BRING DOWN AGREEMENT AND AMENDMENT
THIS
BRING DOWN AGREEMENT AND AMENDMENT (the “Agreement”) is made effective September
25, 2007 by and among SPORTSQUEST, INC., a Delaware corporation (the “Issuer”),
XXXXXX-XXXXXX ENTERTAINMENT, INC., a California corporation (the “Company”),
ZCE, INC., a California corporation (“ZCE”), XXXXX XXXXX (“Xxxxx”) and XXXX
XXXXXXXX XXXXX (“Xxxxx” and together with ZCE and Xxxxx, the
“Members”).
RECITALS
|
A.
|
The
Issuer, the Company, ZCE and Q-C Entertainment, LLC (“Q-C”) entered into
that Agreement for the Exchange of Common Stock dated August 20,
2007 (the
“Exchange Agreement”), pursuant to which ZCE and Q-C agreed to sell 100%
of the capital stock of the Company to the Issuer for the consideration
set forth in the Exchange
Agreement.
|
|
B.
|
Q-C
has become an inactive limited liability company in the State of
Washington. Its sole members are Xxxxx and Xxxxx and, as such, they
have
assumed Q-C’s rights, obligations and liabilities. The parties desire that
Xxxxx and Xxxxx assume the rights, obligations and liabilities of
Q-C
under the Exchange Agreement. All references to “Q-C” under the Exchange
Agreement shall mean Xxxxx and Xxxxx, and all references to the “Members”
under the Exchange Agreement shall mean ZCE, Xxxxx and
Xxxxx.
|
|
X.
|
Xxxxxx-Xxxxxx
Entertainment, LLC, a California limited liability company (the “LLC”),
converted to the Company on September 11, 2007. The capital stock
of the
Company has been issued as follows: 65% to ZCE and 35% to Xxxxx and
Xxxxx,
collectively. All references to the Company in this Agreement mean
the LLC
as converted to the Company.
|
|
D.
|
The
Issuer, the Company and the Members desire to bring down the
representations and warranties set forth in the Exchange Agreement
and to
amend certain provisions of the Exchange
Agreement.
|
|
E.
|
Except
as otherwise defined herein, all capitalized terms used herein shall
have
the meaning provided such terms in the Exchange
Agreement.
|
NOW,
THEREFORE,
in
consideration of the mutual promises, covenants, and representations contained
herein, and other good and valuable consideration, the parties, intending to
be
legally bound, hereby agree as follows:
1. The
Issuer’s Bring Down.
The
Issuer represents and warrants as follows:
(a) Except
as set forth on attached Schedule
1(a)
or in
any documents filed by the Issuer with the SEC, each of the representations
and
warranties of the Issuer contained in the Exchange Agreement are true, complete
and correct in all material respects as of the date of Closing.
(b) The
Issuer has performed and complied in all material respects with all provisions
of the Exchange Agreement required to be performed or complied with by the
Issuer before or at Closing.
2. The
Company’s Bring Down.
The
Company and the Members, jointly and severally, represent and warrant as
follows:
(a) Each
of the representations and warranties of the Company and the Members contained
in the Exchange Agreement are true, complete and correct in all material
respects as of the date of Closing.
(b) The
Company and the Members have performed and complied in all material respects
with all provisions of the Exchange Agreement required to be performed or
complied with by them before or at Closing.
(c) The
parties hereto agree and acknowledge that all references to the Company in
this
Agreement mean the LLC as converted to the Company.
3. Survival.
None of
the representations or warranties contained
in the Exchange Agreement, this Agreement or in any exhibit, schedule,
certificate, agreement or statement delivered pursuant thereto or hereto, shall
survive the Closing.
4. Amendment.
The
parties hereby agree to amend the Exchange Agreement as follows:
(a) All
references to “Q-C” in the Exchange Agreement shall mean Xxxxx and Xxxxx, and
all references to the “Members” in the Exchange Agreement shall mean ZCE, Xxxxx
and Xxxxx.
(b) All
references to “Shareholder” in the Exchange Agreement shall be replaced with the
“Members”.
(c) All
references to “Issuer Shares” in the Exchange Agreement mean those shares of
common stock of the Issuer, $0.0001 par value, issued to the Members under
the
Exchange Agreement in consideration for their stock of the Company.
(d) The
warrants to be issued to the Members under the Exchange Agreement (the
“Warrants”) and the shares issuable on exercise of the Warrants shall be
included in the representations, agreements and understandings made or
acknowledged by the Members in Section 4 of the Exchange Agreement.
(e) All
references to a “Pledge Agreement” in the Exchange Agreement are hereby
deleted.
2
(f) The
Exchange Agreement provides in Section 1(ii) that the Issuer shall pay ZCE
the
sum of $150,000 in cash at Closing (the “Closing Cash Payment”). The parties
acknowledge that the Closing Cash Payment was intended to be used to pay off
certain debts of the Company (the “Debt”). The parties hereby agree to amend the
Exchange Agreement to provide that the Closing Cash Payment shall not be paid
to
ZCE at Closing. Instead, the Exchange Agreement is hereby amended to provide
that the Issuer shall assume the Debt at Closing since it will be purchasing
100% of the stock of the Company, and the Debt will be serviced according to
the
current monthly schedule in the interim. The Issuer shall pay off the Debt
in
full on the closing of the sale of callable secured convertible notes in the
aggregate principal amount of $500,000 to AJW Master Fund, Ltd., AJW Partners,
LLC and New Millennium Capital Partners II, LLC (collectively, “NIR”), pursuant
to that Securities Purchase Agreement dated August 16, 2007 among the Issuer
and
NIR, which closing shall occur within five business days after the declaration
of effectiveness of the Form SB-2 Registration Statement filed by the Issuer
with the SEC on September 14, 2007.
(g) Xxxx
Xxxxxx and the Members shall deliver bank signature cards and other appropriate
documentation on the existing bank account(s) of the Company on or before the
Closing and take any and all steps required to transfer signatory authority
to
designated representatives of Issuer to Issuer’s satisfaction.
5. Miscellaneous.
(a) Amendment.
Except
as
modified by this Agreement, the Exchange Agreement shall remain in full force
and effect.
(b) Captions
and Headings.
The
headings throughout this Agreement are for convenience and reference only and
shall in no way be deemed to define, limit or add to the meaning of any
provision of this Agreement.
(c) No
Oral Change.
This
Agreement and any provision hereof may not be waived, changed, modified or
discharged orally, but only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification or discharge is
sought.
(d) Non
Waiver.
Except
as otherwise expressly provided herein, no waiver of any covenant, condition
or
provision of this Agreement shall be deemed to have been made unless expressly
in writing and signed by the party against whom such waiver is charged; and
(1)
the failure of any party to insist in any one or more cases upon the performance
of any of the provisions, covenants or conditions of this Agreement or to
exercise any option herein contained shall not be construed as a waiver or
relinquishment for the future of any such provisions, covenants or conditions;
(2) the acceptance of performance of any thing required by this Agreement to
be
performed with knowledge of the breach or failure of a covenant, condition
or
provision hereof shall not be deemed a waiver of such breach or failure; and
(3)
no waiver of any party of one breach by another party shall be construed as
a
waiver with respect to any subsequent breach.
3
(e) Entire
Agreement.
This
Agreement and the Exchange Agreement and any
exhibit, schedule, certificate, agreement or statement delivered pursuant hereto
or thereto
contains
the entire agreement and understanding among the parties hereto and supersedes
all prior agreements and understandings.
(f) Notices.
All
notices, requests, demands, and other communications under this Agreement shall
be in writing and shall be deemed to have been duly given on the third day
after
mailing if mailed to the party to whom notice is to be given, by first class
mail, registered or certified, postage prepaid, and properly addressed, as
follows:
Issuer:
000
Xxxxxxxxxxxxx Xxxxxxx, 0xx Xxxxx
Xxxx
Xxxx, Xxxxxxx 00000
Attention:
R. Xxxxxx Xxxx, CEO
The
Members:
Xxxx
Xxxxxx
00000
Xxxxxxx Xxxxx
Xxxxxxx,
Xxxxxxxxxx 00000
(g) Governing
Law.
This
Agreement and the Exchange Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia without giving effect
to any choice or conflict of law provision or rule (whether of the Commonwealth
of Virginia or any other jurisdiction) that would cause the application of
the
laws of any jurisdiction other than the Commonwealth of Virginia.
(h) Counterparts.
This
Agreement may be executed simultaneously in one or more counterparts, each
of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Signatures which are transmitted by facsimile
or
electronic mail shall be deemed original signatures.
[SIGNATURE
PAGE TO FOLLOW]
4
IN
WITNESS WHEREOF, the undersigned have executed this Bring Down Agreement and
Amendment as of the date first written above.
| Xxxxxx-Xxxxxx Entertainment, Inc. | |||
| By: | By: | ||
|
Xxxx
Xxxxxx, President and CEO
|
R.
Xxxxxx Xxxx, President and CEO
|
ZCE,
Inc.
By:
______________________________
Name:
____________________________
Title:
_____________________________
______________________________
Xxxxx
Xxxxx
______________________________
Xxxx
Xxxxxxxx Xxxxx
5
Schedule
1(a)
Section
1(i):
The total issued and outstanding shares of common stock, $0.0001 par value
per
share, of the Issuer at Closing shall be 11,077,922 shares.
Section
2(i):
11,077,922 shares of the Issuer’s common stock are issued and
outstanding
Section
2(iii):
1. On
August 10, 1993, the Issuer entered into an agreement with Air Brook Limousine,
Inc. (“Air Brook Limo”) that stipulated that Air Brook Limo would fund the
Issuer’s operations for as long as Air Brook Limo deemed necessary and as long
as Air Brook Limo was financially able. Such advances were due on demand. Air
Brook Limo could terminate this arrangement at any time at its own discretion,
which it did on August 16, 2007.
2. On
August 16, 2007, Lextra Management Group, Inc. (“Lextra”) acquired 51.16% of the
Issuer’s issued and outstanding common stock and an outstanding accounts
receivable due to Air Brook Limo by the Issuer in the amount of $340,000. On
August 16, 2007, the Issuer issued 6,800,000 shares of common stock to Lextra
in
exchange for the forgiveness of the $340,000 receivable.
3. On
August 16, 2007, the Issuer entered into a Securities Purchase Agreement and
certain ancillary agreements by and among the Issuer and AJW Partners, LLC,
AJW
Master Fund, Ltd. and New Millennium Capital Partners II, LLC (collectively,
the
“Investors”) under which the Issuer has agreed to issue an aggregate $1,500,000
of callable secured convertible notes to the Investors and warrants to purchase
10,000,000 shares of the Issuer’s common stock at an exercise price of $0.25 at
any time through August 16, 2014. Under
the
agreement, the Issuer received $500,000 on August 16, 2007, $500,000 will be
disbursed within five business days of the filing of a registration statement
filed on September 14, 2007, and $500,000 will be disbursed when the
registration statement becomes effective. The
notes
accrue interest at a rate of 8% per year, require quarterly interest payments
in
certain circumstances related to the market price of the Issuer’s common stock
and are due and payable on August 16, 2010. The notes are convertible into
common stock of the Issuer at a discount to the then current fair market value
of the Issuer’s common stock. The
Issuer granted the Investors certain registration rights as set forth in the
Registration Rights Agreement, dated August 16, 2007.
4. On
August 21, 2007, the Issuer acquired all of the assets of Lextra pursuant to
an
Asset Purchase Agreement dated August 21, 2007, in exchange for the issuance
of
2,000,000 shares of common stock to Lextra and the forgiveness of the Issuer’s
$500,000 loan to Lextra, which it made to Lextra on August 16, 2007. The assets
of Lextra were transferred to the Issuer’s wholly-owned subsidiary, SportsQuest
Management Group, Inc., effective August 29, 2007.
6
5. On
August 17, 2007, the Issuer entered into a Stock Issuance, Assumption and
Release Agreement with Greens Worldwide Incorporated (“GRWW”) and AJW Partners,
LLC, AJW Offshore, Ltd., AJW Qualified Partners, LLC and New Millennium Capital
Partners II, LLC. The transaction closed August 17, 2007. Pursuant to the
agreement, GRWW issued 390,000 shares of its Series A Convertible Preferred
Stock, par value $10.00 per share, which shares are convertible into 249,600,000
shares of its common stock, to the Issuer in exchange for the Issuer’s
assumption of 50% of GRWW’s indebtedness to the four investors referenced above.
Under the terms of the agreement, the four investors released GRWW from its
obligations. In consideration for such release, the Issuer issued to the
Investors, callable secured convertible notes with an aggregate face amount
of
$3,903,750, including interest, and GRWW issued to the Investors callable
secured convertible notes with an aggregate face amount of $3,903,750, including
interest. Such notes are due and payable on March 22, 2010, and the notes issued
by the Issuer are convertible into common stock of the Issuer at a 75% discount
to the then current fair market value of the Issuer’s common stock. The terms of
the preferred stock entitle the Issuer to elect a majority of the members of
the
GRWW board of directors. In addition, the Issuer’s ability to vote its shares of
preferred stock on an as-converted basis assures its control of any matters
presented to the holders of GRWW common stock.
6. On
August
23, 2007, the Issuer entered into an Investment Agreement and a Registration
Rights Agreement with Dutchess Private Equities Fund, Ltd. (“Dutchess”) relating
to equity financing in the amount of $50,000,000. The Issuer received a
commitment from Dutchess to
purchase up to $50,000,000 of the Issuer’s common stock at a seven percent
discount to market for
a
period of 36
months.
Pursuant to the agreement, the equity funding commitment may not be utilized
by
the Issuer until it files a registration statement and such registration
statement is declared effective by the SEC.
Section
2(iv):
See disclosure under Section
2(iii)
above.
Section
2(vii):
See disclosure listed under Section
2(iii)
above.
Section
2(x):
|
1.
|
The
Issuer amended and restated its Bylaws on August 16,
2007.
|
|
2.
|
See
disclosure under Section
2(iii)
above.
|
7
