STOCK PURCHASE AND EXCHANGE AGREEMENT
THIS STOCK PURCHASE AND EXCHANGE AGREEMENT (hereinafter referred to as
the "Agreement") is made and entered into this 28th day of June, 1999, by and
among Xxxxxxxxx.xxx, Inc., a Colorado corporation (hereinafter referred to as
the "Company"), on the one hand, and Art Exchange, Inc., a Colorado corporation
(hereinafter referred to as "Art Exchange"), and Xxxx X. Xxxxxx (hereinafter
referred to as "Xxxxxx") and The Xxxxxx Family Trust (hereinafter referred to as
the "Trust"), on the other hand. Xxxx X. Xxxxxx and The Xxxxxx Family Trust are
hereinafter, together, referred to as the "Purchasers."
RECITALS:
WHEREAS, the Company desires to issue, sell and deliver to the
Purchasers, and the Purchasers desires to purchase, acquire and receive from the
Company, an aggregate of 1,000,000 authorized and unissued shares (hereinafter
referred to as the "Shares") of common stock, $.0001 par value per share
(hereinafter referred to as the "Nicklebys Common Stock"), of the Company in
consideration of the exchange therefor of all 1,000,000 issued and outstanding
shares of common stock, $.0001 par value per share (hereinafter referred to as
the "Art Exchange Common Shares"), of Art Exchange which are owned by the
Purchasers, on the terms and subject to the conditions set forth herein; and
WHEREAS, the parties hereto intend that the issuance and sale of the
Shares of Nicklebys Common Stock in exchange for all of the Art Exchange Common
Shares shall qualify as a "tax-free" reorganization as contemplated by the
provisions of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as
amended.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants, agreements, representations and warranties contained herein,
the parties hereto agree as follows:
ARTICLE 1
ISSUANCE AND/OR SALE AND PURCHASE OF SHARES
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1.1 Issuance and Sale of Shares of Nicklebys Common Stock by Company to
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Purchasers in Exchange for Art Exchange Common Shares. At the Closing, as
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defined and to be held in accordance with the provisions of Article 2 below, the
Company agrees to issue, sell and deliver a total of 1,000,000 Shares of
Nicklebys Common Stock to the Purchasers and the Purchasers agrees to purchase,
acquire and receive said aggregate number of Shares of Nicklebys Common Stock
from the Company. In consideration for the issuance and sale of said 1,000,000
Shares of Nicklebys Common Stock to the Purchasers pursuant to the provisions of
this Agreement, and as payment in full of the purchase price for the said Shares
of Nicklebys Common Stock to be issued and sold to, and purchased and acquired
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by, them pursuant to the provisions of this Agreement, at the Closing the
Purchasers, severally and not jointly, shall sell, assign, transfer, convey and
deliver to the Company the stock certificates, duly executed, endorsed and/or
authenticated for transfer to the Company, evidencing 1,000,000 Art Exchange
Common Shares owned of record and beneficially by them.
ARTICLE 2
CLOSING
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The consummation of the issuance and sale to and purchase and acquisition
by the Purchasers of 1,000,000 Shares of Nicklebys Common Stock (hereinafter
referred to as the "Closing") shall occur at the offices of Xxxx & Associates,
0000 Xxxxxxx Xxxxxx, Xxxxx #0000, Xxxxxx, Xxxxxxxx 00000, at 10:30 a.m.,
Mountain Daylight Time, on June 29, 1999, or at such other place and/or on such
other date not later than July 29, 1999, as the parties may agree upon in
writing (hereinafter referred to as the "Closing Date"). If the Closing fails to
occur by June 29, 1999, or by such later date to which the Closing may be
extended as provided hereinabove, then this Agreement shall automatically
terminate, all parties shall pay their own expenses incurred in connection
herewith and no party hereto shall have any further obligations hereunder;
provided, however, that no such termination shall constitute a waiver by any
party or parties which is not in default of any of his, its or their respective
representations, warranties or covenants herein, of any rights or remedies he,
it or they might have at law if any other party or parties are in default of any
of his, its or their respective representations, warranties or covenants under
this Agreement.
At or prior to the Closing, as conditions thereto,
(a) The Company shall deliver, or cause to be delivered, to the Purchasers:
(i) Newly-issued stock certificates representing 600,000 shares, and
400,000 shares, of Nicklebys Common Stock which are being purchased and acquired
for the account of Xxxxxx and the Trust, respectively, in form and substance
reasonably satisfactory to the Purchasers and their counsel.
(ii) The certified resolutions of the Company's Board of Directors
specified in Section 7.3 (a) below.
(iii) The certificate of the Company specified in Section 7.3(b) below.
(iv) The letters of resignation of the current directors of the Company
specified in Section 7.3 (c) below.
(b) The Purchasers shall deliver to the Company:
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(i) The stock certificates evidencing 1,000,000 Art Exchange Common
Shares owned of record and beneficially by the Purchasers which are being sold,
assigned, transferred and conveyed to the Company, duly executed, endorsed
and/or authenticated for transfer to the Company.
(ii) The certified resolutions of Art Exchange's Board of Directors
specified in Section 7.4 (a) below.
(ii) The certificate of Art Exchange and the Purchasers specified in
Section 7.4 (b) below.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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The Company hereby represents and warrants to Art Exchange and the
Purchasers as follows (it being acknowledged that Art Exchange and the
Purchasers are entering into this Agreement in material reliance upon each of
the following representations and warranties, and that the truth and accuracy of
each of which constitutes a condition precedent to the obligations of Art
Exchange and the Purchasers hereunder):
3.1 Organization and Corporate Power. The Company is a corporation duly
---------------------------------
organized, validly existing and in good standing under the laws of the State of
Colorado, and is duly qualified and in good standing to do business as a foreign
corporation in each jurisdiction in which such qualification is required and
where the failure to be so qualified would have a materially adverse effect upon
the Company. The Company has all requisite corporate power and authority to
conduct its business as now being conducted and to own the personal property
which it now owns. The Articles of Incorporation of the Company, as amended to
date, certified by the Secretary of State of Colorado, and the Bylaws of the
Company, certified by the President and the Secretary of the Company, which have
been delivered to the Purchasers prior to the execution hereof, are true and
complete copies thereof as in effect as of the date of this Agreement.
3.2 Authorization. The Company has full power, legal capacity and
--------------
authority to enter into this Agreement and all attendant documents and
instruments necessary to consummate the transactions herein contemplated; to
issue, sell and deliver the Shares of Nicklebys Common Stock to the Purchasers;
and to perform all of the obligations to be performed by the Company hereunder.
This Agreement and all other agreements, documents and instruments to be
executed in connection herewith by the Company have been effectively authorized
by all necessary action, corporate or otherwise, on the part of the Company,
which authorizations remain in full force and effect and have been duly executed
and delivered by the Company, and no other corporate proceedings on the part of
the Company are required to authorize the execution and delivery of this
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Agreement, such other agreements, documents and instruments and the transactions
contemplated hereby. This Agreement and such other agreements, documents and
instruments have been duly executed and delivered by the Company; constitute the
legal, valid and binding obligation of the Company; and are enforceable with
respect to the Company in accordance with their respective terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
priority or other laws or court decisions relating to or affecting generally the
enforcement of creditors' rights or affecting generally the availability of
equitable remedies. Neither the execution and delivery of this Agreement, the
consummation by the Company of any of the transactions contemplated hereby nor
the compliance by the Company with any of the provisions hereof will (i)
conflict with or result in a breach of, violation of or default under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
lease, credit agreement or other agreement, document, instrument or obligation
(including, without limitation, any of the Company's charter documents) to which
the Company is a party or by which the Company or any of the assets or
properties of the Company may be bound or (ii) violate any judgment, order,
injunction, decree, statute, rule or regulation applicable to the Company or any
of the assets or properties of the Company. To the best knowledge of the
Company, no authorization, consent or approval of any public body or authority
is necessary for the consummation by the Company of the transactions
contemplated by this Agreement.
3.3 Capitalization.
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(a) The authorized capital stock of the Company consists of 30,000,000
shares of common stock, $.0001 par value per share (defined above as the
"Nicklebys Common Stock"), and 3,000,000 shares of preferred stock, $.001 par
value per share (hereinafter referred to as the "Nicklebys Preferred Stock"). At
the date hereof, there are 33,000,000 shares of Nicklebys Common Stock issued
and outstanding, with no shares of Nicklebys Common Stock held in the Company's
treasury and no shares of Nicklebys Preferred Stock outstanding or held in the
Company's treasury. All of the outstanding shares of Nicklebys Common Stock have
been duly authorized and validly issued and are fully-paid and nonassessable.
(b) There are no warrants, options, calls, commitments or other rights to
subscribe for or to purchase from the Company any capital stock of the Company
or any securities convertible into or exchangeable for any shares of capital
stock the Company, or any other securities or agreement pursuant to which the
Company is or may become obligated to issue any shares of its capital stock, nor
is there outstanding any commitment, obligation or agreement on the part of the
Company to repurchase, redeem or otherwise acquire any of the outstanding shares
of Nicklebys Common Stock.
(c) There currently are no rights, agreements or commitments of any
character obligating the Company, contingently or otherwise, to register any
shares of its capital stock under any applicable Federal or state securities
laws.
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3.4 Financial Statements. Attached hereto as Exhibit A are true and
---------------------
complete copies of the financial statements of the Company as of May 31, 1999,
including the unaudited balance sheet as of May 31, 1999 (hereinafter referred
to as the "Nicklebys Balance Sheet"), and the related unaudited statement of
profit and loss for the period from January 13, 1999 (inception) through May 31,
1999, which have been certified to by the chief executive officer and the chief
financial officer of the Company. Such financial statements are herein sometimes
collectively referred to as the "Nicklebys Financial Statements." The Nicklebys
Financial Statements (i) are derived from the books and records of the Company,
which books and records have been consistently maintained in a manner which
reflects, and such books and records do fairly and accurately reflect, the
assets and liabilities of the Company, (ii) fairly and accurately present the
financial condition of the Company on the respective dates of such statements
and the results of its operations for the periods indicated, except as may be
disclosed in the notes thereto, and (iii) have been prepared in all material
respects in accordance with generally accepted accounting principles
consistently applied throughout the periods involved (except as otherwise
disclosed in the notes thereto).
3.5 Subsidiaries. The Company has no subsidiaries and no investments,
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directly or indirectly, or other financial interest in any other corporation or
business organization, joint venture or partnership of any kind whatsoever.
3.6 Absence of Undisclosed Liabilities. Except as and to the extent
-----------------------------------
reflected or reserved against in the Nicklebys Balance Sheet, the Company has no
liability(s) or obligation(s) (whether accrued, to become due, contingent or
otherwise) which individually or in the aggregate could have a materially
adverse effect on its business, assets, properties, condition (financial or
otherwise) or prospects.
3.7 Absence of Certain Developments. Except as described on Exhibit B
--------------------------------
attached hereto and incorporated herein by this reference, since the date of the
Nicklebys Balance Sheet, there has been (i) no materially adverse change in the
condition (financial or otherwise) of the Company or in the assets, liabilities,
properties, business, operations or prospects of the Company; (ii) no
declaration, setting aside or payment of any dividend or other distribution with
respect to the Nicklebys Common Stock or redemption, purchase or other
acquisition of any Nicklebys Common Stock or any split-up or other
recapitalization relative to any Nicklebys Common Stock or any action
authorizing or obligating the Company to do any of the foregoing; (iii) no loss,
destruction or damage to any material property or asset of the Company, whether
or not insured; (iv) no acquisition or disposition of assets (or any contract or
arrangement therefor), or any other transaction by the Company otherwise than
for fair value and in the ordinary course of business; (v) no discharge or
satisfaction by the Company of any lien or encumbrance or payment of any
obligation or liability (absolute or contingent) other than current liabilities
shown on the Nicklebys Balance Sheet, or current liabilities incurred since the
date thereof in the ordinary course of business; (vi) no sale, assignment or
transfer by the Company of any of the tangible or intangible assets of the
Company, cancellation by the Company of any debts, claims or obligations,
mortgage, pledge or satisfaction by the Company of any assets to any lien,
charge, security interest or other encumbrance or waiver by the Company of any
rights of value which, in any such case, is material to the business of the
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Company (whether or not in the ordinary course of business); (vii) no payment of
any bonus to or change in the compensation of any director, officer or employee
of the Company, whether directly or by means of any bonus, pension plan,
contract or commitment; (viii) no write-off or material reduction in the
carrying value of any asset which is material to the business of the Company;
(ix) no disposition or lapse of rights as to any intangible property which is
material to the business of the Company; (x) except for ordinary travel
advances, no loans or extensions of credit to shareholders, officers, directors
or employees of the Company; (xi) no entry into any commitment or transaction by
the Company (including, without limitation, any borrowing or capital
expenditure) involving an amount in excess of $1,000.00; (xii) no issuance of
any capital stock, or of any other security convertible into any of the capital
stock, of the Company; and (xiii) no agreement to do any of the things described
in this Section 3.7.
3.8 Tangible Personal Property. Exhibit B sets forth a complete list of
---------------------------
all items of tangible personal property owned and used by the Company in the
current conduct of its business where the original cost was in excess of
$1,000.00. The Company has, and at the Closing will have, good and marketable
title to, and be in possession of, all such items of personal property owned by
the Company, free and clear of all title defects, mortgages, pledges, security
interests, conditional sales agreements, liens, restrictions or encumbrances
whatsoever.
3.9 Tax Matters. The Company has, since its inception, duly filed all
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Federal, state, county and local tax returns required to have been filed by it
in those jurisdictions where the nature or conduct of its business requires such
filing and where the failure to so file would be materially adverse to the
Company. Copies of all such tax returns have been furnished to the Purchasers
prior to the execution hereof. All Federal, state, county and local taxes,
including but not limited to those taxes due with respect to the Company's
property, income, gross receipts, excise, occupation, franchise, permit,
licenses, sales, payroll and inventory due and payable as of the Closing by the
Company have been paid. No amount is required to be reflected in the Nicklebys
Balance Sheet as a liability or reserve for taxes which are due but not yet
payable and, to the best knowledge of the Company, the Company has no accrued
and unpaid taxes of the types referred to hereinabove.
3.10 Contracts and Commitments. The Company has no contract, agreement,
--------------------------
obligation or commitment, written or verbal, express or implied, which involves
a commitment or liability in excess of $1,000.00 or for a term of more than six
months, and no union contracts, employee or consulting contracts, financing
agreements, debtor or creditor arrangements, licenses, franchise, manufacturing,
distributorship or dealership agreements, leases or bonus, health or stock
option plans, except as described on Exhibit B. True and complete copies of all
such contracts and other agreements listed on Exhibit B have been made available
to the Purchasers prior to the execution hereof. The Company has no knowledge of
any circumstances which would affect the validity or enforceability of any of
such contracts and other agreements in accordance with their respective terms.
The Company has performed and complied in all material respects with all
obligations required to be performed by it to date under, and is not in default
(without giving effect to any required notice or grace period) under, or in
breach of, the terms, conditions or provisions of any of such contracts and
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other agreements. The validity and enforceability of any contract or other
agreement described herein shall not in any manner be affected by the execution
and delivery of this Agreement without any further action.
3.11 Patents, Trade Secrets and Customer Lists. The Company has no
---------------------------------------------
patents, applications for patents, trademarks, applications for trademarks,
trade names, licenses or service marks relating to the business of the Company
except as set forth on Exhibit B hereto, nor does any present or former officer,
director or employee of the Company own any patent rights relating to any
products manufactured, rented or sold by the Company. Except as disclosed on
Exhibit B, the Company has the unrestricted right to use, free and clear of any
claims or rights of others, all trade secrets, customer lists and manufacturing
and secret processes reasonably necessary to the manufacture and marketing of
all products made or proposed to be made by the Company, and the continued use
thereof after the Closing by the Company will not conflict with, infringe upon
or otherwise violate any rights of others. Except as set forth on Exhibit B, the
Company has not used and is not making use of any confidential information or
trade secrets of any present or past employee of the Company.
3.12 No Pending Material Litigation or Proceedings. Except as disclosed
----------------------------------------------
on Exhibit B, there are no actions, suits or proceedings pending, threatened
against or affecting the Company (including actions, suits or proceedings where
liabilities may be adequately covered by insurance) at law or in equity or
before or by any Federal, state, municipal or other governmental department,
commission, court, board, bureau, agency or instrumentality, domestic or
foreign, or affecting any of the officers or directors of the Company in
connection with the business, operations or affairs of the Company, which might
result in any adverse change in the business, properties or assets, or in the
condition (financial or otherwise) of the Company, or which might prevent the
sale of the Nicklebys Common Stock pursuant to this Agreement. The Company has
not, since its inception on January 13, 1999, been threatened with any action,
suit, proceeding or claim (including actions, suits, proceedings or claims where
its liabilities may be adequately covered by insurance) for personal injuries
allegedly attributable to products sold or services performed by the Company
asserting a particular defect or hazardous property in any of the Company's
respective products, services or business practices or methods, nor has the
Company been a party to or threatened with proceedings brought by or before any
Federal or state agency; and the Company has no knowledge of any defect or
hazardous property claimed or actual in any such product, service or business
practice or method. The Company is not subject to any voluntary or involuntary
proceeding under the United States Bankruptcy Code and has not made an
assignment for the benefit of creditors.
3.13 Arrangements with Personnel. Except as set forth on Exhibit B
------------------------------
hereto, no stockholder, director, officer or employee of the Company is a party
to any transaction with the Company, including without limitation any contract,
loan or other agreement or arrangement providing for the furnishing of services
by, the rental of real or personal property from or to or otherwise requiring
loans or payments to, any such stockholder, director, officer or employee, or to
any member of the family of any of the foregoing, or to any corporation,
partnership, trust or other entity in which any stockholder, director, officer
or employee of the Company or any member of the family of any of them has a
substantial interest or is an officer, director, trustee, partner or employee.
There is set forth on Exhibit B a list showing (i) the name, title, date and
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amount of last compensation increase, and aggregate compensation, including
amounts paid or accrued pursuant to any bonus, pension, profit sharing,
commission, deferred compensation or other plans or arrangements in effect as of
the date of this Agreement, of each officer, employee, agent or contractor of
the Company who received salary and/or other compensation from the Company, as
well as any employment agreements relating to any such persons; (ii) all powers
of attorney from the Company to any person or entity; (iii) the name of each
person or entity authorized to borrow money or incur or guarantee indebtedness
on behalf of the Company; (iv) all safes, vaults and safe deposit boxes
maintained by or on behalf of the Company and the names of all persons
authorized to have access thereto; and (v) all bank and savings accounts of the
Company and the names of all persons who are authorized signatories with respect
to such accounts, the capacities in which they are authorized and the terms of
their authorizations.
3.14 Labor Relations. The Company has no obligations under any collective
----------------
bargaining agreement or other contract with a labor union, under any employment
contract or consulting agreement or under any executive's compensation plan,
agreement or arrangement, nor is any union or labor organization presently
seeking the right to enter into collective bargaining with the Company. The
Company has furnished to the Purchasers a copy of all written personnel
policies, including without limitation vacation, severance, bonus, pension,
profit sharing and commissions policies.
3.15 Compliance with Laws. To the best knowledge of the Company, the
---------------------
Company holds all licenses, franchises, permits and authorizations necessary for
the lawful conduct of its business as presently conducted, and has complied with
all applicable statutes, laws, ordinances, rules and regulations of all
governmental bodies, agencies and subdivisions having, asserting or claiming
jurisdiction over it, with respect to any part of the conduct of its business
and corporate affairs.
3.16 Relationships with Customers and Suppliers. No present customer
--------------------------------------------
or substantial supplier to the Company has indicated an intention to terminate
or materially and adversely alter its existing business relationship with the
Company and the Company has no reason to believe that any of its present
customers or substantial suppliers intends to do so.
3.17 Brokerage. The Company has no obligation to any person or entity
----------
for brokerage commissions, finders' fees or similar compensation in connection
with the transactions contemplated by this Agreement.
3.18 Investment Representation. The Company has the knowledge and
---------------------------
experience in business and financial matters to meaningfully evaluate the merits
and risks of the issuance and sale of the Shares of Nicklebys Common Stock in
exchange and consideration for the Art Exchange Common Shares as contemplated
hereby. The Company shall conduct an independent review of the business, assets,
properties, books and records of Art Exchange for the purpose of satisfying
itself as to the truth, accuracy and completeness of the representations and
warranties made by the Purchasers. The Company understands and acknowledges that
the Art Exchange Common Shares were originally issued to the Purchasers and will
be sold and transferred to the Company in the transactions contemplated hereby
without registration or qualification or other filings being made under the U.S.
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Securities Act of 1933, as amended, or any applicable state securities or "Blue
Sky" law, in reliance upon specific exemptions therefrom, and in furtherance
thereof the Company represents that the Art Exchange Common Shares will be taken
and received by the Company for its account for investment, with no present
intention of a distribution or disposition thereof to others. The Company
further acknowledges and agrees that the certificates representing the Art
Exchange Common Shares transferred to the Company shall be subject to a
stop-transfer order and shall bear a restrictive legend, in substantially the
following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
ARE "RESTRICTED SECURITIES," AND MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT OR IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY, IS NOT REQUIRED TO BE REGISTERED UNDER
THE ACT."
3.19 Disclosure. Neither this Agreement, nor any certificate, exhibit
-----------
or other written document or statement, furnished to the Purchasers by the
Company in connection with the transactions contemplated by this Agreement
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to be stated in order to make the
statements contained herein or therein not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ART EXCHANGE AND THE
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PURCHASERS
----------
Art Exchange and the Purchasers hereby jointly and severally represent and
warrant to the Company as follows (it being acknowledged that the Company is
entering into this Agreement in material reliance upon each of the following
representations and warranties, and that the truth and accuracy of each of which
constitutes a condition precedent to the obligations of the Company hereunder):
4.1 Authorization.
--------------
(a) Art Exchange has full power,legal capacity and authority to enter into
this Agreement and all attendant documents and instruments necessary to
consummate the transactions herein contemplated; and to perform all of the
obligations to be performed by Art Exchange hereunder. This Agreement and all
other agreements, documents and instruments to be executed in connection
herewith by Art Exchange have been effectively authorized by all necessary
action, corporate or otherwise, on the part of Art Exchange, which
authorizations remain in full force and effect and have been duly executed and
delivered by Art Exchange and/or the Purchasers, and no other corporate
proceedings on the part of Art Exchange are required to authorize the execution
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and delivery of this Agreement, such other agreements, documents and instruments
and the transactions contemplated hereby. This Agreement and such other
agreements, documents and instruments have been duly executed and delivered by
Art Exchange and the Purchasers; constitute the legal, valid and binding
obligation of Art Exchange and the Purchasers; and are enforceable with respect
to Art Exchange and the Purchasers in accordance with their respective terms,
except as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, priority or other laws or court decisions relating to or
affecting generally the enforcement of creditors' rights or affecting generally
the availability of equitable remedies. Neither the execution and delivery of
this Agreement, the consummation by Art Exchange of any of the transactions
contemplated hereby nor the compliance by Art Exchange with any of the
provisions hereof will (i) conflict with or result in a breach of, violation of
or default under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, lease, credit agreement or other agreement,
document, instrument or obligation (including, without limitation, any of Art
Exchange's charter documents) to which Art Exchange is a party or by which Art
Exchange or any of the assets or properties of Art Exchange may be bound or (ii)
violate any judgment, order, injunction, decree, statute, rule or regulation
applicable to Art Exchange or any of the assets or properties of Art Exchange.
To the best knowledge of Art Exchange and the Purchasers, no authorization,
consent or approval of any public body or authority is necessary for the
consummation by Art Exchange of the transactions contemplated by this Agreement.
(b) The Purchasers have full power, legal capacity and authority to enter
into this Agreement and all attendant documents and instruments necessary to
consummate the transactions herein contemplated; to sell, assign, transfer,
convey and deliver the Art Exchange Common Shares to the Company; and to perform
all of the obligations to be performed by them hereunder. All agreements,
documents and instruments to be executed in connection herewith by Art Exchange
have been effectively authorized by all necessary action, corporate or
otherwise, on the part of Art Exchange, which authorizations remain in full
force and effect and have been duly executed and delivered by Art Exchange, and
no other corporate proceedings on the part of Art Exchange are required to
authorize the execution and delivery of such agreements, documents and
instruments. This Agreement has been duly executed and delivered by the
Purchasers, constitutes the legal, valid and binding obligation of the
Purchasers and is enforceable with respect to the Purchasers in accordance with
its terms, except as enforcement hereof may be limited by bankruptcy,
insolvency, reorganization, priority or other laws or court decisions relating
to or affecting generally the enforcement of creditors' rights or affecting
generally the availability of equitable remedies. Neither the execution and
delivery of this Agreement nor the consummation by the Purchasers and Art
Exchange of any of the transactions contemplated hereby, or compliance by the
Purchasers and Art Exchange with any of the provisions hereof, will (i) conflict
with or result in a breach of, violation of or default under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license, lease,
credit agreement or other agreement, document, instrument or obligation
(including, without limitation, any of Art Exchange's charter documents) to
which either the Purchasers or Art Exchange are parties or by which either the
Purchasers or Art Exchange or any of the assets or properties of either the
Purchasers or Art Exchange may be bound or (ii) violate any judgment, order,
injunction, decree, statute, rule or regulation applicable to either the
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Purchasers or Art Exchange or any of the assets or properties of either the
Purchasers or Art Exchange. To the best knowledge of the Purchasers and Art
Exchange, no authorization, consent or approval of any public body or authority
is necessary for the consummation by the Purchasers and Art Exchange of the
transactions contemplated by this Agreement.
4.2 Ownership of Art Exchange. The Purchasers owns 1,000,000 Art
-----------------------------
Exchange Common Shares, constituting all of the issued and outstanding shares of
capital stock of Art Exchange, free and clear of (i) any lien, charge, mortgage,
pledge, conditional sale agreement or other encumbrance of any kind or nature
whatsoever and (ii) any claim as to ownership thereof or any rights, powers or
interest therein by any third party, whether legal or beneficial, and whether
based on contract, proxy or other document or otherwise. All of the Art Exchange
Common Shares have been duly authorized and validly issued and are fully-paid
and nonassessable. Except as set forth in this Section 4.2, there are no
warrants, options, calls, commitments or other rights to subscribe for or to
purchase from Art Exchange any capital stock of Art Exchange or any securities
convertible into or exchangeable for any shares of capital stock of Art
Exchange, or any other securities or agreement pursuant to which Art Exchange is
or may become obligated to issue any shares of its capital stock, nor is there
outstanding any commitment, obligation or agreement on the part of Art Exchange
to repurchase, redeem or otherwise acquire any of the outstanding shares of Art
Exchange.
4.3 Organization and Corporate Power. Art Exchange is a corporation duly
---------------------------------
organized, validly existing and in good standing under the laws of the State of
Colorado, and is duly qualified and in good standing to do business as a foreign
corporation in each jurisdiction in which such qualification is required and
where the failure to be so qualified would have a materially adverse effect upon
Art Exchange. Art Exchange has all requisite corporate power and authority to
conduct its business as now being conducted and to own and lease the properties
which it now owns and leases. The Articles of Incorporation of Art Exchange,
certified by the Secretary of State of Colorado, and the Bylaws of Art Exchange,
certified by the President and the Secretary of Art Exchange, which have been
delivered to the Company prior to the execution hereof, are true and complete
copies thereof as in effect as of the date of this Agreement.
4.4 Financial Statements. Attached hereto as Exhibit C is a true and
---------------------
complete copy of the financial statements of Art Exchange as of June 28, 1999,
including the unaudited balance sheet as of June 28, 1999 (hereinafter referred
to as the "Art Exchange Balance Sheet"), and the related unaudited statement of
profit or loss for the period from June 3, 1999 (inception) through June 28,
1999, which have been certified to by the chief executive officer and the chief
financial officer of Art Exchange. Such financial statements are herein
sometimes collectively referred to as the "Art Exchange Financial Statements."
The Art Exchange Financial Statements (i) are derived from the books and records
of Art Exchange, which books and records have been consistently maintained in a
manner which reflects, and such books and records do fairly and accurately
reflect, the assets and liabilities of Art Exchange, (ii) fairly and accurately
present the financial condition of Art Exchange on the respective dates of such
statements and the results of its operations for the periods indicated, except
as may be disclosed in the notes thereto, and (iii) have been prepared in all
material respects in accordance with generally accepted accounting principles
-11-
consistently applied throughout the periods involved (except as otherwise
disclosed in the notes thereto).
4.5 Subsidiaries. Art Exchange has no subsidiaries and no investments,
-------------
directly or indirectly, or other financial interest in any other corporation or
business organization, joint venture or partnership of any kind whatsoever.
4.6 Absence of Undisclosed Liabilities. Except as and to the extent
--------------------------------------
reflected or reserved against in the Art Exchange Balance Sheet, and as to
matters arising in the ordinary course of the business of Art Exchange since the
date of the Art Exchange Balance Sheet which are disclosed on Exhibit D hereto,
Art Exchange has no liability(s) or obligation(s) (whether accrued, to become
due, contingent or otherwise) which individually or in the aggregate could have
a materially adverse effect on the business, assets, properties, condition
(financial or otherwise) or prospects of Art Exchange.
4.7 Absence of Certain Developments. Except as described on Exhibit D,
--------------------------------
since the date of the Art Exchange Balance Sheet, there has been (i) no
materially adverse change in the condition (financial or otherwise) of Art
Exchange or in the assets, liabilities, properties, business, operations or
prospects of either corporation; (ii) no declaration, setting aside or payment
of any dividend or other distribution with respect to the Art Exchange Common
Shares or redemption, purchase or other acquisition of any Art Exchange Common
Shares or any split-up or other recapitalization relative to any Art Exchange
Common Shares or any action authorizing or obligating Art Exchange to do any of
the foregoing; (iii) no loss, destruction or damage to any material property or
asset of Art Exchange, whether or not insured; (iv) no acquisition or
disposition of assets (or any contract or arrangement therefor), or any other
transaction by Art Exchange otherwise than for fair value and in the ordinary
course of business; (v) no discharge or satisfaction by Art Exchange of any lien
or encumbrance or payment of any obligation or liability (absolute or
contingent) other than current liabilities shown on the Art Exchange Balance
Sheet, or current liabilities incurred since the date thereof in the ordinary
course of business; (vi) no sale, assignment or transfer by Art Exchange of any
of the tangible or intangible assets of either corporation, cancellation by Art
Exchange of any debts, claims or obligations, or mortgage, pledge, satisfaction
of any assets to any lien, charge, security interest or other encumbrance or
waiver by Art Exchange of any rights of value which, in any such case, is
material to the business of Art Exchange (whether or not in the ordinary course
of business); (vii) no payment of any bonus to or change in the compensation of
any director, officer or employee of Art Exchange, whether directly or by means
of any bonus, pension plan, contract or commitment and no change in employee
compensation, whether directly or by means of any bonus, pension plan, contract
or commitment; (viii) no write-off or material reduction in the carrying value
of any asset which is material to the business of Art Exchange; (ix) no
disposition or lapse of rights as to any intangible property which is material
to the business of Art Exchange; (x) except for ordinary travel advances, no
loans or extensions of credit to shareholders, officers, directors or employees
of Art Exchange; (xi) no entry into any commitment or transaction by Art
Exchange (including, without limitation, any borrowing or capital expenditure)
involving an amount in excess of $1,000.00; (xii) no issuance of any capital
stock, or of any other security convertible into any of the capital stock, of
-12-
Art Exchange; or (xiii) any agreement to do any of the things described in this
Section 4.7.
4.8 Tangible Personal Property. Exhibit D sets forth a complete list of
---------------------------
all items of tangible personal property owned or leased and used by Art Exchange
in the current conduct of its business where the original cost was in excess of
$1,000.00. Art Exchange has, and at the Closing will have, good and marketable
title to, and be in possession of, all such items of personal property owned by
it, free and clear of all title defects, mortgages, pledges, security interests,
conditional sales agreements, liens, restrictions or encumbrances whatsoever.
4.9 Tax Matters. Art Exchange has, since its inception, duly filed all
------------
Federal, state, county and local tax returns required to have been filed by it
in those jurisdictions where the nature or conduct of its business requires such
filing and where the failure to so file would be materially adverse to Art
Exchange. Copies of all such tax returns have been furnished to the Company
prior to the execution hereof. All Federal, state, county and local taxes,
including but not limited to those taxes due with respect to Art Exchange's
properties, income, gross receipts, excise, occupation, franchise, permit,
licenses, sales, payroll and inventory due and payable as of the Closing by Art
Exchange have been paid. No amount is required to be reflected in the Art
Exchange Balance Sheet as a liability or reserve for taxes which are due but not
yet payable are sufficient for the payment of all accrued and unpaid taxes of
the types referred to hereinabove.
4.10 Contracts and Commitments. Art Exchange has no contract, agreement,
--------------------------
obligation or commitment, written or verbal, express or implied, which involves
a commitment or liability in excess of $1,000.00 or for a term of more than six
months, and no union contracts, employee or consulting contracts, financing
agreements, debtor or creditor arrangements, licenses, franchise, manufacturing,
distributorship or dealership agreements, leases or bonus, health or stock
option plans, except as described on Exhibit D. True and complete copies of all
such contracts and other agreements listed on Exhibit D have been made available
to the Company prior to the execution hereof. Neither Art Exchange nor the
Purchasers has any knowledge of any circumstances which would affect the
validity or enforceability of any of such contracts and other agreements in
accordance with their respective terms. Art Exchange and the Purchasers have
performed and complied in all material respects with all obligations required to
be performed by them to date under, and are not in default (without giving
effect to any required notice or grace period) under, or in breach of, the
terms, conditions or provisions of any of such contracts and other agreements.
The validity and enforceability of any contract or other agreement described
herein shall not in any manner be affected by the execution and delivery of this
Agreement without any further action.
4.11 Patents, Trade Secrets and Customer Lists. Art Exchange does not
--------------------------------------------
have any patents, applications for patents, trademarks, applications for
trademarks, trade names, licenses or service marks relating to the business of
Art Exchange except as set forth on Exhibit D hereto, nor does any present or
former officer, director or employee of Art Exchange own any patent rights
relating to any products manufactured, rented or sold by Art Exchange. Except as
disclosed on Exhibit D, Art Exchange has the unrestricted right to use, free and
clear of any claims or rights of others, all trade secrets, customer lists and
-13-
manufacturing and secret processes reasonably necessary to the manufacture and
marketing of all products made or proposed to be made by Art Exchange, and the
continued use thereof after the Closing by Art Exchange and will not conflict
with, infringe upon or otherwise violate any rights of others. Except as set
forth on Exhibit D, Art Exchange has not used and is not making use of any
confidential information or trade secrets of any present or past employee of Art
Exchange.
4.12 No Pending Material Litigation or Proceedings. Except as disclosed
----------------------------------------------
on Exhibit D, there are no actions, suits or proceedings pending or threatened
against or affecting Art Exchange (including actions, suits or proceedings where
liabilities may be adequately covered by insurance) at law or in equity or
before or by any Federal, state, municipal or other governmental department,
commission, court, board, bureau, agency or instrumentality, domestic or
foreign, or affecting any of the officers or directors of Art Exchange in
connection with the business, operations or affairs of Art Exchange, which might
result in any adverse change in the business, properties or assets, or in the
condition (financial or otherwise) of Art Exchange, or which might prevent the
sale of the Art Exchange Common Shares pursuant to this Agreement. Except as
disclosed on Exhibit D, Art Exchange has not, during the three (3) years prior
to the Closing Date, been threatened with any action, suit, proceeding or claim
(including actions, suits, proceedings or claims where its liabilities may be
adequately covered by insurance) for personal injuries allegedly attributable to
products sold or services performed by Art Exchange asserting a particular
defect or hazardous property in any of Art Exchange's respective products,
services or business practices or methods, nor has Art Exchange been a party to
or threatened with proceedings brought by or before any Federal or state agency;
and the Company has no knowledge of any defect or hazardous property claimed or
actual in any such product, service or business practice or method. Art Exchange
is not subject to any voluntary or involuntary proceeding under the United
States Bankruptcy Code and has not made an assignment for the benefit of
creditors.
4.13 Arrangements with Personnel. Except as set forth on Exhibit D
------------------------------
hereto, no stockholder, director, officer or employee is presently a party to
any transaction with Art Exchange, including without limitation any contract,
loan or other agreement or arrangement providing for the furnishing of services
by, the rental of real or personal property from or to, or otherwise requiring
loans or payments to, any such stockholder, director, officer or employee, or to
any member of the family of any of the foregoing, or to any corporation,
partnership, trust or other entity in which any stockholder, director, officer
or employee or any member of the family of any of them has a substantial
interest or is an officer, director, trustee, partner or employee. There is set
forth on Exhibit D a list showing (i) the name, title, date and amount of last
compensation increase, and aggregate compensation, including amounts paid or
accrued pursuant to any bonus, pension, profit sharing, commission, deferred
compensation or other plans or arrangements in effect as of the date of this
Agreement, of each officer, employee, agent or contractor of Art Exchange whose
salary and other compensation, in the aggregate, received from Art Exchange or
accrued is at an annual rate (or aggregated for the most recently completed
fiscal year) in excess of $1,000.00, as well as any employment agreements
relating to any such persons; (ii) all powers of attorney from Art Exchange to
any person or entity; (iii) the name of each person or entity authorized to
borrow money or incur or guarantee indebtedness on behalf of Art Exchange; (iv)
all safes, vaults and safe deposit boxes maintained by or on behalf of Art
-14-
Exchange and the names of all persons authorized to have access thereto; and (v)
all bank and savings accounts of Art Exchange and the names of all persons who
are authorized signatories with respect to such accounts, the capacities in
which they are authorized and the terms of their authorizations.
4.14 Compliance with Laws. To the best knowledge of Art Exchange and
-----------------------
the Purchasers, Art Exchange holds all licenses, franchises, permits and
authorizations necessary for the lawful conduct of its business as presently
conducted, and has complied with all applicable statutes, laws, ordinances,
rules and regulations of all governmental bodies, agencies and subdivisions
having, asserting or claiming jurisdiction over said corporations, with respect
to any part of the conduct of its businesses and corporate affairs.
4.15 Brokerage. Neither the Purchasers nor Art Exchange has any
----------
obligation to any person or entity for brokerage commissions, finders' fees or
similar compensation in connection with the transactions contemplated by this
Agreement.
4.16 Investment Representation. The Purchasers and Art Exchange, through
--------------------------
the Purchasers, have the knowledge and experience in business and financial
matters to meaningfully evaluate the merits and risks of the purchase and
acquisition of the Shares of Nicklebys Common Stock in exchange and
consideration for the issuance and sale of the Art Exchange Common Shares as
contemplated hereby. The Purchasers and Art Exchange shall conduct an
independent review of the business, assets, properties, books and records of the
Company for the purpose of satisfying themselves as to the truth, accuracy and
completeness of the representations and warranties made by the Company. The
Purchasers understand and acknowledge that the Nicklebys Common Stock to be
issued, sold, assigned, transferred, conveyed and/or delivered to them in the
transactions contemplated hereby will be issued, sold, assigned, transferred,
conveyed and/or delivered by the Company without registration or qualification
or other filings being made under the U.S. Securities Act of 1933, as amended,
or any applicable state securities or "Blue Sky" law, in reliance upon specific
exemptions therefrom, and in furtherance thereof the Purchasers represent that
the shares of Nicklebys Common Stock will be taken and received by them for
their own accounts for investment, with no present intention of a distribution
or disposition thereof to others. The Purchasers, severally and not jointly,
further acknowledge and agree that the certificates representing the shares of
Nicklebys Common Stock issued and sold to them shall be subject to a
stop-transfer order and shall bear a restrictive legend, in substantially the
following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
ARE "RESTRICTED SECURITIES," AND MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT OR IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY, IS NOT REQUIRED TO BE REGISTERED UNDER
THE ACT."
-15-
4.17 Disclosure. Neither this Agreement, nor any certificate, exhibit
-----------
or other written document or statement, furnished to the Company by the
Purchasers or Art Exchange in connection with the transactions contemplated by
this Agreement contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact necessary to be stated in order
to make the statements contained herein or therein not misleading.
ARTICLE 5
OBLIGATIONS OF THE COMPANY PRIOR TO CLOSING
-------------------------------------------
The Company hereby covenants to and agrees with Art Exchange and the
Purchasers that between the date hereof and the Closing:
5.1 Access to Properties and Records.
---------------------------------
(a) The Company shall give to Art Exchange, the Purchasers and their
authorized representatives full access, during reasonable business hours, in
such a manner as not unduly to disrupt normal business activities, to any and
all of the premises, properties, contracts, books, records and affairs of the
Company, and will cause the officers of the Company to furnish any and all data
and information pertaining to the business of the Company that Art Exchange, the
Purchasers and their authorized representatives may from time to time reasonably
require.
(b) Unless and until the transactions contemplated by this Agreement have
been consummated, the Purchasers, Art Exchange and their representatives shall
hold in confidence all information so obtained and if the transactions
contemplated hereby are not consummated will return all documents hereinabove
referred to and obtained from the Company or its officers. Such obligation of
confidentiality shall not extend to any information which is shown to have been
previously (i) known to the Purchasers or Art Exchange; (ii) generally known to
others engaged in the trade or business of the Company; (iii) part of public
knowledge or literature; or (iv) lawfully received by the Purchasers, Art
Exchange or their authorized representatives from a third party.
5.2 Corporate Existence, Rights and Franchises. The Company shall take
-------------------------------------------
all necessary actions to maintain in full force and effect the corporate
existence, rights, franchises and good standing of the Company. No change shall
be made in the Articles of Incorporation, as amended, or Bylaws of the Company.
5.3 Conduct of Business in the Ordinary Course. The Company shall
-----------------------------------------------
not permit to be done any act which would result in the breach of any of the
covenants of the Company contained herein or which would cause the
representations and warranties of the Company contained herein to become untrue
or inaccurate as of any date subsequent to the date hereof. Without limiting the
generality of the foregoing, the Company shall take all necessary actions to (i)
operate its business diligently in the ordinary course of business as an ongoing
concern and will use their best efforts to preserve intact the Company's
organization and operations at current levels, to retain the services of the
Company's present employees and to preserve the Company's relationships with its
-16-
suppliers and customers and others having business relationships with the
Company; (ii) maintain in good operating condition, ordinary wear and tear
excepted, all of the Company's assets and properties which are in such condition
as of the date hereof; (iii) maintain the books, accounts and records of the
Company in the usual, regular and ordinary manner on a basis consistent with
past practice in recent periods; (iv) refrain from entering into any contract,
agreement, sales order, lease, capital expenditure or other commitment of a
value in excess of $1,000.00 (other than purchases of raw materials and sales of
inventory in the ordinary course of business), or from modifying, amending,
canceling or terminating any of such contracts, agreements, leases or other
commitments presently in force, except as expressly contemplated by this
Agreement, without the prior approval of Art Exchange and the Purchasers (which
approval shall not be unreasonably withheld and which may be verbal to be
followed by written confirmation); (v) refrain from paying any bonus to any
employee, officer or director and from declaring or paying any dividend, or
making any other distribution in respect of, or from redeeming, the Nicklebys
Common Stock; and (vi) refrain from issuing any capital stock of the Company or
any other securities convertible into such capital stock.
ARTICLE 6
OBLIGATIONS OF ART EXCHANGE AND THE PURCHASERS PRIOR TO CLOSING
---------------------------------------------------------------
Art Exchange and the Purchasers hereby jointly and severally covenant to
and agree with the Company that between the date hereof and the Closing:
6.1 Access to Properties and Records.
---------------------------------
(a) The Purchasers shall cause Art Exchange to give to the Company and its
authorized representatives full access, during reasonable business hours, in
such a manner as not unduly to disrupt normal business activities, to any and
all of the premises, properties, contracts, books, records and affairs of Art
Exchange, and will cause the officers of Art Exchange to furnish any and all
data and information pertaining to the business of Art Exchange that the Company
and its authorized representatives may from time to time reasonably require.
(b) Unless and until the transactions contemplated by this Agreement have
been consummated, the Company and its representatives shall hold in confidence
all information so obtained and if the transactions contemplated hereby are not
consummated will return all documents hereinabove referred to and obtained from
Art Exchange or the officers of Art Exchange. Such obligation of confidentiality
shall not extend to any information which is shown to have been previously (i)
known to the Company; (ii) generally known to others engaged in the trade or
business of Art Exchange; (iii) part of public knowledge or literature; or (iv)
lawfully received by the Company or its authorized representatives from a third
party.
6.2 Corporate Existence, Rights and Franchises. The Purchasers shall
---------------------------------------------
take all necessary actions to cause Art Exchange to maintain in full force and
-17-
effect the corporate existence, rights, franchises and good standing of Art
Exchange. No change shall be made in the Articles of Incorporation, as amended,
or Bylaws, as amended, of Art Exchange.
6.3 Conduct of Business in the Ordinary Course. The Purchasers shall
--------------------------------------------
not permit to be done any act which would result in the breach of any of the
covenants of the Purchasers or Art Exchange contained herein or which would
cause the representations and warranties of the Purchasers or Art Exchange
contained herein to become untrue or inaccurate as of any date subsequent to the
date hereof. Without limiting the generality of the foregoing, the Purchasers
shall take all necessary actions to cause Art Exchange to (i) operate its
business diligently in the ordinary course of business as an ongoing concern and
will use his best efforts to preserve intact Art Exchange's organization and
operations at current levels, to retain the services of Art Exchange's present
employees and to preserve Art Exchange's relationships with its suppliers and
customers and others having business relationships with Art Exchange; (ii)
maintain in good operating condition, ordinary wear and tear excepted, all of
Art Exchange's assets and properties which are in such condition as of the date
hereof; (iii) maintain the books, accounts and records of Art Exchange in the
usual, regular and ordinary manner on a basis consistent with past practice in
recent periods; (iv) refrain from entering into any contract, agreement, sales
order, lease, capital expenditure or other commitment of a value in excess of
$1,000.00 (other than purchases of raw materials and sales of inventory in the
ordinary course of business), or from modifying, amending, canceling or
terminating any of such contracts, agreements, leases or other commitments
presently in force, except as expressly contemplated by this Agreement, without
the prior approval of the Company (which approval shall not be unreasonably
withheld and which may be verbal to be followed by written confirmation); (v)
refrain from paying any bonus to any employee, officer or director and from
declaring or paying any dividend, or making any other distribution in respect
of, or from redeeming, the Art Exchange Common Shares; and (vi) refrain from
issuing any capital stock of Art Exchange or any other securities convertible
into such capital stock.
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
--------------------------------------------
The respective obligations of the parties hereto to consummate the
transactions contemplated hereby shall be subject to the fulfillment, at or
prior to the Closing, of the following conditions:
7.1 Regulatory Approvals. There shall have been obtained any and
----------------------
all permits, approvals and qualifications of, and there shall have been made or
completed all filings, proceedings and waiting periods required by, any
governmental body, agency or regulatory authority which, in the reasonable
opinion of counsel to the Company, Art Exchange and the Purchasers, are required
for the consummation of the transactions contemplated hereby.
7.2 No Action or Proceeding. No claim, action, suit, investigation or
-------------------------
other proceeding shall be pending or threatened before any court or governmental
-18-
agency which presents a substantial risk of the restraint or prohibition of the
transactions contemplated by this Agreement or the obtaining of material damages
or other relief in connection therewith.
7.3 Obligations of Art Exchange and the Purchasers. The obligations of
-----------------------------------------------
Art Exchange and the Purchasers hereunder to consummate the transactions
contemplated by this Agreement are expressly subject to the satisfaction of each
of the further conditions set forth below, any or all of which may be waived by
Art Exchange and the Purchasers, jointly and not severally, in whole or in part
without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by Art Exchange or the Purchasers of any other
condition or of any of their rights or remedies, at law or in equity, if the
Company shall be in default or breach of any of its representations, warranties
or covenants under this Agreement:
(a) Art Exchange and the Purchasers, severally and not jointly, shall have
received copies of resolutions (certified as of the date of the Closing as being
in full force and effect by an appropriate officer of the Company) duly adopted
by the Board of Directors of the Company adopting and approving this Agreement,
which shall be in form and substance reasonably satisfactory to Art Exchange and
the Purchasers and their counsel.
(b) The Company shall have performed the agreements and covenants required
to be performed by it under this Agreement prior to the Closing, and there shall
have been no material adverse change in the condition (financial or otherwise),
assets, liabilities, earnings or business of the Company since the date hereof,
and the representations and warranties of the Company contained herein shall,
except as contemplated or permitted by this Agreement or as qualified in a
writing dated as of the Closing Date delivered by the Company to Art Exchange
and the Purchasers, with the approval of Art Exchange and the Purchasers
indicated thereon (which writing is to be attached hereto as Exhibit E), be true
in all material respects on and as of the Closing Date as if made on and as of
such date, and Art Exchange and the Purchasers, severally and not jointly, shall
have received a certificate, dated as of the Closing Date, signed by the chief
executive officer and the chief financial officer of the Company, reasonably
satisfactory to Art Exchange and the Purchasers, to such effect.
(c) The directors of the Company shall have resigned their positions as
Company directors effective as of the Closing Date after one or more of said
directors has caused the election of the slate of directors proposed by Art
Exchange and the Purchasers.
7.4 Obligations of the Company. The obligation of the Company hereunder
---------------------------
to consummate the transactions contemplated by this Agreement is expressly
subject to the satisfaction of each of the further conditions set forth below,
any or all of which may be waived by the Company, in whole or in part without
prior notice; provided, however, that no such waiver of a condition shall
constitute a waiver by the Company of any other condition or of any of its
rights or remedies, at law or in equity, if the Purchasers or Art Exchange shall
be in default or breach of any of their representations, warranties or covenants
under this Agreement:
(a) The Company shall have received copies of resolutions certified as of
the date of the Closing as being in full force and effect by an appropriate
-19-
officer of the Company) duly adopted by the Board of Directors of Art Exchange
adopting and approving this Agreement, which shall be in form and substance
reasonably satisfactory to the Company and its counsel.
(b) The Purchasers and Art Exchange shall have performed the agreements and
covenants required to be performed by them under this Agreement prior to the
Closing, and there shall have been no material adverse change in the condition
(financial or otherwise), assets, liabilities, earnings or business of Art
Exchange since the date hereof, and the representations and warranties of the
Purchasers and Art Exchange contained herein shall, except as contemplated or
permitted by this Agreement or as qualified in a writing dated as of the Closing
Date delivered by the Purchasers and Art Exchange to the Company, with the
approval of the Company indicated thereon (which writing is to be attached
hereto as Exhibit F), be true in all material respects on and as of the Closing
Date as if made on and as of such date, and the Company shall have received a
certificate, dated as of the Closing Date, signed by the chief executive officer
and the chief financial officer of Art Exchange and by the Purchasers,
reasonably satisfactory to the Company, to such effect.
ARTICLE 8
ADDITIONAL AGREEMENTS OF THE PARTIES
------------------------------------
8.1 Taxes and Expenses.
-------------------
(a) Except as otherwise expressly provided in subsection (b) immediately
below, the Company, on the one hand, and Art Exchange and the Purchasers, on the
other hand, shall each pay all of their own respective taxes, attorneys' fees
and other costs and expenses payable in connection with or as a result of the
transactions contemplated hereby and the performance and compliance with all
agreements and conditions contained in this Agreement respectively to be
performed or observed by each of them.
(b) The Company shall pay any and all Colorado taxes, if any, which become
due on account of the issuance, sale and delivery of the Shares of Nicklebys
Common Stock to the Purchasers.
8.2 Expiration of Representations and Warranties.
---------------------------------------------
(a) The representations and warranties of the Company contained herein and
in any other document or instrument delivered by or on behalf of the Company, as
such may be qualified in Exhibit E, shall survive the Closing and any
investigations made by or on behalf of Art Exchange or the Purchasers prior
thereto, and shall remain in full force and effect for a period of three (3)
months after the date of Closing (the "Warranty Period") and thereupon expire.
(b) The representations and warranties of the Purchasers and Art Exchange
contained herein and in any other document or instrument delivered by or on
behalf of them, as such may be qualified in Exhibit F, shall survive the Closing
-20-
and any investigations made by or on behalf of the Company prior thereto, and
shall remain in full force and effect for a period of three (3) months after the
date of Closing (the "Purchasers' Warranty Period") and thereupon expire.
8.3 Indemnification. The Purchasers, jointly and severally, hereby
----------------
agree to indemnify and hold the Company harmless with respect to any and all
claims, losses, damages, obligations, liabilities and expenses, including,
without limitation, reasonable legal and other costs and expenses of
investigating and defending any actions or threatened actions, which the Company
may incur or suffer following the Closing by reason of any breach of any of the
representations and warranties of the Purchasers or Art Exchange contained
herein, during the Purchasers's Warranty Period following the Closing during
which any such representation and warranty shall survive as provided herein,
provided that the Company comply with the following indemnification procedure:
(i) The Company shall give written notice to the Purchasers of a claim
for indemnification within the Purchasers' Warranty Period; which notice
shall set forth the amount involved in the claim for indemnification and
contain a reasonably thorough description of the facts constituting the
basis of such claim.
(ii) The Purchasers shall have a period of thirty (30) days from the
receipt of the notice referred to above to respond to the indemnity claim
to the mutual satisfaction of the Company and the Purchasers.
(iii) If a third party claim is asserted which might result in a claim
for indemnification hereunder, all information within the Company's
knowledge or control relevant and material to the defense of any such claim
shall promptly be made available to the Purchasers and their authorized
representatives, and the Company shall otherwise cooperate with the
Purchasers in the defense of the claim. The Company shall not settle or
compromise any such claim without the prior written consent of the
Purchasers unless suit shall have been instituted against the Company and
the Purchasers shall have failed, after reasonable notice of institution of
the suit, to take control of such suit as provided below. If the Purchasers
admit in writing that they will be liable to the Company with respect to
the full amount and as to all material elements of a third party claim
alleging damages, should the third party prevail in such suit, the
Purchasers shall have the right to assume full control of the defense of
such claim. Otherwise, the Company shall have and retain the right to
control the defense of such claim, and the Purchasers shall be entitled to
participate in the defense of such claim only with the consent of the
Company.
ARTICLE 9
MISCELLANEOUS
-------------
9.1 Other Documents. Each of the parties hereto shall execute and
-----------------
deliver such other and further documents and instruments, and take such other
and further actions, as may be reasonably requested of him or it for the
-21-
implementation and consummation of this Agreement and the transactions herein
contemplated.
9.2 Parties in Interest. This Agreement shall be binding upon and inure
--------------------
to the benefit of the parties hereto, and the heirs, personal representatives,
successors and assigns of all of them, but shall not confer, expressly or by
implication, any rights or remedies upon any other party.
9.3 Governing Law. This Agreement is made and shall be governed in all
--------------
respects, including validity, interpretation and effect, by the laws of the
State of Colorado.
9.4 Notices. All notices, requests or demands and other communications
--------
hereunder must be in writing and shall be deemed to have been duly made if
personally delivered or mailed, postage prepaid, to the parties as follows:
(a) If to the Company, to:
Xxxxxxxxx.xxx, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx #000
Xxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxx, President and Chief Executive Officer
With copies to:
Xxxxxxxx Xxxx, Esq.
Xxxx & Associates
0000 Xxxxxxx Xxxxxx, Xxxxx #0000
Xxxxxx, Xxxxxxxx 00000
(b) If to Art Exchange or the Purchasers, to:
Art Exchange, Inc.
0000 Xxxxx Xxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxx, President and Chief Executive Officer
With copies to:
Xxxx Xxxxxx, Esq.
0000 Xxxxx Xxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Any party hereto may change his or its address by written notice to the other
parties given in accordance with this Section 9.4.
-22-
9.5 Entire Agreement. This Agreement and the exhibits attached hereto
-----------------
contain the entire agreement between and among the parties and supersede all
prior agreements, understandings and writings between or among the parties with
respect to the subject matter hereof and thereof. Each party hereto acknowledges
that no representations, inducements, promises or agreements, verbal or
otherwise, have been made by any party, or anyone acting with authority on
behalf of any party, which are not embodied herein or in an exhibit hereto, and
that no other agreement, statement or promise may be relied upon or shall be
valid or binding. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated verbally. This Agreement may be amended or any
term hereof may be changed, waived, discharged or terminated by an agreement in
writing signed by all parties hereto.
9.6 No Equitable Conversion. Prior to the Closing, neither the
--------------------------
execution of this Agreement nor the performance of any provision contained
herein shall cause any party hereto to be or become liable in any respect for
the operations of the business of any other party, or the condition of property
owned by any other party, for compliance with any applicable laws, requirements
or regulations of, or taxes, assessments or other charges now or hereafter due
to, any governmental authority or for any other charges or expenses whatsoever
pertaining to the conduct of the business or the ownership, title, possession,
use or occupancy of any other party.
9.7 Headings. The captions and headings used herein are for convenience
---------
only and shall not be construed as part of this Agreement.
9.8 Attorneys' Fees. In the event of any litigation between or among
-----------------
the parties hereto, the non-prevailing party or parties shall pay the reasonable
expenses, including but not limited to the attorneys' fees, of the prevailing
party or parties in connection therewith.
9.9 Counterparts. This Agreement may be executed in counterparts, each
-------------
of which shall be deemed an original but all of which taken together shall
constitute but one and the same document.
9.10 IN WITNESS THEREOF, the parties hereto have duly executed and
delivered this Agreement as of the day and year first above written.
THE COMPANY:
ATTEST: XXXXXXXXX.XXX, INC.
By: /s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxx X. Xxxxx
------------------------------ --------------------------------------
Xxxxx X.Xxxxxxxx, Secretary Xxxxx X. Xxxxx, Chief Executive Officer
-23-
Attached to and incorporated in that certain Stock Purchase and Exchange
Agreement dated June 25, 1999, between and among Xxxxxxxxx.xxx, Inc., on the one
hand, and Art Exchange, Inc., Xxxx X. Xxxxxx and the Xxxxxx Family Trust, on the
other hand.
THE PURCHASERS:
THE XXXXXX FAMILY TRUST
/s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxx
-------------------------------- -----------------------------
Xxxx X. Xxxxxx, Individually Xxxx X. Xxxxxx, Trustee
ART EXCHANGE:
ATTEST: ART EXCHANGE, INC.
By: /s/ Xxxx Xxxxxx By: /s/ Xxxx X. Xxxxxx
------------------------------ ------------------------------
Xxxx Xxxxxx, Secretary Xxxx X. Xxxxxx, President
-24-
EXHIBIT A
(Page 1 of 3)
Xxxxxxxxx.Xxx, Inc.
-------------------
8/22/99 Balance Sheet
-------------
As of May 31, 1999
May 31, '99
-----------------
ASSETS
Current Assets
Checking/Savings
checking - 1st Bank 9,713.97
Nicklebys MMKT 272,607.15
------------
Total Checking/Savings 262,321.12
Other Current Assets
merchandise inventory 56,812.25
------------
Total Other Current Assets 56,812.25
------------
Total Current Assets 339,133.37
Fixed Assets
Office Equipment 3,615.80
Software 312.40
Accum. Depreciation - Office -218.09
Accum. Depreciation - Software -26.04
------------
Total Fixed Assets 3,684.07
Other Assets
Web Site 20,000.00
Accum. Amort. - Website -333.33
Mailing List 2,500.00
Accum. Amort. - Mail. List -41.67
Organization Costs 7,500.00
Accum. Amort. - Org. Costs -375.00
Prepaid Marketing 22,185.32
------------
Total Other Assets 51,435.32
TOTAL ASSETS 384,262.75
============
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Other Current Liabilities
Accounts Payable - Trade 585.01
Payroll Liabilities
Federal Withholding Payable 770.38
Medicare Payable 220.97
Social Security Payable 944.76
Colorado Withholding Payable 561.09
Unemployment Taxes Payable 395.60
------------
Total Payroll Liabilities 2,892.60
Sales Tax Payable 2,612.51
------------
Total Other Current Liabilities 6,290.32
------------
Total Current Liabilities 6,290.32
------------
Total Liabilities 6,290.32
Equity
Capital Stock 420,000.00
Net Income -32,037.56
------------
Total Equity 387,982.44
------------
TOTAL LIABILITIES & EQUITY 384,252.76
============
Page 1
EXHIBIT A
(Page 2 of 3)
Xxxxxxxxx.Xxx, Inc.
-------------------
8/22/99 Profit and Loss
---------------
January through May 1999
Jan-May '99
-----------------
Ordinary Income/Expense
Income
Auction sales 79,227.58
Consulting 4,953.45
Internet sales 27,937.14
Retail sales 53,288.00
--------------
Total Income 165,384.17
Cost of Goods Sold
Purchases - merchandise 146,645.22
Purchases - consigned merch. 41,888.28
Purchaese - training 5,854.00
Purchases - inventory adjustment -56,812.25
--------------
Total COGS 140,575.25
--------------
Gross Profit 24,808.92
Expense
Amortization 750.00
Advertising 6,040.85
Bank Service Charges 351.91
Contract labor 568.00
Credit Card Discount Charge 579.36
Depreciation Expense 244.13
Freight 252.71
Licenses and Permits 178.00
Miscellaneous 0.22
Payroll Expenses
Officer Salary 14,000.00
Auction commissions 3,769.88
Payroll Expenses - Other 0.00
--------------
Total Payroll Expenses 17,789.88
Postage and Delivery 473.36
Printing and Reproduction 2,445.57
Professional Fees
Legal Fees 0.00
Web and Computer design 750.00
--------------
Total Professional Fees 750.00
Rent 1,532.63
Repairs
Building Repairs 135.89
--------------
Total Repairs 135.89
Supplies
Marketing 20,908.09
Office 204.52
--------------
Total Supplies 21,112.61
Taxes
Federal Income Tax 13.63
Payroll Taxes 1,810.37
--------------
Total Taxes 1,824.00
Telephone 990.48
Travel & Ent
Entertainment 221.57
Travel 4,910.38
--------------
Total Travel & Ent 5,131.95
Uncategorized Expenses 0.00
--------------
Total Expense 61,131.55
--------------
Net Ordinary Income -36,322.63
Page 1
EXHIBIT A
(Page 3 of 3)
Xxxxxxxxx.Xxx, Inc.
-------------------
8/22/99 Profit and Loss
---------------
January through May 1999
Jan-May '99
-----------------
Other Income/Expense
Other Income
Interest Income 3,570.10
Shipping to Buyer 714.97
Transfer of funds 0.00
--------------
Total Other Income 4,285.07
--------------
Net Other Income 4,285.07
--------------
Net Income -32,837.58
==============
Page 2
EXHIBIT B
3.7(xi) Commitments and transactions by the Company (including, without
limitation, any borrowing or capital expenditure) involving an amount
in excess of $1,000.00:
3.8 Items of tangible personal property owned and used by the Company in
the current conduct of its business where the original cost was in
excess of $1,000.00:
3.10 Contracts, agreements, obligations and commitments, written or verbal,
express or implied, which involve a commitment or liability in excess
of $1,000.00 or for a term of more than six months, and employee and
consulting agreements, licenses, distributorship and dealership
agreements and leases:
Exhibit C
(Page 1 of 2)
ART EXCHANGE, INC.
(A Development Stage Company)
BALANCE SHEET (Unaudited)
June 28,
1999
----
ASSETS
Current Assets: $ -0-
Plant, Property and Equipment: -0-
Other Assets:
Organization costs - net 49
Assumed name, "auction" customer mailing list and
non-exclusive live auction rights to consigned goods 99
--
Total Other Assets 148
---
TOTAL ASSETS $ 148
-----
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities: $ -0-
Stockholders' Equity:
Preferred Stock, $.001 par value;
3,000,000 shares authorized;
none issued -0-
Common Stock, $.0001 par value;
30,000,000 shares authorized;
issued and outstanding
1,000,000 shares 100
Additional paid-in capital 50
Deficit accumulated during
the development stage (2)
----
Total Stockholders' Equity $ 148
-----
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 148
-----
Exhibit C
(Page 2 of 2)
ART EXCHANGE, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS (Unaudited)
For the Period as Noted
June 3, 1999
(inception)
through June
28, 1999
--------
Revenues: $ -0-
Costs and Expenses:
Amortization 2
---
Net (Loss) from
Operations (2)
Other Income
(Expense) -0-
Net (Loss) for
the Period $ (2)
--------
(Loss) Per Share of
Common Stock $ (.00)
Weighted Average
Shares of Common
Stock Outstanding 1,000,000
---------
EXHIBIT D
4.10 Art Exchange obtained, pursuant to that certain Asset Purchase and Sale
Agreement dated June 25, 1999 (the "Agreement"), between Art Exchange and
Museum Auctions, Ltd., now known as Gallery Denver, Inc. ("Gallery
Denver"), the non-exclusive right to conduct live auctions of originals and
reproductions of fine art, antiques and collectibles marketed and sold by
Gallery Denver on consignment; for the provision of which services Gallery
Denver has agreed to pay Art Exchange auction sales commissions, as
provided in Articles XVIII of the Agreement and that certain. Agreement for
Auction Sales Commissions between the parties dated July 28, 1999, in the
amount of twenty-five per cent (25%) of the aggregate sales price of all
such consigned goods marketed and sold by Gallery Denver via live auction
conducted by Art Exchange from time-to-time from and after July 28, 1999.
4.11 Art Exchange purchased, pursuant to the Agreement, the assumed name of
"Museum Auctions, Ltd." in Colorado and all rights to Gallery Denver's
"auction" customer mailing list; which list, however, includes some or all
of the names on Gallery Denver's "gallery" customer mailing list which will
continue to be utilized by Gallery Denver and/or its affiliates.
EXHIBIT E
7.3(b) There is no response which is required to this Section.
EXHIBIT F
7.4(b) There is no response which is required to this Section.
