and the D&O Information shall be acceptable
to Century.
(h) Change of Accountant Form 8-K; Press Release. The Companies
shall have delivered the Change of Accountant Form 8-K and Press Release to
Century, each in a form acceptable to Century.
(i) Financial Advisory Agreement. The Financial Advisory Agreement
between Century and Xxxxxxx Securities, LLC, in the form of Exhibit C hereto,
has been duly executed by the parties and authorized and approved by Century's
board of directors.
(j) Other Deliveries. At Closing, the Company, the Members and the
Stockholders shall have delivered to Century: (i) documents evidencing the
exchange of Interests owned by Members and of the Versatile Shares owned by the
Stockholders, in accordance with Sections 1.4 and 1.5, (ii) copies of
resolutions and actions taken each Company's board of managers, board of
directors, members and stockholders in connection with the approval of this
Agreement and the transactions contemplated hereunder, and (iii) such other
documents or certificates as shall reasonably be required by Century and its
counsel in order to consummate the transactions contemplated hereunder.
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ARTICLE VIII
SURVIVAL
Except as specifically set forth in Sections 5.1, 6.14, 6.15, 9.6 and
10.1, and such other provisions contained herein which contemplates the
performance of any agreement or covenant by any party hereto after the Closing,
all representations, warranties, agreements and covenants contained in or made
pursuant to this Agreement by any party hereto or contained in any Schedule
hereto shall not survive the Closing, and no claims made by virtue of such
representations, warranties, agreements and covenants shall be made or commenced
by any party hereto from and after the Closing.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Agreement may be terminated at any time prior to the
Closing:
(a) by mutual written agreement of Century and the Companies;
(b) by either Century or any of the Companies if the Transaction
shall not have been consummated by November 30, 2005 for any reason; provided,
however, that the right to terminate this Agreement under this Section 9.1(b)
shall not be available to any party whose action or failure to act has been a
principal cause of or resulted in the failure of the Transaction to occur on or
before such date and such action or failure to act constitutes a breach of this
Agreement;
(c) by either Century or any of the Companies if a Governmental
Entity shall have issued an order, decree or ruling or taken any other action,
in any case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Transaction, which order, decree, ruling or other action is
final and nonappealable;
(d) by any of the Companies, upon a material breach of any
representation, warranty, covenant or agreement on the part of Century set forth
in this Agreement, or if any representation or warranty of Century shall have
become materially untrue, in either case such that the conditions set forth in
Section 7.1 or Section 7.2 would not be satisfied as of the time of such breach
or as of the time such representation or warranty shall have become untrue,
provided, that if such inaccuracy in Century's representations and warranties or
breach by Century is curable by Century prior to the Closing Date, then any of
the Companies may not terminate this Agreement under this Section 9.1(d) for
thirty (30) days after delivery of written notice from such Company to Century
of such breach, provided Century continues to exercise commercially reasonable
efforts to cure such breach (it being understood that such Company may not
terminate this Agreement pursuant to this Section 9.1(d) if it shall have
materially breached this Agreement or if such breach by Century is cured during
such thirty (30)-day period); or
42
(e) by Century, upon a material breach of any representation,
warranty, covenant or agreement on the part of any Company, the Members or the
Stockholders set forth in this Agreement, or if any representation or warranty
of any Company, the Members or the Stockholders shall have become materially
untrue, in either case such that the conditions set forth in Section 7.1 or
Section 7.3 would not be satisfied as of the time of such breach or as of the
time such representation or warranty shall have become untrue, provided, that if
such inaccuracy in such representations and warranties or breach by any Company,
the Members or the Stockholders is curable by any Company, the Members or the
Stockholders prior to the Closing Date, then Century may not terminate this
Agreement under this Section 9.1(e) for thirty (30) days after delivery of
written notice from Century to the Companies, the Members and the Stockholders
of such breach, provided the Companies, the Members and the Stockholders
continue to exercise commercially reasonable efforts to cure such breach (it
being understood that Century may not terminate this Agreement pursuant to this
Section 9.1(e) if it shall have materially breached this Agreement or if such
breach by the Companies, the Members or the Stockholders is cured during such
thirty (30)-day period).
9.2 Notice of Termination; Effect of Termination. Any termination of this
Agreement under Section 9.1 above will be effective immediately upon (or, if the
termination is pursuant to Section 9.1(d) or Section 9.1(e) and the proviso
therein is applicable, thirty (30) days after) the delivery of written notice of
the terminating party to the other parties hereto. In the event of the
termination of this Agreement as provided in Section 9.1, this Agreement shall
be of no further force or effect and the Transaction shall be abandoned, except
(i) as set forth in this Section 9.2, Section 9.3 and Article XI (General
Provisions), each of which shall survive the termination of this Agreement, (ii)
if this Agreement is terminated by Century under Section 9.1(b), (c) or (e), or
by any Company under Sections 9.1(b) or (c), the Deposit made pursuant to
Section 1.9 shall be retained by Century as liquidated damages and as its sole
source of damages for any breach or termination hereof, and (iii) if this
Agreement is terminated by any Company under Section 9.1(d), the Deposit made
pursuant to Section 1.9 shall be returned by Century to Company.
9.3 Fees and Expenses. Except as provided in Sections 6.11 and 6.12, all
fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses whether or not the Transaction is consummated. The parties further
agree that, whether or not the Transaction is consummated, the Companies shall
be responsible for any and all costs and expenses incurred in connection with
the preparation and filing of the Transaction Form 8-K (including the U.S. GAAP
Financial Statements and the Pro Forma Financial Statements contained therein)
and the Information Statement.
43
9.4 Amendment. This Agreement may be amended by the parties hereto at any
time by execution of an instrument in writing signed on behalf of each of
Century, the Companies, the Members and the Stockholders.
9.5 Extension; Waiver. At any time prior to the Closing, any party hereto
may, to the extent legally allowed, (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. Delay in exercising any right under this Agreement shall
not constitute a waiver of such right.
9.6 Rescission. Notwithstanding anything contained in this Agreement,
Xxxxxx Xxxxxxxx & Markiles, LLP shall hold, following the Closing, the
certificates of Century's Preferred Shares to be delivered to the Members and
Stockholders hereunder, and the certificates representing the Interests owned by
the Members and the Versatile Shares owned by the Stockholders, together with
any assignments and stock powers related thereto, until Century has provided
written notice to Xxxxxx Xxxxxxxx & Markiles, LLP of the closing of the Equity
Financing. In the event the Equity Financing fails to close for whatever reason
within three business (3) days following the Closing (or such later time as
mutually agreed to by the Companies, Century and KRM Fund, but not more than ten
(10) business days following the Closing, the parties hereto agree that this
Agreement and the Voting Agreement are hereby rescinded and the transactions
hereunder shall be voided ab initio (the "Rescission"). In the event of the
Rescission, (i) Xxxxxx Xxxxxxxx & Markiles, LLP shall promptly deliver to
Century the certificates representing Century's Preferred Shares (subject to
adjustment for any stock dividend, stock split, recapitalization, merger,
consolidation, combination or exchange of shares occurring after the Closing
with respect to such Century's Preferred Shares); (ii) Xxxxxx Xxxxxxxx &
Markiles, LLP shall promptly deliver to each Member the certificates
representing the Interests owned by each Member prior to Closing, together with
assignments thereof; (iii) Xxxxxx Xxxxxxxx & Markiles, LLP shall promptly
deliver to each Stockholder the certificates representing the Versatile Shares
owned by each Stockholder prior to Closing, together with stock powers thereof;
and (iv) Xxxxxx Xxxxxxxx & Markiles, LLP shall deliver the signed resignations
of all of the then current officers and directors of Century together with a
written consent action of all of the then current directors appointing Xxxxx X.
Xxxxxxx as the sole director of Century.
Notwithstanding anything contained herein to the contrary, in the event
this Agreement and the Voting Agreement are rescinded and the transactions
consummated hereunder voided ab initio, the Companies, the Members and
Stockholders who held a position as officer or director of Century following
Closing, jointly and severally, agree to indemnify and hold harmless, Century
against (i) any and all liabilities, obligations, losses, damages, claims,
actions, Liens and deficiencies which exist, or which may be imposed on,
incurred by or asserted against Century or any of its assets, based upon,
resulting from or arising out of, the management, operation and ownership of
Century from and after the Closing and through and including the effective date
of the Rescission, and (ii) any cost or expense (including reasonable attorneys'
fees and court costs) incurred by Century in connection with the foregoing
(including, without limitation, any cost or expense incurred by Century in
enforcing its rights pursuant to this Section 9.6). The parties hereto agree
that the provisions of this Section 9.6 shall survive the Closing.
44
ARTICLE X
POST-CLOSING COVENANTS
10.1 The Companies acknowledge that the agreements contained in this
Section 10.1 are an integral part of the transactions contemplated by this
Agreement and that, without these agreements, Century would not enter into this
Agreement. The parties hereto acknowledge and agree that the failure by Century
or the Companies to satisfy, perform and comply with the covenants set forth in
this Section 10.1 ("Post-Closing Covenants") following the Closing will have a
material adverse effect on Century and the investment of KRM Fund in Century.
During the period beginning upon the Closing and ending on the first anniversary
of the Closing, Century agrees to utilize its commercially reasonable efforts
to, and the Companies agree to utilize their commercially reasonable efforts to
cause Century to, remain a Section 12(g) reporting company in compliance with
and current in its reporting requirements under the Exchange Act, and to remain
quoted on, at a minimum, the OTC BB.
10.2 Other Provisions. Notwithstanding anything contained herein to the
contrary, the provisions of this Article X shall survive (and not be affected in
any respect by) the Closing.
ARTICLE XI
GENERAL PROVISIONS
11.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to Century, to:
Century Pacific Financial Corporation
000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 00
Xxxx Xxxxx, XX XXX 00000
Attn: Xxxxx X. Xxxxxxx, President
(000) 000-0000 telephone
(000) 000-0000 telecopy
45
(b) if to the Companies, the Members or the Stockholders, to:
Xxxxxx Xxxx
Versatile Entertainment, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxxxxx, XX 00000
(000) 000-0000
(000) 000-0000 telecopy
with a copy to:
Xxxxxx Xxxxxxxx & Markiles, LLP
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxx XxXxxxx, Esq.
(000) 000-0000 telephone
(000) 000-0000 telecopy
11.2 Interpretation.
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections, such reference shall be
to a Section of this Agreement. Unless otherwise indicated the words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. When reference is
made herein to "the business of" an entity, such reference shall be deemed to
include the business of all direct and indirect subsidiaries of such entity.
(b) For purposes of this Agreement, the term "Material Adverse
Effect" when used in connection with an entity means any change, event,
violation, inaccuracy, circumstance or effect, individually or when aggregated
with other changes, events, violations, inaccuracies, circumstances or effects,
that is materially adverse to the business, assets (including intangible
assets), revenues, financial condition or results of operations of such entity
and its Subsidiaries, if any, taken as a whole (it being understood that neither
of the following alone or in combination shall be deemed, in and of itself, to
constitute a Material Adverse Effect: (a) changes attributable to the public
announcement or pendency of the transactions contemplated hereby, (b) changes in
general national or regional economic conditions, (c) changes affecting the
industry generally in which the Companies or Century operate, or (d) any SEC
rulemaking requiring enhanced disclosure of reverse merger transactions with a
public shell.
(c) For purposes of this Agreement, the term "Person" shall mean any
individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
46
(b) For purposes of this Agreement, all monetary amounts set forth
herein are referenced in United States dollars, unless otherwise noted.
11.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart. Signatures by facsimile or by
electronic signature are deemed to constitute original signatures.
11.4 Entire Agreement; Third Party Beneficiaries. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Schedules hereto (a)
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof,
it being understood that the Letter of Intent between Century and the Companies
shall terminate upon the execution of this Agreement; and (b) are not intended
to confer upon any other person any rights or remedies hereunder (except as
specifically provided in this Agreement). KRM Fund is a third-party beneficiary
of the certain provisions contained herein to which KRM Fund derives a benefit
and, with respect to such provisions, KRM Fund has the right to enforce them as
if it were a signatory to this Agreement.
11.5 Severability. In the event that any provision of this Agreement, or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
11.6 Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
11.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, USA, regardless of the laws
that might otherwise govern under applicable principles of conflicts of law
thereof.
47
11.8 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
11.9 Assignment. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties. Subject to the first sentence of this Section 11.9, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
11.10 Arbitration. Any disputes or claims arising under or in connection
with this Agreement or the transactions contemplated hereunder shall be resolved
by binding arbitration. Notice of a demand to arbitrate a dispute by either
party shall be given in writing to the other at their last known address.
Arbitration shall be commenced by the filing by a party of an arbitration demand
with the American Arbitration Association ("AAA") in its office in Los Angeles,
California USA. The arbitration and resolution of the dispute shall be resolved
by a single arbitrator appointed by the AAA pursuant to AAA rules. The
arbitration shall in all respects be governed and conducted by applicable AAA
rules, and any award and/or decision shall be conclusive and binding on the
parties. The arbitration shall be conducted in Los Angeles, California USA. The
arbitrator shall supply a written opinion supporting any award, and judgment may
be entered on the award in any court of competent jurisdiction. Each party shall
pay its own fees and expenses for the arbitration, except that any costs and
charges imposed by the AAA and any fees of the arbitrator for his services shall
be assessed against the losing party by the arbitrator. In the event that
preliminary or permanent injunctive relief is necessary or desirable in order to
prevent a party from acting contrary to this Agreement or to prevent irreparable
harm prior to a confirmation of an arbitration award, then either party is
authorized and entitled to commence a lawsuit solely to obtain equitable relief
against the other pending the completion of the arbitration in a court having
jurisdiction over the parties. All rights and remedies of the parties shall be
cumulative and in addition to any other rights and remedies obtainable from
arbitration.
[Remainder of this page intentionally left blank.]
48
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
CENTURY PACIFIC FINANCIAL CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Xxxxx X. Xxxxxxx, President
XXXXX XXXX, LLC
By: /s/ Xxxxxx X. Xxxx
----------------------------
Xxxxxx X. Xxxx, Manager
MEMBERS:
/s/ Xxxxxx X. Xxxx
-------------------------------
Xxxxxx X. Xxxx, Individually
Fashionistas, LLC (formerly known as FOADB
Investors, LLC)
By: /s/ Xxxxxx Xxxxxx
----------------------------
Xxxxxx Xxxxxx, Manager
VERSATILE ENTERTAINMENT, INC.
By: /s/ Xxxxxx Xxxx
----------------------------
Xxxxxx Xxxx, President
STOCKHOLDERS:
/s/ Xxxxxx Xxxx
-------------------------------
Xxxxxx X. Xxxx, Individually
49
/s/ Xxxxx Xxxx
----------------------------
Xxxxx Xxxx, Individually
/s/ Xxxxx Xxxx
---------------------------
Xxxxx Xxxx, Individually
/s/ Xxx Xxxxxx
----------------------------
Xxx Xxxxxx, Individually
/s/ Xxxxxx Xxxxxx
----------------------------
Xxxxxx Xxxxxx, Individually
/s/ Xxxxxxx Xxxxx
----------------------------
Xxxxxxx Xxxxx, Individually
Venture Group, LLC
By: /s/ Xxxxxxxx Xxxxxxxx
----------------------------
Xxxxxxxx Xxxxxxxx, Manager
/s/ Xxxxx Xxxxxxxx
----------------------------
Xxxxx Xxxxxxxx, Individually
Xxxxxx Xxxxxxxx & Markiles, LLP
By: /s/ Xxxx XxXxxxxx
----------------------------
Xxxx XxXxxxxx, Partner
/s/ Xxxxxx Xxxx
----------------------------
Xxxxxx Xxxx, as custodian for Xxxxxxxx
Xxxx Guez UTMA of CA
50
/s/ Xxxxxx Xxxxxxx
----------------------------
Xxxxxx Xxxxxxx, Individually
/s/ Xxxx Xxxxx
----------------------------
Xxxx Xxxxx, Individually
ACKNOWLEDGED AND AGREED
WITH RESPECT TO OBLIGATIONS
UNDER SECTION 6.15 HEREOF:
Xxxxxxx Reverse Merger Fund, LLC,
a Delaware limited liability company
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxx, Manager
51
Index of Exhibits and Schedules
Exhibits
Exhibit A - Voting Agreement
Exhibit B - Certificate of Designations of Series A Preferred Stock
Exhibit C - Financial Advisory Agreement
Schedules
Schedule 1.1 - Company Ownership and Allocation
Company Disclosure Schedules - Xxxxx Xxxx, LLC and Versatile Entertainment,
Inc.
Century Disclosure Schedules
52
