AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
BRONZE MARKETING, INC.
AND
THE HOLDER HOSPITALITY GROUP, INC.
TABLE OF CONTENTS
1. Plan of Reorganization. . . . . . . . . . . . . . . . . . . 1
2. Exchange of Shares. . . . . . . . . . . . . . . . . . . . . 1
3. Pre-Closing Events. . . . . . . . . . . . . . . . . . . . . 2
4. Exchange of Securities. . . . . . . . . . . . . . . . . . . 2
5. Other Events Occurring at Closing . . . . . . . . . . . . . 2
6. Delivery of Shares. . . . . . . . . . . . . . . . . . . . . 2
7. Representations of THHG Stockholders. . . . . . . . . . . . 3
8. Representations of THHG . . . . . . . . . . . . . . . . . . 3
9. Representations of Bronze and Xxxxx. . . . . . . . . . . 4
10. Closing . . . . . . . . . . . . . . . . . . . . . . . . 8
11. Conditions Precedent to the Obligations of THHG . . . . 8
12. Conditions Precedent to the Obligations of Bronze . . .10
13. Indemnification . . . . . . . . . . . . . . . . . . . .11
14. Nature and Survival of Representations. . . . . . . . .11
15. Documents at Closing. . . . . . . . . . . . . . . . . .11
16. Finder's Fees . . . . . . . . . . . . . . . . . . . . .13
17. Miscellaneous . . . . . . . . . . . . . . . . . . . . .13
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Exhibit A - THHG Stockholder Schedule
Exhibit B - Placement Agency Agreement
Exhibit C - Amendment to Articles of Incorporation
Exhibit D - Certificate of Designation of Series A Voting Preferred Stock
Exhibit E - Investment Letter
(i)
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (hereinafter the "Agreement")
is entered into effective as of this 15th day of March, 2004, by and
among Bronze Marketing, Inc., a Nevada corporation (hereinafter "Bronze");
Xxxxxxx Xxxxx, the sole officer and director of Bronze (hereinafter "Xxxxx");
The Holder Hospitality Group, Inc., a Nevada corporation (hereinafter "THHG"),
and the undersigned owners of the outstanding shares of common stock of THHG
(hereinafter the "THHG Stockholders").
RECITALS:
WHEREAS, the THHG Stockholders own all of the issued and outstanding
common stock of THHG (the "THHG Common Stock"). Bronze desires to acquire the
THHG Common Stock solely in exchange for voting common stock and preferred
stock of Bronze, making THHG a wholly-owned subsidiary of Bronze; and
WHEREAS, the THHG Stockholders (as set forth on Exhibit "A") desire to
acquire voting common stock and preferred stock of Bronze in exchange for the
THHG Common Stock, as more fully set forth herein.
NOW THEREFORE, for the mutual consideration set out herein and other
good and valuable consideration, the legal sufficiency of which is hereby
acknowledged, the parties agree as follows:
AGREEMENT
1. PLAN OF REORGANIZATION. It is hereby agreed that the THHG Common
Stock shall be acquired by Bronze in exchange solely for Bronze common and
preferred voting stock (the "Bronze Shares"). It is the intention of the
parties hereto that all of the issued and outstanding shares of capital stock
of THHG shall be acquired by Bronze in exchange solely for Bronze common and
preferred voting stock and that this entire transaction qualify as a corporate
reorganization under Section 368(a)(1)(B) and/or Section 351 of the Internal
Revenue Code of 1986, as amended, and related or other applicable sections
thereunder.
2. EXCHANGE OF SHARES. Bronze and THHG Stockholders agree that on the
Closing Date or at the Closing as hereinafter defined, the THHG Common Stock
shall be delivered at Closing to Bronze in exchange for the Bronze Shares, as
follows:
(a) At Closing, Bronze shall, subject to the conditions set forth
herein, be obligated to issue an aggregate of 28,500,000 shares of Bronze
common stock and 150,000 shares of Series A Voting Preferred Stock ("Preferred
Stock") for delivery to the THHG Stockholders in exchange for 100% of the THHG
Common Stock.
(b) The THHG Stockholders shall surrender at Closing all of their
shares of THHG Common Stock in exchange for the Bronze Shares.
3. PRE-CLOSING EVENTS. The Closing is subject to the completion of
the following:
(a) At Closing, Bronze shall have 1,500,000 shares of its common stock
issued and outstanding and no other shares of capital stock issued or
outstanding and there shall be no outstanding options, warrants or other
rights to purchase or otherwise acquire Bronze securities except those granted
at Closing as described herein relating to the transactions described herein.
(b) Bronze shall have no, and shall demonstrate to the satisfaction of
THHG that it has no, material assets and no liabilities contingent or fixed.
(c) All currently outstanding shares of THHG preferred stock shall be
redeemed and/or cancelled so that THHG has no preferred stock outstanding as
of the Closing.
(d) Bronze shall have completed at least the minimum amount of its best
efforts, $3,000,000 minimum - $5,000,000 maximum private offering which is to
be sold by Xxxxxx Group Capital (the "Private Placement") at $1.00 per share.
The form of the Placement Agency Agreement between Bronze and Xxxxxx Group
Capital is attached hereto as Exhibit "B". This Private Placement will be
sold only to accredited investors and said investors will have no registration
rights with respect to the Private Placement.
(e) All other conditions precedent to Closing as described herein shall
be met.
(f) THHG shall offer evidence reasonably satisfactory to Bronze that it
has entered into binding agreements and has arranged for satisfactory
financing to acquire at least four additional rural casinos in the State of
Nevada.
4. EXCHANGE OF SECURITIES. As of the Closing Date all shares of THHG
Common Stock issued and outstanding on the Closing Date shall be exchanged for
the Bronze Shares (up to an aggregate amount of 28,500,000 shares of common
stock and 150,000 shares of Preferred Stock) to be delivered at Closing to the
THHG Stockholders in proportion to their THHG stock ownership, subject to the
conditions set forth below. All such outstanding shares of THHG Common Stock
shall be deemed, after Closing, to be owned by Bronze. The holder of such
certificates previously evidencing shares of THHG Common Stock outstanding
immediately prior to the Closing Date shall cease to have any rights with
respect to such shares of THHG Common Stock. Therefore, THHG shall become a
wholly-owned subsidiary of Bronze.
5. OTHER EVENTS OCCURRING AT CLOSING. At Closing, the following shall
be accomplished:
(a) Bronze shall file an amendment to its Articles of Incorporation
with the Secretary of State of the State of Nevada in substantially the form
attached hereto as Exhibit "C" effecting an amendment to its Articles of
Incorporation to reflect a name change (as selected by THHG).
(b) Bronze shall file a Certificate of Designation of the Rights and
Preferences of the Series A Voting Preferred Stock with the Secretary of State
of the State of Nevada in substantially the form attached hereto as Exhibit
"D".
(c) The resignation of the existing Bronze sole officer and director
and appointment of new officers and directors as specified in this Agreement.
6. DELIVERY OF SHARES. On or as soon as practicable after the Closing
Date, THHG will use its best efforts to cause the THHG Stockholders to
surrender certificates for cancellation representing their shares of THHG
Common Stock, against delivery of certificates representing the Bronze Shares
for which the shares of THHG Common Stock are to be exchanged at Closing.
7. REPRESENTATIONS OF THHG STOCKHOLDERS. Each THHG Stockholder hereby
represents and warrants effective, each only as to its own THHG shares, this
date and the Closing Date as follows:
(a) The THHG Common Stock is free from claims, liens, or other
encumbrances, and at the Closing Date said THHG Stockholders will have good
title and the unqualified right to transfer and dispose of such THHG Common
Stock.
(b) Each THHG Stockholder is the sole owner of the issued and
outstanding THHG Common Stock as set forth in Exhibit "A";
(c) Each of said THHG Stockholders has no present specific intent to
sell or dispose of the Bronze Shares and is not under a binding obligation,
formal commitment, or existing plan to sell or otherwise dispose of the Bronze
Shares.
8. REPRESENTATIONS OF THHG. THHG hereby represents and warrants as
follows, which warranties and representations shall also be true as of the
Closing Date (references to THHG include THHG and each of its subsidiary
corporations where applicable):
(a) The THHG Stockholders as set forth on Exhibit "A" are the sole
record and beneficial owners of the issued and outstanding common stock of
THHG.
(b) THHG has no outstanding or authorized capital stock, warrants,
options or convertible securities other than as described in the THHG
Financial Statements or any Exhibit attached hereto.
(c) The THHG audited financial statements as of and for the periods
ended December 31, 2002 and 2001, and the unaudited September 30, 2003
financial statements, which have been delivered to Bronze, and the year end
December 31, 2003, financial statements of THHG which will be delivered to
Bronze prior to Closing, (hereinafter collectively referred to as the "THHG
Financial Statements") fairly present the financial condition of THHG as of
the dates thereof. There are no material liabilities or obligations, either
fixed or contingent, not disclosed in the THHG Financial Statements or in any
exhibit thereto or notes thereto other than contracts or obligations in the
ordinary course of business and expenses incurred in connection with the
transactions contemplated by this Agreement; and no such contracts or
obligations in the ordinary course of business constitute liens or other
liabilities which materially alter the financial condition of THHG as
reflected in the THHG Financial Statements. THHG has good title to all assets
shown on the THHG Financial Statements subject only to dispositions and other
transactions in the ordinary course of business, the disclosures set forth
therein and liens and encumbrances of record.
(d) Since the date of the THHG Financial Statements, there have not
been, and at Closing will not be, any material adverse changes in the
financial position of THHG except changes arising in the ordinary course of
business, or from the incurrence of expenses in connection with the
transactions contemplated by this Agreement or as otherwise disclosed in
writing to Bronze.
(e) THHG is not a party to any material pending litigation or, to its
best knowledge, any governmental investigation or proceeding, not reflected in
the THHG Financial Statements, and to its best knowledge, no material
litigation, claims, assessments or any governmental proceedings are threatened
against THHG.
(f) THHG is in good standing in its jurisdiction of incorporation, and
is in good standing and duly qualified to do business in each jurisdiction
where required to be so qualified except where the failure to so qualify would
have no material negative impact on THHG.
(g) THHG has (or, by the Closing Date, will have filed) all material
tax, governmental and/or related forms and reports (or extensions thereof) due
or required to be filed and has (or will have) paid or made adequate
provisions for all taxes or assessments which have become due as of the
Closing Date.
(h) THHG has not materially breached any material agreement to which it
is a party. THHG has previously given Bronze copies or access thereto of all
material contracts, commitments and/or agreements to which THHG is a party
including all relationships or dealings with related parties or affiliates.
THHG has disclosed to Bronze that it is not current in its payments to IGT
relating to the acquisition of the Silver Club, however, THHG shall provide a
written waiver of such defaults by IGT.
(i) THHG has no subsidiary corporations except CMS International, a
Nevada corporation, which in turn owns all the common stock of Silver Club, a
Nevada corporation.
(j) THHG has made all material corporate financial records, minute
books, and other corporate documents and records available for review to
present management of Bronze prior to the Closing Date, during reasonable
business hours and on reasonable notice.
(k) The execution of this Agreement does not materially violate or
breach any material agreement or contract to which THHG is a party and has
been duly authorized by all appropriate and necessary corporate action under
Nevada or other applicable law and THHG, to the extent required, has obtained,
or will use it best efforts to obtain prior to Closing, all necessary
approvals or consents required by applicable law, regulations, or any
agreement to which THHG is a party.
(l) All disclosure information provided by THHG for the purpose of
being set forth in disclosure documents of Bronze or otherwise delivered to
Bronze by THHG for use in connection with the transaction (the "Acquisition")
described herein is true, complete as to the items described) and accurate in
all material respects.
9. REPRESENTATIONS OF BRONZE AND OTHERS. Xxxxx, and Xxxx Xxxxx as the
founder and a principal shareholder of Bronze, each to the best of their
knowledge, and Bronze hereby jointly and severally represent and warrant as
follows, each of which representations and warranties shall continue to be
true as of the Closing Date:
(a) As of the Closing Date, the Bronze Shares, to be issued and
delivered to the THHG Stockholders hereunder will, when so issued and
delivered, constitute, duly authorized, validly and legally issued shares of
Bronze capital stock, fully-paid and nonassessable. The total number of
Bronze shares of common stock outstanding as of the Closing Date shall be
1,500,000 prior to the completion of the acquisition of THHG. These shares do
not include shares expected to be offered in a Private Placement at $1.00 per
share prior to Closing, the proceeds of which will be turned over to the new
management of Bronze at Closing for use as working capital by THHG. As of the
Closing Date, Bronze will have no outstanding or authorized securities,
warrants, options, other rights to purchase or otherwise acquire capital stock
or securities of the Company, preemptive rights, rights of first refusal,
registration rights or related commitments of any nature other than as
described herein or approved by THHG in the Bronze Private Placement referred
to above.
(b) Bronze has the corporate power and authority to enter into this
Agreement and to perform its respective obligations hereunder. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action, including the board of directors and shareholders of Bronze. The
execution and performance of this Agreement will not constitute a material
breach of any agreement, indenture, mortgage, license or other instrument or
document to which Bronze is a party or by which its assets and properties are
bound, and will not violate any judgment, decree, order, writ, rule, statute,
or regulation applicable to Bronze or its properties. The execution and
performance of this Agreement will not violate or conflict with any provision
of the Articles of Incorporation or by-laws of Bronze.
(c) Bronze has delivered to THHG a true and complete copy of its
audited financial statements as of and for the years ended December 31, 2000,
2001, 2002 and 2003, (the "Bronze Financial Statements"). The Bronze
Financial Statements are complete, accurate and fairly present the financial
condition of Bronze as of the dates thereof and the results of its operations
for the periods then ended. There are no material liabilities or obligations
either fixed or contingent not reflected therein. The Bronze Financial
Statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be indicated therein
or in the notes thereto) and fairly present the financial position of Bronze
as of the dates thereof and the results of its operations and changes in
financial position for the periods then ended. Immediately following the
Closing, Bronze's present management will cause all of Bronze's financial
records,including state and federal tax returns, to be delivered to new
management nominated by THHG.
(d) Since December 31, 2003, there have not been any material adverse
changes in the financial condition of Bronze except with regard to
disbursements to pay reasonable and ordinary expenses in connection with
maintaining its corporate status and pursuing the matters contemplated in this
Agreement and the disposition of Bronze's remaining assets and the payment of
all liabilities. Prior to Closing, all accounts payable and other liabilities
of Bronze shall be paid and satisfied in full and Bronze shall, at Closing,
have no obligations, debts, claims or liabilities of any nature either
contingent or fixed (including without limitation, any tax liabilities not yet
due, except for Nevada franchise taxes, if any).
(e) Bronze is not a party to or the subject of any pending litigation,
claims, decrees, orders, stipulations or governmental investigation or
proceeding not reflected in the Bronze Financial Statements or otherwise
disclosed herein, and there are no lawsuits, claims, assessments,
investigations, or similar matters, threatened or contemplated against or
affecting Bronze, its management or its properties.
(f) Bronze is duly organized, validly existing and in good standing
under the laws of the State of Nevada; has the corporate power to own its
property and to carry on its business as now being conducted and is duly
qualified to do business in any jurisdiction where so required except where
the failure to so qualify would have no material negative impact on it.
(g) Bronze has filed all federal, state, county and local income,
excise, property and other tax, governmental and/or related returns, forms, or
reports, which are due or required to be filed by it prior to the date hereof,
except where the failure to do so would have no material adverse impact on
Bronze, and has paid or made adequate provision in the Bronze Financial
Statements for the payment of all taxes, fees, or assessments which have or
may become due pursuant to such returns or pursuant to any assessments
received. Bronze is not delinquent or obligated for any tax, penalty,
interest, delinquency or charge.
(h) There are no existing options, calls, warrants, preemptive rights
or commitments of any character relating to the issued or unissued capital
stock or other securities of Bronze, except as contemplated in this Agreement.
(i) The corporate financial records, minute books, and other documents
and records of Bronze have been made available to THHG prior to the Closing
and shall be delivered to new management of Bronze at Closing.
(j) Bronze has not breached, nor is there any pending, or to the
knowledge of management, any threatened claim that Bronze has breached, any of
the terms or conditions of any agreements, contracts or commitments to which
it is a party or by which it or its assets are is bound. The execution and
performance hereof will not violate any provisions of applicable law or any
agreement to which Bronze is subject. Bronze hereby represents that it has no
business operations or material assets and it is not a party to any material
contract or commitment other than appointment documents with its transfer
agent, and that it has disclosed to THHG all relationships or dealings with
related parties or affiliates.
(k) Bronze common stock is currently approved for quotation on the
Electronic Bulletin Board under the symbol "BNZE" and there are no stop orders
in effect with respect thereto. Bronze has not been informed, and has no
reason to believe, that its common stock will be delisted by the Electronic
Bulletin Board.
(l) All information regarding Bronze which has been provided to THHG or
otherwise disclosed in connection with the transactions contemplated herein,
is true, complete and accurate in all material respects. Bronze has provided
to THHG all material information regarding Bronze. Bronze and Xxxxx
specifically disclaim any responsibility regarding disclosures as to THHG, its
business or its financial condition.
(m) As of Closing the outstanding capitalization of Bronze shall
consist of 1,500,000 shares of common stock, but prior to the commitment to
issue 28,500,000 common shares and 150,000 preferred shares to the THHG
Stockholders pursuant to the terms of this Agreement, and not including any
securities committed under the Private Placement.
(n) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not (a) constitute a
violation (with or without the giving of notice or lapse of time, or both) of
any provision of law or any judgment, decree, order, regulation or rule of any
court or other governmental authority applicable to Bronze, (b) require any
consent, approval or authorization of, or declaration, filing or registration
with, any person, except for compliance with applicable securities laws and
the filing of all documents necessary to consummate the transaction with any
governmental entity, (c) result in a default (with or without the giving of
notice or lapse of time, or both) under, acceleration or termination of, or
the creation in any party of the right to accelerate, terminate, modify or
cancel, any agreement, lease, note or other restriction, encumbrance,
obligation or liability to which Bronze is a party or by which either is bound
or to which any of their assets are subject, (d) result in the creation of any
material lien or encumbrance upon the assets of Bronze or the funds being
delivered in connection herewith, or (e) conflict with or result in a breach
of or constitute a default under any provision of the charter documents of
Bronze.
(o) Bronze has, and at the Closing Date Bronze shall have, disclosed to
THHG all events, conditions and facts materially affecting the business,
finances and legal status of Bronze.
(p) Bronze filed a Registration Statement with the Securities and
Exchange Commission on Form SB-2 which became effective on October 27, 1999.
All information set forth in said Registration Statement was true, correct and
complete, and in full compliance with all applicable securities laws at the
time of its filing and effectiveness. Pursuant to the effectiveness of said
Registration Statement, Bronze became subject to the reporting obligations of
the Securities Exchange Act of 1934 (the "Exchange Act") pursuant to Section
15(d) thereof. Bronze has filed all forms and reports required to be filed by
it under the Exchange Act and all such documents have been true, complete and
accurate in all material respects. Bronze is not subject at the present time,
to the requirements of Section 12(g) of the Exchange Act and is therefore not
subject to the Proxy Rules (Section 14) of the Exchange Act. Therefore any
solicitation of shareholder approval in connection with the transactions
described herein is not subject to such Proxy Rules.
(q) There are no existing or threatened liabilities, claims, lawsuits
and there is no basis for the same, with respect to Bronze's original stock
issuance to its founders, its subsequent securities offerings, solicitation of
proxies in connection with any stockholders' meeting, other dealings with its
stockholders, the public trading of Bronze's securities, activities of brokers
in connection with Bronze's securities. This includes matters relating to
state or federal securities laws as well as general common law or state
corporation law principles.
(r) This Agreement is enforceable against Bronze in accordance with its
terms.
10. CLOSING. The Closing of the transactions contemplated herein shall
take place on such date (the "Closing") as mutually determined by the parties
hereto when all conditions precedent have been met and all required documents
have been delivered, which Closing is expected to take place as soon as
practicable after the receipt of approval by the Nevada Gaming Control Board
and any other applicable licensing agencies, but no later than October 1,
2004. unless extended by mutual consent of all parties hereto. The "Closing
Date" of the transactions described herein (the "Acquisition"), shall be that
date on which all conditions set forth herein have been met and the Bronze
Shares are issued in exchange for the THHG Common Stock. Absent further
mutual agreement, no party shall have any further obligations under this
Agreement if all conditions precedent to its obligations are not fulfilled by
October 1, 2004.
11. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THHG. All obligations
of THHG under this Agreement, unless waived by THHG, are subject to the
fulfillment, prior to or as of the Closing and/or the Closing Date, as
indicated below, of each of the following conditions, unless waived by THHG:
(a) The representations and warranties by or on behalf of Xxxx Xxxxx,
Xxxxx and Bronze contained in this Agreement or in any certificate or document
delivered pursuant to the
provisions hereof shall be true in all material
respects at and as of the Closing and Closing Date as though such
representations and warranties were made at and as of such time.
(b) Bronze shall have performed and complied with all covenants,
agreements, and conditions set forth in, and shall have executed and delivered
all documents required by this Agreement to be performed or complied with or
executed and delivered by it prior to or at the Closing.
(c) On or before the Closing, the board of directors, and shareholders
representing a majority interest the outstanding common stock of Bronze, shall
have approved in accordance with applicable state corporation law the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein.
(d) On or before the Closing Date, Bronze shall have delivered to THHG
certified copies of resolutions of the board of directors and shareholders of
Bronze approving and authorizing the execution, delivery and performance of
this Agreement and authorizing all of the necessary and proper action to
enable Bronze to comply with the terms of this Agreement including the
election of THHG's nominees to the Board of Directors of Bronze and all
matters outlined herein.
(e) The Acquisition shall be permitted by applicable law and Bronze
shall have sufficient shares of its capital stock authorized to complete the
Acquisition. The increase in authorized common stock shall be accomplished by
filing a certificate of amendment to its articles of incorporation in
substantially the form attached hereto as Exhibit "C".
(f) At Closing, the existing sole officer and director of Bronze shall
have resigned in writing from all positions as director and officer of Bronze
effective upon the election and appointment of the THHG nominees.
(g) At the Closing, all instruments and documents delivered to THHG and
THHG Stockholders, and all actions taken by Bronze, pursuant to the provisions
hereof, and all matters relating to compliance with applicable securities
laws, shall be reasonably satisfactory to legal counsel for THHG.
(h) The restricted Bronze shares to be issued to THHG Stockholders at
Closing will be validly issued, nonassessable and fully-paid under Nevada
corporation law as evidenced by a legal opinion from Counsel for Bronze, and
will be issued in compliance with all federal, state and applicable
corporation and securities laws.
(i) THHG and THHG Stockholders shall have received the advice of their
tax advisor, if deemed necessary by them, as to all tax aspects of the
Acquisition.
(j) THHG shall have received all necessary and required approvals and
consents from required parties including the approval of all applicable Nevada
Gaming Authorities.
(k) At the Closing, Bronze shall have delivered to THHG an opinion of
its counsel dated as of the Closing to the effect that:
(i) Bronze is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation;
(ii) This Agreement has been duly authorized, executed and
delivered by Bronze and is a valid and binding obligation of Bronze
enforceable in accordance with its terms;
(iii) Bronze through its board of directors and stockholders has
taken all corporate action necessary for performance under this
Agreement, including, the amendment of its Articles of Incorporation.
(iv) The documents executed and delivered by Bronze to THHG and
THHG Stockholders hereunder are valid duly executed and delivered, and
binding in accordance with their terms and vest in THHG Stockholders,
all right, title and interest in and to the Bronze Shares to be issued
pursuant to the terms hereof, and the Bronze Shares when issued will be
duly and validly issued, fully-paid and nonassessable;
(v) Bronze has the corporate power to execute, deliver and
perform under this Agreement;
(vi) The execution, delivery and performance of this Agreement
and the, consummation of the transactions contemplated hereby will not
(a) to the best of such counsel's knowledge, constitute a violation
(with or without the giving of notice or lapse of time, or both) of any
provision of law or any judgment, decree, order, regulation or rule of
any court or other governmental authority applicable to Bronze, (b)
require any consent, approval or authorization of, or declaration,
filing or registration with, any person, except for compliance with
applicable securities laws (including exemptions from registration) and
the filing of all documents necessary to consummate the transaction with
any governmental entity, (c) to the best of such counsel's knowledge
result in a default (with or without the giving of notice or lapse of
time, or both) under, acceleration or termination of, or the creation in
any party of the right to accelerate, terminate, modify or cancel, any
agreement, lease, note or other restriction, encumbrance, obligation or
liability to which Bronze is a party or by which either is bound or to
which any of their assets are subject, (d) result in the creation of any
material lien or encumbrance upon the assets of Bronze or the funds
being delivered in connection herewith, or (e) conflict with or result
in a breach of or constitute a default under any provision of the
charter documents of Bronze;
(vii) Legal counsel for Bronze has represented Bronze since its
inception and is not aware, after diligent inquiry, of any liabilities,
claims, potential for contingent liabilities or lawsuits involving
Bronze.
12. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BRONZE. All obligation
of Bronze under this Agreement are subject to the fulfillment, prior to or at
the Closing, of each of the following conditions:
(a) The representations and warranties by THHG and THHG Stockholders
contained in this Agreement or in any certificate or document delivered
pursuant to the provisions hereof shall be true in all material respects at
and as of the Closing as though such representations and warranties were made
at and as of such time.
(b) THHG shall have performed and complied with, in all material
respects, all covenants, agreements, and conditions required by this Agreement
to be performed or complied with by it prior to or at the Closing;
(c) THHG shall deliver on behalf of THHG Stockholders a letter commonly
known as an "Investment Letter," signed by each of said shareholders, in
substantially the form attached hereto as Exhibit "D", acknowledging that the
Bronze Shares are being acquired for investment purposes.
(d) THHG shall deliver an opinion of its legal counsel to the effect
that:
(i) THHG is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation and is
duly qualified to do business in any jurisdiction where so required
except where the failure to so qualify would have no material adverse
impact on THHG;
(ii) This Agreement has been duly authorized, executed and
delivered by THHG.
13. INDEMNIFICATION. For a period of one year from the Closing,
Bronze and Xxxxx agree to jointly and severally indemnify and hold harmless
THHG and the THHG Stockholders, and THHG agrees to indemnify and hold harmless
Bronze and Xxxxx, at all times after the date of this Agreement against and in
respect of any liability, damage or deficiency, all actions, suits,
proceedings, demands, assessments, judgments, costs and expenses including
attorney's fees incident to any of the foregoing, resulting from any material
misrepresentations made by an indemnifying party to an indemnified party, an
indemnifying party's breach of covenant or warranty or an indemnifying party's
nonfulfillment of any agreement hereunder, or from any material
misrepresentation in or omission from any certificate furnished or to be
furnished hereunder.
To the extent there is a material breach in this Agreement pursuant to
which THHG is entitled to indemnification, THHG shall be entitled to cause
Bronze management to issue to the THHG Stockholders additional shares of
Bronze common stock based on its fair market value at the time in an amount
equal to any claim or liability which may arise, all in addition to any other
remedies which may be available.
14. NATURE AND SURVIVAL OF REPRESENTATIONS. All representations,
warranties and covenants made by any party in this Agreement shall survive the
Closing and the consummation of the transactions contemplated hereby for one
year from the Closing. All of the parties hereto are executing and carrying
out the provisions of this Agreement in reliance solely on the
representations, warranties and covenants and agreements contained in this
Agreement and not upon any investigation upon which it might have made or any
representation, warranty, agreement, promise or information, written or oral,
made by the other party or any other person other than as specifically set
forth herein.
15. DOCUMENTS AT CLOSING. At the Closing, the following documents
shall be delivered:
(a) THHG will deliver, or will cause to be delivered, to Bronze the
following:
(i) a certificate executed by the President and Secretary of
THHG to the effect that all representations and warranties made by THHG
under this Agreement are true and correct as of the Closing, the same as
though originally given to Bronze on said date;
(ii) a certificate from the jurisdiction of incorporation of THHG
dated at or about the Closing to the effect that THHG is in good
standing under the laws of said jurisdiction;
(iii) An Investment Letter in the form attached hereto as Exhibit
"D" executed by each THHG Stockholder;
(iv) such other instruments, documents and certificates, if any,
as are required to be delivered pursuant to the provisions of this
Agreement;
(v) certified copies of resolutions adopted by the shareholders
and directors of THHG authorizing this transaction; and
(vi) all other items, the delivery of which is a condition
precedent to the obligations of Bronze as set forth herein.
(vii) the legal opinion required by Section 12(d) hereof.
(b) Bronze will deliver or cause to be delivered to THHG:
(i) stock certificates representing the Bronze Shares to be issued
as a part of the stock exchange as described herein;
(ii) a certificate of the President of Bronze, to the effect that
all representations and warranties of Bronze made under this Agreement
are true and correct as of the Closing, the same as though originally
given to THHG on said date;
(iii) certified copies of resolutions adopted by Bronze's board
of directors and Bronze's Stockholders authorizing the Acquisition and
all related matters described herein;
(iv) certificate from the jurisdiction of incorporation of Bronze
dated at or about the Closing Date that Bronze is in good standing under
the laws of said state;
(v) opinion of Bronze's counsel as described in Section 11(k)
above;
(vi) such other instruments and documents as are required to be
delivered pursuant to the provisions of this Agreement including
evidence of filing an amendment to its Articles of Incorporation
changing its name to such name and as selected by THHG and evidence of
filing a Certificate of Designation regarding the Preferred Stock in
substantially the form attached hereto as Exhibit "D".
(vii) resignation of the existing officer and director of Bronze;
(viii) all corporate and financial records of Bronze; and
(ix) all other items, the delivery of which is a condition
precedent to the obligations of THHG, as set forth in Section 12 hereof.
16. FINDER'S FEES. Bronze, represents and warrants to THHG, and THHG
represents and warrants to Bronze that neither of them, or any party acting on
their behalf, has incurred any liabilities, either express or implied, to any
"broker" of "finder" or similar person in connection with this Agreement or
any of the transactions contemplated hereby other than the commission payable
to Xxxxxx Group Capital in the Private Placement. In this regard, Bronze, on
the one hand, and THHG on the other hand, will indemnify and hold the other
harmless from any claim, loss, cost or expense whatsoever (including
reasonable fees and disbursements of counsel) from or relating to any such
express or implied liability other than as disclosed herein.
17. MISCELLANEOUS.
(a) Further Assurances. At any time, and from time to time, after the
Closing Date, each party will execute such additional instruments and take
such action as may be reasonably requested by the other party to confirm or
perfect title to any property transferred hereunder or otherwise to carry out
the intent and purposes of this Agreement.
(b) Waiver. Any failure on the part of any party hereto to comply with
any of its obligations, agreements or conditions hereunder may be waived in
writing by the party to whom such compliance is owed.
(c) Amendment. This Agreement may be amended only in writing as agreed
to by all parties hereto.
(d) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been given if delivered in person or
sent by prepaid first class registered or certified mail, return receipt
requested.
(e) Headings. The section and subsection headings in this Agreement
are inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement.
(f) Costs. In the event the transactions contemplated herein are not
consummated due to the failure of any condition precedent stated herein, the
parties shall each bear their own costs incurred in connection herewith.
(g) Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(h) Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Nevada.
(i) Binding Effect. This Agreement shall be binding upon the parties
hereto and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors and assigns.
(j) Entire Agreement. This Agreement and the attached Exhibits
constitute the entire agreement of the parties covering everything agreed upon
or understood in the transaction. There are no oral promises, conditions,
representations, understandings, interpretations or terms of any kind as
conditions or inducements to the execution hereof.
(k) Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
BRONZE MARKETING, INC.
By: /s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, President
/s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, individually
/s/ Xxxx Xxxxx
Xxxx Xxxxx, as to Paragraph 9
THE HOLDER HOSPITALITY GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxx, Xx.
Xxxxxx X. Xxxxxx, Xx., Chairman
STOCKHOLDERS OF THE HOLDER HOSPITALITY GROUP, INC.
THE HOLDER GROUP, LLC
By: /s/ Xxxxxx X. Xxxxxx, Xx.
Xxxxxx X. Xxxxxx, Xx.
/s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
T108reorgagr.bmi
EXHIBIT "A"
TO AGREEMENT AND PLAN OF REORGANIZATION
THHG Stockholder Schedule
BRONZE PREFERRED BRONZE COMMON
NAME AND ADDRESS SHARES TO BE ISSUED SHARES TO BE ISSUED
Xxxxxx X. Xxxxxx, Xx. 144,000 27,360,000
Xxxxx Xxxxxx 6,000 1,140,000
150,000 28,500,000
EXHIBIT "B"
TO AGREEMENT AND PLAN OF REORGANIZATION
PLACEMENT AGENCY AGREEMENT
BRONZE MARKETING, INC.
426 SOUTH 0000 XXXX #000
XXXX XXXX XXXX, XXXX 00000
PLACEMENT AGENCY AGREEMENT
April , 2004
Xxxxxx Securities LLC
d.b.a. Xxxxxx Group Capital
0000 Xxxxxxxxx Xxxx., Xxxxx 0000
Xxxxxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Gentlemen:
Bronze Marketing, Inc. (the "Company"), hereby confirms its agreement
(the "Agreement") with Xxxxxx Securities LLC (d.b.a. Xxxxxx Group Capital), a
Delaware limited liability company (the "Placement Agent"), as follows:
1. Offering.
(a) This Agreement relates to a $3,000,000 minimum - $5,000,000
maximum best efforts private placement of Bronze common stock, $.001 par
value, at $1.00 per share (the "Shares") offered solely to accredited
investors.
(b) Placement of the Shares by the Placement Agent will be made on a
"best efforts" basis (the "Offering"). The Placement Agent represents and
warrants to the Company that it is registered as a Broker Dealer with the
National Association of Securities Dealers. The minimum subscription for
Shares shall be $25,000; however, the Company and the Placement Agent may, in
their discretion, accept subscriptions for less than $25,000. The Shares will
be offered for a period of time (the "Initial Offering Period") commencing on
the date of the release for distribution of the Memorandum (as hereafter
defined) , and will, subject to acceptance of subscriptions for the Minimum
Amount continue for a period of up to ninety (90) days. The Initial Offering
Period may be extended by two (2) 45-day extensions at the written request of
the Company and at the discretion of the Placement Agent. Assuming the sale
of the minimum amount of the Offering in the Initial Offering Period and the
closing of the Acquisition as defined herein, the Offering may continue until
the entire Offering is completed, as set forth in paragraph 4(c) below.
(c) Subscriptions for the Shares will be accepted by the Company at a
price of $1.00 per Share (the "Offering Price"); provided, however, that the
Placement Agent shall not tender to the Company and the Company shall not
accept subscriptions for, or sell Shares to, any persons or entities who do
not qualify as "Accredited Investors," as such term is defined in Rule 501 of
Regulation D promulgated under Section 4(2) of the Securities Act of 1933, as
amended (the "Act").
(d) The offering of the Shares will be made by the Company pursuant to
the Offering Documents (as hereafter defined), which at all times will be in
form and substance acceptable to the Placement Agent and its counsel and
contain such legends and other information as the Placement Agent and its
counsel may, from time to time, deem necessary and desirable to be set forth
therein. "Offering Documents" as used in this Agreement means the
Confidential Offering Memorandum, which is to be prepared in substantial
conformity with the first draft of the Private Placement Memorandum included
herewith, prepared by Xxxxxx X. Xxxxxx & Associates (the "Memorandum"),
inclusive of all exhibits (including but not limited to the Subscription
Agreement and the Accredited Investor Questionnaire), and all amendments,
supplements and appendices thereto. Unless otherwise defined, each term used
in this Agreement will have the same meaning as set forth in the Offering
Documents.
2. A. Covenants to Deliver Representations and Warranties of the
Company The Company hereby agrees with and covenants to the Placement Agent
that, simultaneously with the Company delivery to the Placement Agent of the
Offering Documents, subject to review and approval by Blue Sky Counsel to the
Company, the Company shall deliver to the Placement Agent the following
representations and warranties:
(a) The Offering Documents have been diligently prepared by the
Company, in conformity with all applicable law, and are in compliance with
Regulation D as promulgated under Section 4(2) of the Act ("Regulation D"),
the Act and the requirements of all other rules and regulations (the
"Regulations") of the Securities and Exchange Commission (the "SEC") relating
to offerings of the type contemplated by the Offering, and the applicable
securities laws and the rules and regulations of those jurisdictions wherein
the Shares are to be offered and sold. The Shares will be offered and sold
pursuant to the registration exemption provided by Regulation D and Section
4(2) of the Act as a transaction not involving a public offering and the
requirements of any other applicable state securities laws and the respective
rules and regulations thereunder in those jurisdictions in which the Placement
Agent notifies the Company that the Shares are being offered for sale. The
Offering Documents describe all material aspects, including attendant risks,
of an investment in the Company. The Company has not taken nor will it
knowingly take any action which conflicts with the conditions and requirements
of, or which would make unavailable with respect to the Offering, the
exemption(s) from registration available pursuant to Regulation D, Rule 506,
under Section 4(2) of the Act and knows of no reason why any such exemption
would be otherwise unavailable to it.
The Company has not been subject to any
order, judgment or decree of any court of competent jurisdiction temporarily,
preliminarily or permanently enjoining it for failing to comply with Section
503 of Regulation D. This representation and warranty is qualified in its
entirety on the assumption that Placement Agent has conducted, is conducting,
and shall conduct the Offering in such a manner that it complies with, and has
taken no action, is taking no action, and shall not take any action to cause
the Offering not to comply with, Regulation D, the Regulations, Rule 506 under
section 4(2) of the Act, or any other applicable federal and/or state
securities laws, rules, or regulations.
(b) The Offering Documents do not include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. There is no fact which the
Company has not disclosed to the Placement Agent and its counsel and of which
the Company is aware which materially and adversely affects or could
reasonably be expected to materially and adversely affect the business
prospects, financial condition, operations, property or affairs of the Company
or any of its subsidiaries. This representation and warranty is not given
with respect to any information provided by Placement Agent (or on its behalf)
for inclusion in any Offering Document.
(c) The Company is a Corporation duly organized, validly existing and
in good standing under the laws of the State of Nevada. The Company does not
have an equity interest in any other firm, partnership, association or other
entity. The Company is duly qualified to transact business as a foreign
Corporation and is in good standing under the laws of each jurisdiction where
the location of its properties or the conduct of its business makes such
qualification necessary, except where the failure to be so qualified would not
have a material adverse effect on the Company or its business.
(d) The Company has all requisite power and authority to conduct its
business as presently conducted and as proposed to be conducted (as described
in the Offering Documents), to enter into and perform its obligations under
this Agreement and the other agreements contemplated hereby and by the
Offering Documents (collectively, the "Transaction Documents") and to issue,
sell and deliver the Shares. Each of the Transaction Documents has been duly
authorized. This Agreement has been duly executed and delivered and
constitutes, and each of the other Transaction Documents, upon due execution
and delivery, will constitute, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
subject to any applicable bankruptcy, insolvency or other laws affecting the
rights of creditors generally and to general equitable principles and the
availability of specific performance.
(e) None of the execution and delivery of, or performance by the
Company under any of the Transaction Documents or the consummation of the
transactions herein or therein contemplated conflicts with or violates, or
will result in the creation or
imposition of, any lien, charge or other
encumbrance upon any of the assets of the Company under any agreement or other
instrument to which the Company is a party or by which the Company or its
assets may be bound, or any term of the charter or bylaws of the Company, or
any license, permit, judgment, decree, order, statute, rule or regulation
applicable to the Company or any of its assets.
(f) All previous issuances by the Company of its securities were made
in accordance with applicable State and Federal Law.
(g) No consent, authorization or filing of or with any court or
governmental authority is required in connection with the issuance or the
consummation of the transactions contemplated herein or in the other
Transaction Documents, except for required filings with the SEC and applicable
"Blue Sky" or state securities commissions relating specifically to the
issuance of the Shares, except that all funds received with respect to this
Offering will be held in escrow pending and conditioned upon the closing of
the acquisition (the "Acquisition") of the Holder Hospitality Group, Inc.,
which Acquisition is subject to the approval of the State of Nevada Gaming
Authorities. If such Acquisition is not completed during the Initial Offering
Period all proceeds will be returned to investors.
(h) The financial statements prepared on behalf of the Company,
together with the related notes, of the Company included in the Offering
Documents (the "Financial Statements") are a fair representation of the
financial position of the Company as at the respective dates specified and the
results of its operations and changes in financial position for the respective
periods covered thereby. Such financial statements, any interim financials
and related notes were prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods indicated. The Company has no material liabilities of any kind,
whether accrued, absolute, contingent or otherwise, which would be required to
be disclosed in the Financial Statements in accordance with GAAP and which
have not been so disclosed, or entered into any material transactions which
would be required to be disclosed in the Financial Statements in accordance
with GAAP and which have not been so disclosed. The other financial and
statistical information with respect to the Company and any pro forma
information and related notes included in the Offering Documents present
fairly the information shown therein. The Company does not know of any facts,
circumstances or conditions materially adversely affecting its operations,
earnings or prospects as reported in the Offering Documents, which have not
been disclosed in the Offering Documents.
(i) To the knowledge of the Company the conduct of business by the
Company as presently and proposed to be conducted is not subject to continuing
oversight, supervision, regulation or examination by any governmental official
or body of the United States or any other jurisdiction wherein the Company
conducts or proposes to conduct such business, except such regulation as is
applicable to commercial
enterprises generally and except as to the proposed
gaming business of the Company. The Company has obtained all material
licenses, permits and other governmental authorization to conduct its business
as presently conducted.
(j) At the present time, none of the following matters exist. At the
time of delivery of the Offering Documents, the following representation will
be delivered with appropriate Schedules to be completed and attached: Other
than as set forth and described in Schedule 1 attached hereto and made a part
hereof, no default by the Company or, to the best knowledge of the Company,
any other party exists in the due performance under any material agreement to
which the Company is a party or to which any of its material assets is
subject. The agreements disclosed in the Offering Documents are the only
material agreements to which the Company is bound or by which its material
assets are subject, are accurately and fairly described in the Offering
Documents and are in full force and effect in accordance with their respective
terms, subject to any applicable bankruptcy, insolvency or other laws
affecting the rights of creditors generally and to general equitable
principles and the availability of specific performance.
(k) There are no actions, proceedings, claims or investigations, or
any state of facts which management of the Company has concluded could give
rise to any action, proceeding, claim or investigation, before or by any court
or governmental authority, which is pending or, to the knowledge of the
Company, threatened, against the Company, or involving its material assets or,
to the knowledge of the Company, involving any of its officers or directors
which, if determined adversely to the Company or such officer or director,
would result in any material adverse change in the condition (financial or
otherwise) or prospects of the Company or materially adversely affect the
transactions contemplated by this Agreement or the other Transaction Documents
or the enforceability thereof.
(l) The Company is not in breach, default or violation of: (i) any
indenture, mortgage, deed of trust, note or other agreement or instrument to
which the Company is a party or by which it is or may be bound or to which any
of its material assets may be subject; (ii) any statute, rule or regulation
currently applicable to the Company; or (iii) any judgment, decree or order
applicable to the Company, which violation or violations individually, or in
the aggregate, would result in any material adverse change in the condition
(financial or otherwise) or prospects of the Company.
(m) The Company does not own any real property in fee simple, and the
Company has good and marketable title to all property (personal, tangible and
intangible) owned by it, free and clear of all security interests, liens and
encumbrances.
(n) Subsequent to the respective dates as of which information is
given in the Offering Documents, the Company has operated its business
diligently and only in the ordinary course as theretofore conducted and, there
has been no: (i) material adverse
change in the condition (financial or
otherwise) of the Company or its business, assets or properties; (ii)
transaction otherwise than in the ordinary course of business, except as
described in the Offering Documents; (iii) issuance of any securities or any
rights to acquire any such securities, other than issuances pursuant to
contractual obligations in existence on the date of and fully disclosed and
described in the Memorandum; (iv) material damage, loss or destruction,
whether or not covered by insurance, with respect to any material asset or
property of the Company; or (v)contract, agreement or commitment to permit any
of the foregoing.
(o) At the present time, the Company has filed all required tax
returns. At the time of delivery of the Offering Documents, the following
representation will be delivered with appropriate Schedule to be completed and
attached: To the extent that same has become due, the Company has filed, on a
timely basis, each Federal, state, local and foreign tax return which is
required to be filed, or has requested an extension therefor, and has paid all
taxes and all related assessments, penalties and interest, other than those
which it is, in good faith, contesting, which are set forth in Schedule 2,
attached hereto and deemed incorporated herein.
(p) The Company has and will maintain appropriate casualty and
liability insurance coverage, in scope and amounts reasonable and customary
for similar businesses.
B. Representations and Warranties of the Placement Agent. The
Placement Agent hereby represents and warrants to Company the following which
are true and correct as of the date hereof, and which shall be true and
correct at all times during the period the Offering shall remain open, both as
to the Placement Agent and as to any affiliate, broker, agent, employee or
other representative (collectively, "Agents") hired, contracted or engaged by
the Placement Agent in connection with the Offering:
a. The Placement Agent and each Agent is duly organized, validly
existing and in good standing under the laws of its state of organization, and
are duly qualified to transact business as a foreign limited liability company
and is in good standing under the laws of each jurisdiction where the location
of its properties or the conduct of their respective businesses makes such
qualification necessary, except where the failure to be so qualified would not
have a material adverse effect on the Placement Agent or its business, any
Agent or its business, or this Offering.
b. The Placement Agent and, to the extent required by law, each Agent
are and will at all times be duly licensed as a broker dealer with all
applicable state and federal licensing agencies where such registration may be
necessary or appropriate to conduct the Offering provided for herein.
c. Assuming the truth of the representations and warranties of the
Company, and the Company's compliance with the following provisions of law,
the Shares will be offered
and sold pursuant to the registration exemption
provided by Regulation D and Section 4(2) of the Act as a transaction not
involving a public offering and the requirements of any other applicable state
securities laws and the respective rules and regulations thereunder in those
jurisdictions in which the Placement Agent notifies the Company that the
Shares are being offered for sale.
d. Neither the Placement Agent nor any of its Agents have taken nor
will any of them knowingly take any action which conflicts with the
conditions and requirements of, or which would make unavailable with respect
to the Offering, the exemption(s) from registration available pursuant to
Regulation D, Rule 506, under Section 4(2) of the Act and knows of no reason
why any such exemption would be otherwise unavailable to it.
e. The Placement Agent and each of its Agents have conducted, are
conducting, and shall conduct the Offering in such a manner that it complies
with, and has taken no action, are taking no action, and shall not take any
action to cause the Offering not to comply with, Regulation D, the
Regulations, Rule 506 under section 4(2) of the Act, or any other applicable
federal and/or state securities laws, rules, or regulations.
f. The Placement Agent and each Agent have all requisite power and
authority to conduct their respective businesses as presently conducted and as
proposed to be conducted in this Offering, and to enter into and perform their
obligations under this Agreement. This Agreement has been duly authorized,
executed and delivered and constitutes valid and binding obligations of the
Placement Agent, enforceable against the Placement Agent in accordance with
its respective terms, subject to any applicable bankruptcy, insolvency or
other laws affecting the rights of creditors generally and to general
equitable principles and the availability of specific performance.
g. None of the execution and delivery of, or performance by the
Placement Agent under this Agreement or the consummation of the transactions
herein contemplated conflicts with or violates any license, permit, judgment,
decree, order, statute, rule or regulation applicable to the Placement Agent
or any of its assets.
3. Placement Agent Appointment and Compensation.
(a) The Company hereby appoints the Placement Agent and its selected
dealers (all of whom must be registered broker-dealers with the NASD and with
states in which they perform selling activities) as its exclusive agent in
connection with the Offering. The Company has not and will not make, or
permit to be made, any offers or sales of the Shares other than through the
Placement Agent without its prior written consent. The Placement Agent has no
obligation to purchase any of the Shares. The agency of the Placement Agent
hereunder shall continue until the later of the Termination Date or the Final
Closing (as hereafter defined).
(b) The will deliver to the Placement Agent copies of the Offering
Documents and has consented, and hereby consents, to the use of such copies
for the purposes permitted by the Act and applicable securities laws, and
hereby authorizes the Placement Agent and its agents, employees and selected
dealers to use the Offering Documents in connection with the sale of the
Shares until the Termination Date, and no other person or entity is or will be
authorized by the Company to give any information or make any representations
other than those contained in the Offering Documents or to use any offering
materials other than those contained in the Offering Documents in connection
with the sale of the Shares.
(c) The Company will cooperate with the Placement Agent by making
available to its representatives such information as may be requested in
making a reasonable investigation of the and its affairs and shall provide
access to such employees as shall be reasonably requested. Prior to the First
Closing, if requested by the Placement Agent, the Company shall provide, at
its own expense, credit or similar reports on such key management persons as
the Placement Agent shall reasonably request.
(d) The Company shall pay to the Placement Agent a placement fee (the
"Placement Agent's Fee) equal to (i) seven percent (7%) of the Offering Price
paid per Share by each investor where the Placement Agent or Agents or brokers
working through the Placement Agent are the procuring source for such
investor; and (ii) Placement Agent Warrants on a basis of one warrant for
every five shares sold. The warrants shall be exercisable for a five year
term, exercisable as set forth herein in all or part, with registration
rights, as further described herein or any attachment hereto. Additionally,
the Company will pay the fees and expenses of Blue Sky Counsel for the
Company, whether engaged directly by the Company or through the Placement
Agent. The Placement Agent Warrants shall be exercisable at the following
price per share during each twelve month period following issuance of said
Warrants: (1) 1st twelve months = $1.10; (2) 2nd twelve months = $1.20; (3)
3rd twelve months = $1.30; (4) 4th twelve months = $1.40; and, (5) 5th twelve
months = $1.50.
4. Subscription and Closing Procedure. (a) Each prospective purchaser
will be required to complete and execute one original Signature Page for each
of the Subscription Agreement and the Accredited Investor Questionnaire in the
forms to be prepared and annexed to the Offering Documents ("Subscription
Documents"), which will be forwarded or delivered to the Placement Agent at
the Placement Agent's offices at the address set forth in Section 11 hereof,
together with the subscriber's check or good funds in the full amount of the
Offering Price for the number of Shares desired to be purchased.
(b) All funds for subscriptions received from the Offering of the
Shares will be promptly forwarded by the Placement Agent or the Company, if
received by it, to and deposited into the escrow account (the "Escrow
Account") established for such purpose with (the "Escrow
Agent"), with a power of attorney relating thereto in the
favor of Xxxxxxx X.
Xxxxxx, Xx., Financial Operations Principal of Placement Agent. All such
funds for subscriptions will be held in the Escrow Account pursuant to the
terms of an Escrow Agreement among the Company, the Placement Agent and the
Escrow Agent. The Company will pay all fees related to the establishment and
maintenance of the Escrow Account. Any interest accruing on funds in the
Escrow Account shall be utilized first to reimburse the Company for such fees
and the balance shall be distributed evenly to the Company and the Placement
Agent. Subject to the receipt of such subscriptions for the Minimum Amount,
the Company will either accept or reject the Subscription Documents in a
timely fashion and at each Closing will countersign the Subscription Documents
and provide duplicate copies of such Agreements to the Placement Agent for
distribution to the subscribers. The Company will give notice to the
Placement Agent of its acceptance of each subscription. The Company will
promptly return to subscribers incomplete, improperly completed, improperly
executed and rejected subscriptions and give written notice thereof to the
Placement Agent upon such return.
(c) If subscriptions for the Minimum Amount are received and accepted
on or prior to Ninety (90) days after the release for distribution of the
Memorandum, subject to not more than two (2) Forty-Five (45) day extensions
upon the mutual agreement of the Company and the Placement Agent, (the "Cut-
off Date") and the funds therefor have been collected by the Escrow Agent and
all of the conditions set forth elsewhere in this Agreement are fulfilled, a
closing shall be held promptly with respect to the Shares sold (the "First
Closing"). The First Closing shall only occur if the Company is able to
simultaneously complete the acquisition of The Holder Hospitality Group, Inc.
(the "Acquisition"). Thereafter, the remaining Shares will continue to be
offered and sold until the Termination Date which shall be a date no more than
90 days after the First Closing subject to two 45 day extensions. Additional
closings ("Closings") may from time to time be conducted at times mutually
agreeable with respect to additional Shares sold with the final closing
("Final Closing") to occur within ten days after the earlier of the
Termination Date or the sale of all Shares offered. Delivery of payment for
the accepted subscriptions for Shares from the funds held in the Escrow
Account will be made at each Closing at the Placement Agent's offices against
delivery of the Shares by the Company at the address set forth in Section 11
hereof (or at such other place as may be mutually agreed upon between the
Company and the Placement Agent).
(d) If Subscription Documents for the Minimum Amount have not been
received and accepted by the Company on or before the Cut-off Date (as may
have been extended as provided for herein) for any reason, the Company is
unable to complete the Acquisition the Offering will be terminated, no Shares
will be sold, and the Escrow Agent will, at the request of the Placement
Agent, cause all monies received from subscribers for the Shares to be
promptly returned to such subscribers without interest, penalty, expense or
deduction.
5. Further Covenants. The Company hereby covenants and agrees that:
(a) The Company shall not, at any time prior to the Final Closing,
take any action which would cause any of the representations and warranties
made by it in this Agreement not to be materially true, accurate and correct
on and as of each closing date with the same force and effect as if such
representations and warranties had been made on and as of each such date.
(b) If, at any time prior to the Final Closing any event shall occur
which does or may materially affect the Company or as a result of which it
might become necessary to amend or supplement the Offering Documents so that
the representations and warranties herein remain correct, or in case it shall,
in the reasonable opinion of counsel to the Placement Agent communicated in
writing or to the Company (with a copy to its counsel), be necessary to amend
or supplement the Offering Documents to comply with Regulation D or any other
applicable securities laws or regulations, the Company will promptly notify
the Placement Agent and shall, at its sole cost, prepare and furnish to the
Placement Agent copies of appropriate amendments and/or supplements in such
quantities as the Placement Agent may request. The Company will not at any
time, whether before or after the Final Closing, prepare or use any amendment
or supplement to the Offering Documents of which the Placement Agent will not
previously have been advised and furnished with a copy, or to which the
Placement Agent or its counsel will have objected reasonably in writing or
orally (confirmed in writing within 24 hours), or which is not in compliance
with the Act, the Regulations and other applicable securities laws. As soon
as the Company is advised thereof, the will Company advise the Placement
Agent and its counsel, and confirm the advice in writing, of any order
preventing or suspending the use of the Offering Documents, or the suspension
of the qualification or registration of the Shares for offering (to the extent
applicable) or the suspension of any exemption for such qualification or
registration of the Shares for offering in any jurisdiction, or of the
institution or threatened institution of any proceedings for any of such
purposes, and the Company will use its good faith reasonable efforts to
prevent the issuance of any such order and, if issued, to obtain as soon as
reasonably possible the lifting thereof.
(c) The Company shall comply with the Act, the Regulations, the 1934
Act and the rules and regulations thereunder, all applicable state securities
laws and the rules and regulations thereunder in the states in which the
Company's Blue Sky counsel has advised the Placement Agent that the Shares are
qualified or registered for sale or exempt from such qualification or
registration, so as to permit the continuance of the sales of the Shares, and
will file with the SEC, and shall promptly thereafter forward to the Placement
Agent, copies of any and all reports on Form D as are required.
(d) The Company shall place a legend on the certificates representing
the Shares issued to subscribers stating that the securities evidenced thereby
have not been registered under the Act or applicable state securities laws,
setting forth or referring to
the applicable restrictions on transferability
and sale of such securities under the Act and applicable state laws.
(e) The Company shall apply the net proceeds from the sale of the
Shares to fund its working capital requirements, and as outlined in the
Memorandum with regard to the Acquisition of The Holder Hospitality Group,
Inc.
(f) During the Offering Period, the Company shall make available for
review by prospective purchasers of the Shares during normal business hours at
the Company's legal counsel's offices, upon their request, copies of any
Corporate records to the extent that such shall not violate any obligation on
the part of the Company to maintain the confidentiality thereof and shall
afford each prospective purchaser of Shares the opportunity to ask questions
of and receive answers from an officer of the Company concerning the terms and
conditions of the Offering and the opportunity to obtain such other additional
information necessary to verify the accuracy of the Offering Documents to the
extent it possesses such information or can acquire it without unreasonable
expense.
(g) The Company shall pay all reasonable expenses incurred in
connection with the preparation and printing of all necessary Offering
Documents and instruments related to the Offering and the issuance of the
Shares and will also pay the Company's own expenses for accounting fees, legal
fees and other costs involved with the Offering. The Company will provide at
its own expense such quantities of the Offering Documents and other documents
and instruments relating to the Offering as the Placement Agent may reasonably
request. In addition, the Company will pay all filing fees, costs and legal
fees for Blue Sky services and related filings and expenses of its counsel
with respect to Blue Sky qualifications and filings. The Blue Sky filings
shall be prepared by the Company's Blue Sky counsel and timely filed by
Company's Blue Sky counsel. The Company's Blue Sky counsel shall be
responsible for filing the Federal Form D with the SEC. In the event the
Offering is not closed for any reason the Placement Agent shall be responsible
for all of its own costs and fees.
(h) Until the termination of the Offering in accordance with the
provisions of Section 9 of this Agreement, or the expiration of the Offering
or this Agreement, without the prior written consent of the Placement Agent,
neither the Company nor any person or entity acting on its behalf will
negotiate with any other placement agent or underwriter with respect to a
private or public offering of the Company's debt or equity securities.
Neither the Company nor anyone acting on its behalf will, until the
termination of the Offering in accordance with the provisions of Section 9 of
this Agreement or the expiration of the Offering or this Agreement, without
the prior written consent of the Placement Agent, offer for sale to, or
solicit offers to subscribe for Shares or other securities of the Company
from, or otherwise approach or negotiate in respect thereof with, any other
person. The Company may, however, provide information regarding the
Offering
and the business of the Company to prospective purchasers and will refer all
such prospective purchasers to the Placement Agent for actual subscription.
(i) As part of the Placement Agent's due diligence, the Placement
Agent may wish to conduct background checks of the Company's management or
principal shareholders. The Company agrees to provide requested data, such as
social securities numbers and home addresses, which may be required to conduct
background checks.
(j) Subject to the sale of the Minimum Amount of Shares in the
Offering, the Company grants to the Placement Agent, for a period of twelve
(12) months from the Final Closing, the right of first refusal to act as agent
with respect to future private offerings of the Company's securities. It is
understood that if such an offering is proposed to the Placement Agent on
terms and conditions substantially similar to the terms and conditions set
forth herein, (a) the Placement Agent shall have thirty (30) days in which to
negotiate and enter into a Placement Agreement with the Company to raise or
facilitate the consummation of such financing and, if the Placement Agent
fails or refuses to do so, then the Company shall be permitted to facilitate
its own equity financing on its own or through a third party without the
requirement of compensating the Placement Agent, whereupon this right of first
refusal shall thereafter be forfeited and terminated. The Company grants to
the Placement Agent the right to introduce any public offering of the
Company's Securities or of any successor corporation to the Company for a
period of 12 months from the Final Closing.
(k) The Company shall provide for inclusion in the Offering Documents,
by Supplement, unaudited interim financial statements for each of its fiscal
quarters beginning March 31, 2004. Such statements shall be provided within
forty-five (45) days of the end of such quarter. Following the Final Closing
of the Offering, the Company will provide audited annual financial statements
to the holders of the Shares not more than one hundred and twenty (120) days
following the end of its fiscal year.
(l) The Company shall, for a period of not less than three years
following the date of the Offering Documents, keep its books and records up to
date and provide annual budgets to its limited partners along with audited
financial statements.
6. (A) Conditions of Placement Agent's Obligations. The obligations
of the Placement Agent hereunder are subject to the fulfillment, at or before
each Closing, of the following additional conditions:
(a) Each of the representations and warranties of the Company as set
forth herein, in the Offering Documents and to be delivered to the Placement
Agent pursuant to Section 2 herein above shall be true and correct in all
material respects when made on the date hereof and on and as of each Closing
Date as though made on and as of each Closing Date.
(b) The Company shall have performed and complied, in all material
respects, with all agreements, covenants and conditions required to be
performed and complied with by it under the Transaction Documents at or before
each Closing.
(c) No order suspending the use of the Offering Documents or enjoining
the offering or sale of the Shares shall have been issued, and no proceedings
for that purpose or a similar purpose shall have been initiated or pending,
or, to the best of the Company's knowledge, are threatened.
(d) The Placement Agent shall have received certificates of the Chief
Executive Officer and Chief Financial Officer of the Company, dated as of each
Closing Date, certifying, in such detail as the Placement Agent may reasonably
request, as to the fulfillment of the conditions set forth in subparagraphs
(a), (b) and (c) above.
(e) The Company shall have delivered to the Placement Agent (i) a
currently dated good standing certificate from the secretary of state of its
jurisdiction of formation and each jurisdiction in which the Company is
qualified to do business as a foreign corporation, and (ii) certified
resolutions of the Company's Board of Directors approving this Agreement and
the other Transaction Documents, and the transactions and agreements
contemplated by this Agreement and the other Transaction Documents.
(f) On or prior to the date hereof and at each Closing, the Company
shall have provided a certificate to the Placement Agent confirming that there
have been no material adverse changes in the condition (financial or
otherwise) or prospects of the Company or its business, properties or assets
from the latest date of the financial statements included in the Offering
Documents, the absence of material undisclosed liabilities and such other
matters relating to the financial condition and prospects of the Company that
the Placement Agent may reasonably request.
(g) At each Closing, the Company shall have paid to the Placement
Agent, the Placement Agent's Fee, and the Expense Allowance as set forth in
Section 3(d) hereof.
(h) There shall have been delivered to the Placement Agent a signed
opinion of counsel to the Company ("Company Counsel"), dated as of each
Closing Date, as to such matters and in such form as the Placement Agent and
its counsel may reasonably request. The opinion shall address those matters
described in Paragraphs 2(c), (d), (e), and (g) hereinabove subject to
knowledge qualifiers and other standard limitations and assumptions for
opinions given in transactions of the nature contemplated by this Agreement.
(i) All proceedings taken at or prior to each Closing in connection
with the authorization, issuance and sale of the Shares will be reasonably
satisfactory in form and substance to the Placement Agent and its counsel, and
such counsel shall have been
furnished with all such documents and
certificates as they may reasonably request upon reasonable prior notice in
connection with the transactions contemplated hereby.
(j) Prior to signing this Agreement, the Placement Agent and its
counsel shall have completed to their satisfaction a due diligence review of
the Company and are reasonably satisfied with, inter alia, the Company
business affairs, contractual relations, its pending and threatened litigation
and other matters affecting the Company financial condition, assets,
properties, business and prospects. The Company and its legal counsel,
accountants, agents, employees and advisors shall have previously provided to
the Placement Agent and its counsel all documents and materials that they may
request in order to complete such due diligence review.
(B) Conditions of the Company Obligations. The obligations of the
Company hereunder are subject to the fulfillment, at or before each Closing,
and of continued fulfillment throughout the term of the Offering, of the
following additional conditions:
(a) Each of the representations and warranties of the Placement Agent
as set forth herein shall be true and correct in all material respects when
made on the date hereof and on and as of each Closing Date as though made on
and as of each Closing Date.
(b) No order suspending the use of the Offering Documents or enjoining
the offering or sale of the Shares shall have been issued, and no proceedings
for that purpose or a similar purpose shall have been initiated or pending,
or, to the best of the Placement Agent's knowledge, are threatened.
7. PLACEMENT AGENT WARRANTS.
(a) Issuance of Warrants. Upon Closing, the issuance of warrant
certificates for the Placement Agent Warrants (the "Warrants"), which term
includes all shares issuable upon exercise of said Warrants, shall be made
forthwith (and in any event within five (5) business days thereafter) without
charge to the Holder thereof including, without limitation, any tax which may
be payable in respect of the issuance thereof, and such certificates shall be
issued in the name of, or in such names as may be directed by, the Holder
thereof; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance
and delivery of any such certificates in a name other than that of the Holder,
and the Company shall not be required to issue or deliver such certificates
unless or until the person or persons requesting the issuance thereof shall
have paid to the Company the amount of such tax or shall have established to
the satisfaction of the Company that such tax has been paid.
(b) Restriction On Transfer of Warrants. The Holder of a Warrant, by
its acceptance thereof, covenants and agrees that the Warrants are being
acquired as an
investment and not with a view to the distribution thereof;
that the Warrants may not be sold, transferred, assigned, hypothecated or
otherwise disposed of, in whole or in part, for a period of one (1) year from
the date of issuance, except to officers of the Participating Dealer.
(c) Registration Rights.
i. Legend on the Warrants Until Registration Under the
Securities Act of 1933. Until the Warrants are sold pursuant to registration
with the SEC, they shall bear the following legend:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act"),
and may not be offered or sold except pursuant to (i) an effective
registration statement under the Act, (ii) to the extent
applicable, Rule 144 under the Act (or any similar rule under such
Act relating to the disposition of securities), or (iii) an
opinion of counsel, if such opinion shall be reasonably
satisfactory to counsel to the issuer, that an exemption from
registration under such Act is available.
ii. Piggyback Registration. If, at any time commencing one year
after the date hereof and expiring five (5) years after the date hereof, the
Company proposes to register any of its securities under the Act (other than
pursuant to Form X-0, Xxxx X-0 or a comparable registration statement or the
initial registration statement described in the Private Placement Memorandum)
it will give written notice by registered mail, at least thirty (30) days
prior to the filing of each such registration statement, to the Placement
Agent and to all other Holders of the Warrants of its intention to do so. If
the Placement Agent or other Holders of the Warrants notify the Company within
twenty (20) business days after receipt of any such notice of its or their
desire to include any such securities in such proposed registration statement,
the Company shall afford the Placement Agent and such Holders of the Warrants
the opportunity to have any such Warrants (and underlying shares) registered
under such registration statement.
Notwithstanding the provisions of this Section, the Company shall have
the right at any time after it shall have given written notice pursuant to
this Section (irrespective of whether a written request for inclusion of any
such securities shall have been made) to elect not to file any such proposed
registration statement, or to withdraw the same after the filing but prior to
the effective date thereof.
iii. Demand Registration.
(a) At any time commencing one year after the date hereof and
expiring five (5) years after the date hereof, the Holders of the
Warrants representing a "Majority" (as hereinafter defined) of such
securities shall have the right (which
right is in addition to the
registration rights under any Section hereof), exercisable by written
notice to the Company, to have the Company prepare and file with the
Securities and Exchange Commission (the "Commission"), on one occasion,
a registration statement on Form SB-2 (or comparable registration
statement which the Company is then eligible to use) and such other
documents, including a prospectus, as may be necessary in the opinion of
both counsel for the Company and counsel for the Placement Agent and
Holders, in order to comply with the provisions of the Act, so as to
permit a public offering and sale of their respective Warrant Securities
for six (6) consecutive months by such Holders and any other Holders of
the Warrants who notify the Company within ten (10) days after receiving
notice from the Company of such request.
(b) The Company covenants and agrees to give written notice of any
registration request under this Section by any Holder or Holders to all
other registered Holders of the Warrants within ten (10) days from the
date of the receipt of any such registration request.
iv. Covenants of the Company With Respect to Registration. In
connection with any registration under Section ii or iii hereof, the Company
covenants and agrees as follows:
(a) The Company shall use its best efforts to file a
registration statement within thirty (30) days of receipt of any
demand therefor, shall use its best efforts to have any
registration statements declared effective at the earliest
possible time, and shall furnish each Holder desiring to sell
Warrants such number of prospectuses as shall reasonably be
requested.
(b) The Company shall pay all costs (excluding fees and
expenses of Holder(s)' counsel and any underwriting or selling
commissions), fees and expenses in connection with all
registration statements filed pursuant to Sections ii and iii(a)
hereof including, without limitation, the Company's legal and
accounting fees, printing expenses, blue sky fees and expenses.
(c) The Company will take all necessary action which may be
required in qualifying or registering the Warrants included in a
registration statement for offering and sale under the securities
or blue sky laws of such states as reasonably are requested by the
Holder(s), provided that the Company shall not be obligated to
execute or file any general consent to service of process or to
qualify as a foreign corporation to do business under the laws of
any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of the
Warrants to be sold pursuant to any registration statement and
each person, if any, who controls such Holders within the meaning
of Section 15 of the Act or
Section 20(a) of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), against all
loss, claim, damage, expense or liability (including all expenses
reasonably incurred in investigating, preparing or defending
against any claim whatsoever) to which any of them may become
subject under the Act, the Exchange Act or otherwise, arising from
such registration statement but only to the same extent and with
the same effect as the provisions pursuant to which the Company
has agreed to indemnify the Placement Agent contained in Placement
Agent's Agreement.
(e) The Holder(s) of the Warrants to be sold pursuant to a
registration statement, and their successors and assigns, shall
severally, and not jointly, indemnify the Company, its officers
and directors and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act, against all loss, claim, damage, expense or
liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim
whatsoever) to which they may become subject under the Act, the
Exchange Act or otherwise, arising from information furnished by
or on behalf of such Holders, or their successors or assigns, for
specific inclusion in such registration statement to the same
extent and with the same effect as the provisions contained herein
pursuant to which the Placement Agent has agreed to indemnify the
Company.
(f) The Company shall not permit the inclusion of any
securities other than the Warrants (and underlying shares) to be
included in any registration statement filed pursuant hereof, or
permit any other registration statement to be or remain effective
during the effectiveness of a registration statement filed
pursuant to hereof (other than (i) shelf registrations effective
prior thereto and (ii) registrations on Form S-4 or S-8), without
the prior written consent of the Holders of the Warrants
representing a Majority of such securities.
(h) The Company shall furnish to each Holder participating
in the offering and to each Placement Agent, if any, a signed
counterpart, addressed to such Holder or Placement Agent, of (i)
an opinion of counsel to the Company, dated the effective date of
such registration statement (and, if such registration includes an
underwritten private offering, an opinion dated the date of the
closing under the Placement Agent's Agreement) relating to the due
incorporation of the Company, the validity of the shares being
issued, the due execution and delivery of the Placement Agent's
Agreement and Rule 10b-5, and (ii) a "cold comfort" letter dated
the effective date of such registration statement (and, if such
registration includes an underwritten private offering, a letter
dated the date
of the closing under the Placement Agent's
Agreement) signed by the independent private accountants who have
issued a report on the Company's financial statements included in
such registration statement, covering substantially the same
matters with respect to such registration statement (and the
prospectus included therein) and, with respect to events
subsequent to the date of such financial statements, as are
customarily covered in accountants' letters delivered to Placement
Agents in underwritten private offerings of securities.
(i) The Company shall as soon as practicable after the
effective date of the registration statement, and in any event
within 15 months thereafter, make "generally available to its
security holders" (within the meaning of Rule 158 under the Act)
an earnings statement (which need not be audited) complying with
Section 11(a) of the Act and covering a period of at least 12
consecutive months beginning after the effective date of the
registration statement.
(j) The Company shall deliver promptly to each Holder
participating in the offering requesting the correspondence and
memoranda described below and to the managing Placement Agents,
copies of all correspondence between the Commission and the
Company, its counsel or auditors and all memoranda relating to
discussions with the Commission or its staff with respect to the
registration statement and permit each Holder and Placement Agent
to do such investigation, upon reasonable advance notice, with
respect to information contained in or omitted from the
registration statement as it deems reasonably necessary to comply
with applicable securities laws or rules of the NASD. Such
investigation shall include access to books, records and
properties and opportunities to discuss the business of the
Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times and as often as any
such Holder or Placement Agent shall reasonably request.
8. Indemnification. (a) The Company will indemnify and hold harmless
the Placement Agent, its selected dealers and their respective officers,
directors, employees and each person, if any, who controls the Placement Agent
within the meaning of the Act and such selected dealers (each an "Indemnitee")
against, and pay or reimburse each Indemnitee for, any and all losses, claims,
damages, liabilities or expenses (which will, for all purposes of this
Agreement, include, but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys' fees), to which any Indemnitee
party become subject based on or arising out of (A) any breach by the Company
of the representations, warranties, covenants or agreements by the Company
contained in or made pursuant to this Agreement, (B) any untrue statement of a
material fact contained in the Memorandum or in any amendment or supplement
thereto, or (C) any omission to state in the Memorandum any material fact
required to be stated therein or necessary
to make the statements therein, in
light of the circumstances under which they are made, not misleading. The
foregoing notwithstanding, the Company shall not be liable in any such case
for losses, claims, damages, liabilities or expenses that a court of competent
jurisdiction shall have found in a final judgment or that the parties have
agreed in a binding settlement to which the Placement Agent is a party, or to
have arisen primarily from the gross negligence or willful misconduct of the
Placement Agent or any Agent of Placement Agent or the party claiming a right
to indemnification, and provided further, the Company shall not be responsible
for, nor does the Company indemnify or hold harmless the Placement Agent or
its controlling persons against any losses, claims, damages, liabilities or
expenses to the extent arising out of or resulting from: (A) the offer or sale
of the Shares to any person who was not given, delivered or sent a copy of the
Memorandum as Company appropriate, or the failure by the Placement Agent or
any Agent of the Placement Agent to offer and sell the Shares in accordance
with the provisions of any applicable rules, regulations and published
administrative interpretations under Section 4(2) of the Act and the rules
thereunder and the securities or blue sky laws of the jurisdiction in which
the Shares are offered or sold by or through the Placement Agent or any Agent
of the Placement Agent (except insofar as any of the foregoing resulted from
an error or omission of the Company, it being understood that the Company and
its counsel is responsible for properly legending the offering documents); (B)
an untrue statement of a material fact made in the Offering Documents, or an
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
reliance upon and in conformity with written information furnished to the
Company by the Placement Agent, any selected dealer, or any such controlling
persons specifically for use in the preparation thereof, or (C) any violations
by the Placement Agent, any Agent of the Placement Agent, or any selected
dealer, of the Act or state securities laws which does not result from a
violation thereof by the Company or any of its affiliates or (D) any
violations by the Placement Agent, any Agent of the Placement Agent, or any
selected dealer of this Agreement, in connection with the sales efforts made
with respect to the sale of Shares, or otherwise. In addition to the
foregoing agreement to indemnify and reimburse, the Company will indemnify and
hold harmless each Indemnitee against any and all losses, claims, damages,
liabilities or expenses whatsoever (or actions or proceedings or
investigations in respect thereof) (which shall for all purposes of this
Agreement, include, but not be limited to, all costs of defense and
investigation and all reasonable attorneys' fees) to which any Indemnitee may
become subject insofar as such costs, expenses, losses, claims, damages or
liabilities arise out of or are based upon the claim of any person or entity
that he or it is entitled to broker's or finder's fees from any Indemnitee in
connection with the Offering, which claims result from conduct by the Company
or the officers, directors or employees of the Company. The foregoing
indemnity agreements will be in addition to any liability, which the Company
may otherwise have.
(b) The Placement Agent will indemnify and hold harmless the Company
and the respective officers, directors, employees of the Company and each
person, if any,
who controls the Company within the meaning of the Act (each
an "Indemnitee") against, and pay or reimburse each Indemnitee for, any and
all losses, claims, damages, liabilities or expenses (which will, for all
purposes of this Agreement, include, but not be limited to, all reasonable
costs of defense and investigation and all reasonable attorneys' fees), to
which any Indemnitee may become subject based on or arising out of any breach
by the Placement Agent or any Agent of the Placement Agent of the
representations, warranties, covenants, or agreements by the Placement Agent
contained in or made pursuant to the this Agreement. The foregoing
notwithstanding, the Placement Agent will not be liable in any such case for
losses, claims, damages, liabilities or expenses that a court of competent
jurisdiction shall have found in a final judgment or that the parties have
agreed in a binding settlement to which the Company is a party, or to have
arisen primarily from the gross negligence or willful misconduct of the
Company or the party claiming a right to indemnification, and provided
further, the Placement Agent shall not be responsible for, nor does the
Placement Agent indemnify or hold harmless the Company or its controlling
persons harmless against any losses, claims, damages, liabilities or expenses
to the extent arising out of or resulting from (A) an untrue statement of a
material fact made in the Offering Documents, or an omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (B) any violations
by the Company of the Act or state securities laws which does not result from
a violation thereof by the Placement Agent or any of its affiliates or (C) any
violations by the Company of this Agreement, in connection with the sales
efforts made with respect to the sale of Shares, or otherwise. In addition to
the foregoing agreement to indemnify and reimburse, the Placement Agent will
indemnify and hold harmless each Indemnitee against any and all losses,
claims, damages, liabilities or expenses whatsoever (or actions or proceedings
or investigations in respect thereof), (which shall for all purposes of this
Agreement, include, but not be limited to, all costs of defense and
investigation and all reasonable attorneys' fees) to which any Indemnitee may
become subject insofar as such costs, expenses, losses, claims, damages or
liabilities arise out of or are based upon the claim of any person or entity
that he or it is entitled to broker's or finder's fees from any Indemnitee in
connection with the Offering, which claims result from conduct by the
Placement Agent or its officers, directors or employees. The foregoing
indemnity agreements will be in addition to any liability, which the Placement
Agent may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, claim, proceeding or
investigation ("Action"), such indemnified party, if a claim in respect
thereof is to be made against the indemnifying party under this Section, will
promptly notify the indemnifying party of the commencement thereof, but the
omission to so notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party under this Section unless
the indemnifying party has been substantially prejudiced by such omission.
The indemnifying party will be entitled to participate in, and, to the extent
that it may wish, jointly with any other indemnifying party, to assume the
defense thereof subject to the
provisions herein stated, with counsel
reasonably satisfactory to such indemnified party. The indemnified party will
have the right to employ separate counsel in any such Action and to
participate in the defense thereof, but the fees and expenses of such counsel
will not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the Action with counsel reasonably satisfactory to
the indemnified party, provided, however, that if the indemnified party shall
be requested by the indemnifying party to participate in the defense thereof
or shall have concluded iii good filth and specifically notified the
indemnifying party either that there may be specific defenses available to it
which are different from or additional to those available to the indemnifying
party due to principles of conflicts of interest, then the counsel
representing it, to the extent made necessary by such defenses, shall have the
right to direct such defenses of such Action on its behalf and in such case
the reasonable fees and expenses of such counsel in connection with any such
participation or defenses shall be paid by the indemnifying party; provided,
that the indemnifying party shall only be obligated to pay for the fees and
expenses of one such additional counsel on behalf of all parties indemnified
under the terms of this Section. No settlement of any Action against an
indemnified party will be made without the consent of the indemnifying party
and the indemnified party, which consent shall not be unreasonably withheld or
delayed in light of all factors of importance to such party, and no
indemnifying party shall be liable to indemnify any person for any settlement
of any such claim effected without such indemnifying party's consent. An
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there shall be a final judgment for the plaintiff, the indemnifying party
agrees to indemnify the indemnifying party to the extent set forth in this
Agreement. In no event shall the indemnifying party be liable to the
indemnified party for consequential damages or lost profits accruing to the
indemnified party.
9. Contribution. To provide for just and equitable contribution, if
(i) an indemnified party makes a claim for indemnification pursuant hereto and
it is finally determined, by a judgment, order or decree not subject to
further appeal that such claims for indemnification may not be enforced, even
though this Agreement expressly provides for indemnification in such case; or
(ii) any indemnified or indemnifying party seeks contribution under the Act,
the 1934 Act, or otherwise, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Placement Agent and its selected
dealers on the other in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or expenses (or actions
in respect thereof), as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Placement Agent on the other shall be deemed to be in the same proportion as
the total net proceeds from the Offering (before deducting expenses) received
by the Company bear to the total commissions and fees received by the
Placement Agent. The relative fault, in the case of an untrue statement,
alleged untrue statement, omission or alleged omission will be determined by,
among other
things, whether such statement, alleged statement, omission or
alleged omission relates to information supplied by the Company or by the
Placement Agent, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement, alleged
statement, omission or alleged omission. The Company and the Company
Placement Agent agree that it would be unjust and inequitable if the
respective obligations of the Company and the Placement Agent for
contribution were determined by pro rata allocation of the aggregate losses,
liabilities, claims, damages and expenses or by any other method or allocation
that does not reflect the equitable considerations referred to in this
Section. No person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) will be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation. For purposes
of this Section, each person, if any, who controls the Placement Agent within
the meaning of the Act will have the same rights to contribution as the
Placement Agent, and each person, if any, who controls the Company within the
meaning of the Act will have the same rights to contribution as the Company,
subject in each case to the provisions of this Section. Anything in this
Section to the contrary notwithstanding, no party will be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This Section is intended to supersede, to the
extent permitted by law, any right to contribution under the Act, the 1934 Act
or otherwise available.
10. Termination.
(a) This Offering may be terminated by the Placement Agent at any time
prior to the expiration of the Offering Period as contemplated in Section 1(b)
hereof ("Expiration Date") in the event that (i) any of the representations or
warranties of the Company contained herein, in the Offering Documents or in
any other Transaction Document shall prove to have been false or misleading in
any material respect when made or deemed made or (ii) the Company shall have
failed to perform any of its material obligations hereunder. In the event of
any such termination occasioned by or arising out of or in connection with any
willful or grossly negligent breach or failure pursuant to clauses (i) or (ii)
above on the part of the Company, the Placement Agent shall be entitled to
receive an amount equal to the sum of: (A) all Placement Agent's that the
Placement Agent would have been entitled to hereunder if it had placed the
Maximum Offering other than Shares available for over-subscriptions, and (B)
the full amount of the Expense Allowance that the Placement Agent would have
been entitled to hereunder if it had placed the Maximum Offering other than
Shares available for over-subscriptions. The Placement Agent shall be
entitled to no other amounts as may be due under any indemnity or contribution
obligation provided herein or in any other Transaction Document, at law or
otherwise.
(b) This Offering may be terminated by the Company at any time prior
to the Expiration Date in the event of a material breach of any of the
representations and warranties of the Placement Agent set forth herein, or
failure of the Placement Agent
to perform any of its material obligations
hereunder, or upon failure of any of the conditions to the obligations of the
Company as set forth herein; provided that no such termination shall be
effective unless and until the Company has provided the Placement Agent with
written notice specifying the alleged circumstances giving rise to such
termination right and the Company's intention to terminate the Offering and
affording the Placement Agent thirty (30) days to cure the same. In the event
of any termination by the Company pursuant to authority set forth herein, the
Placement Agent shall be entitled to reimbursement of any amounts spent by it
and recoverable hereunder accrued through the termination date, but shall be
entitled to no other amounts as may be due under any indemnity or
contribution obligation provided herein or in any other Transaction Document,
at law or otherwise. Notwithstanding the foregoing, if the Company shall
terminate the Offering for any reason, including but not limited to those set
forth in this paragraph and those deemed to be an act of God, governmental
authority, fire, explosion or any other occurrence or thing beyond the
commercially reasonable control of the Company, then the Placement Agent shall
be entitled to retain the portion of the Expense Allowance that the Company
has paid, if any, as set forth herein.
(c) Upon any such termination the Escrow Agent will, at the request of
the Placement Agent, cause all monies received in respect of subscriptions for
Shares not accepted by the Company to be promptly returned to such subscribers
without interest, penalty, expense or deduction. Any interest earned thereon
shall be applied first to the payment of amounts, if any, due to the Escrow
Agent and next to the payment of any amounts payable to the Placement Agent
hereunder that remain unpaid.
11. Survival.
(a) The obligations of the parties to pay any costs and expenses
hereunder and to provide indemnification and contribution as provided herein
shall survive any termination hereunder for a period of two (2) years with
respect to indemnification and contribution.
(b) The respective indemnities, agreements, representations,
warranties and other statements of the Company set forth in or made pursuant
to this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of, and regardless of any access to
information by, the Company or the Placement Agent, or any of their officers
or directors or controlling person thereof and will survive the sale of the
Shares.
12. Notices. All communications hereunder will be provided in writing
except as otherwise expressly provided herein, or after notice by one party to
the other party of a change of address, if sent to the Placement Agent, will
be mailed, delivered, or transmitted by facsimile and confirmed to:
if to the Company: Xxxxxxx Xxxxx
426 South 0000 Xxxx #000
Xxxx Xxxx Xxxx, Xxxx 00000
with a copy to: Xxxxxx X. Xxxxxx & Associates
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
if to Placement Agent: Xxxxxx Securities LLC
(d.b.a. Xxxxxx Group Capital)
0000 Xxxxxxxxx Xxxx, XX Xxxxx 000
Xxxxxxx, XX 00000
with a copy to:
APPLICABLE LAW, COSTS, ETC. THIS AGREEMENT WILL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE.
THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY GEORGIA OR
UNITED STATES FEDERAL COURT SITTING IN GEORGIA OVER ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY AGREEMENT CONTEMPLATED
HEREBY, AND THE COMPANY HEREBY IRREVOCABLY AGREES THAT ALL, CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH GEORGIA OR
FEDERAL COURT. THE COMPANY FURTHER WAIVES ANY OBJECTION TO VENUE IN SUCH
STATE AND ANY OBJECTION TO AN ACTION OR PROCEEDING IN SUCH STATE ON THE BASIS
OF A NON-CONVENIENT FORUM. THE COMPANY FURTHER AGREES THAT ANY ACTION OR
PROCEEDING BROUGHT AGAINST THE PLACEMENT AGENT SHALL BE BROUGHT ONLY IN NEW
YORK OR UNITED STATES FEDERAL COURTS SITTING IN COUNTY OF NEW YORK. SERVICE
OF PROCESS MAY BE MADE UPON THE COMPANY BY MAILING A COPY THEREOF TO IT, BY
CERTIFIED OR REGISTERED MAIL, AT ITS ADDRESS TO BE USED FOR THE GIVING OF
NOTICES UNDER THIS AGREEMENT. THE COMPANY AND THE PLACEMENT AGENT EACH HEREBY
WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED
HEREBY. THE PLACEMENT AGENT OR THE COMPANY, AS THE CASE MAY BE, SHALL BE
ENTITLED TO COSTS AND REASONABLE ATTORNEY'S FEES IN THE EVENT IT
PREVAILS IN
ANY CLAIMS, ACTIONS, AWARDS OR JUDGMENT UNDER THIS AGREEMENT.
13. Miscellaneous. Placement Agent may at its option, to fulfill its
responsibilities hereunder, assign this Agreement to an associated broker-
dealer or syndicate while continuing to be fully involved in completing this
Placement. No provision of this Agreement may be changed or terminated except
by a writing signed by the party or parties to be charged therewith. Unless
expressly so provided, no party to this Agreement will be liable for the
performance of any other party's obligations hereunder. Any party hereto may
waive compliance by the other with any of the terms, provisions and conditions
set forth herein, provided, however that any such waiver shall be in writing
specifically setting forth those provisions waived thereby. No such waiver
shall be deemed to constitute or imply waiver of any other term, provision or
condition of this Agreement. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which shall constitute
one original Agreement.
14. Term. The initial term of this engagement shall be the earlier of
(i) Six (6) months, (ii) the Final Closing, or (iii) the mutual agreement of
the parties, and it shall automatically renew on a month-to-month basis until
terminated in writing by either party.
15. Time of Essence. Time is of the essence in this Agreement and in
each and every provision hereof.
16. Entire Agreement. This Agreement, together with any other
agreement referred to herein, shall supersede all prior agreements between the
parties with respect to the Shares purchased hereunder and the subject matter
hereof.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return this Agreement, whereupon it will become a
binding agreement between the Company and the Placement Agent in accordance
with its terms.
Very truly yours,
BRONZE MARKETING, INC.
By:
President and Sole Director
Acknowledged and Accepted:
XXXXXX SECURITIES LLC
(d.b.a. Xxxxxx Group Capital)
By: , authorized officer
Date:
T108placeagr.bmi
EXHIBIT "C"
TO AGREEMENT AND PLAN OF REORGANIZATION
FORM OF AMENDMENT TO ARTICLES OF INCORPORATION
CERTIFICATE OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
BRONZE MARKETING, INC.
Pursuant to the applicable provisions of the Nevada Business
Corporations Act, Bronze Marketing, Inc. (the "Corporation") adopts the
following Articles of Amendment to its Articles of Incorporation:
FIRST: The present name of the Corporation is Bronze Marketing, Inc.
SECOND: The following amendments to its Articles of Incorporation were
adopted by the board of directors and by majority consent of shareholders of
the Corporation in the manner prescribed by applicable law.
(1) The Article entitled ARTICLE I - NAME, is amended to read as
follows:
ARTICLE I - NAME
The name of the corporation shall be: The Holder Hospitality Group,
Inc.
(2) The Article entitled ARTICLE II - STOCK, is amended to read as
follows:
ARTICLE II - STOCK
The aggregate number of shares which this Corporation shall have
authority to issue is 50,000,000 shares of Common Stock having a par value of
$.001 per share and 1,000,000 shares of Preferred Stock having a par value of
$.001 per share. All Common Stock of the Corporation shall be of the same
class, and shall have the same rights and preferences. The Corporation shall
have authority to issue the shares of Preferred Stock in one or more series
with such rights, preferences and designations as determined by the Board of
Directors of the Corporation. Fully-paid stock of this Corporation shall not
be liable to any further call or assessment.
THIRD: The number of shares of the Corporation outstanding and entitled
to vote at the time of the adoption of said amendment was 1,500,000.
FOURTH: The number of shares voted for such amendments was
( %) and no shares were voted against such amendment.
DATED this day of , 200 .
BRONZE MARKETING, INC.
By:
Xxxxxxx Xxxxx, President/Secretary
VERIFICATION
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
The undersigned being first duly sworn, deposes and states: that the
undersigned is the President of Bronze Marketing, Inc., that the undersigned
has read the Certificate of Amendment and knows the contents thereof and that
the same contains a truthful statement of the Amendment duly adopted by the
board of directors and stockholders of the Corporation.
Xxxxxxx Xxxxx,
President
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
Before me the undersigned Notary Public in and for the said County and
State, personally appeared the President and Secretary of Bronze Marketing,
Inc., a Nevada corporation, and signed the foregoing Articles of Amendment as
her own free and voluntary acts and deeds pursuant to a corporate resolution
for the uses and purposes set forth.
IN WITNESS WHEREOF, I have set my hand and seal this day of
, 200 .
NOTARY PUBLIC
Notary Seal:
T108certamd.bmi
EXHIBIT "D"
TO AGREEMENT AND PLAN OF REORGANIZATION
FORM OF CERTIFICATE OF DESIGNATION OF RIGHTS AND PREFERENCES OF THE
SERIES A VOTING PREFERRED STOCK
CERTIFICATE OF DESIGNATION OF
SERIES A VOTING PREFERRED STOCK
SETTING FORTH THE POWERS, PREFERENCES,
RIGHTS, QUALIFICATIONS, LIMITATIONS AND
RESTRICTIONS OF SUCH SERIES OF PREFERRED STOCK
Pursuant to Nevada law, , a Nevada corporation
(the "Company"), does hereby certify that:
Pursuant to the authority conferred upon the Board of Directors of
the Company by the Certificate of Incorporation of the Company, the Board of
Directors of the Company on , adopted the
following resolution creating a series of preferred stock designated as Series
A Voting Preferred Stock, and such resolution has not been modified and is in
full force and effect on the date hereof:
RESOLVED that, (pursuant to the affirmative vote of a majority of
stockholders, and) pursuant to the authority vested in the Board of Directors
of the Company in accordance with the provisions of the Certificate of
Incorporation. a series of the class of authorized preferred stock. par value
$.001 per share, of the Company is hereby created and that the designation and
number of shares thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations and restrictions thereof are as follows:
SECTION 1. DESIGNATION, NUMBER AND RANK.
(a) The shares of the series shall be designated as "Series A
Voting Preferred Stock" (the "Series A Preferred Stock"). The number of
shares initially constituting the Series A Preferred Stock shall be One
Hundred Fifty Thousand (150,000).
(b) The Series A Preferred Stock shall, with respect to
dividends and distributions and with respect to rights on liquidation,
dissolution and winding up, rank (i) higher and prior to the Junior Stock,
(ii) on a parity with all shares of Parity Stock of which none currently exist
and no class of securities has been approved and thus no Parity Stock shall be
created or issued without the consent of a majority of the holders of the
Series A Preferred Stock, (iii) shall not be junior, lower or subsequent to
any shares or class of stock of the Company, and (iv) shall be senior, higher
or prior to any shares or class of stock of the Company.
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
(a) In preference to the holders of shares of Common Stock and
of any shares of other capital stock of the Company other than Parity Stock
and Senior Stock, the holders of shares of Series A Preferred Stock shall
automatically and immediately be entitled to receive, out of the assets of the
Company legally available therefor, cumulative cash dividends equal to $6.00
per share
annually, calculated at an annual rate (the "Dividend Rate") equal
to six (6%) percent of the stated value of $100 per share of Series A
Preferred Stock ("Stated Value"). Such dividends shall accrue and be payable
in immediately available funds annually on the last Business Day of January in
each year for the prior calendar year (each such date being referred to herein
as a "Annual Dividend Payment Date") commencing on the first Annual Dividend
Payment Date occurring after the Issue Date.
(b) At the sole discretion of the Company, after notice to the
holder, the cumulative dividends payable pursuant to Section 2(a) may be paid,
in whole or in part, by the issuance of additional shares of Series A
Preferred Stock upon the same terms as cash dividends payable pursuant to
Section 2(a); provided that, such Stock dividends shall (i) if paid in shares
of Preferred Stock, shall be paid at a valuation rate equal to the Stated
Value of the Series A Preferred Stock, which will establish the number of
shares of Preferred Stock to be issued as such dividend payment; and (ii)
accrue and be payable by the immediate delivery at the address of such holder
as shown in the stock books of the Company of (x) a certificate or
certificates representing the shares of Series A Preferred Stock to which such
holder is entitled and (y) a check made payable to such holder for an amount
corresponding to any fractional interest in a share of Series A Preferred
Stock.
(c) The Company shall pay all documentary, stamp, transfer or
other transactional taxes attributable to the issuance or delivery of shares
of Series A Preferred Stock pursuant to this Section 2. All shares of Series A
Preferred Stock or Common Stock issued and delivered pursuant to this Section
2 will upon issuance by the Company and delivery be duly authorized and issued
and fully paid and non-assessable and not subject to any purchase option or
right of first refusal or preemptive, subscription or similar rights.
(d) Dividends payable pursuant to Section 2 above with respect
to any shares shall begin to accrue and be cumulative from the Issue Date, and
shall accrue on a daily basis, in each case whether or not declared. If the
Company makes a dividend payment on the shares of Series A Preferred Stock in
an amount that is less than the total amount of accrued and payable dividends
on such shares at such time, then the dividends paid shall be allocated pro
rata among all such shares of Series A Preferred Stock at the time outstanding
on a share-by-share basis.
(e) Accumulated but unpaid dividends for any past annual
dividend periods may be declared and paid at any time, without reference to
any regular Annual Dividend Payment Date. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon pursuant to this Section 2, which record date shall be not more than
20 days nor less than 5 days prior to the date fixed herein for the payment
thereof.
(f) No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the shares of the
Series A Preferred Stock which may be in arrears.
SECTION 3. VOTING RIGHTS.
(a) In addition to any voting rights provided by law, each share
of Series A Preferred Stock shall be entitled to 100 votes per share.
(b) The shares of Series A Preferred Stock and the shares of
Common Stock (and any other shares of capital stock of the Company at the time
entitled thereto to vote) shall vote together as one class on all matters
submitted to a vote of stockholders of the Company.
SECTION 4. CONVERSION.
Any conversion shall be at one-half of the Current Market Price of
the company's common stock but in no event less than $3.00 per share (the
"Conversion Price"). Each share of Series A Preferred Stock shall be
convertible at the option of the holder at any time after eighteen months from
the original issuance date of said Series A Preferred Stock into shares of the
Common Stock of the Company, $.001 par value, (the "Common Stock") at any time
and from time to time based on the Stated Value of the Series A Preferred
Stock. The Conversion Price and number of shares of Common Stock issuable upon
conversion of the Preferred Stock will be subject to adjustment in certain
circumstances upon any recapitalization, including but not limited to stock
splits, readjustments or reclassifications, to protect against dilution, as
set forth in more detail in this Section 4 hereof.
Shares of Series A Preferred Stock may, at the option of the
holder thereof, be converted into shares of Common Stock, on the terms and
conditions set forth in this Section 4, at any time and from time to time.
Subject to the provisions for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall be convertible in the manner
hereinafter set forth into one (1) fully paid and nonassessable share of
Common Stock.
(a) Adjustments. The number of shares of Common Stock into
which each share of Series A Preferred Stock is convertible, and the number of
votes to which the holder of a share of Series A Preferred Stock is entitled
pursuant to Section 4, shall be subject to adjustment from time to time as
follows:
(i) Dividend and Distributions. In case the Company shall
at any time or from time to time declare a dividend, or make a distribution,
on the outstanding shares of Common Stock in shares of Common Stock or
subdivide or reclassify the outstanding shares of Common Stock into a larger
number of shares or combine or reclassify the outstanding shares of Common
Stock into a smaller number of shares of Common Stock, then, and in each such
case:
(A) the number of shares of Common Stock into which each
share of Series A Preferred Stock is convertible shall be
adjusted so that the holder of each share thereof shall be
entitled to receive, upon the conversion thereof, the number
of shares of Common Stock which the holder of a share of
Series A Preferred Stock would have been entitled to receive
after the happening of any of the events described above had
such share been converted immediately prior to the happening
of such event or the record date therefor, whichever is
earlier;
(B) the number of votes to which a holder of a share of
Series A Preferred Stock is entitled pursuant to Section 3
shall be adjusted so that, after the happening of any of the
events described above, such holder shall be entitled to a
number of votes equal to (I) the number of votes to which
such holder was entitled pursuant to Section 3 immediately
prior to such happening multiplied by (II) a fraction, the
numerator of which is the number of shares of Common Stock
into which one share of Series A Preferred Stock was
convertible immediately after such happening and the
denominator of which is the number of shares of Common Stock
into which one share of Series A Preferred Stock was
convertible immediately prior to such happening; and
(C) an adjustment made pursuant to this clause (i) shall
become effective (I) in the case of any such dividend or
distribution, (1) immediately after the close of business on
the record date for the determination of holders of shares
of Common Stock entitled to receive such dividend or
distribution, for purposes of subclause (A), and (2)
immediately after the close of business on the date of
payment of such dividend or distribution, for purposes of
subclause (B), or (II) in the case of any such subdivision,
reclassification or combination, at the close of business on
the day upon which such corporate action becomes effective,
for purposes of both subclause (A) and subclause (B).
(ii) Merger; Consolidation. In case at any time the Company
shall be a party to any transaction (including, without limitation, a
merger, consolidation, sale of all or substantially all of the Company's
assets, liquidation or recapitalization of the Common Stock and
excluding any transaction to which clause (i) or (ii) of this paragraph
(a) applies) in which the previously outstanding Common Stock shall be
changed into or, pursuant to the operation of law or the terms of the
transaction to which the Company is a party, exchanged for different
securities of the Company or common stock or other securities of another
corporation or interests in a noncorporate entity or other property
(including cash) or any combination of any of the foregoing, then, as a
condition of the consummation of such transaction, lawful and adequate
provision shall be made so that each holder of shares of Series A
Preferred Stock shall be entitled, upon conversion, to an amount per
share equal to (A) the aggregate amount of stock, securities. cash
and/or any other property (payable in
kind), as the case may be, into
which or for which each share of Common Stock is changed or exchanged
times (B) the number of shares of Common Stock into which a share of
Series A Preferred Stock is convertible immediately prior to the
consummation of such transaction.
(b) Anti-Dilution Rights. In order to allow the holders of the
Series A Preferred Stock to maintain their pro rata share of the Company's
capital stock on a fully diluted basis, except as set forth in the next
sentence of this '4(b) and solely with respect to this '4(b), the holders of
the Series A Preferred Stock shall be entitled, as of right, to purchase or
subscribe for pro rata any stock of the Company to be issued by reason of an
increase of the issued stock of the Company or the creation a new class of
securities, and the issuance of such securities (collectively referred to as
"New Securities"). The anti-dilution rights set forth hereinabove shall not
be applicable to and the definition of "New Securities" shall not include the
following securities (the "Exempt Securities"): (i) securities issued to
employees, consultants or directors of the Company Pursuant to any stock
option plan or stock purchase or stock bonus arrangement approved by the Board
of Directors, up to a maximum amount of five (5%) percent of the outstanding
Common Stock on a fully diluted basis, (ii) securities offered to the public
pursuant to a registration statement filed pursuant to the Securities Act, and
(iii) securities issued pursuant to an acquisition of another corporation by
the Company by merger, purchase of all or substantially all of the assets or
other reorganization whereby the Company owns not less than fifty-one (51%)
percent of the voting stock of such corporation.
(a) Notice and Exercise of Anti-Dilution Rights. In the event
the Company proposes to issue New Securities, it shall give the holders
of the Series A Preferred Stock written notice of its intention,
describing the type of New Securities, the price and general terms upon
which the Company proposes to issue the same. In exercising such anti-
dilutive rights, the holders of the Series A Preferred Stock shall be
given thirty (30) days from the receipt of such notice to agree to
purchase or subscribe for such New Securities, at the same price and on
the same terms, in the proportion that the number of shares of Common
Stock that underlies the Series A Preferred Stock, if converted, bears
to the sum of (1) the total number of shares of Common Stock issued and
outstanding and (2) the number of such underlying shares.
(b) Over-Allotment. The holders of the Series A Preferred Stock
shall have the right of over-allotment such that, in the event other
holders having anti-dilutive rights fail to exercise such right to
purchase all of the New Securities, the remaining holders of the Series
A Preferred Stock may purchase the non-purchasing holders' New
Securities not so purchased, on a pro rata basis, based upon the
respective fully diluted Common Stock ownership in the Company of each
such remaining holder of Series A Preferred Stock, within fifteen (15)
days from the date the non-purchasing holders fail to exercise their
rights hereunder. The holders of the Series A Preferred Stock shall be
required to commit in writing, at the time they exercise their anti-
dilution rights, the maximum amount of over-allotment shares they agree
to purchase, if any become available.
(c) Method of Conversion. (i) The holder of any shares of Series
A Preferred Stock may exercise its right to convert such shares into
shares of Common Stock by surrendering for such purpose to the Company,
at its principal office or at the principal office of the transfer agent
or at such other office or agency maintained by the Company for that
purpose, a certificate or certificates representing the shares of Series
A Preferred Stock to be converted accompanied by a written notice
stating that such holder elects to convert all or a specified whole
number of such shares in accordance with the provisions of this Section
4 and specifying the name or names in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued. In
case such notice shall specify a name or names other than that of such
holder, such notice shall be accompanied by payment of all transfer
taxes payable upon the issuance of shares of Common Stock in such name
or names.
(ii) Promptly after such notification, such notifying
holder of Series A Preferred Stock shall surrender for purposes of
conversion to the Company, at its principal office or at such
other office or agency maintained by the Company for that purpose,
the certificate or certificates representing all shares of Series
A Preferred Stock held by such holder.
(iii) Such conversion shall be deemed to have been made at
the close of business on the date of giving of such notice and of
such surrender of the certificate or certificates representing the
shares of Series A Preferred Stock to be converted so that the
rights of the holder thereof as to the shares being converted
shall cease, except for the right to receive shares of Common
Stock and any Dividend Arrearage in accordance herewith, and the
person entitled to receive the shares of Common Stock shall be
treated for all purposes as having become the record holder of
such shares of Common Stock at such time.
(d) Issuance of Common Stock. Other than taxes payable by
the holder of any Series A Preferred Stock in accordance with paragraph (b) of
this Section 4, the Company will pay any and all issuance, documentary or
stamp taxes and other taxes (other than taxes based on income) that may be
payable in respect of any issuance or delivery of shares of Common Stock on
conversion of Series A Preferred Stock pursuant hereto. As promptly as
practicable, and in any event within five (5) Business Days after the
surrender of the certificate or certificates representing such shares of
Series A Preferred Stock being converted and, in the case of a conversion by
the holder pursuant to paragraph (b), the receipt by the Company of such
notice relating thereto and, if applicable, payment of all transfer taxes (or
the demonstration to the satisfaction of the Company that such taxes have been
paid), the Company shall deliver or cause to be delivered (i) certificates
representing the number of validly issued, fully paid and nonassessable full
shares of Common Stock to which the holder of shares of Series A Preferred
Stock so converted shall be entitled and (ii) in the case of a conversion at
the election of the holder of Series A Preferred Stock, if less than the full
number of shares of Series A Preferred Stock evidenced by the surrendered
certificate or certificates are being converted, a new certificate or
certificates, of like tenor, for the number of shares of Series A Preferred
Stock evidenced by such surrendered certificate or certificates less the
number of shares converted.
(e) Right to Dividends. Upon conversion of any shares of Series
A Preferred Stock, the holder thereof shall be immediately entitled to receive
its Dividend Arrearage (if any) from (i) legally available funds in respect of
the shares so converted to the date of conversion, or (ii) in additional
shares of Series A Preferred Stock in accordance with the provisions of
Section 2.
(f) No Fractional Shares. In connection with the conversion of
any shares of Series A Preferred Stock, no fractions of shares of Common Stock
shall be issued, but in lieu thereof the Company adjust such fractional
interest by rounding up to the next whole share of Common Stock.
(g) Reservation of Shares. The Company shall at all times
reserve and keep available out of its authorized and unissued Common Stock,
solely for the purpose of effecting the conversion of the Series A Preferred
Stock, such number of shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all then outstanding shares of Series A
Preferred Stock. The Company shall immediately reserve five million
(5,000,000) shares of its Common Stock to be available upon conversion of the
Series A Preferred Stock. The Company shall from time to time, subject to and
in accordance with applicable state corporate law, increase the authorized
amount of Common Stock if at any time the number of authorized shares of
Common Stock remaining unissued shall not be sufficient to permit the
conversion at such time of all then outstanding shares of Series A Preferred
Stock. The Company shall at all times reserve and keep available out of its
authorized and unissued Series A Preferred Stock, solely for the purpose of
payment of stock dividends upon shares of Series A Preferred Stock pursuant to
Section 2, such number of shares of Series A Preferred Stock as shall from
time to time be sufficient to effect the payment of such stock dividends upon
all then outstanding shares of Series A Preferred Stock.
(h) Waiver of Adjustment. Notwithstanding anything to the
contrary set forth herein, the operation of, and any adjustment in the number
of shares of Common Stock issuable upon conversion of the Series A Preferred
Stock pursuant to, this Section 4, may be waived with respect to any specific
share or shares of Series A Preferred Stock, either prospectively or
retroactively and either generally or in a particular instance, by a writing
executed by the registered holder of such share or shares of Series A
Preferred Stock. Any such waiver shall bind all future holders of such share
or shares of Series A Preferred Stock for which such rights have been waived.
SECTION 5. REPORTS AS TO ADJUSTMENTS.
Whenever the number of shares of Common Stock into which each
share of Series A Preferred Stock is convertible (or the number of votes to
which each share of Series A Preferred Stock is entitled) is adjusted as
provided in Section 4, the Company shall promptly mail by either first class
mail (or bulk mail if the number of holders exceeds 500) to the holders of
record of the outstanding shares of Series A Preferred Stock at their
respective addresses as the same shall appear in the Company's stock records a
notice stating that the number of shares of Common Stock into which the shares
of Series A Preferred Stock are convertible has been adjusted and setting
forth the new number of shares of Common Stock (or describing the new stock,
securities, cash or other
property) into which each share of Series A
Preferred Stock is convertible (and the new number of votes to which each
share of Series A Preferred Stock is entitled), as a result of such
adjustment, a brief statement of the facts requiring such adjustment and the
computation thereof, and when such adjustment became effective.
SECTION 6. REDEMPTION.
(a) The Company shall have the right to compel each holder of
the Series A Preferred Stock to redeem any or all of the shares of Series A
Preferred Stock held by such holder on any Annual Dividend Payment Date (the
"Redemption Date"), provided written demand as set forth below is given. The
redemption price for each share of Series A Preferred Stock to be redeemed
shall be paid by the Company in cash in an amount equal to $100 per share (the
"Redemption Price").
(b) Thirty (30) days prior to the Redemption Date, the Company
shall provide each holder of Series A Preferred Stock with a written demand
("Redemption Notice") (addressed to the holder at its address on the stock
transfer books of the Company) to redeem shares of Series A Preferred Stock as
provided above, which notice shall specify the Redemption Price and the number
of shares to be redeemed. All Redemption Notices hereunder shall be sent by
certified mail, return receipt requested, and shall be deemed to have been
provided when received.
(c) Any outstanding shares of Series A Preferred Stock, not
previously redeemed, which are outstanding on the tenth annual anniversary
after the original issuance date must be redeemed by the Company at $100 per
share along with the payment of all accrued but unpaid dividends.
(d) On or prior to the Redemption Date, each holder of Series A
Preferred Stock shall surrender his or its certificate or certificates
representing the shares to be redeemed, in the place designated in the
Redemption Notice. If less than all shares represented by such certificate or
certificates are redeemed, the Company shall issue a new certificate for the
unredeemed shares. From and after the Redemption Date, unless there shall be
a default in payment of the Redemption Price, all rights of each holder with
respect to shares of Series A Preferred Stock redeemed on the Redemption Date
shall cease (except the right to receive the Redemption Price) and such shares
shall not be deemed to be outstanding for any purpose whatsoever.
SECTION 7. RESTRICTIVE COVENANTS.
Unless approved in writing by a majority-in-interest of the holders of
the Series A Preferred Stock, the Company shall not:
(a) (i) Authorize, adopt or approve an amendment to the
Certificate of Incorporation that would increase or decrease the par value of
the shares of Series A Preferred Stock, or alter or change the powers,
preferences or special rights of the shares of Series A Preferred Stock, or
alter or change the powers, preferences or special rights of the shares of
Series A Preferred Stock or any other capital stock of the Company, (ii)
amend, alter or repeal the Certificate of Incorporation so as to adversely
affect the shares of Series A Preferred Stock including, without limitation,
by granting any voting right to any holder of notes, bonds, debentures or
other debt obligations of the Company, (iii) reclassify any shares of the
Company's capital stock into Senior Stock or Parity Stock, (iv) issue any
Senior Stock or Parity Stock, (v) effect a voluntary redemption of any Parity
Stock, Junior Stock or Common Stock, or (vi) agree to take any of the
foregoing actions; provided, however, that nothing set forth in this clause
7(a) shall prohibit the Company from repurchasing shares of Common Stock held
by an employee of the Company upon the termination of the Company's employment
of such employee pursuant to an agreement providing the terms of such
repurchase that has been approved by Company's Board of Directors (an
"Approved Repurchase");
(b) Upon the occurrence, and during the continuation, of a
Noncompliance Event (as defined below), (i) declare or pay dividends, or make
any other distributions, on any shares of Common Stock or other Junior Stock;
or (ii) declare or pay dividends, or make any other distributions, on any
shares of Parity Stock, except, with respect to clause (ii) of this
subparagraph (b), dividends or distributions paid ratably on the Series A
Preferred Stock and all Parity Stock on which dividends are payable or in
arrears, in proportion to the total amounts to which the holders of all shares
of the Series A Preferred Stock and such Parity Stock are then entitled. A
"Noncompliance Event" shall be deemed to have occurred and be continuing
whenever quarterly dividends payable on shares of Series A Preferred Stock as
provided in Section 2 are not paid in full (whether such failure is a result
of the Company not having sufficient legally available funds or for any other
reason) at such time and thereafter until all unpaid dividends payable,
whether or not declared, on the outstanding shares of Series A Preferred Stock
shall have been paid in full; and
(c) Either on its own or through any Subsidiary, purchase or
otherwise acquire for consideration any outstanding shares of capital stock of
the Company, provided, however that nothing set forth in this Section 7 shall
prohibit an Approved Repurchase.
SECTION 8. LIQUIDATION. DISSOLUTION OR WINDING UP.
(a) If the Company shall commence a voluntary case under the
United States Bankruptcy Code or any applicable bankruptcy, insolvency or
similar law of any other country, or consent to the entry of an order for
relief in an involuntary case under any such law or to the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or other
similar
official) of the Company or of any substantial part of its property,
or make an assignment for the benefit of its creditors, or admit in writing
its inability to pay its debts generally as they become due, or if a decree or
order for relief in respect of the Company shall be entered by a court having
jurisdiction in an involuntary case under the United States Bankruptcy Code or
any applicable bankruptcy, insolvency or similar law of any other country, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or other similar official) of the Company or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and on
account of any such event the Company shall liquidate, dissolve or wind up. or
if the Company shall otherwise liquidate, dissolve or wind up, no distribution
shall be made to (i) the holders of shares of Junior Stock unless, prior
thereto, the holders of shares of Series A Preferred Stock shall have received
the Liquidation Preference, plus all accrued and unpaid dividends, whether or
not declared or currently payable, to the date of distribution, with respect
to each share, or (ii) the holders of shares of Parity Stock, except
distributions made ratably on the Series A Preferred Stock and all other
Parity Stock in proportion to the total amounts to which the holders of all
shares of Series A Preferred Stock and other Parity Stock are entitled upon
such liquidation, dissolution or winding up.
(b) Neither the consolidation or merger of the Company with or
into any other Person nor the sale or other distribution to another Person of
all or substantially all the assets, property or business of the Company shall
be deemed to be a liquidation, dissolution or winding up of the Company for
purposes of this Section 8.
SECTION 9. CERTAIN REMEDIES.
To the extent permitted by applicable law, the holders of twenty
(20%) percent or more of the outstanding shares of Series A Preferred Stock
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Certificate of Designation and to enforce specifically the
terms and provisions of this Certificate of Designation in the United States
District Court for either the State of Nevada or State of Nevada, this being
in addition to any other remedy to which such holder may be entitled at law or
equity.
SECTION 10. REACQUIRED SHARES.
Any shares of Series A Preferred Stock exchanged, redeemed,
purchased or otherwise acquired by the Company or any of its Subsidiaries in
any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares of Series A Preferred Stock shall upon
their cancellation become authorized but unissued shares of preferred stock,
$.001 par value, of the Company and, upon the filing of an appropriate
certificate with the Secretary of State of the State of Nevada, may be
reissued as part of another series of preferred stock, par value $.001 per
share, of the Company subject to the conditions or restrictions on issuance
set forth herein, but in any event may not be reissued as shares of Series A
Preferred Stock unless all of the shares of Series A Preferred Stock shall
have already been redeemed.
SECTION 11. DEFINITIONS.
For the purposes of this Certificate of Designation of Series A
Preferred Stock, the following terms shall have the meanings indicated:
* "Additional Dividends" shall have the meaning assigned to such
term in Section 2(b).
* "Affiliate" shall have the meaning assigned to such term in the
Securities Exchange Act of 1934, as amended.
* "Approved Repurchase" shall have the meaning assigned to such term
in Section 7.
* "Business Day" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in New York City are
authorized or required by law or executive order to close.
* "Certificate of Incorporation" shall mean the Certificate of
Incorporation of the Company, as amended from time to time.
* "Common Stock" shall mean the Common Stock, no par value per
share, of the Company.
* "Company" shall have the meaning ascribed to such term in the
Preamble.
* "Current Market Price" per share shall mean, on any date specified
herein for the determination thereof, (a) if the Common Stock is
then listed on a national securities exchange, designated for
quotation on the NASD OTC Bulletin Board, the National Market
System or the Small Cap Market of the Nasdaq Stock Market, the NQB
Pink Sheets printed and published weekly or updated daily through
the NQB EQS Pink Sheets system, or such other trading market or
exchange upon which the Common Stock quoted in the over-the-
counter-market by a member firm of the NYSE, or the NASD OTC
Bulletin Board, the average daily closing price of the Common
Stock for those days during the period of thirty (30) days, ending
on such date, on which the national securities exchanges were open
for trading, and (b) if the Common Stock is not then so listed,
designated or quoted, the closing price on such date.
* "Dividend Rate" shall mean a rate of interest equal to 6% per
annum if paid in cash or cash equivalents.
* "Dividend Arrearage" shall have the meaning assigned to such term
in Section 2(b).
* "Fair Value" shall have the meaning assigned to such term in
Section 4.
* "Issue Date", with respect to any shares of Series A Preferred
Stock shall mean the first date on which such shares of Series A
Preferred Stock are deemed to have been issued or were actually
issued, whichever is earlier.
* "Junior Preferred Stock" shall mean any series of preferred stock
of the Company issued subsequent and in conformity with the filing
of this Certificate of Designation.
* "Junior Stock" shall mean any capital stock of the Company ranking
junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock, including, without
limitation, the Common Stock and other Preferred Stock.
* "Liquidation Preference" with respect to each share of Series A
Preferred Stock shall mean one hundred (US $100.00) dollars per
share.
* "Noncompliance Event" shall have the meaning assigned to such term
in Section 7(b).
* "Parity Stock" shall mean any capital stock of the Company ranking
on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock.
There is no class of stock presently authorized which is on a
parity with the Series A Preferred Stock.
* "Person" means an individual, a limited liability company, a
limited liability partnership, a corporation, a partnership, an
association, a joint stock company, a trust, joint venture, an
unincorporated organization or any other entity or organization,
domestic or foreign.
* "Annual Dividend Payment Date" shall have the meaning assigned to
such term in Section 2(a).
* "Senior Preferred Stock" shall mean all shares of Series A
Preferred Stock.
* "Senior Stock" shall mean any capital stock of the Company ranking
senior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock. There shall be no
stock senior to the Series A Preferred Stock.
* "Series A Preferred Stock" shall have the meaning assigned to such
term in Section 1(a).
* "Subsidiary" of any Person shall mean with respect to any Person,
a corporation or other entity of which fifty (50%) percent or more
of the voting power of the voting equity interest, is owned,
directly or indirectly, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries"
herein shall refer to a Subsidiary or Subsidiaries of the Company.
SECTION 12. SECTION REFERENCES.
All references herein to sections or subsections shall be to
sections or subsections of this Certificate of Designation unless otherwise
expressly provided.
IN WITNESS WHEREOF, through its designated
officer has caused this Certificate to be duly executed in its corporate name
as of , 2004.
By:
President
T08ycertdsgn.bmi
EXHIBIT "E"
TO AGREEMENT AND PLAN OF REORGANIZATION
FORM OF INVESTMENT LETTER
INVESTMENT LETTER
TO THE BOARD OF DIRECTORS OF BRONZE MARKETING, INC. ("CORPORATION")
The undersigned hereby represents to the Corporation, that (1) the shares
of the Corporation's common stock and preferred stock (the "Securities") which
are being acquired by the undersigned are being acquired for the undersigned's
own account and for investment and not with a view to the public resale or
distribution thereof; (2) the undersigned will not sell, transfer or otherwise
dispose of the securities except in compliance with the Securities Act of
1933, as amended (the "Act"); and (3) the undersigned is aware that the
Securities are "restricted securities" as that term is defined in Rule 144 or
the General Rules and Regulations under the Act.
The undersigned acknowledges that it has been afforded access to
disclosure documents and information regarding the Corporation as requested by
the undersigned.
The undersigned further acknowledges that it has had an opportunity to
ask questions of and receive answers from duly designated representatives of
the Corporation concerning the terms and conditions pursuant to which the
Securities are being purchased. The undersigned acknowledges that it has been
afforded an opportunity to examine such documents and other information which
it has requested for the purpose of verifying the information set forth in the
documents referred to above.
The undersigned acknowledges and understands that the Securities are
unregistered and must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such registration is available.
The undersigned further acknowledges that it is fully aware of the
applicable limitations on the resale of the Securities. These restrictions
for the most part are set forth in Rule 144. The Rule permits sales of
"restricted securities" upon compliance with the requirements of such Rule.
If the Rule is available to the undersigned, the undersigned may make only
routine sales of securities, in limited amounts, in accordance with the terms
and conditions of that Rule.
The Company is the only person which may register its Securities under
the Act and it currently is not contemplating registering any of its
Securities. Furthermore, the Company has not made any representations,
warranties or covenants to the undersigned regarding registration of the
Securities or compliance with any exemption under the Act.
By reason of the undersigned's knowledge and experience in financial and
business matters in general, and investments in particular, it is capable of
evaluating the merits and risks of an investment by it in the Securities.
The undersigned is capable of bearing the economic risks of an investment
in the Securities and fully understands the speculative nature of the
Securities.
The undersigned's present financial condition is such that it is under no
present or contemplated future need to dispose of any portion of the
Securities to satisfy any existing or contemplated undertaking, need, or
indebtedness.
Any and all certificates representing the Securities, and any and all
securities issued in replacement thereof or in exchange therefor, shall bear
the following legend, which the undersigned has read and understands:
The shares represented by this Certificate have not been
registered under the Securities Act of 1933 (the "Act") and are
"restricted securities" as that term is defined in Rule 144 under
the Act. The shares may not be offered for sale, sold or
otherwise transferred except pursuant to an effective registration
statement under the Act or pursuant to an exemption from
registration under the Act, the availability of which is to be
established to the satisfaction of the Company.
The undersigned further agrees that the Corporation shall have the right
to issue stop-transfer instructions to its transfer agent and acknowledges
that the Corporation has informed the undersigned of its intention to issue
such instructions.
Very truly yours,
Date: , 200
T108invstltr.bmi
