STOCK PURCHASE AGREEMENT
Exhibit
12.1
This
Stock Purchase Agreement (“Agreement”) is made as of April 7, 2005, by
8 Holdings LLC, a Colorado limited liability company (“8 Holdings,” or the
“Purchaser”), Metaphor Corp., a Nevada corporation (“Metaphor”), and Xxxx X.
Xxxx, an individual (“Xx. Xxxx”).
RECITALS
A. Metaphor
desires to sell and issue, and the Purchaser desires to purchase, shares of
the
common stock of Metaphor that will be equal to, in the aggregate, 66.82% of
the
issued and outstanding shares of Metaphor immediately after such purchase,
for
the consideration and on the terms set forth in this Agreement; and
B. In
order
to induce the Purchaser to enter into this Agreement, and as additional
consideration therefore, Metaphor and Xx. Xxxx desires to make certain
agreements contained in this Agreement.
AGREEMENT
In
consideration of the premises and the covenants and representations set forth
herein, and for other good and valuable consideration, the parties, intending
to
be legally bound, agree as follows:
| 1. |
DEFINITIONS
|
For
purposes of this Agreement, the following terms have the meanings specified
or
referred to in this Section 1:
“ABCI”
-- as
defined in Section 3.1(c).
“ABCI
Merger”--
as
defined in Section 3.1(c).
“Accounts
Receivable”
-- as
defined in Section 3.6.
“Balance
Sheet”--as
defined in Section 3.4(b).
“Breach”--a
“Breach”
of a
representation, warranty, covenant, obligation, or other provision of this
Agreement or any instrument delivered pursuant to this Agreement will be deemed
to have occurred if there is or has been (a) any inaccuracy in or breach of,
or
any failure to perform or comply with, such representation, warranty, covenant,
obligation, or other provision, or (b) any claim (by any Person) or other
occurrence or circumstance that is or was inconsistent with such representation,
warranty, covenant, obligation, or other provision, and the term “Breach” means
any such inaccuracy, breach, failure, claim, occurrence, or
circumstance.
“Xxxx
Lock-Up Agreement”
-- as
defined in Section 2.4(a)(vi).
“Xxxx
Note”
-- as
defined in Section 2.4(a)(v).
“Closing”--
as
defined in Section 2.3.
“Closing
Date”
-- the
date and time as of which the Closing actually takes place.
“Consent”--
any
approval, consent, ratification, waiver, or other authorization (including
any
Governmental Authorization).
“Consideration”
-- as
defined in Section 2.2.
“Contemplated
Transactions”--
all of
the transactions contemplated by this Agreement, including the following: (a)
the issuance of the Shares by Metaphor to the Purchaser or its designees; (b)
the execution, delivery, and performance of the Escrow Agreement, the JMAX
Consulting Agreement, the Xxxx Note, and the Xxxx Lock-Up Agreement; (c) the
performance by the Purchaser and Metaphor of their respective covenants and
obligations under this Agreement; and (d) the Purchaser’s acquisition and
ownership of the Shares and exercise of control over Metaphor.
“Contract”--
any
agreement, lease, license, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
“Damages”--
as
defined in Section 10.2.
“Encumbrance”--
any
charge, claim, community property interest, condition, equitable interest,
lien,
option, pledge, security interest, right of first refusal, or restriction of
any
kind, including any restriction on use, voting, transfer, receipt of income,
or
exercise of any other attribute of ownership.
“Environment”--
soil,
land surface or subsurface strata, surface waters (including navigable waters,
ocean waters, streams, ponds, drainage basins, and wetlands), groundwater,
drinking water supply, stream sediments, ambient air (including indoor air),
plant and animal life, and any other environmental medium or natural
resource.
“Environmental,
Health, and Safety Liabilities”--
any
cost, damages, expense, liability, obligation, or other responsibility arising
from or under Environmental Law or Occupational Safety and Health Law and
consisting of or relating to:
(a) any
environmental, health, or safety matters or conditions (including on-site or
off-site contamination, occupational safety and health, and regulation of
chemical substances or products);
(b) fines,
penalties, judgments, awards, settlements, legal or administrative proceedings,
damages, losses, claims, demands and response, investigative, remedial, or
inspection costs and expenses
arising
under
Environmental Law or Occupational Safety and Health Law;
(c) financial
responsibility under Environmental Law or Occupational Safety and Health Law
for
cleanup costs or corrective action, including any investigation, cleanup,
removal, containment, or other
remediation
or response actions required by applicable Environmental Law or Occupational
Safety and Health Law (whether or not such actions have been required or
requested by any
Governmental
Body or any other Person) and for any natural resource damages; or
(d) any
other
compliance, corrective, investigative, or remedial measures required under
Environmental Law or Occupational Safety and Health Law.
The
terms
“removal,”“remedial,” and “response action,” include the types of activities
covered by the United States Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. § 9601 et seq., as amended.
“Environmental
Law”--
any
Legal Requirement that requires or relates to:
(a) advising
appropriate authorities, employees, and the public of intended or actual
releases of pollutants or hazardous substances or materials, violations of
discharge limits, or other prohibitions and
of
the
commencements of activities, such as resource extraction or construction, that
could have significant impact on the Environment;
(b) preventing
or reducing to acceptable levels the release of pollutants or hazardous
substances or materials into the Environment;
(c) reducing
the quantities, preventing the release, or minimizing the hazardous
characteristics of wastes that are generated;
(d) assuring
that products are designed, formulated, packaged, and used so that they do
not
present unreasonable risks to human health or the Environment when used or
disposed of;
(e) protecting
resources, species, or ecological amenities;
(f) reducing
to acceptable levels the risks inherent in the transportation of hazardous
substances, pollutants, oil, or other potentially harmful
substances;
(g) cleaning
up pollutants that have been released, preventing the threat of release, or
paying the costs of such clean up or prevention; or
(h) making
responsible parties pay private parties, or groups of them, for damages done
to
their health or the Environment, or permitting self-appointed representatives
of
the public interest to recover
for
injuries
done to public assets.
“Escrow
Agent”
- shall
mean Xxxxxx Xxxxx LLP or such other Person as the parties hereto may
select.
“Escrow
Agreement”
- as
defined in Section 2.4(a).
“Exchange
Act”
-- the
Securities Exchange Act of 1934, as amended, or any successor law, and
regulations and rules issued pursuant to that Act or any successor
law.
“Financing”--
gross
proceeds raised by equity and/or convertible debt funding in an amount of at
least $15,000,000, a majority of which will be expended on or before the Closing
for the Media Acquisition and the
Contemplated
Transactions, together with costs of the Media Acquisition and the Contemplated
Transactions.
“GAAP”--
generally accepted United States accounting principles.
“Governmental
Authorization”--
any
approval, consent, license, permit, waiver, or other authorization issued,
granted, given, or otherwise made available by or under the authority of any
Governmental Body or pursuant
to
any
Legal Requirement.
“Governmental
Body”--
any:
(a) nation,
state, county, city, town, village, district, or other jurisdiction of any
nature;
(b) federal,
state, local, municipal, foreign, or other government;
(c) governmental
or quasi-governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or other
tribunal);
(d) multi-national
organization or body; or
(e) body
exercising, or entitled to exercise, any administrative, executive, judicial,
legislative, police, regulatory, or taxing authority or power of any
nature.
“Hazardous
Materials”--
any
waste or other substance that is listed, defined, designated, or classified
as,
or otherwise determined to be, hazardous, radioactive, or toxic or a pollutant
or a contaminant under or pursuant to
any
Environmental Law, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos-containing materials.
“Indemnified
Persons”--
as
defined in Section 10.2.
“IRC”--
the
Internal Revenue Code of 1986 or any successor law, and regulations issued
by
the IRS pursuant to the Internal Revenue Code or any successor law.
“IRS”--
the
United States Internal Revenue Service or any successor agency, and, to the
extent relevant, the United States Department of the Treasury.
“JMAX
Consulting Agreement”
-- as
defined in Section 2.5(a)(iv).
“Knowledge”-
a human
being, including, but not limited to, Xxxx X. Xxxx, will be deemed to have
“Knowledge” of a particular fact or other matter if such individual is actually
aware of such fact or other matter or should
have
known about such fact or matter based on the information in that individual’s
possession or made available to him. A Person (other than a human being) will
be
deemed to have “Knowledge” of a particular fact or other
matter
if
any individual who is serving, or who has at any time served, as a director,
officer, partner, executor, or trustee of such Person (or in any similar
capacity) has, or at any time had, Knowledge of such fact or other
matter.
“Legal
Requirement”--
any
federal, state, local, municipal, foreign, international, multinational, or
other administrative order, constitution, law, ordinance, principle of common
law, regulation, statute, or treaty.
“Listed
Liabilities”
-- as
defined in Section 2.5(b)(iii).
“Media
Acquisition”-
means
the acquisition by Metaphor pursuant to the Media Acquisition
Agreement.
“Media
Acquisition Agreement”
- means
that certain Sale and Purchase Agreement to be entered into by and among
Metaphor, Hong Kong Huicong International Group Limited, and the other parties
named
therein, substantially
in the form attached hereto as Exhibit A.
“Metaphor”--
as
defined in the first paragraph of this Agreement.
“Metaphor
Closing Documents”
-- as
defined in Section 3.2(a).
“Metaphor
Common Stock”
-- as
defined in Section 3.3(a).
“Metaphor
Disclosure Schedule”--
the
disclosure schedule delivered by Metaphor to the Purchaser concurrently with
the
execution and delivery of this Agreement.
“Xx.
Xxxx”
-- as
defined in the first paragraph of this Agreement
“Occupational
Safety and Health Law”--
any
Legal Requirement designed to provide safe and healthful working conditions
and
to reduce occupational safety and health hazards, and any program, whether
governmental
or
private (including those promulgated or sponsored by industry associations
and
insurance companies), designed to provide safe and healthful working
conditions.
“Order”--
any
award, decision, injunction, judgment, order, ruling, subpoena, or verdict
entered, issued, made, or rendered by any court, administrative agency, or
other
Governmental Body or by any arbitrator.
“Ordinary
Course of Business”--
an
action taken by a Person will be deemed to have been taken in the “Ordinary
Course of Business” only if:
(a) such
action is consistent with the past practices of such Person and is taken in
the
ordinary course of the normal day-to-day operations of such Person;
(b) such
action is not required to be authorized by the board of directors of such Person
(or by any Person or group of Persons exercising similar authority);
and
(c) such
action is similar in nature and magnitude to actions customarily taken, without
any authorization by the board of directors (or by any Person or group of
Persons exercising similar authority), in
the
ordinary
course of the normal day-to-day operations of other Persons that are in the
same
line of business as such Person.
“Organizational
Documents”--
the
articles or certificate of incorporation and the bylaws of a corporation, or
the
articles or certificate of organization and the limited liability company
agreement of a limited liability
company,
and any amendment thereto.
“Person”--
any
individual, corporation (including any non-profit corporation), general or
limited partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union, or other entity or
Governmental
Body.
“Proceeding”--
any
action, arbitration, audit, hearing, investigation, litigation, or suit (whether
civil, criminal, administrative, investigative, or informal) commenced, brought,
conducted, or heard by or before, or otherwise
involving,
any Governmental Body or arbitrator.
“Reporting
Expenses”
- as
defined in Section 2.7 of this Agreement.
“Required
Documents”
- as
defined in Section 11.16 of this Agreement.
“SEC”
-- the
Securities and Exchange Commission.
“SEC
Documents”
-- as
defined in Section 3.4(a) of this Agreement.
“Securities
Act”--
the
Securities Act of 1933, as amended, or any successor law, and regulations and
rules issued pursuant to that Act or any successor law.
“Shares”--
as
defined in Section 2.1 of this Agreement
“Tax
Return”--
any
return (including any information return), report, statement, schedule, notice,
form, or other document or information filed with or submitted to, or required
to be filed with or submitted to, any
Governmental
Body in connection with the determination, assessment, collection, or payment
of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal
Requirement
relating to any Tax.
“Threatened”--
a
claim, Proceeding, dispute, action, or other matter will be deemed to have
been
“Threatened” if any demand or statement has been made (orally or in writing) or
any notice has been given (orally or in
writing),
or if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced,
taken,
or
otherwise pursued in the future.
| 2. |
SALE
AND TRANSFER OF SHARES; ESCROW
CLOSING
|
2.1 Shares
.
Subject
to the terms and conditions of this Agreement, at the Closing Metaphor will
sell
and transfer to the Purchaser and/or its designees a number of shares of
Metaphor Common Stock equal to, in the aggregate, 66.82% of the Metaphor Common
Stock issued and outstanding immediately subsequent to Closing (the “Shares”).
In addition, at the Closing the Purchaser and/or its designees shall receive,
and the “Shares” shall also include, that number of shares of Metaphor Common
Stock equal to the difference between 30.86% of the Metaphor Common Stock issued
and outstanding immediately subsequent to the closing of the transactions
contemplated in the Media Acquisition Agreement and the number of shares issued
by Metaphor pursuant to the Media Acquisition Agreement. Allocation of the
Shares among the Purchaser and its designees will be determined according to
the
written instructions of 8 Holdings that 8 Holdings will deliver to Metaphor
at
least five business days prior to the Closing Date (the “Share Allocation
Notice”).
2.2 Consideration
.
In
consideration for the Shares, and subject to the terms and conditions of this
Agreement, at the Closing the Purchaser shall transfer to Metaphor the proceeds
of the Financing, reduced by the costs of the Financing and the Contemplated
Transactions (the “Consideration”).
2.3 Closing
.
The
closing of the transactions contemplated by this Agreement (the “Closing”) will
take place at the offices of Xxxxxx Xxxxx LLP, in Denver, Colorado, or at such
other location as the parties hereto agree, on the earlier of (a) June 30,
2005;
or (b) the date that is five business days following the date designated by
8
Holdings, or at such other time and places to which Metaphor and 8 Holdings
agree.
Subject
to the provisions of Section 9, failure to consummate the purchase and sale
provided for in this Agreement on the date and time and at the place determined
pursuant to this Section 2.3 will not result in the termination of this
Agreement and will not relieve any party of any obligation under this
Agreement.
2.4 Escrow.
(a) Concurrent
with the execution of this Agreement, Metaphor will deliver to the Escrow Agent,
under an escrow agreement substantially in the form of Exhibit
A
attached
hereto (the “Escrow
Agreement”)
which the Escrow Agent and the parties to this Agreement shall enter into at
the
time of execution of this Agreement:
(i)
a number
of shares of Metaphor Common Stock equal to 66.82% of the Metaphor Common Stock
issued and outstanding on the date hereof, issueable to the Purchaser or
its designees;
(ii) a
copy of
duly executed resolutions of Metaphor’s board of directors, certified by the
President and Secretary of Metaphor, electing Xxxxxx Xxxxxxx, and Xxxxx Xx,
and/or other
directors
designated to Metaphor by 8 Holdings, to be directors of Metaphor effective
as
of the Closing Date;
(iii) resignations
of each of the directors of Metaphor, effective as of the Closing
Date;
(iv) a
copy of
the consulting agreement in the form of Exhibit 2.4(a)(iv), executed by Metaphor
and JMAX Holdings, Inc., to be effective as of the Closing Date (the “JMAX
Consulting
Agreement”);
(v) a
copy of
the note payable by Metaphor to Xx. Xxxx in the form of Exhibit 2.4(a)(v),
due
and payable on the Closing Date (the “Xxxx Note”);
(vi) a
“no-sale and lock-up” written agreement in the form of Exhibit 2.4(a)(vi)
executed by Metaphor and Xx. Xxxx, to be effective as of the Closing Date (the
“Xxxx Lock-Up
Agreement”);
and
(vii) a
number
of shares of Metaphor Common Stock equal to 30.68% of the Metaphor Common Stock
issued and outstanding on the date hereof, to be exchanged by Metaphor
pursuant
to
the Media Acquisition Agreement.
(b) Concurrent
with the execution of this Agreement, 8 Holdings will deliver to the Escrow
Agent, under the Escrow Agreement, $65,000.
2.5 Closing
Obligations
At
the
Closing:
(a) The
Escrow Agent, pursuant to the Escrow Agreement, will deliver to the
Purchaser:
(i) certificates
representing the Shares issued to the Purchaser or its designees in the amounts
to be delivered to Metaphor by 8 Holdings in accordance with Section 2.1 of
this
Agreement;
(ii) a
copy of
duly executed resolutions of Metaphor’s board of directors, certified by the
President and Secretary of Metaphor, electing Xxxxxx Xxxxxxx, and Xxxxx Xx,
and/or other
directors
designated to Metaphor by 8 Holdings, to be directors of Metaphor effective
as
of the Closing Date;
(iii) resignations
of each of the directors of Metaphor, effective as of the Closing
Date;
(iv) the
JMAX
Consulting Agreement;
(v) the
Xxxx
Note; and
(vi) the
Xxxx
Lock-Up Agreement.
(b) Metaphor
will deliver to the Purchaser:
(i) a
certificate executed by the President and Secretary of Metaphor representing
and
warranting to the Purchaser that each of Metaphor’s representations and
warranties in this
Agreement
was
accurate in all respects as of the date of this Agreement and is accurate in
all
respects as of the Closing Date as if made on the Closing Date;
(ii) a
certificate executed by the President and Secretary of Metaphor certifying
as to
(A) its Organizational Documents, (B) the incumbency of its officers, and (C)
resolutions of both
the
board of
directors and shareholders of Metaphor authorizing the transactions described
herein;
(iii) The
updated list of all Metaphor liabilities (the “Listed Liabilities”) as described
in Section 2.6;
(iv) The
updated list of all Reporting Expenses as described in Section 2.7;
and
(v) A
list of
all of the shareholders of Metaphor as of the Closing Date, including the number
of shares of Metaphor Common Stock each shareholder owns.
(c) The
Purchaser will deliver to Metaphor:
(i) the
Consideration; and
(ii) a
certificate executed on behalf of the Purchaser representing and warranting
to
Metaphor that each of the Purchaser’s representations and warranties in this
Agreement was
accurate
in
all respects as of the date of this Agreement and is accurate in all respects
as
of the Closing Date as if made on the Closing Date.
(d) The
Escrow Agent, in accordance with the Escrow Agreement, will deliver the $65,000
placed in escrow pursuant to Section 2.4(b) of this Agreement to Xx. Xxxx for
payment of certain Metaphor
liabilities
as described in Section 2.6 below.
2.6 Metaphor
Liabilities
Attached
hereto as Exhibit
2.6
is a
list of all of Metaphor’s outstanding liabilities as of the date hereof. This
list will be updated at the Closing. At the Closing, 8 Holdings shall
provide Xx. Xxxx with $65,000 to satisfy all of Metaphor’s outstanding
liabilities as of the time of Closing. To the extent that Xx. Xxxx satisfies
Metaphor’s liabilities for less than $65,000, Xx. Xxxx shall be entitled to
retain the difference. Xx. Xxxx will assume, and indemnify Metaphor
for,
all liability, costs, and expenses related to these liabilities pursuant to
the
provisions of Sections 10.2 and 10.3 of this Agreement.
2.7 Exchange
Act Filing Expenses
If,
during the period beginning immediately after the date Metaphor filed its Form
10-KSB for the fiscal year ended December 31, 2004 and ending on the Closing
Date, Metaphor incurs a reasonable third-party expense in the preparation or
filing of either a Form 10-QSB or a Form 8-K pursuant to the Exchange Act,
8
Holdings shall, on the Closing Date, reimburse Metaphor for such reasonable
third-party expenses (“Reporting Expenses”). No later than ten days before the
Closing Date, Metaphor shall provide 8 Holdings with a list of all of its
Reporting Expenses. This list will be updated at Closing. The provisions of
this
paragraph are based on the assumption that Xx. Xxxx will prepare, at no charge
to Metaphor, all such reports in the same manner and to the same extent that
he
has done prior to the date of this Agreement.
| 3. |
REPRESENTATIONS
AND WARRANTIES OF METAPHOR
|
Metaphor
represents and warrants that, except as set forth in the Metaphor Disclosure
Schedule attached hereto as Schedule
A,
the
statements contained in this Section 3 are true and correct as of the
date
of this Agreement and shall be true and correct as of the Closing
Date.
3.1 Organization
and Good Standing.
(a) Metaphor
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Nevada, with full corporate power and authority to
conduct its business as it is
now being
conducted, to own or use the properties and assets that it purports to own
or
use, and to perform all its obligations under applicable Contracts. Metaphor
is
duly qualified to do business as a
foreign
corporation and is in good standing under the laws of each state or other
jurisdiction where such qualification is required.
(b) Metaphor
has delivered to 8 Holdings complete and correct copies of Metaphor’s
Organizational Documents as currently in effect, and such Organizational
Documents have not been amended,
corrected,
restated or superseded in any way. Metaphor is not in violation, nor has it
taken any action in violation, of any provisions of its Organizational
Documents. Metaphor has delivered to 8 Holdings
minutes
of all of Metaphor’s board of directors and stockholders meetings, all of which
are complete and accurate as of the date of this Agreement and as of the Closing
Date.
(c) Metaphor
has delivered to 8 Holdings complete and correct copies of the Organizational
Documents of ABCI Holdings, Inc., a Delaware corporation (“ABCI”), as in effect
as of the date of the merger
between
Metaphor and ABCI (the “ABCI Merger”). ABCI took no action in violation of any
provisions of its Organizational Documents in consummating either the ABCI
Merger, or any transactions
incident
to the ABCI Merger. Metaphor has delivered to 8 Holdings minutes of all of
ABCI’s board of directors and stockholders meetings, all of which were complete
and accurate as of the date of the
ABCI
Merger.
3.2 Authority;
No Conflict.
(a) This
Agreement constitutes the legal, valid, and binding obligation of Metaphor,
enforceable against Metaphor in accordance with its terms. Upon the execution
and delivery by Metaphor of (i) the
JMAX
Consulting Agreement; (ii) the Xxxx Note; and (iii) the Xxxx Lock-Up Agreement
(collectively, the “Metaphor Closing Documents”), the Metaphor Closing Documents
will constitute the legal,
valid,
and binding obligations of Metaphor, enforceable against Metaphor in accordance
with their respective terms. Metaphor has the absolute and unrestricted right,
power, authority, and capacity to
execute
and deliver this Agreement and the Metaphor Closing Documents and to perform
its
obligations under this Agreement and the Metaphor Closing
Documents.
(b) This
Agreement constitutes the legal, valid, and binding obligation of Xx. Xxxx,
enforceable against Xx. Xxxx in accordance with its terms. Upon the execution
and delivery by Xx. Xxxx of
the Xxxx
Lock-Up Agreement, and as of the Closing Date, the Xxxx Lock-Up Agreement will
constitute the legal, valid, and binding obligation of Xx. Xxxx, enforceable
against Xx. Xxxx in
accordance
with its terms.
(c) Except
as
set forth in Section 3.2(c) of the Metaphor Disclosure Schedule, neither
the execution and delivery of this Agreement nor the consummation or performance
of any of the Contemplated
Transactions
will, directly or indirectly (with or without notice or lapse of
time):
(i) contravene,
conflict with, or result in a violation of (A) any provision of the
Organizational Documents of Metaphor, or (B) any resolution adopted by the
board
of directors or the
stockholders
of Metaphor;
(ii) contravene,
conflict with, or result in a violation of, or give any Governmental Body or
other Person the right to challenge any of the Contemplated Transactions or
to
exercise any
remedy
or
obtain any relief under, any Legal Requirement, Governmental Authorization,
or
any Order to which Metaphor, or any of the assets owned or used by Metaphor,
may
be
subject;
(iii) cause
Metaphor or the Purchaser to become subject to, or to become liable for the
payment of, any Tax;
(iv) cause
any
of the assets owned by Metaphor to be reassessed or revalued by any taxing
authority or other Governmental Body;
(v) contravene,
conflict with, or result in a violation or breach of any provision of, or give
any Person the right to declare a default or exercise any remedy under, or
to
accelerate the
maturity
or
performance of, or to cancel, terminate, or modify, any Contract;
or
(vi) result
in
the imposition or creation of any Encumbrance upon or with respect to any of
the
assets owned or used by Metaphor.
(d) Except
as
set forth in Section 3.2(d) of the Metaphor Disclosure Schedule, Metaphor
is not or will not be required to give any notice to or obtain any Consent
from
any Person in connection with the
execution
and
delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
3.3 Capitalization;
Shareholders.
(a) The
authorized equity securities of the Company consist of (1) 100,000,000 shares
of
common stock (the “Metaphor Common Stock”), par value $0.0001 per share, of
which 509,705 shares are issued
and
outstanding, and (ii) 10,000,000 shares of preferred stock, none of which is
issued or outstanding. All of the outstanding shares of Metaphor Common Stock
have been duly authorized and
validly
issued and are fully paid and nonassessable. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other
Contracts
or
commitments relating to the issuance, sale, or transfer of any Metaphor Common
Stock or other securities of Metaphor. None of the outstanding equity securities
or other securities of
Metaphor
was
issued in violation of the Securities Act or any other Legal Requirement.
Metaphor does not own, or have any Contract to acquire, any equity securities
or
other securities of any
Person
or any
direct or indirect equity or ownership interest in any other
business.
(b) Metaphor
has delivered to 8 Holdings, and will update at Closing pursuant to Section
2.5(b)(v), a complete and correct list of all the shareholders of Metaphor,
including the number of shares of
Metaphor
Common Stock each shareholder owns. As of the date of this Agreement, as well
as
on the Closing Date, there are, and will be, at least 100 round-lot shareholders
of Metaphor. A “round-
lot
shareholder” is a shareholder owning at least 100 shares of
Metaphor.
3.4 Financial
Statements;
Securities and Exchange Commission Filings.
(a) Metaphor
has made available to the Purchaser each statement, report, registration
statement (with the prospectus in the form filed pursuant to Rule 424(b) of
the
Securities Act), definitive proxy
statement,
and other reports filed with the SEC by Metaphor or ABCI prior to the date
of
this Agreement, and will furnish to the Purchaser, at the time of filing with
the SEC, true and complete copies
of
any
additional documents filed with the SEC by Metaphor after the date hereof and
prior to the Closing (collectively, the "SEC Documents"). As of their respective
filing dates, the SEC
Documents
complied in all material respects with the requirements of the Exchange Act
and
the Securities Act, and the rules promulgated thereunder, except as modified
by
subsequent reports. All
documents
required to be filed as exhibits to the SEC Documents have been so filed, and
all material contracts so filed as exhibits are in full force and effect, except
those which have expired in
accordance
with their terms, and neither Metaphor nor any of its Affiliates is in material
default thereof. None of the SEC Documents, as of their respective dates,
contained any untrue statement of a
material
fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not
misleading.
(b) Metaphor
has delivered to 8 Holdings audited financial statements of Metaphor, as
required by Form 10-KSB, as of and for the year ended December 31, 2004
(including the notes thereto, if any, the
“Balance
Sheet”).
(c) The
financial statements of Metaphor, including the notes thereto, included in
the
SEC Documents (the "Metaphor Financial Statements") were complete and correct
in
all material respects as of their
respective
dates, complied as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto as of their
respective
dates, and have been prepared in accordance with GAAP and Regulation S-X (17
CFR
Part 210), applied on a basis consistent throughout the periods indicated and
consistent with each
other
(except
as may be indicated in the notes thereto or, in the case of unaudited statements
included in quarterly reports on Form 10-QSB, as permitted by Form 10-QSB of
the
SEC). The Metaphor
Financial
Statements and the Balance Sheet fairly present the financial condition and
operating results of Metaphor or ABCI at the dates and during the periods
indicated therein (subject, in the case
of
unaudited
statements, to normal year-end adjustments).
3.5 Books
and Records
The
books
of account, minute books, stock record books, and other records of Metaphor
and
ABCI, all of which have been made available to the Purchaser, are complete
and
correct and have been maintained in accordance with sound business practices
and
the requirements of Section 13(b)(2) of the Exchange Act, including the
maintenance of an adequate system of internal controls. The minute book of
Metaphor contains accurate and complete records of all meetings held of, and
corporate action taken by, the stockholders, the boards of directors, and
committees of the boards of directors of Metaphor, and no meeting of any such
stockholders, board of directors, or committee has been held for which minutes
have not been prepared and are not contained in such minute books. At the
Closing, all of those books and records will be in the possession of
Metaphor.
3.6 Assets;
Accounts Receivable
Except
as
set forth in Section 3.6 of the Metaphor Disclosure Schedule, Metaphor owns
no
direct or indirect interest in any properties or assets (whether real, personal,
or mixed and whether tangible or intangible). All accounts receivable, if any,
of Metaphor on the accounting records of Metaphor as of the Closing Date
(collectively, the “Accounts Receivable”) represent or will represent valid
obligations arising from the Ordinary Course of Business. Unless paid prior
to
the Closing Date, the Accounts Receivable are or will be as of the Closing
Date
current and collectible net of the respective reserves shown on the accounting
records of Metaphor as of the Closing Date (which reserves are adequate and
calculated consistent with past practice). There is no contest, claim, or right
of set-off under any Contract with any obligor of an Accounts Receivable
relating to the amount or validity of such Accounts Receivable.
3.7 No
Undisclosed Liabilities;
Liabilities as of the Closing Date
Metaphor
has no liabilities or obligations of any nature (whether known or unknown and
whether absolute, accrued, contingent, or otherwise) except for liabilities
or
obligations reflected or reserved against in the Balance Sheet and current
liabilities incurred in the Ordinary Course of Business since the date
thereof.
3.8 Taxes.
(a) Metaphor
and ABCI have filed or caused to be filed on a timely basis all Tax Returns
that
are or were required to be filed by or with respect to either of them, either
separately or as a member of a
group
of
corporations, pursuant to applicable Legal Requirements. Metaphor has delivered
to 8 Holdings copies of, and Section 3.7 of the Metaphor Disclosure
Statement contains a complete and
accurate
list
of, all such Tax Returns. Metaphor and ABCI have paid, or made provision for
the
payment of, all Taxes that have or may have become due pursuant to those Tax
Returns or otherwise,
or
pursuant to any assessment
received by Metaphor or ABCI, except such Taxes, if any, as are listed in
Section 3.7 of the Metaphor Disclosure Schedule and are being contested
in
good faith and
as
to which
adequate reserves (determined in accordance with GAAP) have been provided in
Section 3.7 of the Metaphor Disclosure Statement.
(b) The
United States federal and state income Tax Returns of Metaphor and ABCI subject
to such Taxes have not been audited by the IRS or relevant state tax
authorities. Except as described in
Section 3.11
of
the Metaphor Disclosure Schedule, neither Metaphor nor ABCI has not given or
been requested to give waivers or extensions (or is or would be subject to
a
waiver or extension
given
by any
other Person) of any statute of limitations relating to the payment of Taxes
of
Metaphor or ABCI, or for which either Metaphor or ABCI may be
liable.
(c) The
charges, accruals, and reserves with respect to Taxes on the respective books
of
Metaphor are adequate (determined in accordance with GAAP) and are at least
equal to Metaphor’s liability for
Taxes.
There
exists no proposed tax assessment against Metaphor. No consent to the
application of Section 341(f)(2) of the IRC has been filed with respect to
any
property or assets held, acquired,
or
to be
acquired by Metaphor. All Taxes that Metaphor is or was required by Legal
Requirements to withhold or collect have been duly withheld or collected and,
to
the extent required, have been
paid
to the
proper Governmental Body or other Person.
(d) All
Tax
Returns filed by Metaphor are true, correct, and complete. There is no tax
sharing agreement that will require any payment by Metaphor after the date
of
this Agreement.
3.9 No
Material Adverse Change
Since
the
date of the Balance Sheet, there has not been any material adverse change in
the
business, operations, properties, prospects, assets, or condition of Metaphor,
and no event has occurred or circumstance exists that may result in such a
material adverse change.
3.10 Employee
Benefits;
Labor Matters.
(a) Except
as
disclosed in Section 3.10 of the Metaphor Disclosure Schedule, neither Metaphor
nor ABCI has ever sponsored, maintained, or participated in any plan, program,
policy, practice, contract,
agreement
or
other arrangement providing for compensation, severance, termination pay,
deferred compensation, performance awards, employee pension benefit plans,
stock
or stock-related awards,
welfare
benefits, fringe benefits or other employee benefits or remuneration of any
kind, whether written, unwritten or otherwise, funded or unfunded, including
each “employee benefit plan,” within
the
meaning
of Section 3(3) of ERISA for the benefit of any employee. Except as set forth
in
Section 3.10 of the Metaphor Disclosure Schedule, Metaphor has no employees,
consultants, or
independent
contractors. Section 3.10 of the Metaphor Disclosure Schedule sets forth any
compensation, accrued time off, retention bonus, or transaction bonus payable
to
any employee,
consultant,
or independent contractor of Metaphor.
(b) There
are
no collective bargaining agreements to which either Metaphor or ABCI was a
party
or was subject to. Metaphor and ABCI complied with all applicable then current
laws respecting
employment
and employment practices, terms and conditions of employment and wages and
hour.
Neither Metaphor nor ABCI has received written notice of any unfair labor
practices complaint
pending
against them before the National Labor Relations Board.
3.11 Compliance
With Legal Requirements; Governmental Authorizations.
(a) Except
as
set forth in Section 3.11 of the Metaphor Disclosure Schedule:
(i) Metaphor
is, and Metaphor and ABCI at all times since December 31, 1996 have been, in
full compliance with each Legal Requirement that is or was applicable to them
or
to the
conduct
or
operation of their business or the ownership or use of any of their
assets;
(ii) no
event
has occurred or circumstance exists that (with or without notice or lapse of
time):
(A) may
constitute or result in a violation by Metaphor of, or a failure on the part
of
Metaphor to comply with, any Legal Requirement; or
(B) may
give
rise to any obligation on the part of Metaphor to undertake, or to bear all
or
any portion of the cost of, any remedial action of any nature; and
(iii) neither
Metaphor nor ABCI has received any notice or other communication (whether oral
or written) from any Governmental Body or any other Person
regarding:
(A) any
actual, alleged, possible, or potential violation of, or failure to comply
with,
any Legal Requirement or Government Authorization; or
(B) any
actual, alleged, possible, or potential obligation on the part of Metaphor
or
ABCI to undertake, or to bear all or any portion of the cost of, any remedial
action of any nature.
3.12 Legal
Proceedings; Orders.
(a) There
is
no pending Proceeding: (i) that has been commenced by or against either Metaphor
or ABCI, or that otherwise relates to or may affect the business of, or any
of
the assets owned or used
by,
Metaphor
or ABCI; or (ii) that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the Contemplated
Transactions. To the
Knowledge
of
Metaphor, (1) no such Proceeding has been Threatened, and (2) no event has
occurred or circumstance exists that may give rise to or serve as a basis for
the commencement of any
such
Proceeding.
(b) Metaphor
is, and at all times Metaphor and ABCI have been, in full compliance with all
of
the terms and requirements of each Order to which it, or any of the assets
owned
or used by it, is or has
been
subject.
3.13 Absence
of Certain Changes and Events
Except
as
set forth in Section 3.13 of the Metaphor Disclosure Schedule, since December
31, 2004, Metaphor has conducted its business only in the Ordinary Course of
Business and there has not been any of the following:
(a) change
in
Metaphor’s authorized or issued capital stock; grant of any stock option or
right to purchase shares of capital stock of Metaphor; issuance of any security
convertible into such capital
stock;
grant
of any registration rights; purchase, redemption, retirement, or other
acquisition by Metaphor of any shares of any such capital stock; or declaration
or payment of any dividend or other
distribution
or payment in respect of shares of capital stock;
(b) amendment
to the Organizational Documents of Metaphor;
(c) payment
or increase by Metaphor of any bonuses, salaries, or other compensation to
any
stockholder, director, officer, employee, or independent contractor, or entry
into any employment,
severance,
or
similar Contract with any director, officer, employee, or independent
contractor;
(d) damage
to
or destruction or loss of any asset or property of Metaphor, whether or not
covered by insurance, materially and adversely affecting the properties, assets,
business, financial condition,
or
prospects
of Metaphor, taken as a whole;
(e) entry
into, termination of, or receipt of notice of termination of any Contract or
transaction;
(f) sale,
lease, or other disposition of any asset or property of Metaphor or mortgage,
pledge, or imposition of any lien or other encumbrance on any material asset
or
property of Metaphor, including the
sale,
lease,
or other disposition of any of the Intellectual Property Assets;
(g) cancellation
or waiver of any claims or rights with a value to Metaphor;
(h) material
change in the accounting methods used by Metaphor; or
(i) agreement,
whether oral or written, by Metaphor to do any of the foregoing.
3.14 Contracts;
No Defaults.
(a) Section
3.14(a) of the Metaphor Disclosure Schedule contains a complete and accurate
list, and Metaphor has delivered to 8 Holdings true and complete copies, of
each
Contract entered into by
Metaphor,
including without limitation, each of the following:
(i) each
joint venture, partnership, and other agreement (however named) involving a
sharing of profits, losses, costs, or liabilities by Metaphor with any other
Person;
(ii) each
agreement containing covenants that in any way purport to restrict the business
activity of Metaphor or limit the freedom of Metaphor to engage in any line
of
business or to
compete
with
any Person;
(iii) each
power of attorney that is currently effective and outstanding;
(iv) each
agreement for capital expenditures by Metaphor;
(v) each
written warranty, guaranty, and or other similar undertaking with respect to
contractual performance extended by Metaphor; and
(vi) each
amendment, supplement, and modification (whether oral or written) in respect
of
any of the foregoing.
Section
3.14(a) of the Metaphor Disclosure Schedule sets forth reasonably complete
details concerning the terms of such Contracts, including the parties to the
Contracts, and the amount of the remaining commitment of Metaphor under the
Contracts.
(b) Except
as
set forth in Section 3.14(b) of the Metaphor Disclosure Schedule, each Contract
or other agreement identified or required to be identified in Section 3.14(a)
of
the Metaphor Disclosure
Schedule
is
in full force and effect and is valid and enforceable in accordance with its
terms.
(c) Except
as
set forth in Section 3.14(c) of the Metaphor Disclosure Schedule:
(i) Metaphor
is in full compliance with all applicable terms and requirements of each
Contract under which Metaphor has or had any obligation or liability or by
which
Metaphor is
bound;
(ii) each
other Person that has or had any obligation or liability under any Contract
under which Metaphor has or had any rights is in full compliance with all
applicable terms and
requirements
of such Contract;
(iii) no
event
has occurred or circumstance exists that (with or without notice or lapse of
time) may contravene, conflict with, or result in a violation or breach of,
or
give Metaphor or
other
Person
the right to declare a default or exercise any remedy under, or to accelerate
the maturity or performance of, or to cancel, terminate, or modify, any Contract
entered into
by
Metaphor;
and
(iv) Metaphor
has not given to or received from any other Person any notice or other
communication (whether oral or written) regarding any actual, alleged, possible,
or potential
violation
or
breach of, or default under, any Contract.
(d) Except
as
set forth in Section 3.14(d) of the Metaphor Disclosure Schedule, there are
no
renegotiations of, attempts to renegotiate, or outstanding rights to renegotiate
any material amounts paid or
payable
to or
by Metaphor under current or completed Contracts with any Person, and no such
Person has made written demand for such renegotiation.
3.15 Insurance.
(a) Metaphor
has delivered to 8 Holdings true and complete copies of all policies of
insurance to which Metaphor is a party or under which Metaphor, ABCI, or any
director or officer of Metaphor or
ABCI,
is or
has been covered with respect to matters related to Metaphor or ABCI at any
time;
(b) Metaphor
is not: (i) a Party to any self-insurance arrangement by or affecting Metaphor,
including any reserves established thereunder; (ii) a party to any contract
or
arrangement, other than a policy
of
insurance,
for the transfer or sharing of any risk by Metaphor; and (iii) obligated to
third parties with respect to insurance (including such obligations under leases
and service agreements).
3.16 Environmental
Matters
Except
as
set forth in Section 3.16 of the Metaphor Disclosure Schedule:
(a) Metaphor
is, and Metaphor and ABCI at all times have been, in full compliance with,
and
have not been and are not in violation of or liable under, any Environmental
Law. Metaphor has no basis to
expect,
nor
has it or any other Person for whose conduct it is or may be held to be
responsible received, any actual or Threatened order, notice, or other
communication from any Governmental Body
or
Person of
any actual or potential violation or failure to comply with any Environmental
Law, or of any actual or Threatened obligation to undertake or bear the cost
of
any Environmental, Health,
and
Safety
Liabilities with respect to any properties or assets (whether real, personal,
or
mixed) in which Metaphor or ABCI has had an interest, or with respect to any
property at or to which
Hazardous
Materials were generated, manufactured, refined, transferred, imported, used,
or
processed by Metaphor, ABCI, or any other Person for whose conduct they are
or
may be held
responsible,
or from which Hazardous Materials have been transported, treated, stored,
handled, transferred, disposed, recycled, or received.
(b) There
are
no pending or, to the Knowledge of Metaphor, Threatened claims, Encumbrances,
or
other restrictions of any nature, resulting from any Environmental, Health,
and
Safety Liabilities or
arising
under
or pursuant to any Environmental Law, with respect to or affecting any
properties and assets (whether real, personal, or mixed) in which Metaphor
or
ABCI has or had an interest.
(c) Metaphor
has no basis to expect to receive, nor has it or any other Person for whose
conduct it is or may be held responsible received, any citation, directive,
inquiry, notice, Order, summons,
warning,
or
other communication that relates to Hazardous Materials, or any alleged, actual,
or potential violation or failure to comply with any Environmental Law, or
of
any alleged, actual, or
potential
obligation to undertake or bear the cost of any Environmental, Health, and
Safety Liabilities with respect to any properties or assets (whether real,
personal, or mixed) in which Metaphor or
ABCI
had an
interest, or with respect to any property or facility to which Hazardous
Materials generated, manufactured, refined, transferred, imported, used, or
processed by Metaphor, ABCI, or any
other
Person
for whose conduct Metaphor is or may be held responsible, have been transported,
treated, stored, handled, transferred, disposed, recycled, or
received.
3.17 Brokers
or Finders
Metaphor
and its agents have incurred no obligation or liability, contingent or
otherwise, for brokerage or finders’ fees or agents’ commissions or other
similar payment in connection with this Agreement.
3.18 Disclosure.
(a) No
representation or warranty of Metaphor in this Agreement and no statement in
the
Metaphor Disclosure Schedule omits to state a material fact necessary to make
the statements herein or therein,
in
light of
the circumstances in which they were made, not misleading.
(b) No
notice
given pursuant to Section 11.3 will contain any untrue statement or omit to
state a material fact necessary to make the statements therein or in this
Agreement, in light of the circumstances
in
which they
were made, not misleading.
(c) There
is
no fact known to Metaphor that has specific application to Metaphor (other
than
general economic or industry conditions) and that materially adversely affects
the assets, business,
prospects,
financial condition, or results of operations of Metaphor that has not been
set
forth in this Agreement or the Metaphor Disclosure Schedule.
| 4. |
REPRESENTATIONS
AND WARRANTIES OF 8
HOLDINGS
|
The
Purchaser represents and warrants to Metaphor, with respect to itself, as
follows:
4.1 Authority;
No Conflict.
(a) This
Agreement constitutes the legal, valid, and binding obligation of that
Purchaser, enforceable against that Purchaser in accordance with its terms.
That
Purchaser has the absolute and
unrestricted
right, power, and authority to execute and deliver this Agreement and to perform
its obligations under this Agreement.
(b) Neither
the execution and delivery of this Agreement by that Purchaser nor the
consummation or performance of any of the Contemplated Transactions that
Purchaser will give any Person the right
to
prevent,
delay, or otherwise interfere with any of the Contemplated Transactions pursuant
to: (i) any provision of that Purchaser’s Organizational Documents; (ii) any
resolution adopted by that
Purchaser;
(iii) any Legal Requirement or Order to which that Purchaser may be subject;
or
(iv) any Contract to which that Purchaser is a party or by which that Purchaser
may be bound.
4.2 Investment
Intent
The
Persons receiving Shares pursuant
to Section 2.1 are acquiring the Shares for their own account and not with
a
view to distribution of the Shares within the meaning of Section 2(11) of the
Securities Act.
4.3 Proceedings
There
is
no pending Proceeding that has been commenced against that Purchaser and that
challenges, or may have the effect of preventing, delaying, making illegal,
or
otherwise interfering with, any of the Contemplated Transactions. To that
Purchaser’s Knowledge, no such Proceeding has been Threatened.
4.4 Consideration
The
Purchaser will have sufficient assets available at the Closing to pay the
Consideration and to perform their respective obligations
hereunder.
4.5 Brokers
or Finders
That
Purchaser has not incurred any obligation or liability, contingent or otherwise,
for brokerage or finders’ fees or agents’ commissions or other similar payment
in connection with this Agreement.
| 5. |
COVENANTS
OF METAPHOR PRIOR TO CLOSING
DATE
|
5.1 Access
and Investigation
Between
the date of this Agreement and the Closing Date, Metaphor will, and will cause
Metaphor and its representatives to:
(a) afford
the Purchaser and its representatives full and free access to Metaphor’s
personnel, properties, contracts, books and records, and other documents and
data;
(b) furnish
the Purchaser with copies of all such contracts, books, records and other
existing documents and data as the Purchaser may reasonably request; and
(c) furnish
the Purchaser with such additional financial, operating, and other data and
information as the Purchaser may reasonably request.
5.2 Operation
of the Business of Metaphor
Except
as
otherwise set forth in this Agreement, between the date of this Agreement and
the Closing Date, Metaphor will conduct the business of Metaphor only in the
Ordinary Course of Business, use its best efforts to preserve intact the current
business organization of Metaphor, and otherwise report periodically to 8
Holdings concerning the status of the business, operations,
and
finances of Metaphor. Between the date of this Agreement and the Closing Date,
prior to filing any SEC Document Metaphor will provide 8 Holdings with a draft
of any such SEC Document, and Metaphor will obtain 8 Holdings written consent
to
file such SEC Document with the SEC.
5.3 Negative
Covenants
Except
as
otherwise expressly permitted by this Agreement, between the date of this
Agreement and the Closing Date, Metaphor will not, without the prior written
consent of 8 Holdings, take any affirmative action, or fail to take any
reasonable action within its control, as a result of which any of the changes
or
events listed in Section 3.13 is likely to occur. Metaphor will not, without
the
prior written consent of 8 Holdings, take any action to alter the total number
of shares of Metaphor common stock outstanding. Metaphor will not, without
prior
written consent of 8 Holdings, enter into any amendment to, or waive any of
its
rights under, the Xxxx Lock-Up Agreement, the JMAX Consulting Agreement or
the
Xxxx Note.
5.4 Required
Consents
As
promptly as practicable after the date of this Agreement, Metaphor will obtain
all Consents required to be obtained by Metaphor in order to consummate the
Contemplated Transactions, including, without limitation, the approval of the
Contemplated Transactions by the
stockholders of Metaphor.
5.5 Notification
Between
the date of this Agreement and the Closing Date, Metaphor will promptly notify
8
Holdings in writing if Metaphor becomes aware of any fact or condition that
causes or constitutes a Breach of any of Metaphor’s representations and
warranties as of the date of this Agreement, or if Metaphor becomes aware of
the
occurrence after the date of this Agreement of any fact or condition that would
(except as expressly contemplated by this Agreement) cause or constitute a
Breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. During the same period, Metaphor will promptly notify 8 Holdings
of
the occurrence of any Breach of any covenant of Metaphor in this Section 5
or of
the occurrence of any event that may make the satisfaction of the conditions
in
Section 7 impossible or unlikely.
5.6 No
Negotiation
Until
such time, if any, as this Agreement is terminated pursuant to Section 9,
Metaphor will not, and will cause each of its representatives not to, directly
or indirectly solicit, initiate, or encourage any inquiries or proposals from,
discuss or negotiate with, provide any non-public information to, or consider
the merits of any unsolicited inquiries or proposals from, any Person (other
than 8 Holdings) relating to any transaction involving the sale of the business
or assets of Metaphor, or any of the capital stock of Metaphor other than
pursuant to the Media Acquisition Agreement, or any merger, consolidation,
business combination, or similar transaction involving Metaphor.
5.7 Common
Stock of Metaphor Held in Escrow
If,
at
any time between the date of this Agreement and the Closing Date, there is
a
change in the number of outstanding shares of common stock of Metaphor, Metaphor
shall, within 3 business days of such occurrence, provide the Escrow Agent
with
a certificate representing the number of shares of Metaphor Common Stock equal
to 66.82% of the Metaphor Common Stock issued and outstanding on the date
thereof, issueable to the Purchaser or its designees.
5.8 Efforts
Between
the date of this Agreement and the Closing Date, Metaphor and Xx. Xxxx will
use
their reasonable commercial efforts to cause the conditions in Sections 7 and
8
to be satisfied.
| 6. |
COVENANTS
OF THE PURCHASER PRIOR TO CLOSING
DATE
|
Between
the date of this Agreement and the Closing Date, 8 Holdings will use its
reasonable commercial efforts to cause the conditions in Sections 7 and 8 to
be
satisfied.
| 7. |
CONDITIONS
TO THE PURCHASER’S OBLIGATION TO
CLOSE
|
The
Purchaser’s obligation to purchase the Shares and to take the other actions
required to be taken by the Purchaser at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by 8 Holdings, in whole or in
part):
7.1 Accuracy
of Representations
All
of
Metaphor’s representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), must have been accurate in all material respects as of the date
of this Agreement, and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date, without giving effect to any
supplement to the Metaphor Disclosure Schedule.
7.2 Metaphor’s
Performance
All
of
the covenants and obligations that Metaphor and Xx. Xxxx are required to perform
or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been duly performed and complied with
in
all material respects.
7.3 Media
Acquisition
The
Media
Acquisition either has closed prior to the Closing Date or is closing concurrent
with the Closing of the transactions contemplated hereunder.
7.4 Consents
Each
of
the Consents identified in Section 3.2(d) of the Metaphor Disclosure Schedule
must have been obtained and must be in full force and effect.
7.5 No
Proceedings
Since
the
date of this Agreement, there must not have been commenced or Threatened against
the Purchaser or Metaphor, or against any Person affiliated with the Purchaser
or Metaphor, any Proceeding (a) involving any challenge to, or seeking damages
or other relief in connection with, any of the Contemplated Transactions, or
(b)
that may have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the Contemplated Transactions.
7.6 No
Prohibition
Neither
the consummation nor the performance of any of the Contemplated Transactions
will, directly or indirectly (with or without notice or lapse of time),
materially contravene, or conflict with, or result in a material violation
of,
or cause the Purchaser or any Person affiliated with the Purchaser to suffer
any
material adverse consequence under either any applicable Legal Requirement
or
Order, or any Legal Requirement or Order that has been published, introduced,
or
otherwise proposed by or before any Governmental Body.
7.7 Shares
Held by the Escrow Agent
Metaphor
shall have instructed the Escrow Agent to release the shares of Metaphor Common
Stock held by the Escrow Agent pursuant to Section 2.4(a) of this Agreement
and
the Escrow Agreement to the Purchaser or its designees.
7.8 Legal
Opinion.
8
Holdings shall have received one or more opinions (which may be subject to
knowledge and other qualifications and assumptions customary for this type
of
transaction as well as any reasoned analysis which is appropriate under the
circumstances), dated the Closing Date, from counsel to Metaphor, as to the
matters set forth on Exhibit 7.8.
| 8. |
CONDITIONS
TO METAPHOR’S OBLIGATION TO
CLOSE
|
Metaphor’s
obligation to deliver the Shares and to take the other actions required to
be
taken by Metaphor at the Closing is subject to the satisfaction, at or prior
to
the Closing, of each of the following conditions (any of which may be waived
by
Metaphor, in whole or in part):
8.1 Accuracy
of Representations
All
of
the Purchaser’s representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), must have been accurate in all material respects as of the date
of this Agreement and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date.
8.2 Purchaser’s
Performance
All
of
the covenants and obligations that the Purchaser is required to perform or
to
comply with pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), must have been performed and complied with in all material
respects.
8.3 No
Injunction
There
must not be in effect any Legal Requirement or any injunction or other Order
that prohibits the issuance of the Shares by Metaphor to the Purchaser or its
designees.
8.4 Escrow
Agent
8
Holdings shall have instructed the Escrow Agent to release the $65,000 held
by
the Escrow Agent pursuant to Section 2.4(b) of this Agreement and the Escrow
Agreement to Xx. Xxxx at the time of Closing.
| 9. |
TERMINATION
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9.1 Termination
Events
This
Agreement may, by notice given prior to or at the Closing, be
terminated:
(a) by
either
8 Holdings or by Metaphor if a material Breach of any provision of this
Agreement has been committed by the other party and such Breach has not been
waived by the party not committing
the
Breach;
(b) (i)
by 8
Holdings if any of the conditions in Section 7 has not been satisfied as of
the
Closing Date or if, at any time prior to the Closing Date, satisfaction of
such
a condition is or becomes
impossible
(other than through the failure of 8 Holdings to comply with its obligations
under this Agreement) and 8 Holdings has not waived such condition on or before
the Closing Date; or (ii) by
Metaphor,
if
any of the conditions in Section 8 has not been satisfied as of the Closing
Date
or if, at any time prior to the Closing Date, satisfaction of such a condition
is or becomes impossible
(other
than
through the failure of Metaphor to comply with its obligations under this
Agreement) and Metaphor have not waived such condition on or before the Closing
Date;
(c) by
mutual
consent of 8 Holdings and Metaphor; or
(d) by
either
8 Holdings or Metaphor if the Closing has not occurred (other than through
the
failure of any party seeking to terminate this Agreement to comply fully with
its obligations under this
Agreement)
on
or before August 31, 2005, or such later date as the parties may agree
upon.
9.2 Effect
of Termination
Each
party’s right of termination under Section 9.1 is in addition to any other
rights it may have under this Agreement or otherwise, and the exercise of a
right of termination will not be an election of remedies. If this Agreement
is
terminated pursuant to Section 9.1, all further obligations of the parties
under
this Agreement will terminate, except that the obligations in Section 11.2
will
survive; provided,
however,
that if
this Agreement is terminated by a party because of the Breach of the Agreement
by the other party or because one or more of the conditions to the terminating
party’s obligations under this Agreement is not satisfied as a result of the
other party’s failure to comply with its obligations under this Agreement, the
terminating party’s right to pursue all legal remedies will survive such
termination unimpaired.
9.3 Termination
Fee.
In the
event that this Agreement is terminated pursuant to Sections 9.1(a), 9.1(b)(ii),
9.1(c), or 9.1(d), 8 Holdings shall pay to Xx. Xxxx a break up fee of $25,000
no
later than 5 business days after the date this Agreement is terminated;
provided, however, that this Section 9.3 shall not apply if the sole reason
for
the termination of this Agreement pursuant to Section 9.1(a) is a result of
Metaphor committing a material Breach of any provision of this Agreement that
has not been waived by 8 Holdings.
| 10. |
INDEMNIFICATION;
REMEDIES
|
10.1 Survival;
Right To Indemnification Not Affected By Knowledge
All
representations, warranties, covenants, and obligations in this Agreement other
than Sections 2.6 and 10.2, the Metaphor Disclosure Schedule, the supplements
to
the Metaphor Disclosure Schedule, and any other certificate or document
delivered pursuant to this Agreement will survive the Closing and continue
in
full force and effect until the second anniversary of the Closing Date. The
indemnity covenants and obligations of Xx. Xxxx in Sections 2.6 and 10.2 shall
survive the Closing in full force and effect indefinitely. The waiver of any
condition based on the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or obligation, will not affect
the right to indemnification, payment of Damages, or other remedy based on
such
representations, warranties, covenants, and obligations.
10.2 Indemnification
and Payment of Damages By Xxxx X. Xxxx
Xx.
Xxxx
will indemnify and hold harmless each of the Purchaser, Metaphor, and their
respective representatives, stockholders, controlling persons, and Affiliates
(collectively, the “Indemnified Persons”) for, and will pay to the Indemnified
Persons the amount of, any loss, liability, claim, damage (including incidental
and consequential damages), expense (including costs of investigation and
defense and reasonable attorneys’ fees) or diminution of value, whether or not
involving a third-party claim (collectively, “Damages”), arising, directly or
indirectly, from or in connection with:
(a) any
Breach of any representation or warranty made by Metaphor in this Agreement
(without giving effect to any supplement to the Metaphor Disclosure Schedule),
the Metaphor Disclosure
Schedule,
the
supplements to the Metaphor Disclosure Schedule, or any other certificate or
document delivered by Metaphor pursuant to this Agreement;
(b) any
Breach by Metaphor or Xx. Xxxx of any covenant or obligation of Metaphor or
Xx.
Xxxx in this Agreement; or
(c) any
liability, costs, damages, or expenses incurred by any of them with respect
to
any of the Listed Liabilities.
The
remedies provided in this Section 10.2 will not be exclusive of or limit any
other remedies that may be available to any Purchaser or the other Indemnified
Persons.
10.3 Limitations
on Indemnification
Xx.
Xxxx
will have no liability pursuant to Section 10.2(a) for a Breach of any
representation or warranty that occurred prior to January 15, 2003, unless
Xx.
Xxxx had Knowledge of such Breach.
10.4 Procedure
For Indemnification
(a) Claim
for Damages. Any
Indemnified Person seeking indemnification for any claim shall give written
notice in accordance with Section 11.3 of this Agreement (an “Indemnification
Claim”), promptly
after
discovery of the potential claim; provided, however, that an Indemnified Person
shall not be foreclosed from seeking indemnification by any failure to provide
timely notice of the existence of
an
Indemnification Claim, provided that the amount of any such claim will be
reduced by the amount that the indemnifying party actually has been materially
damaged or prejudiced as a result of
such
delay.
All Indemnification Claims submitted shall be paid within thirty (30) calendar
days after the later of written demand for such Indemnification Claim or final
determination of the amount of
the
Indemnification Claim.
(b) Defense
of Third-Party Claims. Promptly
after the receipt by an Indemnified Person of notice of any claim of any third
party, that is subject to indemnification hereunder, the Indemnified Person
shall
give
written
notice of such claim to the indemnifying party in accordance with Section 11.3,
stating the nature and basis of such claim and the amount thereof, to the extent
known; provided,
however,
that
failure of an Indemnified Person to give such notice promptly shall not relieve
the indemnifying party from any liability which it may have on account of this
indemnification or
otherwise,
except to the extent that the indemnifying party is materially prejudiced
thereby. The indemnifying party shall be entitled to participate in the defense
or settlement of such matter and the
parties
agree
to cooperate in any such defense or settlement and to give each other full
access to all information relevant thereto and the indemnifying party shall
not
be obligated to indemnify an
Indemnified
Person hereunder for any settlement entered into without the indemnifying
party’s prior written consent, which consent shall not be unreasonably withheld,
conditioned, or delayed.
| 11. |
GENERAL
PROVISIONS
|
11.1 Expenses
Except
as
otherwise expressly provided in this Agreement, each party to this Agreement
will bear its respective expenses incurred in connection with the preparation,
execution, and performance of this Agreement and the Contemplated Transactions,
including all fees and expenses of agents, representatives, counsel, and
accountants. Metaphor covenants and agrees that no out-of-pocket expenses
incurred in connection with this Agreement or the Contemplated Transactions
will
be unpaid as of the day before Closing. In the event of termination of this
Agreement, the obligation of each party to pay its own expenses will be subject
to any rights of such party arising from a breach of this Agreement by another
party.
11.2 Reverse
Stock Split.
The
Purchaser covenants and agrees that, for a period of eighteen months after
the
Closing Date, without the written consent of Xx. Xxxx, the Purchaser shall
not
consent to, vote for, or request a reverse stock split of the outstanding
Metaphor Common Stock. Notwithstanding the foregoing, the parties to this
Agreement hereby agree that this section shall not prohibit any issuance of
Metaphor Common Stock to any third party, to any increase in the total number
of
shares of Metaphor Common Stock authorized, or any authorization or issuance
of
any class of equity in Metaphor that has preferences and rights superior to
the
Metaphor Common Stock.
11.3 Confidentiality
Between
the date of this Agreement and the Closing Date, the Purchaser and Metaphor
will
maintain in confidence, and will cause the directors, officers, employees,
agents, and advisors of the Purchaser and Metaphor to maintain in confidence,
any written, oral, or other information obtained in confidence from another
party in connection with this Agreement or the Contemplated Transactions,
unless:
(a) such
information is already known to such party or to others not bound by a duty
of
confidentiality or such information becomes publicly available through no fault
of such party;
(b) the
use
of such information is necessary or appropriate in making any filing or
obtaining any consent or approval required for the consummation of the
Contemplated Transactions; or
(c) the
furnishing or use of such information is required by or necessary or appropriate
in connection with legal proceedings.
If
the
Contemplated Transactions are not consummated, each party will return or destroy
as much of such written information as the other party may reasonably request,
and the provisions of this Section 11.2 will survive the Closing. If the
Contemplated Transactions are consummated, the provisions of this Section 11.2
will survive the Closing with respect to the Metaphor and its officers,
directors, and agents.
11.4 Notices
All
notices, consents, waivers, and other communications under this Agreement must
be in writing and will be deemed to have been duly given when:
(a) delivered
by hand (with written confirmation of receipt);
(b) sent
by
facsimile on a business day (with written confirmation of receipt), or on the
next business day if sent by facsimile on any day other than a business day;
or
(c) when
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and
facsimile numbers set forth below (or
to
such other
addresses and facsimile numbers as a party may designate by notice to the other
parties):
Metaphor:
Xxxx
X.
Xxxx, Esq.
Chief
Executive Officer
000
Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx,
XX 00000
Fax:
(000) 000-0000
8
Holdings: Xxxxxxx
Xxxxxxx
8
Holdings LLC
0000
Xxxxx Xxxxxx
Xxxxxxx,
XX 00000
Fax:
(000) 000-0000
with
a
copy to: Xxxx
Xxxxxxxxx, Esq.
Xxxxxx
Xxxxx LLP
0000
Xxxxxxx Xxxxxx
Xxxxx
0000
Xxxxxx,
XX 00000
Fax:
(000) 000-0000
11.5 Jurisdiction;
Service of Process
Any
action or proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement may be brought against any of the parties in
the
federal or state courts located in the State of Colorado, County of Denver,
and
each of the parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. Process in any action or proceeding referred
to
in the preceding sentence may be served on any party anywhere in the
world.
11.6 Further
Assurances
The
parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents,
and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
11.7 Waiver
The
rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement or the documents referred to
in
this Agreement will operate as a waiver of such right, power, or privilege,
and
no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or
the
exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law:
(a) no
claim
or right arising out of this Agreement or the documents referred to in this
Agreement can be discharged by one party, in whole or in part, by a waiver
or
renunciation of the claim or right
unless
in
writing signed by the other party;
(b) no
waiver
that may be given by a party will be applicable except in the specific instance
for which it is given; and
(c) no
notice
to or demand on one party will be deemed to be a waiver of any obligation of
such party or of the right of the party giving such notice or demand to take
further action without notice or
demand
as
provided in this Agreement or the documents referred to in this
Agreement.
11.8 Entire
Agreement and Modification
This
Agreement supersedes all prior agreements between the parties with respect
to
its subject matter (including the Agreement in Principle between 8 Holdings
and
Metaphor dated December 30, 2004) and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by the
party
to be charged with the amendment.
11.9 Metaphor
Disclosure Schedule.
(a) The
disclosures in the Metaphor Disclosure Schedule, and those in any supplement
thereto, relate only to the representations and warranties in the Section of
the
Agreement in which they are
expressly
designated and not to any other representation or warranty in this
Agreement.
(b) In
the
event of any inconsistency between the statements in the body of this Agreement
and those in the Metaphor Disclosure Schedule (other than an exception expressly
set forth as such in the
Metaphor
Disclosure Schedule with respect to a specifically identified representation
or
warranty), the statements in the body of this Agreement will
control.
11.10 Assignments,
Successors, and No Third-Party Rights
Neither
party may assign any of its rights under this Agreement without the prior
consent of the other parties,
except
that the Purchaser may assign any of its rights under this Agreement to any
Affiliate of the Purchaser. Subject to the preceding sentence, this Agreement
will apply to, be binding in all respects upon, and inure to the benefit of
the
successors and permitted assigns of the parties. Nothing expressed or referred
to in this Agreement will be construed to give any Person other than the parties
to this Agreement any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provision of this Agreement. This Agreement
and
all of its provisions and conditions are for the sole and exclusive benefit
of
the parties to this Agreement and their successors and assigns.
11.11 Severability
If
any
provision of this Agreement is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Agreement will remain
in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to
the
extent not held invalid or unenforceable.
11.12 Section
Headings, Construction
The
headings of Sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All references to “Section”
or “Sections” refer to the corresponding Section or Sections of this Agreement.
All words used in this Agreement will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly provided, the
word “including” does not limit the preceding words or terms.
11.13 Time
of Essence.
With
regard to all dates and time periods set forth or referred to in this Agreement,
time is of the essence.
11.14 Governing
Law
This
Agreement will be governed by the laws of the State of Nevada without regard
to
conflicts of laws principles.
11.15 Counterparts
This
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
11.16 Further
Documents.
The
parties agree that, in the interests of executing this Agreement at this time,
which the parties agree is important to the consummation of the various related
transactions, this Agreement is being executed prior to 8 Holdings’ receipt and
review of the Metaphor Disclosure Schedules and certain other documents and
materials required to be provided by Metaphor to 8 Holdings (all such Metaphor
Disclosure Schedules, documents and materials are referred to collectively
as
the “Required Documents”). As a result, the parties hereto acknowledge and agree
that 8 Holdings shall be entitled to terminate this Agreement, in its
discretion, at any time not later than 10 business days after receipt of the
Required Documents.
[Signature
Page Follows]
2
208983
IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement as
of
the date first written above.
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as an individual
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(printed):
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8
HOLDINGS LLC
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2
208983
