SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of
The Securities Exchange Act of 1934
CENTROCOM CORP.
a Nevada corporation
(Exact name of registrant as specified in its charter)
NEVADA 86-0869570
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
1301 Dove Street, Suite 460, Newport Beach, California 92660
(Address of registrant's principal executive offices) (Zip Code)
713.622.4200
(Registrant's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Act:
Common stock, Par value $.0005
(Title of Class)
Title of each class Name of Each Exchange on which
to be so registered: each class is to be registered:
- -------------------- -------------------------------
None None
Securities to be registered under Section 12(g) of the Act:
Common Stock, Par value $.0005
- ------------------------------
(Title of Class)
Copies to:
Thomas E. Stepp, Jr.
Stepp & Beauchamp LLP
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Facsimile 949.660.9010
Page 1 of 17
Exhibit Index is specified on Page 16
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Centrocom Corp.,
a Nevada corporation
Index to Form 10-SB Registration Statement
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Item Number and Caption Page
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1. Description of Business 3
2. Management's Discussion and Analysis of Financial Condition 4
and Results of Operations
3. Description of Property 9
4. Security Ownership of Certain Beneficial Owners and Management 10
5. Directors, Executive Officers, Promoters and Control Persons 11
6. Executive Compensation - Remuneration of Directors and Officers 12
7. Certain Relationships and Related Transactions 12
8. Legal Proceedings 13
9. Market for Common Equity and Related Shareholder Matters 13
10. Recent Sales of Unregistered Securities 14
11. Description of Securities 14
12. Indemnification of Officers and Directors 15
13. Financial Statements 15
14. Changes in and Disagreements with Accountants 14
15. Financial Statements and Exhibits 15
15(a) Index to Financial Statements
Financial Statements F-1 through F-11
15(b) Index to Exhibits
Exhibits E-1 through E-93
Signatures 17
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Item 1. Description of Business.
The Company. Centrocom Corporation (the "Company") was incorporated as
Condo Management, Inc., a Nevada corporation, on June 18, 1992. On or about June
4, 1996, the Company changed its name to One and Only, Inc. On or about March
14, 1997, the Company changed its name to FamilyWare International, Inc. On or
about June 4, 1999, the Company changed its name to Centrocom Corporation. The
principal business address of the Company is 1301 Dove Street, Suite 460,
Newport Beach, California 92660. The Company's telephone number is 713.622.4200.
The Company's facsimile number is 713.622.5089.
The Company's Subsidiaries. Family Ware Products, Inc. ("FWPI"), was
incorporated in British Columbia on August 13, 1993. In or about February 1994,
FWPI caused to be formed a wholly-owned subsidiary, Family Ware, Inc. ("FWI"),
incorporated under the laws of the State of Delaware. In or about January of
1997, the Company purchased 100% of the issued and outstanding stock of FWPI.
Immediately thereafter, FWPI transferred 100% ownership in FWI to the Company.
FWPI and FWI are currently wholly-owned subsidiaries of the Company. On or about
May 7, 1999, the Company acquired 100% of the issued and outstanding stock of
Centrocom Corporation, a Nevada corporation . On or about June 4, 1999,
Centrocom Corporation, currently a wholly-owned subsidiary of the Company,
changed its name to Centrocom Technologies Corporation ("CTC"). Neither FWPI nor
FWI are currently engaged in any business activity. The Company anticipates that
FWPI and FWI will be wound up and fully dissolved.
Business of the Company. On or about May 7, 1999, the Company entered into
a Common Stock Exchange and Acquisition Agreement ("Acquisition Agreement") with
CTC. Pursuant to the Acquisition Agreement, the Company acquired from Eric
Peacock and Vernon Briggs III, former officers and directors of the Company,
1,000,000 common shares of CTC, which shares represented all of the issued and
outstanding shares of CTC's $.001 par value common stock in exchange for the
issuance by the Company to Mr. Briggs and Mr. Peacock of a total of 9,000,000
shares of the Company's $.0005 par value common stock. As a result, CTC became a
wholly-owned subsidiary of the Company. CTC was incorporated in 1996 for the
purpose of designing and marketing Internet and network-oriented software.
In or around, August, 1999, the Company, Eric Peacock and Vernon Briggs III
entered into a Letter of Intent ("LOI") which contemplates the spin-off of CTC
as a subsidiary of the Company. On or about October 21, 1999, the Company, Eric
Peacock ("Peacock"), Vernon M. Briggs III ("Briggs") and CTC (collectively the
"Parties") entered into an Agreement of Mutual Rescission ("Rescission
Agreement"). The Rescission Agreement provides for the return to Briggs and
Peacock of the one million (1,000,000) shares of $.001 common stock acquired by
the Company pursuant to the Acquisition Agreement. The Rescission Agreement also
provides for the return to the Company of the nine million (9,000,000) shares of
$.0005 par value common stock acquired by Peacock and Briggs pursuant to the
Acquisition Agreement.
The Company and CTC are currently negotiating a Software Licensing
Agreement ("Licensing Agreement") whereby the Company will be granted a license
to exploit the Zowwwie!.com website and related software (collectively
"Software") more particularly described in this Item 1 under the heading
"Licensed Products." The specific terms of the Licensing Agreement are currently
being negotiated as well. As consideration for the license granted under the
Licensing Agreement, CTC will acknowledge receipt of Four Hundred Thousand
Dollars ($400,000.00) previously received by CTC from the Company. The Parties
anticipate that the Licensing Agreement will contain terms restricting CTC's
right to compete with the Company.
The Company and CTC are currently negotiating a Software Development and
Maintenance Agreement ("Maintenance Agreement"). The Parties anticipate that
under the terms of the Maintenance Agreement, CTC will provide services for the
development, supervision and management of the Software for a period of no less
than eighteen (18) months. As consideration, the Company anticipates it will pay
CTC Nineteen Thousand Four Hundred Forty Four Dollars ($19,444.00) a month for
the term of the Maintenance Agreement assuming the Maintenance Agreement is not
terminated. If terminated by reason of default or otherwise, the Company will
have no further obligation to CTC under the Maintenance Agreement. The Parties
anticipate that the Maintenance Agreement will contain terms restricting CTC's
right to compete with the Company.
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CTC has designed Internet and network-oriented software that links people,
information and data together to facilitate the delivery of goods and services
over the Internet ("e-commerce"). CTC has a library of software and tools that
can be customized to accommodate the requirements of various businesses. The
Company will start with an examination of the particular client's business needs
and requirements, taking into account the type of business, including, but not
limited to, the products or services provided by that client and the management
and goals of the particular client. Taking into account the particular client's
requirements, the Company will provide the vehicle for manufacturers and
distributors to effectively and rapidly market and sell their products and/or
services.
Licensed Products. The following represents those products developed by CTC
that will be licensed to the Company pursuant to the Licensing Agreement:
Auction Software. CTC has designed and developed software that allows
manufacturers and single sellers to globally market, over the Internet, products
and services. The software allows the seller to list an item for sale, identify
a minimum price for the opening bids and specify how long the auction will last.
Upon the successful sale of their product, the seller is charged an adjustable
fee depending on the product's sales price. Buyers are not charged for making
bids or purchasing products. The software keeps detailed track of sales progress
in an entertaining, interactive format.
E-Commerce Software. This software allows businesses to list their products
and services on the Internet in an accessible format, as well as permitting the
consumer to efficiently browse for inventory on the Internet and to add and
place items in a database that saves information for up to 30 days.
Zowwwie!.com. CTC has designed and developed software that will provide
manufacturers, distributors and retailers the opportunity to offer and sell
their products and services on the Internet using either an auction format or a
fixed price format. Consumers are provided information on available products,
location of products (including a map of how to get there), contact lists,
warranty information, upgrades, customer support, price comparisons and product
manuals. Zowwwie!.com provides its clients the opportunity to advertise their
products, move aged inventory, auction products, announce new products, and
update product manuals. Zowwie!.com also permits the user to participate in
contests, chat rooms and bulletin boards where users have the opportunity to
develop online relationships with other users that have similar product
interests.
The Company anticipates that the Licensing Agreement and Maintenance
Agreement will involve the licensing, development and maintenance of the
Zowwwie!.com Web site and related software, including, but not limited to, the
auction software and e-commerce software.
Employees. The Company currently has 12 full-time employees.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources. In July of 1998 until in or around May
1999, the Company ceased all operations. At that time, the Company's assets were
used to settle all liabilities and the carrying value of the assets exceeded the
carrying value of the liabilities. At December 30, 1998, the Company did not
have any cash resources. Also, at December 30, 1998, the Company did not have
any assets or liabilities. For the fiscal year ended December 30, 1998, the
Company experienced a net loss of $725,706, down from the $2,220,032 loss
experienced during the fiscal year ended December 30, 1997.
Results of Operations. On or about October 4, 1999, the Company launched
its Zowwie!.com Web site. Currently, the Company's Web site contains price
listings on (i) computers, including brand names such as IBM and Compaq; (ii)
electronics, including products manufactured by Sharp, Sony, Panasonic and
Lucent; (iii) jewelry; and
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(iv) miscellaneous items such as cookware by Lamex. However, the Company has not
yet realized any significant revenue from operations. With the Company's
purchase of all of the issued and outstanding $.001 par value common stock of
CTC the subsequent signing of the LOI, and subsequent to the anticipated signing
of the Licensing Agreement and Maintenance Agreement, the Company now holds
assets it believes will allow it to achieve long-term liquidity. The Company
believes that the realization of those assets is dependent upon the Company's
ability to complete the material steps necessary to make Zowwwie!.com a
commercial success. As noted above, manufacturers, distributors and retailers
have already listed their products on the Company's Web site. The Company is
negotiating with additional suppliers to list products and services on the
Company's Web site.
The Company's success is materially dependent upon its ability to satisfy
additional financing requirements. The Company is reviewing its options to raise
substantial equity capital. The Company anticipates that it will begin to
realize positive gross revenue in or around March, 2000. In order to satisfy its
requisite budget, management has held and continues to conduct negotiations with
various investors. The Company anticipates that these negotiations will result
in additional investment income for the Company. To achieve and maintain the
competitiveness of its Web site, the Company may be required to raise
substantial funds. The Company's forecast for the period for which its financial
resources will be adequate to support its operations involves risks and
uncertainties and actual results could fail as a result of a number of factors.
The Company anticipates that it will need to raise additional capital to
develop, promote and conduct its operations. Such additional capital may be
raised through public or private financing as well as borrowing and other
sources.
There can be no assurance that additional funding will be available under
favorable terms, if at all. If adequate funds are not available, the Company may
be required to curtail operations significantly or to obtain funds through
entering into arrangements with collaborative partners or others that may
require the Company to relinquish rights to certain products and services that
the Company would not otherwise relinquish.
However, the Company believes it is poised to maintain its long-term
liquidity. The Company believes that within a short period of time, it can begin
to produce positive revenue through its Internet activities. Coupled with the
further issuance of common stock of the Company, the Company believes it can
significantly improve its long-term liquidity.
Marketing. The Company plans to market its products and services to
manufacturers, distributors and retailers of a wide array of products and
services. The Company's goal is to develop and constantly increase the number of
users on its Web site. The Company believes that the more users it can generate,
the more products and services its clients will sell, and the more money clients
will pay to utilize the Company's products and services. The Company believes
that e-commerce and online auctioning are fast-growing industries on the
Internet. The Company believes that statistics show that more than 100 million
people, in approximately 175 countries are connected to the Internet and
thousands more are connecting on every day. Industry analysts believe that the
Internet will have in excess of 700 million Web servers by the year 2000.
The Company has enlisted the services of the marketing firm of Willis:Grace
in Houston, Texas. Willis:Grace is being compensated for their services by the
Company with stock and fees. The Company anticipates that Willis:Grace will
focus its initial marketing efforts on markets encompassing rural, urban and
suburban sectors in the United States only.
The Company anticipates that it will market its products and services to a
wide range of manufacturers, distributors and retailers as well as to single
sellers. The Company believes its products and services have universal
application and can be customized to meet the specific requirements of most
businesses and individuals wishing to participate in e-commerce or conduct other
business over the Internet. The Company anticipates that it will market its
products and technologies through its Web site, trade publications, trade shows,
and direct sales. The
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Company is currently negotiating with various manufacturers, distributors and
retailers in an effort to secure written additional agreements for the
distribution of products over the Company's Web site.
Competition. The Online auctioning and sale of goods and services over the
Internet is a new and rapidly evolving market. The Company anticipates it may
face significant competition from Internet providers of products and services
such as e-Bay, Auction Universe and eCom eCom.com, Inc. Although the Company
believes it does not currently face significant competition, the Company does
expect competition to intensify in the future. Barriers to opening a new
Internet storefront are rising, but remain minimal for such a true global reach.
The Company believes that the principal competitive factors in Internet
auctioning and e-commerce are selection, convenience, price, speed and
accessibility, customer service, quality of site content, and reliability and
speed of fulfillment. Many of the Company's current and potential competitors
have longer operating histories, larger customer bases, greater brand
recognition, and significantly greater financial, marketing and other resources.
In addition, larger, well-established and well-financed entities may acquire,
invest in, or form joint ventures with the Company's competitors. Competition
will increase as the Internet and e-commerce in general become more widely
accepted. However, the Company believes that its potential client base will also
increase as the Internet and e-commerce become widely accepted as a means of
marketing and distributing products and services.
The Company believes that the diverse segments of the Internet market will
provide opportunities for more than one supplier of products and services
similar to those of the Company. However, it is possible that a single supplier
may dominate one or more market segments. If competition increases, the Company
might have to respond to competitive pressures by implementing pricing,
marketing and other programs, or seeking out additional strategic alliances or
acquisitions, that may be less favorable than would otherwise be established or
obtained. Any such response to competitive pressures could materially adversely
affect the Company's business, results of operations and financial conditions.
Many of the Company's existing competitors, as well as a number of potential new
competitors, have significantly greater financial, technical and marketing
resources than the Company.
Increased competition could result in advertising or sponsorship price
reductions, reduced margins or loss of market share, any of which could harm the
Company's business. Competition is likely to increase significantly as new
companies enter the market and current competitors expand their services. Many
of the Company's present and potential competitors are likely to enjoy
substantial competitive advantages, including the following (i) larger numbers
of users; (ii) larger numbers of advertisers; (iii) greater brand recognition;
(iv) more fully-developed e- commerce opportunities; (v) larger technical,
production and editorial staffs; and (vi) substantially greater financial,
marketing, technical and other resources. If the Company does not compete
effectively or if it experiences any pricing pressures, reduced margins or loss
of market share resulting from increased competition, the Company's business
could be adversely affected. Competition may include companies that are larger
and better capitalized than the Company and that have expertise and established
brand recognition in these markets. There can be no assurance that the Company's
competitors will not develop Internet-related products and services that are
superior to those of the Company or that achieve greater market acceptance than
the Company's offerings.
The Company believes that the software developed and licensed to the
Company by CTC will allow the Company to meet and even surpass its competition.
The Company believes that the Zowwwie!.com Web site and related software will be
distinguished from its competitors by its ability to be customized to meet the
needs of the particular client. The extensive information provided to consumers
regarding available products, location of products, contact lists, warranty
information, upgrades, customer support, price comparisons and product manuals
also provides a competitive advantage to the Company. The Company also believes
it can attract significant users
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through the use of contests, chat rooms and bulletin boards. Moreover, users
will have the opportunity to develop online relationships with other users that
have similar product interests. The Company also believes that the quality,
variety and accessibility of the products and services it offers on its Web site
will attract users and encourage retailers, manufacturers and distributors to
utilize the Company's products and services.
Technological Changes and New Products and Services. The market for
Internet-related products and services is characterized by rapid technological
change, changing customer needs, frequent new product introductions and evolving
industry standards. These market characteristics are exacerbated by the emerging
nature of this market and the fact that many companies are expected to introduce
new and innovative products and services in the near future. The Company's
future success will depend on the Company's ability to continually and on a
timely basis introduce new products, services and technologies and to continue
to improve the performance, features and reliability of the Company's products
and services in response to both evolving demands of the marketplace.
The use of Internet e-commerce as the primary means of distribution of
products and services is unproven. The success of the Company is significantly
dependent on an increase in the use of the Internet for e-commerce. Many
retailers have little or no experience using the Internet for e-commerce. If the
markets for Internet advertising or e- commerce do not continue to develop, the
business and the financial condition of the Company may be adversely affected.
Demand and market acceptance for e- commerce is uncertain and may not increase
as necessary for the Company's business to grow or succeed. The adoption of
e-commerce, particularly by companies that have historically relied on
traditional methods of to sell their products and services, requires the
acceptance of a new way of conducting business, exchanging information and
completing commercial transactions. If e-commerce fails to develop or develops
more slowly than the Company expects, its business could be adversely affected.
There can be no assurance that the Company will not experience difficulties
that could delay or prevent the successful development, introduction or
marketing of new or enhanced technologies, products and services, or that the
Company's new products and services will adequately meet the requirements of the
marketplace and achieve significant market acceptance. Due to certain market
characteristics, including technologic change, changing customer needs, frequent
new product and service introductions and evolving industry standards,
timeliness of introduction of these new products and services is critical.
Delays in the introduction of new products and services may result in customer
dissatisfaction and may delay or cause a loss of revenue. There can be no
assurance that the Company will be successful in developing new products or
services or improving existing products and services that respond to
technological changes or evolving industry standards, that the Company will not
experience difficulties that could delay or prevent the successful development,
introduction and marketing of new or improved products and services, or that its
new products and services will adequately meet the requirements of the
marketplace and achieve market acceptance. If the Company is unable to develop
and introduce new or improved products or services in a timely manner in
response to changing market conditions or customer requirements, the Company's
business, operating results and financial condition will be materially adversely
affected.
Software Defects. The Company's products and services consist of or depend
on complex software. Complex software occasionally contains defects,
particularly when first introduced or when new versions are released. Although
the Company and CTC conduct extensive testing, the Company may not discover
software defects that affect new or current products and services until after
the software is deployed. The Company has not to date experienced any material
software defects, however, it is possible that, despite testing by the Company
and CTC, defects may exist. Significant interruptions in the Company's
activities that could damage the Company's reputation or increase service costs,
cause the loss of revenue, delay market acceptance or divert development
resources, any of which could cause the Company's business to suffer.
Government Regulation and Legal Uncertainties. The Company is not currently
subject to direct regulation by any government agency in the United States,
other than regulations applicable to businesses generally,
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and there are currently few laws or regulations directly applicable to access to
or commerce on the Internet. Due to the increasing popularity and use of the
Internet, it is possible that a number of laws and regulations may be adopted
with respect to the Internet, covering issues such as user privacy, pricing and
characteristics and quality of products and services. For example, the Company
may be subject to the provisions of the recently enacted Communications Decency
Act ("CDA"). Although the constitutionality of the CDA, the manner in which the
CDA will be interpreted and enforced and its effect on the Company's operations
cannot be determined, it is possible that the CDA could expose the Company to
substantial liability. The CDA could also dampen the growth in use of the
Internet generally and decrease the acceptance of the Internet as a
communications and commercial medium, and could, thereby, have a material
adverse effect on the Company's business, results of operations and financial
condition. In addition, several telecommunications carriers are seeking to have
telecommunications over the Internet regulated by the Federal Communications
Commission ("FCC") in the same manner as other telecommunications services. For
example, America's Carriers Telecommunications Association ("ACTA") has filed a
petition with the FCC for this purpose.
Because the growing popularity and use of the Internet has burdened the
existing telecommunications infrastructure and many areas with high Internet use
have begun to experience interruptions in phone service, local telephone
carriers, such as Pacific Bell, have petitioned the FCC to regulate ISPs and
OSPs in a manner similar to long distance telephone carriers and to impose
access fees on the ISPs and OSPs. If either of these petitions is granted, or
the relief sought therein is otherwise granted, the costs of communicating on
the Internet could increase substantially, potentially slowing the growth in use
of the Internet, which could in turn decrease the demand for the Company's
products and services. A number of proposals have been made at the federal,
state and local level that would impose additional taxes on the sale of goods
and services through the Internet. Such proposals, if adopted, could
substantially impair the growth of e-commerce, and could adversely affect the
Company's opportunity to derive financial benefit from such activities.
Moreover, the applicability to the Internet of the existing laws governing
issues such as property ownership, copyright, defamation, obscenity, and
personal privacy is uncertain, and the Company may be subject to claims that its
services violate such laws. Any such new legislation or regulation in the United
States or the application of existing laws and regulations to the Internet could
have a material adverse effect on the Company's business, operating results, and
financial condition.
Concerns about transactional security may hinder the Company's sale of its
products and services and e-commerce in general. A significant barrier to
e-commerce is the secure transmission of confidential information over public
networks. Any breach in the Company's security could expose the Company to a
risk of loss or litigation and possible liability. The Company may rely on
encryption and authentication technology licensed from third parties to provide
secure transmission of confidential information. As a result of advances in
computer capabilities, new discoveries in the field of cryptography or other
developments, a compromise or breach of the algorithms the Company anticipates
using to protect customer transaction data may occur. A compromise of the
Company's security could severely harm the Company's business. A party who is
able to circumvent the Company's security measures could misappropriate
proprietary information, including customer credit card information, or cause
interruptions in the operation of the Company's Web site. The Company may be
required to expend significant capital and other resources to protect against
the threat of security breaches or to alleviate problems caused by these
breaches. However, protection may not be available at a reasonable price or at
all. Concerns over the security of e-commerce and the privacy of users may also
inhibit the growth of the Internet as a means of conducting commercial
transactions.
The Company's success and ability to compete may be significantly dependent
on its proprietary content. The Company will rely on copyright law and software
encryption to protect its content. While the Company will actively take steps to
protect its proprietary rights, these steps may not be adequate to prevent the
infringement or misappropriation of the content of the Company's Web site.
Infringement or misappropriation of such content or intellectual property could
materially harm the Company's business. The Company may need to obtain licenses
from
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others to refine, develop, market and deliver new services. The Company cannot
make assurances that it will be able to obtain any such licenses on commercially
reasonable terms or at all or that rights granted pursuant to any licenses will
be valid and enforceable.
Year 2000 Compliance. Historically, certain computer programs were written
using two digits rather than four to define the applicable year. Accordingly.
the Company's software may recognize a date using "00" as 1900 rather than the
year 2000, which could result in major systems failures or miscalculations,
commonly referred to as the Year 2000 issue.
The Company has performed an assessment of major information technology
systems and believes it has completed all necessary modifications or
replacements in an attempt to ensure that systems are Year 2000 compliant. The
costs of addressing this issue did not have a material adverse effect on the
Company's financial position, results of operations or cash flows. The potential
impact of the Year 2000 issue on significant customers, vendors and suppliers of
the Company cannot be reasonably estimated at this time. However, if
unanticipated or undetected year 2000 issues arise in the future that the
Company cannot fix before January 1, 2000, the Company's operating costs could
be increased and the Company could experience business interruptions which could
harm their businesses. If the Company has not adequately addressed its year 2000
readiness issues in its internally developed proprietary software, the Company
could be subject to claims of mismanagement, misrepresentation or breach of
contract and related litigation, which could be costly and time consuming to
defend. In addition, the software and systems of governmental agencies, utility
companies, Internet access companies, third-party service providers and others
outside of the Company's control may not be year 2000 ready. If these entities
are not year 2000 ready, a systemic failure beyond the Company's control could
result, including a prolonged Internet, telecommunications or general electrical
failure. This type of failure would make it difficult or impossible to use the
Internet or access to the Company's Web sites and would prevent the Company from
publishing the Company's content. If a prolonged failure of this type occurred,
the Company's business would be severely harmed.
Item 3. Description of Property
Property held by the Company. As of the dates specified in the following
table, the Company held the following property:
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Property December 30, 1998 December 30, 1997
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Cash $0.00 $ 30,129.00
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Furniture and Equipment (net) $0.00 $135,861.00
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The Company's Facilities. The Company is in the process of locating new
facilities for its operations. Until such time, the Company will occupy those
facilities it occupied prior to the signing of the Rescission Agreement.
Item 4. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners. The following
represents the beneficial owners of 5% or more of the Company's issued and
outstanding common stock, other than officers and directors:
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Name of Percent of
Title of Class Beneficial Owner Amount Class
- -------------- ---------------- ------ -----
Common Stock (Name and Address of Beneficial 9,099,710 42.5%
Owner Unknown at this time.)
Represented by Certificate
Number 1505 and Held by
Cede & Co.
P.O. Box 222
Bowling Green Station
New York, New York 10274
(b) Security Ownership by Management. None of the current directors or
principal executive officers of the Company beneficially own any shares of the
Company's common stock.
Changes in Control. Management of the Company is not aware of any
arrangements which may result in "changes in control" as that term is defined by
the provisions of Item 403 of Regulation S-B.
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Item 5. Directors, Executive Officers, Promoters and Control Persons
================================================================================
Name and Address Age Position Term as Director
- ---------------- --- -------- ----------------
David A. Smith 46 President On or about October
Chief Executive Officer 20, 1999 to present.
Secretary
Director
================================================================================
President Chief Executive Officer Secretary Director
David A. Smith, President, Chief Executive Officer, Secretary and a Director. In
1975, Mr. Smith graduated from Baylor University and has been a Certified Public
Accountant for over 20 years. In 1976, Mr. Smith joined the "big six" public
accounting firm KPMG Peat Marwick, in Houston, Texas. In 1979, he left to start
his own public accounting practice. In 1984 he was joined by Roger Goddard
forming Smith, Goddard & Co, where Mr. Smith served as President until 1995. In
1995, Mr. Smith sold his interest in Smith, Goddard & Co., and formed Office
Network, Inc. ("ONI"), a company specializing in the design, development and
distribution of e-commerce software. Mr. Smith joined the Company as Chief
Financial Officer in April of 1999. Mr. Smith has never been a director of a
reporting company.
All directors hold office until the next annual meeting of the shareholders
and the election and qualification of their successors. Officers are elected
annually by the Board of Directors and serve at the discretion of the Board of
Directors.
There are no orders, judgments, or decrees of any governmental agency or
administrator, or of any court of competent jurisdiction, revoking or suspending
for cause any license, permit or other authority to engage in the securities
business or in the sale of a particular security or temporarily or permanently
restraining Mr. Smith from engaging in or continuing any conduct, practice or
employment in connection with the purchase or sale of securities, or convicting
such person of any felony or misdemeanor involving a security, or any aspect of
the securities business or of theft or of any felony, nor is Mr. Smith the
officer or director of any corporation or entity so enjoined.
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Item 6. Executive Compensation - Renumeration of Directors and Officers.
Receipt of Compensation Regardless of Profitability. The officers,
directors, and employees of the Company may be entitled to receive significant
compensation, payments, and reimbursements regardless of whether the Company
operates at a profit or a loss. Any compensation received by officers,
directors, and management personnel of the Company will be determined from time
to time by the Board of Directors of the Company. Officers, directors, and
management personnel of the Company will be reimbursed for any out-of-pocket
expenses incurred on behalf of the Company.
Renumeration of Officers. Specified below, in tabular form, is the
aggregate annual remuneration of the Company's Chief Executive Officer and the
two (2) most highly compensated executive officers other than the Chief
Executive Officer who were serving as executive officers at the end of the
Company's last completed fiscal year.
================================================================================
Name of individual or Capacities in which Aggregate
Identity of Group remuneration was received remuneration
- ----------------- ------------------------- ------------
David Smith Chief Financial Officer Shares of
Common Stock
(Accrued, yet
unissued)
================================================================================
Renumeration of Directors. As of December 30, 1998, no compensation has
been paid to any of the directors of the Company.
Item 7. Certain Relationships and Related Transactions
Transactions with Promoters. There were no transactions with promoters.
Related Party Transactions. The following related party transactions
occurred before the Company ceased operations in July of 1998 and before the
Company resumed operations in or around May, 1999. The related party
transactions described below involved former officers and former directors of
the Company. The Company no longer has any financial obligation to the parties
referenced below.
The Company entered into various software sales agreements with Columbia
Diversified Software Fund Limited Partnership ("Columbia") and Nifco Synergy Ltd
("Nifco") for the sale of computer software. At the time, certain shareholders
of the Company were partners in Columbia and Nifco. Each agreement involved the
transfer of software rights and title for cash, notes, and participation in
sales. Pursuant to the sales agreement with Columbia, the Company earned an
agency fee from Columbia for marketing, selling and updating the software. The
Company and Columbia had a verbal agreement whereby the Company paid Columbia a
fixed management fee for administration services provided to the Company. The
Company and Columbia had agreed to the right of offset of the two fees. Net fees
received by the Company for the year ended December 30, 1997 were $120,017. Net
fees paid by the Company for the year ended December 30, 1998 were $21,898. In
or around 1996, the Company
12
<PAGE>
advanced Nifco $220,740 as required by the sales agreement. The Company expensed
the amount in 1997. Nifco also granted the Company a line of credit, bearing
interest at 8%. No amounts were drawn on the line.
The Company received unsecured, non-interest bearing advances from 471141
BC Limited, a wholly-owned company of Alnoor Kassam, former President and former
director of the Company, and from Equicorp Investment, Inc., a company
wholly-owned by Alnoor Kassam's brother. The amount outstanding to 471141 BC
Limited at December 30, 1997 was $558,167. The amount outstanding to 471141 BC
Limited at December 30, 1998 was $0. During 1997, the Company repaid Equicorp
Investment, Inc., $47,090. For the periods ending December 30, 1997 and 1998, no
amounts were outstanding to Equipcorp Investment, Inc.
The Company advanced monies to Cyberactive US, Inc., a company controlled
by the Company's former President, Alnoor Kassam. The balance outstanding at
December 30, 1997 was $240,798, which was fully reserved. The balance at
December 30, 1998 was $0.
Item 8. Legal Proceedings
The Company is not aware of any pending litigation nor does it have any
reason to believe that any such litigation exists.
Item 9. Market For Common Equity and Related Stockholder Matters
The Company participates in the OTC Bulletin Board, an electronic quotation
medium for securities traded outside of the Nasdaq Stock Market, under the
trading symbol "ZOWI". The Company's common stock has closed at a low of $0.17
and a high of $9.00 for the 52-week period ending October 7, 1999 and closed at
$0.56 on that date. Such quotations represent inter-dealer prices, without
retail mark-up, mark-down or commission and many not represent actual
transactions. As of December 30, 1998, there were no warrants to purchase common
stock outstanding. There have been no cash dividends declared on the Company's
common stock since the Company's inception. The Company has not yet adopted any
policy regarding payment of dividends.
Penny Stock Regulation. The Commission has adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks". Penny
stocks are generally equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system). The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from those rules, deliver a standardized
risk disclosure document prepared by the Commission, which (i) contained a
description of the nature and level of risk in the market for penny stocks in
both public offerings and secondary trading; (ii) contained a description of the
broker's or dealer's duties to the customer and of the rights and remedies
available to the customer with respect to violation to such duties or other
requirements of Securities' laws; (iii) contained a brief, clear, narrative
description of a dealer market, including "bid" and "ask" prices for penny
stocks and significance of the spread between the "bid" and "ask" price; (iv)
contains a toll-free telephone number for inquiries on disciplinary actions; (v)
defines significant terms in the disclosure document or in the conduct of
trading in penny stocks; and (vi) contains such other information and is in such
form (including language, type, size and format), as the Commission shall
require by rule or regulation. The broker-dealer also must provide, prior to
effecting any transaction in penny stock, the customer (i) with bid and offer
quotations for the penny stock; (ii) the compensation of the broker-dealer and
its salesperson in the transaction; (iii) the number of shares to which such bid
and ask prices apply, or other comparable information relating to the depth and
liquidity of the market for such stock; and (iv) month account statements
showing the market value of each penny stock held in the customer's account. In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock
13
<PAGE>
is a suitable investment for the purchaser and receive the purchaser's written
acknowledgment of the receipt of a risk disclosure statement, a written
agreement to transactions involving penny stocks, and a signed and dated copy of
a written suitably statement. These disclosure requirements may have the effect
of reducing the trading activity in the secondary market for a stock that
becomes subject to the penny stock rules. If any of the Company's securities
become subject to the penny stock rules, holders of those securities may have
difficulty selling those securities.
Item 10. Recent Sales of Unregistered Securities
There have been no sales of unregistered securities within the last three
(3) years which would be required to be disclosed pursuant to Item 701 of
Regulation S-B except for the following:
On or about December 15, 1998, the Company sold 2,000,000 shares of its
$.0005 par value common stock for $0.05 per share. The shares were issued in
reliance upon the exemption from the registration and prospectus delivery
requirements of the Securities Act of 1933, as amended ("Act"), which exemption
is specified by the provisions of Section 3(b) of the Act and Rule 504 of
Regulation D promulgated by the Securities and Exchange Commission pursuant to
that Section 3(b). Gross proceeds from that offering were $100,000. The majority
of those funds were used for working capital.
Item 11. Description of Securities
The Company is authorized to issue 50,000,000 shares of common stock,
$.0005 par value. As of June 30, 1999, there were 73 shareholders. As of June
30, 1999, 21,426,192 shares of the Company's common stock were issued and
outstanding.
Common Stock. The holders of the Company's common stock are entitled to one
vote for each share held of record on all matters to be voted on by those
shareholders. There is no cumulative voting with respect to the election of
directors of the Company, with the result that the holders of more than 50% of
the Company's common stock voted for the election of directors can elect all of
those directors. The holders of the Company's common stock are entitled to
receive dividends when, as, and if declared by the Company's Board of Directors
from funds legally available therefor. In the event of liquidation, dissolution,
or winding up of the Company, the holders of the Company's common stock are
entitled to share ratably in all assets remaining available for distribution to
them after payment of the Company's liabilities and after provision has been
made for each class of stock, if any, having preference over the Company's
common stock. Holders of shares of the Company's common stock, as such, have no
conversion, preemptive or other subscription rights, and there are no redemption
provisions applicable to the Company's common stock.
Non-Cumulative Voting. The holders of shares of common stock of the Company
do not have cumulative voting rights, which means that the holders of more than
50% of the outstanding common stock of the Company, voting for the election of
directors of the Company, may elect all of the directors of the Company to be
elected, if they so desire, and, in such event, the holders of the remaining
common stock of the Company may not be able to elect any of the Company's
directors.
Registration Rights. Existing holders of shares of the Company's common
stock are not entitled to rights with respect to the registration of such shares
under the Securities Act.
Dividends. The payment by the Company of dividends, if any, in the future,
shall be determined by the Company's Board of Directors, in its discretion, and
will depend among other things, upon the Company's earnings, the Company's
capital requirements, and the Company's financial condition, as well as other
relevant factors. The Company has not paid or declared any dividends to date.
Holders of common stock are entitled to receive dividends
14
<PAGE>
as declared and paid from time to time by the Company's Board of Directors from
funds legally available therefor. The Company intends to retain any earnings for
the operation and expansion of its business and does not anticipate paying cash
dividends in the foreseeable future.
Item 12. Indemnification of Directors and Officers
Limitation on Liability of Officers and Directors of the Company. Section
78.7502 of the Nevada General Corporation Law permits the Company to eliminate
or limit the personal liability of the officers and directors of the Company to
the Company and its shareholders for damages for breach of fiduciary duty as a
director or officer. Accordingly, should the Company amend its Articles of
Incorporation to include such elimination or limitation of personal liability,
or should the Company, as it contemplates, enter into indemnification agreements
with each of its executive officers and directors pursuant to which the Company
agrees to indemnify each such person for all expenses and liabilities, the
officers and directors of the Company may have no liability to the shareholders
of the Company for any mistakes or errors of judgment or for any act of
omission, unless such act or omission involves intentional misconduct, fraud, or
a knowing violation of law or results in unlawful distributions to the
shareholders of the Company. DISCLOSURE OF POSITION OF COMMISSION REGARDING
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES:
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF
1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE COMPANY
PURSUANT TO THE FOREGOING PROVISIONS, THE COMPANY HAS BEEN INFORMED THAT IN THE
OPINION OF THE SECURITIES AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS
AGAINST PUBLIC POLICY AS EXPRESSED IN THE SECURITIES ACT OF 1933 AND IS,
THEREFORE, UNENFORCEABLE.
Item 13. Financial Statements.
Copies of the financial statements specified in Regulation 228.310 (Item
310) are filed with this Registration Statement, Form 10-SB (see Item 15 below).
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There have been no changes in or disagreements with the Company's
accountants since the formation of the Company required to be disclosed pursuant
to Item 304 of Regulation S-B.
Item 15. Financial Statements and Exhibits
(a) Index to Financial Statements Page
1 Independent Auditor's Report F-1
2 Audited Consolidated Balance Sheets
as at December 30, 1997 and 1998 F-2
3 Audited Consolidated Statement of Loss
for Periods Ended December 30, 1997 and 1998 F-3
4 Audited Consolidated Statements of Stockholders'
15
<PAGE>
Equity for Period Ended December 30, 1998 F-4
5 Audited Consolidated Statements of Cash Flows
for Periods Ended December 30, 1997 and 1998 F-5
6 Notes to Financial Statements F-6 through F-11
(b) Index to Exhibits.
Copies of the following documents are filed with this Registration
Statement, Form 10-SB as exhibits:
Index to Exhibits Page
- ----------------- ----
1 Articles of Incorporation of E-1 through E-2
Condo Management, Inc.
2 Amended and Restated Articles
of Incorporation Evidencing Name
Change to One and Only, Inc. E-3 through E-5
3 Certificate of Amendment of Articles
of Incorporation Evidencing Name Change
to FamilyWare International, Inc. E-6 through E-8
4 Certificate of Amendment of Articles of
Incorporation Evidencing Name Change
to Centrocom Corp. E-9 through E-10
5 Bylaws of Centrocom Corp. E-11 through E-30
6 Share Exchange Agreement Between
Michael Brown, Paul Harris, 471141 B.C.
Ltd., FamilyWare Products Inc. and One
and Only, Inc. E-31 through E-44
7 Common Stock Exchange and Acquisition
Agreement Between the Company, Centrocom
Technologies Corporation (formerly Centrocom
Corp.), Vernon Briggs III, Eric Peacock and
Alnoor Kassam E-45 through E-93
8 Mutual Rescission Agreement Between the
Company, Centrocom Technologies Corporation
(formerly Centrocom Corp.), Vernon Briggs III
and Eric Peacock E-94 through E-116
<PAGE>
SIGNATURES
In accordance with the provisions of Section 12 of the Securities Exchange
Act of 1934, Centrocom Corp. has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Newport Beach, California, on October __, 1999.
Centrocom Corp.
a Nevada corporation
By: /s/ David A. Smith
----------------------------
David A. Smith
Its: President
16
<PAGE>
STRABALA
RAMIREZ
& Associates
Independent Auditors' Report
Certified Public Accountants & Consultants
A Professional Corporation
Board of Directors
FamilyWare International, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of FamilyWare
International, Inc. (a Nevada corporation) and Subsidiaries as of December 30,
1998 and 1997 and the related consolidated statements of losses, stockholders'
equity, and cash flows for the year then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well us evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of FamilyWare
International, Inc. and Subsidiaries as of December 30, 1998 and l997 and the
results of their operations and cash flows for the years then ended in
conformity with generally accepted accounting principles.
As discussed in Note 1 to the financial statements, the Company ceased
operations in 1998. As discussed in Note 8, the Company entered into a business
combination with Centrocom Corp. on May 7, 1999; unaudited pro forma information
is disclosed therein.
STRABALA, RAMIREZ & ASSOCIATES, INC.
/s/ Strabala, Ramirez & Associates, Inc.
Irvine, California
June 14, 1999
|_| ORANGE COUNTY CORPORATE OFFICE 19762 MacArthur Blvd., Suite 100, Irvine, CA
92612 (949) 852-1600 FAX (949) 852-1606
|_| LOS ANGELES OFFICE 4250 Wilshire Boulevard, Penthouse Suite, Los Angeles,
California 90010 (323) 934-2400 FAX (323) 934-2935
F-1
<PAGE>
FAMILYWARE INTERNATIONAL, INC.
(FORMERLY ONE AND ONLY, INC.) AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
ASSETS
December 30, December 30,
1998 1997
------------ ------------
Current Assets
Cash $ -- $ 30,179
Accounts receivable, net of allowance
for doubtful accounts of
$0 and $238,731, respectively -- 32,081
Prepaid expenses and other current assets -- 55,568
----------- -----------
Total current assets -- 117,828
----------- -----------
Furniture and equipment, net -- 135,861
----------- -----------
Other assets
Capitalized software costs, net -- 456,363
Trademark, net -- 3,240
----------- -----------
Total other assets -- 459,603
----------- -----------
Total assets $ -- $ 713,292
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
December 30, December 30,
1998 1997
------------ ------------
Current liabilities
Accounts payable $ -- $ 462,284
Accrued expenses -- 13,718
----------- -----------
Total current liabilities -- 476,002
Advances from related parties -- 558,167
----------- -----------
Total liabilities -- 1,034,169
----------- -----------
Stockholders' equity
Common stock, $.05 par value,
authorized 500,000 shares; issued
and outatanding 71,025 shares
at December 30, 1998 and 1997 3,551 3,551
Additional paid-in capital 4,060,893 3,034,285
Cumulative translation adjustment 11,839 (8,136)
Accumulated deficit (4,076,283) (3,350,577)
----------- -----------
Total stockholders' equity -- (320,877)
----------- -----------
Total liabilities and stockholders' equity $ -- $ 713,292
=========== ===========
F-2
<PAGE>
FAMILYWARE INTERNATIONAL, INC.
(FORMERLY ONE AND ONLY, INC.) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF LOSS
- --------------------------------------------------------------------------------
Year ended December 30
---------------------------
1998 1997
----------- -----------
Revenues
Sales $ 202 $ 4,955
Other income 2,144 2,310
Interest income 4,011 3,642
----------- -----------
6,357 10,907
Less cost of sales (4) (701)
----------- -----------
Net revenues 6,353 10,206
----------- -----------
Expenses
Salaries 220,610 517,557
Consultants 206,446 416,293
Write off of software development costs -- 216,792
Amortization and depreciation 128,508 148,603
General and administrative 214,016 855,251
Bad debt 35,532 75,742
----------- -----------
Total expenses 805,112 2,230,238
----------- -----------
Loss before provision for income tax (798,759) (2,220,032)
Provision for income tax -- --
----------- -----------
Loss from operations (798,759) (2,220,032)
=========== ===========
Excess carrying value of assets traded to
settle liabilities 73,053 --
=========== ===========
Net loss $ (725,706) $(2,220,032)
=========== ===========
EPS $ (0.20) $ (0.32)
=========== ===========
The accompanying notes are an integral pan of these consolidated
financial statements
F-3
<PAGE>
FAMILYWARE INTERNATIONAL, INC.
(FORMERLY ONE AND ONLY, INC.) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stock
------------
Additional Cumulative Total
paid-in translation Accumulated stockholders'
Shares Amount capital adjustment Deficit equity
---------- ---------- ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 30, 1996 5,000,000 $ 2,500 $ l,262,145 $ (8,030) $(1,130,545) $ 126,070
Cash received from joint ventures -- -- 2,289,705 -- -- 2,289,705
Common stock issued in share exchange with
FamilyWare Products, Inc. - January 1997 2,002,500 1,001 (617,515) -- -- (616,514)
Issuance of common stock - March 1997 100,000 50 99,950 -- -- 100,000
Net Loss -- -- -- -- (2,220,032) (2,220,032)
Foreign currency translation adjustment -- -- -- (106) -- (106)
---------- ---------- ------------ ---------- ----------- -----------
Balance at December 30, 1997 7,102,500 3,551 3,034,285 (8,136) (3,350,577) (320,877)
Cash received from joint ventures -- -- 1,026,608 -- -- 1,026,608
Reverse 100 to 1 stock split - July 1998 (7,031,475) -- -- -- -- --
Loss from operations -- -- -- -- (798,759) (798,759)
Excess current value of assets traded to settle
liabilities -- -- -- -- 73,053 73,053
Foreign currency translation adjustment -- -- -- 19,975 -- 19,975
---------- ---------- ------------ ---------- ----------- -----------
Balance at December 30, 1998 71,025 $ 3,551 $ 4,060,893 $ 11,839 $(4,076,283) $ --
========== ========== ============ ========== =========== ===========
</TABLE>
F-4
<PAGE>
FAMILYWARE INTERNATIONAL, INC.
(FORMERLY ONE AND ONLY, INC.) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended December 30,
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (725,705) $(2,220,032)
Adjustments to reconcile net loss to net cash used by operating activities:
Excess current value of assets traded to settle liabilities 73,053 --
Write off of prepaid development costs -- 216,792
Bad debt expense 35,532 75,742
Depreciation and amortization 128,508 148,603
Foreign currency translation adjustment 2,494 (12,967)
Changes in assets and liabilities, prior to discontinuation of operations:
Increase in accounts receivable (32,081) 4,344
Increase in prepaid expenses and other current assets 55,568 (45,609)
Increase (decrease) in accounts payable and accrued expenses (302,372) 26,126
----------- -----------
Net cash used in operating activities (1,014,393) (1,807,001)
----------- -----------
Cash flows from investing activities:
Acquisition of furniture and equipment (1,951) (104,313)
----------- -----------
Net cash used in investing activities (1,951) (104,313)
----------- -----------
Cash flows from financing activities:
Advances from (payments to) related parties (40,443) 131,985
Common stock and paid in capital 1,026,608 1,773,191
----------- -----------
Net cash provided by financing activities 986,165 1,905,176
----------- -----------
Net increase in cash (30,179) (14,334)
Cash, beginning of period 30,179 44,513
----------- -----------
Cash, end of period $ -- 30,179
=========== ===========
</TABLE>
Supplemental Disclosure
The Company paid no interest or income taxes in 1997 and 1998.
The accompanying notes are an integral part of those consolidated
financial staemcnts
F-5
<PAGE>
FAMILYWARE INTERNATIONAL, INC.
(FORMERLY ONE AND ONLY, INC.) AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 30, 1998 AND 1997
- --------------------------------------------------------------------------------
1. DISCONTINUATION OF OPERATIONS
FamilyWare International, Inc. (the Company) is the parent company of two wholly
owned subsidiaries: FamilyWare Products, Inc. and FamilyWare, Inc. The
subsidiaries were formed to design, develop, acquire, market and support a
complete range of software products targeted for the home and Internet user in
Canada and the United States. In July 1998, the Company ceased all operations.
The Company's assets were used to settle all liabilities; the carrying value of
the assets exceeded the carrying value of the liabilities. (See Note 8 for
events occurring subsequent to year-end and management's plan to continue as a
going concern.)
2. ORGANIZATION AND HISTORY
Organization
FamilyWare Products, Inc.'s primary product was known as "The FamilyWare
Software" which consisted of a group of database programs designed to organize
and report on personal information such as, medical records, valuables and
family history.
FamilyWare, Inc.'s primary products were "MindProber" and "SchoolCentral."
MindProber was purchased from Text Generation, Inc. in 1996. It was a
personality inventory program, designed to assist in developing vocational
interests and enhancing intellectual skills. SchoolCentral was designed to help
parents organize their children's curricular and extracurricular activities.
The Company entered into various joint venture agreements hoping to fund
research and development and promote sales of the software. Because the Company
failed to meet its obligation under the terms of those agreements, the Company
forfeited all software ownership rights during 1998. In July 1998, the Company
discontinued all operations (see Note 1).
History
FamilyWare Products, Inc., formerly Simple Simon Says Products, Inc.,
incorporated in British Columbia in August 1993. In February 1994, FamilyWare
Products, Inc. established a wholly owned subsidiary, FamilyWare, Inc.,
incorporated in Delaware.
In January 1997, One and Only, Inc., formerly Condo Management, Inc., a public
company incorporated in Nevada, purchased all of FamilyWare Products, Inc's
outstanding stock through a share exchange agreement. The shareholders of
FamilyWare Products, Inc. exchanged 100% of their stock, or 150,000 shares, for
5,000,000 shares, or 70%, of One and Only, Inc., obtaining both voting and
management control of the surviving entity. The merger has been treated as a
re-capitalization of FamilyWare Products, Inc. The share exchange effectively
created a 33 1/3 for 1 stock split for FamilyWare Products, Inc. Accordingly,
the financial statements reflect the historical activity of FamilyWare Products,
Inc. with the capital structure of One and Only, Inc. Prior to the merger, One
and Only, Inc. was a non-operating (shell) entity. In February 1997, One and
Only, Inc. changed its name to FamilyWare International, Inc.
F-6
<PAGE>
FAMILYWARE INTERNATIONAL, INC.
(FORMERLY ONE AND ONLY, INC.) AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 30, 1998 AND 1997
- --------------------------------------------------------------------------------
2. ORGANIZATION AND HISTORY (continued)
In July 1998, the Board of Directors of FamilyWare International, Inc.
authorized a 1 for 100 reverse stock split decreasing the number of shares
issued and outstanding to 71,015 and increasing par value to $0.05 per share.
All references to the number of shares issued and outstanding in the
accompanying statements have been restated to reflect both stock splits.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year-End
FamilyWare Products, Inc. fiscal year ends December 30, as permitted under
Canadian tax law. After the January 1997 merger, FamilyWare International, Inc.
and FamilyWare, Inc, adopted December 30 as their fiscal year end.
Principles of Consolidation
The consolidated financial statements include the accounts of FamilyWare
International, Inc. and its wholly owned subsidiaries. All significant
intercompany accounts and transactions were eliminated.
Financial Instruments
The Company's financial instruments, cash, accounts receivables and payables,
are carried at their fair values. The Company's short-term debt consist of
advances from related parties. A reasonable cost estimate of fair value could
not be made without excessive costs; therefore, it is not practicable to
estimate the fair value of short-term debt.
Furniture and Equipment
Furniture and equipment are stated at cost. The Company depreciated costs; over
the estimated useful lives, ranging from 4 to 5 years using the 20% to 30%
declining balance method for depreciation.
Software Development Costs
SFAS No. 86, Accounting for the Costs of Computer Software to be Sold, Leased,
Or Otherwise Marketed, requires capitalization of (internally developed and
purchased) software development costs once technological feasibility has been
achieved. Those costs are reported at the lower of cost or net realizable value.
Commencing upon initial product release, costs were amortized on a straight-line
basis over 5 years.
Trademark
The Company capitalized $3,782 of costs incurred establishing the "FamilyWare"
trademark and amortized those costs on a straight-line basis over 5 years.
Amortization expense in 1997 and 1998 was $176 and $754, respectively. The
unamortized balance of $2,486 was written off at December 30, 1998.
Earnings per Share
Earnings (loss) per share amounts are based on the weighted average number of
shares of common stock outstanding during each period, restated to reflect the
stock splits (see Note 2).
F-7
<PAGE>
FAMILYWARE INTERNATIONAL, INC.
(FORMERLY ONE AND ONLY, INC.) AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 30, 1998 AND 1997
- --------------------------------------------------------------------------------
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
SFAS No. 128, Earnings per Share, requires the Company to disclose basic and
diluted earnings per share. Diluted EPS includes potential common stock (that
is, securities such as options or warrants) in the calculation thereby
disclosing the diluted earnings of existing shareholders. The Company had no
potential common stock; therefore, basic EPS equals diluted EPS.
Income Taxes
The Company adopted the asset and liability method of accounting for income
taxes as required by SFAS No. 109, Accounting for Income Taxes. Under this
approach, deferred income taxes are recorded to reflect the tax consequences on
future years of differences between the tax bases of assets and liabilities and
their financial reporting amounts at each yearend. The tax benefits of operating
losses are recognized if management believes, based on available evidence, that
it is more likely than not that they will be realized. Overall, the company used
the benefits from net operating losses to reduce the provision for income taxes
on items included in comprehensive income. Due to the uncertainty of the
Company's future of operations, a valuation allowance has been established to
reduce the deferred tax asset.
Foreign Currency Translation
The Company maintained its records in Canadian dollars, the functional currency.
Monetary assets and liabilities were translated into U.S. dollars at year-end
exchange rates; non-monetary assets were translated at historical rates. The
resulting translation adjustments are reflected in the balance sheet in the
Shareholders' Equity section titled "Cumulative translation adjustment."
Revenue and expense accounts were translated at the average rates in effect
during the year. Transaction adjustments for those transactions not in Canadian
dollars are included in income.
Use of Estimates
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts and disclosure of assets,
liabilities, revenues and expenses at each year end. Actual results could differ
from these estimates.
4. FURNITURE AND EQUIPMENT
Furniture and equipment at December 30, 1997 and 1998 consists of the following:
1997 1998
--------- ---------
Computer equipment $ 119,298 121,249
Office furniture 44,019 44,019
Office equipment 10,587 10,587
--------- ---------
173,904 175,855
Less accumulated depreciation (38,043) (58,703)
Less assets traded for payables -- (117,152)
--------- ---------
Furniture and equipment, net $ 135,861 $ --
========= =========
F-8
<PAGE>
FAMILYWARE INTERNATIONAL, INC.
(FORMERLY ONE AND ONLY, INC.) AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 30, 1998 AND 1997
- --------------------------------------------------------------------------------
4. FURNITURE AND EQUIPMENT (continued)
Depreciation expense was $28,497 and $20,660, for the years ended December 30,
1997 and 1998, respectively. In 1998, furniture and equipment were traded as
payment for outstanding liabilities.
5. CAPITALIZED SOFTWARE COSTS
The Company purchased software from a shareholder of the Company (see Note 6).
The purchase price was set at $270,000 plus participation in net sales, based on
a prescribed formula, increasing the price a maximum of $155,000. Sales goals
were not achieved, thus no additional costs were paid. Capitalized software
costs at December 30, 1997 and 1998 consists of the following:
1997 1998
--------- ---------
Purchased software $ 270,000 $ 270,000
Internally developed software 398,959 398,959
--------- ---------
668,959 668,959
Less accumulated amortization (212,596) (319,690)
Less write off -- (349,269)
--------- ---------
Capitalized software costs, net $ 456,363 $ --
========= =========
Amortization expense was $119,930 and $107,094, for the years ended December 30,
1997 and 1998, respectively; the unamortized costs were written off at December
30, 1998.
6. RELATED PARTY TRANSACTIONS
Software Purchases
The Company paid $270,000 to a wholly-owned subsidiary of Alnoor Kassam, a
shareholder, for title and rights to certain software, in 1996.
Software Sales to Unincorporated Joint Ventures
The Company entered into various software sales agreements with Columbia
Diversified Software Fund Limited Partnership (Columbia) and Nifco Synergy Ltd
(Nifco) for the sale of all software. Certain shareholders of the Company are
partners in Colombia. Each agreement involved the transfer of software rights
and title for cash, notes, and participation in sales.
In accordance with APB No. 18, The Equity Method of Accounting for Investments
in Common Stock and related Emerging Issues Task Force issuances, no software
sales took place. Among the reasons, the Company had continuing involvement in
the software subsequent to the transfer and continuing involvement in the
activities of Columbia and Nifco, in relation to the software. As a result, the
Company carried the software on their books; the related notes receivable were
not recorded. Payments received by the Company (the initial cash and payments on
the notes) were treated as equity investments in the Company and are carried in
Additional Paid in Capital on the balance sheet.
F-9
<PAGE>
FAMILYWARE INTERNATIONAL, INC.
(FORMERLY ONE AND ONLY, INC.) AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 30, 1998 AND 1997
- --------------------------------------------------------------------------------
6. RELATED PARTY TRANSACTIONS (continued)
Agency and Management Fees
In accordance with the sales agreement, the Company earns an agency fee from
Colombia for marketing, selling and updating the software. Pursuant to a verbal
agreement, the Company pays Colombia management fees for administration on
behalf of the Company. The management fee is fixed, as mutually agreed upon by
the Company and Columbia. The Company and Columbia have agreed to the right of
offset of the two fees. Therefore the amounts have been offset and are included
in general and administrative expenses in the income statement. Net fees paid
(received) by the Company for the year ended December 30, 1997 and 1998 were
$120,017 and ($21,898).
Prepaid Development Fees
In 1996, the Company advanced Nifco $220,740 for software development costs, in
accordance with the sales agreement. The Company expensed the amount in 1997.
Line of Credit
Nifco granted the Company a line of credit, bearing interest at 8%. No amounts
were drawn on the line.
Advances from Related Parties
The Company received unsecured noninterest-bearing advances from 471141 BC
Limited, a wholly owned company of Alnoor Kassam, a shareholder of the Company,
and from Equicorp Investment, Inc., a wholly owned company of Alnoor Kassam's
brother. Amounts outstanding to 471141 BC Limited at December 30, 1997 and 1998
were $558,167 and $0. During 1997, the Company repaid Equipcorp $47,090; no
amounts were outstanding at December 30, 1997 and 1998.
Advances to Related Parties
The Company advanced monies to Cyberactive US, Inc., a company controlled by the
Company's president. The balance outstanding at December 30, 1997 was $240,798,
which was fully reserved; the balance at December 30, 1998 was $0.
7. COMMITMENTS AND CONTINGINCIES
The Company leased corporate office space under a five-year noncancellable,
long-term operating lease expiring in April 2002. The lease required monthly
payments of $3,727. In addition, the Company is responsible for its
proportionate share of operating costs and the estimated property taxes in equal
monthly installments. The Company leased equipment under noncancellable,
long-term operating leases. Minimum payments due through 2002 under the terms of
the original agreements total $389,428 at December 30. 1998. The Company
successfully terminated all obligations and as of December 30, 1998, no amounts
are due.
F-10
<PAGE>
FAMILYWARE INTERNATIONAL, INC.
(FORMERLY ONE AND ONLY, INC.) AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 30, 1998 AND 1997
- --------------------------------------------------------------------------------
8. UNAUDITED SUBSEQUENT EVENT
On May 7, 1999, the Company entered into a Common Stock Exchange and Acquisition
Agreement with CentroCom Corp. Each share of CentroCom stock (1,000,000 shares)
was exchanged for 9 shares of Company stock (9,000,000 shares). The combination
will be accounted for as a pooling of interest. Historical financial information
presented in future reports will be restated to include CentroCom. The unaudited
summarized pro forma data, effectively combining net revenue and net loss of the
two companies for the years ended December 30, 1997 and 1998, gives effect to
the acquisition had it occurred on December 31, 1996. Pro-forma information is
as follows:
December 30, 1997 December 30, 1998
----------------- -----------------
(unaudited) (unaudited)
Net revenue $ 74,128 $134,999
Net loss ($2,715,377) ($863,625)
F-11
[STAMP]
ARTICLES OF INCORPORATION
CONDO MANAGEMENT INC., A CLOSE CORPORATION
KNOW ALL MEN BY THESE PRESENTS:
I.
The name of the corporation, which is hereinafter referred to as "the
corporation," shall be "Condo Management Inc.," a close corporation and shall
have less than thirty (30) stockholders and will be subject to NRS 78A.020.
II.
The resident agent is: Michael J. Daniels, 537 E. Sahara, Suite 200, Las
Vegas, NV 81904.
III.
The nature of the business of the proposed corporation will be to conduct
lawful real estate management and to engage in any lawful activity, permitted by
the laws of the State of Nevada, and desirable to support the continued
existence of the corporation.
IV.
The total authorized capital stock of the corporation will be Twenty-five
thousand dollars ($25,000.00). This will consist of twenty-five thousand
(25,000) shares of One Dollar ($1.00) par value common stock. Such stock may be
issued from time to time without any action by the stockholders for such
consideration as may be fixed from time to time by the Board of Directors, and
shares so issued, the full consideration for which has been paid or delivered,
shall be deemed the full paid up stock, and the holder of such shares shall not
be liable for any further payment thereof. Each share of stock shall have voting
privileges and will be eligible for dividends.
V.
The governing board of this corporation shall be known as directors, and
shall be styled directors, and the number of directors may from time to time be
increased or decreased in such manner as shall be provided by the bylaws of this
corporation, provided that the number of directors shall not be reduced to less
than one (1) director. The names and addresses of the first directors are as
follows:
Kim Hopkins, 4616 W. Sahara Avenue, #331, Las Vegas, NV 89102.
-1-
E-1
<PAGE>
VI.
The capital stock, after par value has been paid, will be subject to
assessment to pay debts of the corporation and paid up stock and stock issued as
fully paid shall be assessable or assessed.
VII.
The name and address of the original incorporators are:
Kim Hopkins, 4616 W. Sahara Avenue, #331, Las Vegas, NV 89102.
VII.
The corporation shall have perpetual existence according to NRS 78.035.
The undersigned, being the original incorporators hereinbefore named, for
the purpose of forming a corporation to do business both within and without the
State of Nevada, and in pursuance of the general corporation law of the State of
Nevada, do make and file this certificate, hereby declaring and certifying that
the facts hereinabove stated are true, and accordingly have hereunto set her
hand this 22nd day of May 1992.
/s/ Kim R. Hopkins
------------------
Kim Hopkins
STATE OF NEW JERSEY)
) ss.
COUNTY OF UNION )
On this 22nd day of May, 1992 personally appeared before me, a Notary
Public in and for said County of Union, State of New Jersey, Kim Hopkins, who
proved to be the person signing these Articles of Incorporation and who
acknowledged that she executed the above instrument freely and voluntarily for
the uses and purposes therein mentioned.
/s/ Eleanor E. McGann
- ---------------------
NOTARY PUBLIC, In and for said
County and State.
[NOTARY PUBLIC STAMP]
-2-
E-2
FILED
THE OFFICE OF THE STATE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JUN 04 1996
6507-92
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
CONDO MANAGEMENT, INC., A CLOSE CORPORATION,
a Nevada Corporation
Norman A. Davis and Mark Kepes certify that:
1. They are the duly elected and acting President and Secretary,
respectively, of the corporation named above.
2. The Articles of Incorporation of the corporation shall be amended and
restated to read in full as follows:
I.
The name of the corporation shall be One and Only, Inc. and shall be
governed by Chapter 78 of the Nevada Revised Statutes.
II.
The Resident Agent is Michael J. Daniels, 537 E. Sahara, Suite 209 Las
Vegas, Nevada 89104.
III.
The nature of the business of the corporation will be to engage in any
lawful activity permitted by the laws of the State of Nevada, and
desirable to support the continued existence of the corporation.
IV.
The total authorized capital stock of the corporation will be
Twenty-Five Thousand Dollars ($25,000.00). This will consist of Fifty
million (50,000,000) shares of $.0005 par value common stock. Such
stock may be issued from time to time without any action by the
stockholders for such consideration as may be fixed from time to time
by the Board of Directors, and shares so issued, the full
consideration for which has been paid or delivered, shall be deemed
the fully paid up stock, and the holder of such shares shall not be
liable for any further payment thereof. Each share of stock shall have
E-3
<PAGE>
voting privileges and will be eligible for dividends.
On the amendment of this Article IV to read as hereinabove set forth
and the restating oldie Articles of Incorporation, each outstanding
share is split up, divided, and converted into 2225 shares of common
stock.
V.
The governing board of this corporation shall be known as directors
and shall be styled directors, and the number of directors may from
time to time be increased or decreased in such manner as shall be
provided by the bylaws of this corporation, provided that the number
of directors shall not be reduced to less than one (1) director. The
name and address of the first director is as follows:
Kim Hopkins: 4616 W. Sahara, #331, Las Vegas, NV 89102.
VI.
The name and address of the original incorporator is:
Kim Hopkins: 4616 W. Sahara, #331, Las Vegas, NV 89102.
VII.
The corporation shall have perpetual existence according to NRS
78.035.
The undersigned, being the original incorporator hereinbefore named,
for the purpose of fanning a corporation to do business both within
and without the State of Nevada, and in pursuance of the general
corporation law of the State of Nevada, does make and file this
Certificate, hereby declaring and certifying the facts hereinabove
stated are true, and accordingly has hereunto set her hand this 18th
day of June, 1992.
(Originally Executed)
Kim Hopkins
E-4
<PAGE>
3. The foregoing amendment of Article I and this certificate have been
approved by the Board of Directors of the corporation.
4. The foregoing amendment of Article IV and the Restated Articles of
Incorporation was approved by the required vote of the shareholders of the
corporation in accordance with the Nevada Business Corporation Act the total
number of outstanding shares entitled to vote with respect to the foregoing
amendment was 900 common shares; and the number of shares voting in favor of the
foregoing amendment equaled or exceeded the vote required, such required vote
being a majority of the outstanding shares of Common Stock
We further declare under penalty of perjury under the laws of the State of
Nevada that the matter set forth in this certificate are true and correct of our
knowledge.
Dated: May 10, 1996
/s/ Norman A. Davis
-------------------------------
Norman A. Davis
President
/s/ Mark Kepes
-------------------------------
Mark Kepes
Secretary
STATE OF NEVADA)
) SS
COUNTY OF CLARK)
On this 10th day of May, 1996 personally appeared before me, a Notary
Public in and for said County and State, Norman A. Davis and Mark Kepes, each
acknowledged that they executed the above instrument freely and voluntarily for
the uses and purposes therein mentioned.
[STAMP]
NOTARY PUBLIC
STATE OF NEVADA
County of Clark
MICHAEL J. DANIELS
No: 02-0237-1
My Appointment Expires Feb. 11, 2000
SUBSCRIBED and SWORN to me before me
this 10th day of May, 1996.
/s/ Michael J. Daniels
- --------------------------------
NOTARY PUBLIC, in and for said
County and State.
E-5
3259CD
FILED
IN THE OFFICE OF
SECRETARY OF STATE OF THE
STATE OF NEVDA
MAR 14 1997
No C 6507-92
/s/ Dean Heller
DEAN HELLER, SECRETARY OF STATE
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
OF
ONE AND ONLY, INC.
We, the undersigned President and Secretary of ONE AND ONLY, INC. do hereby
certify as follows;
That the Board of Directors of said corporation at a meeting duly convened,
held on February 5, 1997, adopted a resolution to amend the Amended and Restated
Articles of Incorporation filed on June 4, 1996 as follows:
ARTICLE I is hereby amended to read as follows:
I.
The name of the corporation shall be
FAMILYWARE INTERNATIONAL, INC.
The number of shares of the corporation outstanding and entitled to vote on
an amendment to the Articles of Incorporation is 7,002,500, that said amendment
has been consented to and approved by majority vote of the stockholders holding
at least a majority of each class of stock outstanding and entitled to vote
thereon pursuant to an Action by Written Consent of the Shareholders of One and
Only, Inc.
/s/ Michael I. Brown
---------------------------------
MICHAEL I. BROWN
President
/s/ Charmaine L. Chin
---------------------------------
CHARMAINE L. CHIN
Secretary
E-6
<PAGE>
PROVINCE OF BRITISH COLUMBIA )
)ss.
CITY OF VANCOUVER )
On March 3, 1997, personally appeared before me, a Notary Public, MICHAEL
I. BROWN, known to me to be the person whose name is subscribed to the foregoing
Certificate of Amendment of Articles of Incorporation and acknowledged that he
executed the same:
(Notary Stamp or Seal) /s/ Pamela Joe
---------------------------------
Notary Public
A Notary Public in and for
the Province of British Columbia
PAMELA E. JOE
Barrister & Solicitor
1710-1177 W. [illegible]
VANCOUVER [illegible]
[illegible]
PROVINCE OF BRITISH COLUMBIA )
)ss.
CITY OF VANCOUVER )
On March 3, 1997, personally appeared before me, a Notary Public, CHARMAINE
L. CHIN, known to me to be the person whose name is subscribed to the foregoing
Certificate of Amendment of Articles of Incorporation and acknowledged that she
executed the same:
(Notary Stamp or Seal) /s/ Pamela Joe
---------------------------------
Notary Public
A Notary Public in and for
the Province of British Columbia
PAMELA E. JOE
Barrister & Solicitor
1710-1177 W. [illegible]
VANCOUVER [illegible]
[illegible]
Page 2 of 2
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<PAGE>
--------------------------
STATE OF NEVADA
Secretary of State
I hereby certify that this
is a true and complete copy
of the document as filed in
this office.
MAR 17 '97
/s/ Dean Heller
DEAN HELLER
Secretary of State
By [illegible]
--------------
--------------------------
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SECRETARY OF STATE OF THE
STATE OF NEVDA
JAN 07 1998
No C 6507-92
/s/ Dean Heller
DEAN HELLER,
SECRETARY OF STATE
CERTIFICATE OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
FAMILYWARE INTERNATIONAL INC.,
a Nevada corporation
Pursuant to the provisions of the Nevada Revised Statues, FamilyWare
Internationa1 Inc., a Nevada corporation, adopts the following amendment to its
Articles of Incorporation.
1. The undersigned hereby certifies that on the 4th day of June, 1999, a
Special Meeting of the Board of Directors was duly held and convened at which
there was present a quorum of the Board of Directors acting throughout all
proceedings, and at which time the following resolution was duly adopted by the
Board of Directors:
BE IT RESOLVED, that the Secretary of the corporation is hereby
ordered and directed to obtain at least a majority of the voting power
of the outstanding stock of the corporation for the following purpose:
To amend Article One to provide that the name of the corporation shall
be changed from FamilyWare International Inc. to Centrocom Corp.
2. Pursuant to the provisions of the Nevada Revised Statutes, a majority of
the stockholders holding at least 51% of the 21,426,192 shares issued and
outstanding of Family Ware International Inc. gave their written consent to the
adoption of the Amendment to Article One of the Articles of Incorporation as
follows:
ARTICLE ONE. {NAME} The name of the corporation is: Centrocom Corp.
In witness whereof, the undersigned being the President and Secretary of
FamilyWare International Inc., a Nevada corporation, hereunto affix's his
signature this 4th day of June, 1999.
FamilyWare Internationa1 Inc.
By: /s/ Vernon M. Briggs III
--------------------------------
Vernon Briggs III, President,
Secretary
1
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<PAGE>
ALL-PURPOSE ACKNOWLEDGMENT
================================================================================
State of California )
) SS.
County of Orange )
On June 4, 1999 before me, Katharine 0. Lawler
------------ -------------------
(DATE) (NOTARY)
personally appeared Vernon Briggs III
-----------------------------------------------------------
SIGNER(S)
|_| personally known to me - OR- |XX| proved to me on the basis
of satisfactory evidence
to be the person(s) whose
name is/ subscribed to
the within instrument and
acknowledged to me that
he/she/they executed the
same in his authorized
capacity, and that by his
signature on the
instrument the person, or
the entity upon behalf of
which the person acted,
executed the instrument.
[STAMP]
KATHARINE O. LAWLER
Comm. #1205407
NOTARY PUBLC-CALIFORNIA
Orange County
My Comm. Expires Dec. 19, 2002
WITNESS my hand and official seal.
/s/ KATHARINE O. LAWLER
----------------------------------
NOTARY SIGNATURE
================================OPTIONAL INFORMATION============================
The information below is nor required by law. However, it could prevent
fraudulent attachment of this acknowledgment to an unauthorized document.
CAPACITY CLAIMED BY SIGNER (PRINCIPAL) DESCRIPTION OF ATTACHED DOCUMENT
|_| INDIVIDUAL
|_| CORPORATE OFFICER ________________________________
_________________________________ TITLE OR TYPE OF DOCUMENT
TITLE(S)
|_| PARTNER(S) ________________________________
|_| ATTORNEY-IN-FACT NUMBER OF PAGES
|_| TRUSTEE(S)
|_| GUARDIAN/CONSERVATOR ________________________________
|_| OTHER: __________________________ DATE OF DOCUMENT
_________________________________
_________________________________ ________________________________
OTHER
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
_____________________________________ RIGHT THUMBPRINT ---------------
_____________________________________ OF
SIGNER
---------------
================================================================================
APA 12/98 VALLEY-SIERRA, 800-362-3369
E-10
BYLAWS FOR THE REGULATION
EXCEPT AS OTHERWISE PROVIDED BY STATUTE
OR ITS ARTICLES OF INCORPORATION OF
FAMILYWARE INTERNATIONAL, INC.
ARTICLE I.
Offices
Section 1. PRINCIPAL OFFICE. The principal office for the transaction of
the business of the corporation is hereby fixed and located at Suite 880, Bank
of America Plaza, 50 West Liberty Street, Reno, Nevada 89501, being the offices
of THE NEVADA AGENCY AND TRUST COMPANY. The board of directors is hereby granted
full power and authority to change said principal office from one location to
another in the State of Nevada.
Section 2. OTHER OFFICES. Branch or subordinate offices may at any time be
established by the board of directors at any place or places where the
corporation is qualified to do business.
ARTICLE II.
Meetings of Shareholders
Section 1. MEETING PLACE. All annual meetings of shareholders and all other
meetings of shareholders shall be held either at the principal office or at any
other place within or without the State of Nevada which may be designated either
by the board of directors, pursuant to authority hereinafter granted to said
board, or by the written consent of all shareholders entitled to vote thereat,
given either before or shareholders entitled to
1
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<PAGE>
vote thereat, given either before or after the meeting and filed with the
Secretary of the corporation.
Section 2. ANNUAL MEETINGS. The annual meetings of shareholders shall be
held on the second Thursday of September of each year, at the hour of 10:00
o'clock A.M. of said day commencing with the year 1999; provided, however, that
should said day fall upon a legal holiday then any such annual meeting of
shareholders shall be held at the same time and place on the next day thereafter
ensuing which is not a legal holiday.
Written notice of each annual meeting signed by the president or a vice
president, or the secretary, or an assistant secretary, or by such other person
or persons as the directors shall designate, shall be given to each shareholder
entitled to vote thereat, either personally or by mail or other means of written
communication, charges prepaid, addressed to such shareholder at his address
appearing on the books of the corporation or given by him to the corporation for
the purpose of notice. If a shareholder gives no address, notice shall be deemed
to have been given to him, if sent by mail or other means of written
communication addressed to the place where the principal office of the
corporation is situated, or if published at least once in some newspaper of
general circulation in the county in which said office is located. All such
notices shall be sent to each shareholder entitled thereto not less than ten
(10) nor more than sixty (60) days before each annual meeting, and shall specify
the place, the day and the hour of such meeting, and shall also state the
purpose or purposes for which the meeting is called
2
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<PAGE>
Section 3. SPECIAL MEETINGS. Special meetings of the shareholders, for any
purpose or purposes whatsoever, may be called at any time by the president or by
the board of directors, or by one or more shareholders holding not less than 10%
of the voting power of the corporation. Except in special cases where other
express provision is made by statute, notice of such special meetings shall be
given in the same manner as for annual meetings of shareholders. Notices of any
special meeting shall specify in addition to the place, day and hour of such
meeting, the purpose or purposes for which the meeting is called.
Section 4. ADJOURNED MEETINGS AND NOTICE THEREOF. Any shareholders'
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by the vote of a majority of the shares, the holders of which
are either present in person or represented by proxy thereat, but in the absence
of a quorum, no other business may be transacted at any such meeting.
When any shareholders' meeting, either annual or special, is adjourned for
thirty (30) days or more, notice of the adjourned meeting shall be given as in
the case of an original meeting. Save as aforesaid, it shall not be necessary to
give any notice of an adjournment or of the business to be transacted at an
adjourned meeting, other than by announcement at the meeting at which such
adjournment is taken.
Section 5. ENTRY OF NOTICE. Whenever any shareholder entitled to vote has
been absent from any meeting of shareholders, whether annual or special, an
entry in the
3
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<PAGE>
minutes to the effect that notice has been duly given shall be conclusive and
incontrovertible evidence that due notice of such meeting was given to such
shareholders, as required by law and the Bylaws of the corporation.
Section 6. VOTING. At all annual and special meetings of stockholders
entitled to vote thereat, every holder of stock issued to a bona fide purchaser
of the same, represented by the holders thereof, either in person or by proxy in
writing, shall have one vote for each share of stock so held and represented at
such meetings, unless the Articles of Incorporation of the company shall
otherwise provide, in which event the voting rights, powers and privileges
prescribed in the said Articles of Incorporation shall prevail. Voting for
directors and, upon demand of any stockholder, upon any question at any meeting
shall be by ballot. Any director may be removed from office by the vote of
stockholders representing not less than two-thirds of the voting power of the
issued and outstanding stock entitled to voting power.
Section 7. QUORUM. The presence in person or by proxy of the holders of a
majority of the shares entitled to vote at any meeting shall constitute a quorum
for the transaction of business. The shareholders present at a duly called or
held meeting at which a quorum is present may continue to do business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave less
than a quorum.
Section 8. CONSENT OF ABSENTEES. The transactions of any meeting of
shareholders, either annual or special, however called and noticed, shall be as
valid as
4
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<PAGE>
though at a meeting duly held after regular call and notice, if a quorum be
present either in person or by proxy, and if either before or after the meeting,
each of the shareholders entitled to vote, not present in person or by proxy,
sign a written waiver of Notice, or a consent to the holding of such meeting, or
an approval of the minutes thereof. All such waivers, consents or approvals
shall be filed with the corporate records or made a part of the minutes of this
meeting.
Section 9. PROXIES. Every person entitled to vote or execute consents shall
have the right to do so either in person or by an agent or agents authorized by
a written proxy executed by such person or his duly authorized agent and filed
with the secretary of the corporation; provided that no such proxy shall be
valid after the expiration of eleven (11) months from the date of its execution,
unless the shareholder executing it specifies therein the length of time for
which such proxy is to continue in force, which in no case shall exceed seven
(7) years from the date of its execution.
ARTICLE III
Section 1. POWERS. Subject to the limitations of the Articles of
Incorporation or the Bylaws, and the provisions of the Nevada Revised Statutes
as to action to be authorized or approved by the shareholders, and subject to
the duties of directors as prescribed by the Bylaws, all corporate powers shall
be exercised by or under the authority of, and the business and affairs of the
corporation shall be controlled by the board of directors. Without prejudice to
such general powers, but subject to the same limitations,
5
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<PAGE>
it is hereby expressly declared that the directors shall have the following
powers, to wit:
First - To select and remove all the other officers, agents and employees
of the corporation, prescribe such powers and duties for them as may not be
inconsistent with law, with the Articles of Incorporation or the Bylaws, fix
their compensation, and require from them security for faithful service.
Second - To conduct, manage and control the affairs and business of the
corporation, and to make such rules and regulations therefor not inconsistent
with law, with the Articles of incorporation or the Bylaws, as they may deem
best.
Third - To change the principal office for the transaction of the business
of the corporation from one location to another within the same county as
provided in Article I, Section 1, hereof; to fix and locate from time to time
one or more subsidiary offices of the corporation within or without the State of
Nevada, as provided in Article I, Section 2, hereof; to designate any place
within or- without the State of Nevada for the holding of any shareholders I
meeting or meetings; and to adopt, make and use a corporate seal, and to
prescribe the forms of certificates of stock, and to alter the form of such seal
and of such certificates from time to time, as in their judgment they may deem
best, provided such seal and such certificates shall at all times comply with
the provisions of law.
Fourth - To authorize the issue of shares of stock of the corporation from
time to time, upon such terms as may be lawful, in consideration of money paid,
labor done or services actually rendered, debts or securities canceled, or
tangible or intangible property
6
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<PAGE>
actually received, or in the case of shares issued as a dividend, against
amounts transferred from surplus to stated capital.
Fifth - To borrow money and incur indebtedness for the purposes of the
corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations or other evidences of debt and securities therefore.
Sixth - To appoint an executive committee and other committees and to
delegate to the executive committee any of the powers and authority of the board
in management of the business and affairs of the corporation, except the power
to declare dividends and to adopt, amend or repeal Bylaws. The executive
committee shall be composed of one or more directors.
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS. The authorized number of
directors of the corporation shall be not less than one (1) and no more than
fifteen (15).
Section 3. ELECTION AND TERM OF OFFICE. The directors shall be elected at
each annual meeting of shareholders, but if any such annual meeting is not held,
or the directors are not elected thereat, the directors may be elected at any
special meeting of shareholders. All directors shall hold office until their
respective successors are elected.
Section 4. VACANCIES. Vacancies in the board of directors may be filled by
a majority of the remaining directors, though less than a quorum, or by a sole
remaining
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director, and each director so elected shall hold office until his successor is
elected at an annual or a special meeting of the shareholders.
A vacancy or vacancies in the board of directors shall be deemed to exist
in case of the death, resignation or removal of any director, or if the
authorized number of directors be increased, or if the shareholders fail at any
annual or special meeting of shareholders at which any director or directors are
elected to elect the full authorized number of directors to be voted for at that
meeting.
The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors. If the board of directors
accept the resignation of a director tendered to take effect at a future dine,
the board or the shareholders shall have the power to elect a successor to take
office when the resignation is to become effective.
No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of his term of office.
Section 5. PLACE OF MEETING. Regular meetings of the board of directors
shall be held at any place within or without the State which has been designated
from time to time by resolution of the board or by written consent of all
members of the board. In the absence of such designation, a regular meeting
shall be held at the principal office of the corporation. Special meetings of
the board may be held either at a place so designated, or at the principal
office.
Section 6. ORGANIZATION MEETING. Immediately following each annual
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meeting of shareholders, the board of directors shall hold a regular meeting for
the purpose of organization, election of officers, and the transaction of other
business. Notice of such meeting is hereby dispensed with.
Section 7. OTHER REGULAR MEETINGS. Other regular meetings of the board of
directors shall be held without call on the eighth (8th) day of each month at
the hour of 10:00 clock A.M. of said day; provided, however, should said day
fall upon a legal holiday, then said meeting shall be held at the same time on
the next day thereafter ensuing which is not a legal holiday. Notice of all such
regular meetings of the board of directors is hereby dispensed with.
Section 8. SPECIAL MEETINGS. special meetings of the board of directors for
any purpose or purposes shall be called at any time by the president, or, if he
is absent or unable or refuses to act, by any vice president or by any two (2)
directors.
Written notice of the time and place of special meetings shall be delivered
personally to the directors or sent to each director by mail or other form of
written communication, charges prepaid, addressed to him at his address as it is
shown upon the records of the corporation, or if it is not shown on such records
or is not readily ascertainable, at the place in which the meetings of the
directors are regularly held. In case such notice is mailed or telegraphed, it
shall be deposited in the United States mail or delivered to the telegraph
company in the place in which the principal office of the corporation is located
at least forty-eight (48) hours prior to the time of the holding of the
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meeting. In case such notice is delivered as above provided, it shall be so
delivered at least twenty-four (24) hours prior to the time of the holding of
the meeting. Such mailing, telegraphing or delivery as above provided shall be
due, legal and personal notice to such director.
Section 9. NOTICE OF ADJOURNMENT, Notice of the time and place of holding
an adjourned meeting need not be given to absent directors, if the time and
place be fixed at the meeting adjourned.
Section 10. ENTRY OF NOTICE. Whenever any director has been absent from any
special meeting of the board of directors, an entry in the minutes to the effect
that notice has been duly given shall be conclusive and incontrovertible
evidence that due notice of such special meeting was give to such director, as
required by law and the Bylaws of the corporation.
Section 11. WAIVER OF NOTICE. The transactions of any meeting of the board
of directors, however called and noticed or wherever held, shall be as valid as
though had a meeting duly held after regular call and notice, if a quorum be
present, and if, either before or after the meeting, each of the directors not
present sign a written waiver of notice or a consent to the holding of such
meeting or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
Section 12. QUORUM. A majority of the authorized number of directors shall
be
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necessary to constitute a quorum for the transaction of business, except to
adjourn as hereinafter provided. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present, shall be regarded as the act of the board of directors, unless a
greater number be required by law or by the Articles of Incorporation.
Section 13. ADJOURNMENT. A quorum of the directors may adjourn any
directors' meeting to meet again at a stated day and hour; provided, however,
that in the absence of a quorum, a majority of the directors present at any
directors' meeting, either regular or special, may adjourn from time to time
until the time fixed for the next regular meeting of the board.
Section 14. FEES AND COMPENSATION. Directors shall not receive any stated
salary for their services as directors, but by resolution of the board, a fixed
fee, with or without expenses of attendance may be allowed for attendance at
each meeting. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise, and receiving compensation therefor.
ARTICLE IV.
Officers
Section 1. OFFICERS. The officers of the corporation shall be a president,
a vice president and a secretary/treasurer. The corporation may also have, at
the discretion of
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the board of directors, a chairman of the board, one or more vice presidents,
one or more assistant secretaries, one or more assistant treasurers, and such
other officers as may be appointed in accordance with the provisions of Section
3 of this Article. Officers other than president and chairman of the board need
not be directors. Any person may hold two or more offices.
Section 2. ELECTION. The officers of the corporation, except such officers
as may be appointed in accordance with the provisions of Section 3 or Section 5
of this Article, shall be chosen annually by the board of directors, and each
shall hold his office until he shall resign or shall be removed or otherwise
disqualified to serve, or his successor shall be elected and qualified.
Section 3. SUBORDINATE OFFICERS, ETC. The board of directors may appoint
such other officers as the business of the corporation may require, each of whom
shall hold office for such period, have such authority and perform such duties
as are provided in the Bylaws or as the board of directors may from time to time
determine.
Section 4. REMOVAL AND RESIGNATION. Any officer may be removed, either with
or without cause, by a majority of the directors at the time in office, at any
regular or special meeting of the board.
Any officer may resign at any time by giving written notice to the board of
directors or to the president, or to the secretary of the corporation. Any such
resignation shall take effect at the date of the receipt of such notice or at
any later time specified therein; and,
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unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in the Bylaws for regular appointments to such office.
Section 6. CHAIRMAN OF THE BOARD. The chairman of the board, if there shall
be such an officer, shall, if present, preside at all meetings of the board of
directors, and exercise and perform such other powers and duties as may be from
time to time assigned to him by the board of directors or prescribed by the
Bylaws.
Section 7. PRESIDENT. Subject to such supervisory powers, if any, as may be
given by the board of directors to the chairman of the board, if there be such
an officer, the president shall be the chief executive officer of the
corporation and shall, subject to the control of the board of directors, have
general supervision, direction and control of the business and officers of the
corporation. He shall preside at all meetings of the shareholders and in the
absence of the chairman of the board, or if there be none, at all meetings of
the board of directors. He shall be ex-officio a member of all the standing
committees, including the executive committee, if any, and shall have the
general powers and duties of management usually vested in the office of
president of a corporation, and shall have such other powers and duties as may
be prescribed by the board of directors or the Bylaws.
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Section 8. VICE PRESIDENT. In the absence or disability of the president,
the vice presidents in order of their rank as fixed by the board of directors,
or if not ranked, the vice president designated by the board of directors, shall
perform all the duties of the president and when so acting shall have all the
powers of, and be subject to all the restrictions upon, the president. The vice
presidents shall have such other powers and perform such of the duties as from
time to time may be prescribed for them respectively by the board of directors
or the Bylaws.
Section 9. SECRETARY. The secretary shall keep, or cause to be kept, a book
of minutes at the principal office or such other place as the board of directors
may order, of all meetings of directors and shareholders, with the time and
place of holding, whether regular or special, and if special, how authorized,
the notice thereof given, the names of those present at directors' meetings, the
number of shares present or represented at shareholders' meetings and the
proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal office, a
share register, or a duplicate share register, showing the names of the
shareholders and their addresses; the number and classes of shares held by each;
the number and date of certificates issued for the same, and the number and date
of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all the meetings
of the shareholders and of the board of directors required by the Bylaws or by
law to be given,
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and he shall keep the seal of the corporation in safe custody, and shall have
such other powers and perform such other duties as may be prescribed by the
board of directors or the Bylaws.
Section 10. TREASURER. The treasurer shall keep and maintain, or cause to
be kept and maintained, adequate and correct accounts of the properties and
business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursement, gains, losses, capital, surplus and shares.
Any surplus, including earned surplus, paid-in surplus and surplus arising from
a reduction of stated capital, shall be classified according to source and shown
in a separate account. The books of account shall at all times be open to
inspection by any director.
The treasurer shall deposit all moneys and other valuables in the name and
to the credit of the corporation with such depositories as may be designated by
the board of directors. He shall disburse the funds of the corporation as may be
ordered by the board of directors, shall render to the president and directors,
whenever they request it, an account of all of his transactions as treasurer and
of the financial condition of the corporation, and shall have such other powers
and perform such other duties as may be prescribed by the board of directors or
the Bylaws.
ARTICLE V.
Miscellaneous
Section 1. RECORD DATE AND CLOSING STOCK BOOKS. The board of
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directors may fix a time, in the future, not exceeding fifteen (15) days
preceding the date of any meeting of shareholders, and not exceeding thirty (30)
days preceding the date fixed for the payment of any dividend or distribution,
or for the allotment of rights, or when any change or conversion or exchange of
shares shall go into effect, as a record date for the determination of the
shareholders entitled to notice of and to vote at any such meeting, or entitled
to receive any such dividend or distribution, or any such allotment of rights,
or to exercise the rights in respect to any such change, conversion or exchange
of shares, and in such case only shareholders of record on the date so fixed
shall be entitled to notice of and to vote at such meetings, or to receive such
dividend, distribution or allotment of rights, or to exercise such rights, as
the case may be, notwithstanding any transfer of any shares on the books of the
corporation after any record date fixed as aforesaid. The board of directors may
close the books of the corporation against transfers of shares during the whole,
or any part of any such period.
Section 2. INSPECTION OF CORPORATE RECORDS. The share register or duplicate
share register, the books of account, and minutes of proceedings of the
shareholders and directors shall be open to inspection upon the written demand
of any shareholder or the holder of a voting trust certificate, at any
reasonable time, and for a purpose reasonably related to his interests as a
shareholder, or as the holder of a voting trust certificate, and shall be
exhibited at any time when required by the demand of ten percent (10%) of the
shares represented at any shareholders' meeting. Such inspection
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may be made in person or by an agent or attorney, and shall include the right to
make extracts. Demand of inspection other than at a shareholders' meeting shall
be made in writing upon the president, secretary or assistant secretary of the
corporation.
Section 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
payment of money, notes or other evidences of indebtedness, issued in the name
of or payable to the corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the board of directors.
Section 4. ANNUAL REPORT. The board of directors of the corporation shall
cause to be sent to the shareholders not later than one hundred twenty (120)
days after the close of the fiscal or calendar year an annual report.
Section 5. CONTRACT, ETC., HOW EXECUTED. The board of directors, except as
in the Bylaws otherwise provided, may authorize any officer or officers, agent
or agents, to enter into any contract, deed or lease or execute any instrument
in the name of and on behalf of the corporation, and such authority may be
general or confined to specific instances; and unless so authorized by the board
of directors, no officer, agent or employee shall have any power or authority to
bind the corporation by any contract or engagement or to pledge its credit to
render it liable for any purpose or to any amount.
Section 6. CERTIFICATES OF STOCK. A certificate or certificates for shares
of the capital stock of the corporation shall be issued to each shareholder when
any such
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shares are fully paid up. All such certificates shall be signed by the president
or a vice president and the secretary or an assistant secretary, or be
authenticated by facsimiles of the signature of the president and secretary or
by a facsimile of the signature of the president and the written signature of
the secretary or an assistant secretary. Every certificate authenticated by a
facsimile of a signature must be countersigned by a transfer agent or transfer
clerk.
Certificates for shares may be issued prior to full payment under such
restrictions and for such purposes as the board of directors or the Bylaws may
provide; provided, however, that any such certificate so issued prior to full
payment shall state the amount remaining unpaid and the terms of payment thereof
Section 7. REPRESENTATIONS OF SHARES OF OTHER CORPORATIONS.
The president or any vice president and the secretary or assistant
secretary of this corporation are authorized to vote, represent and exercise on
behalf of this corporation all rights incident to any and all shares of any
other corporation or corporations standing in the name of this corporation. The
authority herein granted to said officers to vote or represent on behalf of this
corporation or corporations may be exercised either by such officers in person
or by any person authorized so to do by proxy or power of attorney duly executed
by said officers.
Section 8. INSPECTION OF BYLAWS. The corporation shall keep in its
principal office for the transaction of business the original or a copy of the
Bylaws as
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amended, or otherwise altered to date, certified by the secretary, which shall
be open to inspection by the shareholders at all reasonable times during office
hours.
Section 9. REFUSAL TO REGISTER TRANSFER. The Corporation shall not register
any transfer of securities issued by the Corporation in any transaction that
qualifies for the exemption from registration requirements specified by the
provisions of Regulation S, unless such transfer is made in accordance with the
provisions of Regulation S.
ARTICLE VI.
Amendments
Section 1. POWER OF SHAREHOLDERS. New Bylaws may be adopted or these Bylaws
may be amended or repealed by the vote of shareholders entitled to exercise a
majority of the voting power of the corporation or by the written assent of such
shareholders.
Section 2. POWER OF DIRECTORS. Subject to the right of shareholders as
provided in Section 1 of this Article VI to adopt, amend or repeal Bylaws,
Bylaws other than a Bylaw or amendment thereof changing the authorized number of
directors may be adopted, amended or repealed by the board of directors.
Section 3. ACTION BY DIRECTORS THROUGH CONSENT IN LIEU OF MEETING. Any
action required or permitted to be taken at any meeting of the board of
directors or of any committee thereof, may be taken without a meeting, if a
written consent
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thereto is signed by all the members of the board or of such committee. Such
written consent shall be filed with the minutes of proceedings of the board or
committee.
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3254K
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (the "Agreement") is entered into and
effective as of December 20, 1996, by and between MICHAEL I BROWN, PAUL R.
HARRIS, residents of Vancouver, British Columbia and 471141 B.C. LTD, a British
Columbia corporation (collectively the "SHAREHOLDERS"), FAMILYWARE PRODUCTS
INC., a Canadian corporation ("FP1") and ONE AND ONLY, INC., a Nevada
corporation ("OAO" or the "COMPANY").
1. RECITALS
This Agreement is entered into with reference to and in contemplation of
the following facts, circumstances and representations:
1. The SHAREHOLDERS are the owners of all of the outstanding and issued
shares of common stock of FPI (the "FPI Shares").
2. OAO desires to issue a total of 4,901,760 shares of its common stock
(the "OAO Shares") to the SHAREHOLDERS and their respective designees
in exchange for all of the FPI Shares.
3. OAO desires to issue an additional 98,240 shares of its common stock
to certain creditors of FPI (the "Creditor Shares") in consideration
of the cancellation of the debts and obligations of FPI to these
creditors.
4. The SHAREHOLDERS desire to exchange the FPI Shares for the OAO Shares
in accordance with the terms and conditions of this Agreement.
5. FPI desires that this transaction be consummated.
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2. EXCHANGE AND ISSUANCE OF SHARES
2.1 Exchange of OAO Shares: OAO shall exchange and deliver to the
SHAREHOLDERS and their respective designees a total of 4,901,760 Regulation S
shares of OAO common stock in accordance with the allocation set forth in the
attached Schedule "A".
2.2 Issuance of Creditor Shares: OAO shall further issue an additional
98,240 Regulation S shares of OAO common stock to those creditors of FPI as set
forth in the attached Schedule "B".
2.3 Exchange of FPI Shares: At the closing the SHAREHOLDERS shall exchange
and deliver to OAO a total of 150,000 shares of FPI common stock which
represents all of the issued and outstanding shares of FPI.
2.4 Nature of OAO Shares and Creditor Shares: The SHAREHOLDERS and
creditors shall be issued the OAO Shares and the Creditor Shares (collectively
referred to herein as the "Shares") pursuant to Regulation S which unless
otherwise contractually restricted, shall be subject to a one (1) year holding
period before the Shares are eligible for sale to U.S. persons or in the U.S.
public market.
2.5 Restricted Nature of Shares: Notwithstanding the one (1) year holding
period for the Shares to be issued pursuant to Regulation S, each of the
SHAREHOLDERS who become "affiliates" or "control persons" of OAO will be subject
to certain limitations with respect to the sale of their respective Shares.
Accordingly, as a result of such a designation, the sale of the Shares will be
limited by SEC Rule 144.
2.6 Voting Rights of Control Shares: The issuance of the OAO Shares to the
SHAREHOLDERS will result in the SHAREHOLDERS obtaining "control shares" and a
"controlling interest" in OAO as the terms are defined in Nevada Revised
Statutes Sections 78.3784 and 78.43785. The voting rights of these control
shares must be approved by the Shareholders of OAO pursuant to Nevada Revised
Statute Section 78.379.1. Accordingly, OAO will provide the necessary written
consent of the OAO Shareholders granting the voting rights to these control
shares.
2.7 Private Sale Acknowledgment: The parties acknowledge and agree that the
exchange and issuance of the Shares is being undertaken as a
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private sale pursuant to Section 4 of the Securities Act of 1933, as amended,
and is not being transacted via broker-dealer and/or in the public market place.
3. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The COMPANY represents and warrants to the SHAREHOLDERS and FPI as follows:
3.1 Organization: OAO is a corporation duly incorporated and validly
existing under the laws of Nevada and is in good standing with respect to all of
its regulatory filings.
3.2 Capitalization: The authorized capital of OAO consists of 50,000,000
common shares with a par value of $.0005 and of which 2,002,500 common shares
have been validly authorized and issued by the COMPANY, are outstanding as fully
paid and non-assessable shares and were issued in full compliance with all
federal and state securities laws. Such issued and outstanding shares are
hereinafter referred to as the "Existing OAO Shares,"
3.3 Financial Statements: OAO has furnished to the SHAREHOLDERS and FPI
audited financial statements for the periods ending December 31, 1994, December
31, 1995 and June 30, 1996. That at the Closing the financial affairs of OAO
will be materially the same as represented in the financial statements for the
period ending June 30, 1996.
3.4 Books and Records: All material transactions of OAO have been promptly
and properly recorded or filed in or with its books and records and the Minute
Book of OAO contains records of all meetings and proceeds of the shareholders
and directors thereof.
3.5 Legal Compliance: OAO is not in breach of any laws, ordinances,
statutes, regulations, by-laws, orders or decrees to which OAO is subject or
which apply to it or any of its assets.
3.8 Tax Returns: All tax returns and reports of OAO required by law to be
filed prior to the date hereof have been tiled and are substantially true,
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complete and correct and all taxes and governmental charges have been paid.
3.7 Adverse Financial Events: OAO has not experienced nor is it aware of
any occurrence or event which has had or might reasonably be expected to have a
material adverse effect on its financial condition.
3.8 Disputes, Claims and Investigations: There are no disputes, claims,
actions, suits, judgments, investigations or proceedings outstanding or pending
or to the knowledge of OAO threatened against or affecting OAO at law or in
equity or before or by any federal, state, municipal or other governmental
department, commission, board, bureau or agency.
3.9 Employee Liabilities: OAO has no liability to former employees or any
liability to any governmental authorities with respect to current or former
employees.
3.10 No Conflicts or Agreement Violations: The execution, delivery and
performance of this Agreement will not conflict with or be in violation of the
articles or by-laws of OAO or of any agreement to which OAO is a party and will
not give any person or company a right to terminate or cancel any agreement or
right enjoyed by OAO and will not result in the creation or imposition of any
lien, encumbrances or restriction of any nature whatsoever in favor of a third
party upon or against the assets of OAO.
3.11 Validity Issued and Authorized Shares: That the Shares will be validly
authorized and issued by the COMPANY, they will be fully paid and non-assessable
and that they will be issued in full compliance with all federal and state
securities laws.
3.12 Restrictive Legend: That the Shares will have a restrictive legend
imposed thereon identifying them as "Regulation S shares" which are subject to
the conditions and limitations of Regulation S Rule 903(c)(3) with respect to
their sale in the U.S. public market place.
3.13 Restriction on Recapitalization: That for a period of one (1) year
from the Closing, that the COMPANY will not institute a recapitalization in the
form of a reverse stock split.
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3.14 Corporate Authority: The officers or representatives of the COMPANY
executing this Agreement represent that they have been authorized to execute
this Agreement pursuant to a resolution of their Board of Directors.
4. REPRESENTATIONS OF SHAREHOLDERS AND FPI
The SHAREHOLDERS and FPI collectively and individually hereby represent and
warrant to OAO as follows:
4.1 Share Ownership: That the SHAREHOLDERS are the owners, beneficially and
of record, of all of the FPI Shares free and clear of all liens, encumbrances,
claims, charges and restrictions.
4.2 Transferability of Shares: That the SHAREHOLDERS have full power to
transfer the FPI Shares to OAO without obtaining the consent or approval of any
other person or governmental authority other than the Board of Directors of FPI
which has earlier granted such approval.
4.3 Validly Issued and Authorized Shares: That the FPI Shares are validly
authorized and issued, fully paid, and nonassessable, and the FPI Shares have
been so issued in full compliance with all federal and provincial securities
laws.
4.4 Organization: FPI is a corporation duly incorporated and validly
existing under the laws of Canada and is in good standing with respect to all of
its regulatory filings.
4.5 Capitalization: The authorized capital of FPI consists of an unlimited
amount of common shares with no par value and of which 150,000 common shares are
issued and outstanding as fully paid and non-assessable shares.
4.6 Financial Statements: FPI has furnished to OAO unaudited financial
statements for the period ending November 30, 1996. That at the Closing the
financial affairs of FPI will be materially the same as represented in these
same financial statements.
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4.7 Books and Records: All material transactions of FPI have been promptly
and properly recorded or filed in or with its books and records and the Minute
Book of FPI contains records of all meetings and proceeds of the shareholders
and directors thereof.
4.8 Legal Compliance: FPI is not in breach of any laws, ordinances,
statutes, regulations, by-laws, orders or decrees to which FPI is subject or
which apply to it or any of its assets.
4.9 Tax Returns: All tax returns and reports of FPI required by law to be
filed prior to the date hereof have been filed and are subsequently true,
complete and correct and all taxes and governmental charges have been paid.
4.10 Adverse Financial Events: FPI has not experienced nor is it aware of
any occurrence or event which has had or might reasonably be expected to have a
material adverse effect on its financial condition.
4.11 Disputes, Claims and Investigations: There are no disputes, claims,
actions, suits, judgments, investigations or proceedings outstanding or pending
or to the knowledge of FPI threatened against or affecting FPI at law or in
equity or before or by any federal, provincial, municipal or other governmental
department, commission, board, bureau or agency.
4.12 Employee Liabilities: FPI has no liability to former employees or any
liability to any government authorities with respect to current or former
employees.
4.13 No Conflicts or Agreement Violations: The execution, delivery and
performance of this Agreement will not conflict with or be in violation of the
articles or by-laws of FPI or of any agreement to which FPI is a party and will
not give any person or company a right to terminate or cancel any agreement or
right enjoyed by FPI and will not result in the creation or imposition of any
lien, encumbrances or restriction of any nature whatsoever in favor of a third
party upon or against the assets of FPI.
4.14 No Liens: That FPI has not received a notice of any assignment, lien,
encumbrance, claim or charge against the FPI Shares.
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4.15 Restriction on Recapitalization: That the SHAREHOLDERS and FPI
specifically represent, warrant and agree that for a period of one (1) year from
the Closing, that the SHAREHOLDERS will not as the controlling shareholders of
OAO nor will FPI institute a recapitalization of OAO in the form of a reverse
stock split.
4.16 Corporate Authority: The officers or representatives of FPI and the
471141 B.C. LTD executing this Agreement represent that they have been
authorized to execute this Agreement pursuant to resolutions of their respective
Boards of Directors.
5. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS ALONE
The SHAREHOLDERS alone further represent and warrant to OAO as follows with
respect to the OAO Shares:
5.1 Financially Responsible: That they are financially responsible, able to
meet their obligations and acknowledge that this investment will be speculative.
5.2 Investment Experience: That they have had experience in the business of
investments in one or more of the following: (i) investment experience with
securities such as stock and bonds; (ii) ownership of interests in partnerships,
new ventures and start-up companies; (iii) experience in business and financial
dealings; and that they can protect their own interests in an investment of this
nature and they do not have an "Investor Representative", as that term is
defined in Regulation D of the Securities Act of 1933 and do not need such an
Investor Representative.
5.3 Investment Risk: That they are capable of bearing the high degree of
economic risks and burdens of this investment, including but not limited to the
possibility of complete loss of all its investment capital and the lack of a
liquid market, such that it may not be able to liquidate readily the investment
whenever desired or at the then current asking price.
5.4 Access to Information: That they have had access to the information
regarding the financial conditions of the COMPANY, including but not limited to
the Disclosure and Financial Statement dated September 23, 1996 filed by the
COMPANY pursuant to Rule 15c2-11(a)(5) of the
Page 7 of 12
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<PAGE>
Securities Exchange Act of 1934, and they were able to request copies of such
information, ask questions of and receive answers from the COMPANY regarding
such information and any other information they desire concerning the OAO
Shares, and all such questions have been answered to their full satisfaction.
5.5 Private Transaction: That at no time were they presented with or
solicited by any leaflet, public promotional meeting, circular, newspaper or
magazine article, radio or television advertisement or any other form of general
advertising.
5.6 Investment Intent: The OAO Shares are not being purchased with a view
to or for the resale or distribution thereof and they have no present plans to
enter into any contract, undertaking, agreement or arrangement for such resale
or distribution.
5.7 Due Diligence: That the SHAREHOLDERS shall have completed a due
diligence review of the affairs of OAO and are satisfied with the results of
that review.
6. CLOSING, ESCROW HOLDER AND
CONDITIONS TO CLOSING
6.1 Exchange Closing: The closing of the share exchange as contemplated by
this Agreement (the "Closing") shall take place in Vancouver, British Columbia,
at such time and place as may be agreed among by the parties, but in no event
later than __________, 1996, unless otherwise extended in writing by the
parties.
6.2 Appointment of Escrow Holder: The parties hereby appoint CARMINE J.
BUA, III, ESQ. as the Escrow Holder pursuant to this Agreement.
6.3 Opinion of Counsel for OAO: The SHAREHOLDERS and FPI shall have
received an opinion from the legal counsel for OAO, in form and substance
reasonably satisfactory to the SHAREHOLDERS and FPI, to the effect that:
Page 8 of 12
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<PAGE>
1. OAO is a corporation duly organized and legally existing under the
laws of the State of Nevada and is in good standing with respect to
all of its regulatory filings, and
2. This Agreement when duly executed and delivered by OAO, constitutes a
legal, valid and binding obligation of OAO enforceable against it in
accordance with its terms, and
3. The Shares delivered pursuant to the Agreement have been validly
issued are fully paid and non-assessable, and
4. The Existing OAO Shares and the Shares have been legally and validly
issued and have been and are in compliance with all federal and state
securities laws including but not limited to SEC Regulation S and
Nevada Revised Statutes Chapters 78 and 90.
6.4 Opinion of Counsel For SHAREHOLDERS and FPI: OAO shall have received an
opinion from the legal counsel for the SHAREHOLDERS and FPI, in form and
substance reasonably satisfactory to OAO, to the effect that:
1. FPI is a corporation duly organized and legally existing under the
laws of Canada and is in good standing with respect to all of its
regulatory filings, and
2. The FPI Shares delivered pursuant to this Agreement have been validly
issued, fully paid, non-assessable, and have been originally issued in
full compliance with all federal and provincial securities laws.
3. The SHAREHOLDERS have the full power to transfer the FPI Shares to OAO
Page 9 of 12
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<PAGE>
without obtaining the consent or approval of any other person or
governmental agency upon the approval by the Board of Directors of
FPI.
6.5 Escrow Conditions and Closing: Prior to the Closing the following will
be required:
1. Delivery of FPI Shares: The SHAREHOLDERS shall deliver to the Escrow
Holder the certificate or certificates representing the FPI Shares
registered in the name of OAO, duly endorsed for transfer accompanied
by a duly executed assignment of the FPI Shares to OAO.
2. Delivery of OAO Shares: OAO shall deliver to the Escrow Holder a total
of 4,901,760 of the Shares registered in the names of the SHAREHOLDERS
and their respective designees as set forth in Schedule "A".
3. Delivery of Creditor Shares: OAO shall deliver to the Escrow Holder a
total of 98,240 of the Shares registered in the name of the creditors.
4. Legal Opinion and Documents: Both parties shall deliver to the Escrow
Holder such legal opinions and other documents as are required by the
terms and conditions of the Agreement.
5. Requisite Corporate Resolutiona: Each party shall deliver to the
Escrow Holder certified copies of resolutions from their respective
Boards of Directors authorizing the subject transaction.
Page 10 of 12
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<PAGE>
6. Shareholder Approval: OAO shall deliver to the Escrow Holder
documentation evidencing the OAO shareholder approval of the subject
transaction.
6.6 Close of Termination: The subject transaction shall "close' upon the
satisfaction of the above conditions.
7. COOPERATION, ARBITRATION, INTERPRETATION,
MODIFICATION AND ATTORNEY FEES
7.1 Cooperation of Parties: The parties further agree that they will do all
things necessary to accomplish and facilitate the purpose of this Agreement and
that they will sign and execute any and all documents necessary to bring about
and perfect the purposes of this Agreement.
7.2 Arbitration: The parties hereby submit all controversies, claims and
matters of difference arising out of this Agreement to arbitration In Las Vegas,
Nevada according to the rules and practices of the American Arbitration
Association from time to time in force. This submission and agreement to
arbitrate shall be specifically enforceable. The Agreement shall further be
governed by the laws of the State of Nevada.
7.3 Interpretation of Agreement: The parties agree that should any
provision of this Agreement be found to be ambiguous in any way, such ambiguity
shall not be resolved by construing such provisions or any part of or the entire
Agreement in favor of or against any party herein, but rather by construing the
terms of this Agreement fairly and reasonable in accordance with their generally
accepted meaning.
7.4 Modification of Agreement: This Agreement may be amended or modified in
any way at any time by an instrument in writing stating the manner in which it
is amended or modified and signed by each of the parties hereto. Any such
writing amending or modifying this Agreement shall be attached to and kept with
this Agreement.
7.5 Attorney Fees: If any legal action or any arbitration or other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with
Page 11 of 12
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<PAGE>
any of the provisions of the Agreement, the successful or prevailing party shall
be entitled to recover reasonable attorneys' fees and other costs incurred in
that action or proceeding, in addition to any other relief to which it may be
entitled.
7.6 Entire Agreement: This Agreement constitutes the entire Agreement and
understanding of the parties hereto with respect to the matters herein set
forth, and all prior negotiations, writings
and understandings relating to the subject matter of this Agreement are merged
herein and are superseded and canceled by this Agreement.
7.7 Counterparts: This Agreement may be signed in one or more counterparts.
7.8 Facsimile Transmission Signatures: A signature received pursuant to a
facsimile transmission shall be sufficient to bind a party is Agreement
DATED: December 24th, 1996 /s/ MICHAEL I. BROWN
-----------------------------------
MICHAEL I. BROWN
DATED: December 24th, 1996 /s/ PAUL R. HARRIS
-----------------------------------
PAUL R. HARRIS
471141 B.C. LTD
DATED: December 24th, 1996 /s/ ALNOOR KASSAM
-----------------------------------
ALNOOR KASSAM
President
ONE AND ONLY, INC.
DATED: December 24th, 1996 /s/ MICHAEL I. BROWN
-----------------------------------
MICHAEL I. BROWN
President
Page 12 of 12
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<PAGE>
SCHEDULE "A"
NAME NO. SHARES
---- ----------
1. Michael Ivan Brown 2,300,307
2. Paul R. Harris 1,370,153
3. Philip A. Cox 100,000
4. Margaret Wilkins Sciple 400,000
S. Larry D. Whitehead 100,000
6. Brian R. Gisel 22,500
7. Donald R. Kirkby 22,500
8. Michael J. Ozerkevich 14,000
9. Edward M. Paterson 35,000
10. Gregg J. Paterson 2,000
11. Bruce H. Hirtle In Trust for Pilar Land 8,100
12. John C. Donaldson 13,100
13. Bruce H. Hirtle 9,500
14. Henry C. Wood 1,300
15. Robert M. Striha 1,300
16. Kerwin G. Parsons 1,300
17. Ann M. Lindsay 1,300
18. Stanley R. Cowdell 1,300
19. Nicolas 0. Desmarais 2,700
20. David G. Calder 1,300
21. Tracey A. St. Denis 1,300
22. Charmaine L. Chin 7,800
23. Holmes Financial Corporation 400,000
24. Kirk E. Exner 5,000
25. Barakeat Holdings Ltd. 40,000
---------
26. AMANDA MARIA BROWN 40,000
---------
TOTAL SHARES 4,901,760
=========
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<PAGE>
SCHEDULE "B"
NAME NO. SHARES
---- ----------
1. Larry W. Prentice I/T
for Ernst & Young 8,167
2. Merrill W. Shepard I/T for
Russell & DuMoulin 3,536
3. Edward M. Paterson In Trust 6,537
4. Luz Maria Cabo 80,000
------
TOTAL SHARES 98,240
======
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COMMON STOCK EXCHANGE AND ACQUISITION AGREEMENT
by and among
FamilyWare International Inc.,
a Nevada corporation;
and
CENTROCOM Corp.,
a Nevada corporation;
and
Eric Peacock and Vernon M. Briggs III
and
Alnoor Kassam
THIS COMMON STOCK EXCHANGE AND ACQUISITION AGREEMENT ("Agreement") is made
and entered into in quadruplicate this 7th day of May, 1999, by and among
FamilyWare International, Inc., a Nevada corporation ("Purchaser"); CENTROCOM
Corp., a Nevada corporation ("Company"); Alnoor Kassam ("Kassam"); Eric Peacock
("Peacock") and Vernon M. Briggs III ("Briggs") and provides for the Company to
be acquired by the Purchaser and a wholly owned subsidiary of the Purchaser, and
for the stockholders of the Company, by such acquisition, to become stockholders
of the Purchaser. Peacock and Briggs shall be defined in this Agreement,
collectively, as the "Sellers" and each of which may be referred to in this
Agreement singularly as a "Seller".
RECITALS
A. The Purchaser desires to acquire, on the terms and subject to the
conditions specified in this Agreement, the business of the Company.
B. The Company and the Sellers believe that it is desirable and in the best
interests of the Company that its business be acquired by the Purchaser, by the
acquisition by the Purchaser of all of the issued and outstanding shares of
$.001 par value common stock of the Company, which common stock is owned by the
Sellers, on the terms and subject to
1
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<PAGE>
the conditions specified in this Agreement.
C. Peacock owns fifty percent (50%) of the issued and outstanding shares of
$.001 par value common stock of the Company, and desires to exchange those
shares for shares of $.0005 par value common stock of the Purchaser, on the
terms and subject to the conditions specified in this Agreement.
D. Briggs owns fifty percent (50%) of the issued and outstanding shares of
$.001 par value common stock of the Company, and desires to exchange those
shares of the Company's common stock for shares of $.0005 par value common stock
of the Purchaser, on the terms and subject to the conditions specified in this
Agreement.
E. Kassam is the sole, remaining member of the Board of Directors of the
Purchaser.
NOW, THEREFORE, IN CONSIDERATION OF THE RECITALS SPECIFIED ABOVE THAT SHALL BE
DEEMED TO BE A SUBSTANTIVE PART OF THIS AGREEMENT, AND THE MUTUAL COVENANTS,
PROMISES, UNDERTAKINGS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES SPECIFIED IN
THIS AGREEMENT AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, WITH THE INTENT TO BE OBLIGATED
LEGALLY AND EQUITABLY, THE PARTIES DO HEREBY COVENANT, PROMISE, AGREE, REPRESENT
AND WARRANT AS FOLLOWS:
ARTICLE I
DEFINITIONS
As used in this Agreement, in addition to terms defined elsewhere in this
Agreement, the terms specified below in this Article I shall have the
definitions and meanings specified immediately after those terms, unless a
different and common meaning of the term is clearly indicated by the context,
and variants and derivatives of the following terms shall have correlative
meanings. To the extent that certain of the definitions and meanings specified
below suggest, indicate, or express agreements between or among parties to this
Agreement, or specify representations or warranties or covenants of a party, the
parties agree to the same by execution of this Agreement. The parties to this
Agreement agree that agreements, representations, warranties, and covenants
expressed in any part or provision of this Agreement shall for all purposes of
this Agreement be treated in the same manner as other such agreements,
representations, warranties, and covenants specified elsewhere
2
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<PAGE>
in this Agreement, and the article or section of this Agreement within which
such an agreement, representation, warranty, or covenant is specified shall have
no separate meaning or effect on the same.
1.1 "Accumulated Funding Deficiency". An "accumulated funding deficiency"
as defined by the provisions of Section 302(a)(2) of ERISA or the last two
sentences of Section 412(a)(2) of the Code, or, in either case, successor
provisions to such provisions adopted by amendments to ERISA or the Code, as the
case may be, and including, in each case, other provisions of ERISA, the Code or
other law, and regulations adopted pursuant to ERISA or the Code or such other
law, modifying, amending, interpreting or otherwise affecting the application of
such provisions, either in general or as applied to the nature or circumstances
of a particular person that is a party to, or is affected by, or is involved in,
the Transaction and with respect to which person the use of the term in this
Agreement, or in the particular provision of this Agreement, is relevant.
1.2 "Affiliate". When used with respect to a person, an "affiliate" of that
person is a person controlling, controlled by, or under common Control with that
person.
1.3 "Agreement". This Plan of Reorganization and Agreement, including all
of its schedules and exhibits and all other documents specifically referred to
in this Agreement that have been or are to be delivered by a party to this
Agreement to another such party in connection with the Transaction or this
Agreement, and including all duly adopted amendments, modifications, and
supplements to or of this Agreement and such schedules, exhibits, and other
documents.
1.4 "Audited Financial Statements". The balance sheet, income statement,
statement of stockholders' equity, and statement of cash flows or, in each
instance, equivalent statements of the respective, subject corporation as
commonly provided to such corporation's shareholders, as at December 31, 1998,
and for the three (3) years then ended, as reported on by Auditors.
1.5 "Auditors". Independent certified public accountants currently retained
for the purpose of auditing financial statements of the respective, particular
person.
1.6 "Business Day". Any day that is not a Saturday, Sunday, or a day on
which banks in Los Angeles, California, are authorized to close.
1.7 "Closing". The completion of the Transaction, to occur as contemplated
by the provisions of Article II of this Agreement.
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<PAGE>
1.8 "Closing Date". The date on which the Closing actually occurs, which
shall be no later than May 12, 1999, unless otherwise agreed by the parties to
this Agreement, but shall not in any event be prior to satisfaction or waiver of
the conditions to Closing specified by the provisions of Article IX of this
Agreement.
1.9 "Closing Time". The time at which the Closing actually occurs. All
events that are to occur at the Closing Time shall, for all purposes, be deemed
to occur simultaneously, except to the extent, if at all, that a specific order
of occurrence is otherwise described.
1.10 "Code". The Internal Revenue Code of 1986, as amended and in effect at
the time of execution of this Agreement.
1.11 "Company". CENTROCOM Corp., a Nevada corporation, which will, pursuant
to the Transaction, become a wholly owned Subsidiary of the Purchaser.
1.12 "Company Balance Sheet". The most recent balance sheet included in the
Audited Financial Statements of the Company.
1.13 "Complete Withdrawal". A "complete withdrawal" from a Multiemployer
Plan as defined by the provisions of Section 4203 of ERISA or successor
provisions to such provision adopted by amendments to ERISA and including other
provisions of ERISA or of other law and regulations adopted pursuant to ERISA or
such other law, modifying, amending, interpreting or otherwise affecting the
application of such provision, either in general or as applied to the nature or
circumstances of a particular person that is a party to, or is affected by, or
is involved in, the Transaction and with respect to which person the use of the
term in this Agreement, or in the particular provision of this Agreement, is
relevant.
1.14 "Consideration". Nine million (9,000,000) shares of $.0005 par value
common stock of the Purchaser, for which the common stock of the Company issued
and outstanding immediately prior to the consummation of the Transaction will be
exchanged.
1.15 "Control". Generally, the power to direct the management or affairs of
an person.
1.16 "ERISA". The Employee Retirement Income Security Act of 1974, as
amended and in effect at the time of execution of this Agreement.
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<PAGE>
1.17 "GAAP". Generally Accepted Accounting Principles, as in effect on the
date of any statement, report or determination that purports to be, or is
required to be, prepared or made in accordance with GAAP. All references in this
Agreement to financial statements prepared in accordance with GAAP shall be
defined and mean in accordance with GAAP consistently applied throughout the
periods to which reference is made.
1.18 "HSR". The Hart-Scott-Rodino Antitrust Improvement Act of 1976, as
amended.
1.19 "Inventories". The stock of raw materials, work-in-process and
finished goods, including, but not limited to, finished goods purchased for
resale, held for manufacturing, assembly, processing, repairing, finishing,
sale, or resale to others, from time to time in the ordinary course of the
business in the form in which such inventories then are held or after
manufacturing, assembling, finishing, processing, incorporating with other goods
or items, refining, repairing, or similar processes.
1.20 "IRS". The Internal Revenue Service.
1.21 "Liabilities". At any point in time ("Determination Time"), the
obligations of a person, whether known or unknown, contingent or absolute,
recorded on its books or not, arising or resulting in any way from facts,
events, agreements, obligations or occurrences that existed or transpired at a
prior point in time, or resulted from the passage of time to the Determination
Time, but not including obligations accruing or payable after the Determination
Time to the extent (but only to the extent) that such obligations (i) arise
pursuant to previously existing agreements for services, benefits, or other
considerations, and (ii) accrue or become payable with respect to services,
benefits, or other considerations received by the person after the Determination
Time.
1.22 "Multiemployer Plan". A "multiemployer plan," as defined by the
provisions of Section 3(37) of ERISA or Section 414(f) of the Code, or, in
either case, successor provisions to such provisions adopted by amendments to
ERISA or the Code, as the case may be, and including, in each case, other
provisions of ERISA, the Code or other law, and regulations adopted pursuant to
ERISA or the Code or such other law, modifying, amending, interpreting, or
otherwise affecting the application of such provisions, either in general or as
applied to the nature or circumstances of a particular person that is a party
to, or is affected by, or is involved in, the Transaction and with respect to
which person the use of the term in this Agreement, or in the particular
provision of this Agreement, is relevant.
5
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<PAGE>
1.23 "Parent". With respect to any person, a person of which that person
is, directly or indirectly through one or more other Parents, a Subsidiary.
1.24 "Partial Withdrawal". A "partial withdrawal" from a Multiemployer
Plan, as defined in Section 4205 of ERISA or successor provisions to such
provision adopted by amendments to ERISA and including other provisions of ERISA
or of other law, and regulations adopted pursuant to ERISA or such other law,
modifying, amending, inter preting or otherwise affecting the application of
such provision, either in general or as applied to the nature or circumstances
of a particular person that is a party to, or is affected by, or is involved in,
the Transaction and with respect to which person the use of the term in this
Agreement, or in the particular provision of this Agreement, is relevant.
1.25 "Payables". Liabilities of a party arising from the borrowing of money
or the incurring of obligations for merchandise or goods purchased.
1.26 "Plan Termination". A termination of a Pension Plan, whether partial
or complete, within the meaning of Title IV of ERISA.
1.27 "PBGC". The Pension Benefit Guaranty Corporation.
1.28 "Pension Plan". A "pension plan" or "employee pension benefit plan,"
as defined in Section 3(2) of ERISA or successor provisions to such provision
adopted by amendments to ERISA and including other provisions of ERISA or of
other law, and regulations adopted pursuant to ERISA or such other law,
modifying, amending, interpreting, or otherwise affecting the application of
such provision, either in general or as applied to the nature or circumstances
of a particular person that is a party to, or is affected by or is involved in
the Transaction and with respect to which person the use of the term in this
Agreement, or in the particular provision of this Agreement, is relevant.
1.29 "Prohibited Transaction". A "prohibited transaction," as defined in
Section 406 of ERISA or Section 4975(c) of the Code, or, in either case,
successor provisions to such provisions adopted by amendments to ERISA or the
Code, as the case may be, and including, in each case, other provisions of
ERISA, of the Code or of other law, and regulations adopted pursuant to ERISA or
the Code or such other law, modifying, amending, interpreting, or otherwise
affecting the application of such provisions, either in general or as applied to
the nature or circumstances of a particular person that is a party to, or is
affected by or is involved in the Transaction and with respect to which person
the use of the term in this Agreement, or in the particular provision of this
Agreement, is relevant.
6
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<PAGE>
1.30 "Projections". The projections of economic results of the Company,
prepared quarterly through April 30, 1999, and delivered to the Purchaser
pursuant to the terms of this Agreement. The Projections include projected
financial results for the business operations of the Company. The Purchaser
acknowledges that projections of future economic performance are necessarily
unreliable and subject to the occurrence or nonoccurrence of a variety of
events, but the Company represents and warrants that the Projections have been
prepared on the basis of assumptions that are, in the judgment of the Company,
reasonable in all respects and are not to the knowledge of the Company contrary
in any material respect to fact or to events that have occurred or are presently
in existence.
1.31 "Proprietary Rights". Trade secrets, copyrights, patents, trademarks,
service marks, customer lists, and all similar types of intangible property
developed, created or owned by the person claiming ownership, proprietary or
similar, or used by such person in connection with its business, whether or not
the same are entitled to legal protection.
1.32 "Purchaser". FamilyWare International, Inc., a Nevada corporation,
which, pursuant to the provisions of this Agreement, is acquiring all of the
issued and outstanding shares of $.001 par value common stock of the Company.
The Purchaser shall include FamilyWare International, Inc., a Nevada
corporation, and each of its Subsidiaries, as an entirety, and representations
and warranties as to the Purchaser specified in this Agreement shall be deemed
to mean FamilyWare International, Inc., a Nevada corporation, and each of its
Subsidiaries, both separately and together as a consolidated entity, unless and
except to the extent expressly indicated otherwise.
1.33 "Purchaser Balance Sheet". The most recent balance sheet included in
the Audited Financial Statements of the Purchaser.
1.34 "Purchaser's Securities". Shares of $.0005 par value common stock of
the Purchaser issuable in respect of the outstanding shares of common stock of
the Company, pursuant to the Transaction.
1.35 "Receivables". Accounts receivable, notes receivable, and other
obligations appearing as assets on the books of a particular person, and
customarily presented as assets in the balance sheets of such person prepared in
accordance with GAAP, indicating moneys owed to such person.
1.36 "Reportable Event". A "reportable event," as defined in Section
4043(b) of ERISA or successor provisions to such provision adopted by amendments
to ERISA and including other provisions of ERISA or of other law, and
regulations adopted pursuant to
7
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<PAGE>
ERISA or such other law, modifying, amending, interpreting, or otherwise
affecting the application of such provision, either in general or as applied to
the nature or circumstances of a particular person that is a party to, or is
affected by or is involved in the Transaction and with respect to which person
the use of the term in this Agreement, or in the particular provision of this
Agreement, is relevant.
1.37 "SEC". The Securities and Exchange Commission.
1.38 "Securities Act". The Securities Act of 1933, as amended to the date
as of which any reference thereto is relevant pursuant to this Agreement,
including any substitute or replacement statute adopted in place or lieu
thereof.
1.39 "Sellers". Eric Peacock and Vernon M. Briggs III, who are the only
shareholders of the Company and who are executing this Agreement and thereby
agreeing to be obligated by certain provisions of this Agreement.
1.40 "Subsidiary". With respect to any person, another person of which
fifty percent (50%) or more of the effective voting power, or the effective
power to elect a majority of the board of directors or similar governing body,
or fifty percent (50%) or more of the true equity interest, is owned by such
first person, directly or indirectly.
1.41 "Transaction". The issuance by the Purchaser of the Consideration in
exchange for all of the issued and outstanding shares of $.001 par value common
stock of the Company, held by the Sellers, and pursuant to which the Company
shall become a wholly-owned Subsidiary of the Purchaser.
1.42 "Unaudited Financial Statements". The balance sheet, income statement,
statement of stockholders' equity and statement of cash flows or equivalent
statements of the respective, particular person, as commonly prepared, as at
March 31, 1999, with comparable statements for the similar period of the prior
fiscal year.
1.43 "Welfare Plan". A "welfare plan" or an "employee welfare benefit plan"
defined in Section 3(1) of ERISA or successor provisions to such provision
adopted by amendments to ERISA and including other provisions of ERISA or of
other law, and regulations adopted pursuant to ERISA or such other law,
modifying, amending, interpreting, or otherwise affecting the application of
such provision, either in general or as applied to the nature or circumstances
of a particular person that is a party to, or is affected by or is involved in
the Transaction and with respect to which person the use of the term in this
Agreement, or in the particular provision of this Agreement, is relevant.
8
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<PAGE>
ARTICLE II
THE TRANSACTION
2.1 The Transaction. On the Closing Date, and at the Closing Time, subject
in all instances to each of the terms, conditions, provisions and limitations
specified in this Agreement, the Company will become a wholly owned Subsidiary
of the Purchaser, pursuant to which (i) the Sellers shall sell, transfer,
convey, assign, deliver and set over to the Purchaser, free and clear of any and
all liens and charges, and the Purchaser shall acquire from the Sellers, the
shares of $.001 par value common stock of the Company owned by the Sellers,
comprising, as to each such Seller, his entire ownership of equity securities of
the Company, in exchange for the Consideration payable for each share of such
common stock of the Company held by the Sellers; (ii) the officers of the
Company immediately prior to the effectiveness of the Transaction will hold such
offices with the Purchaser immediately after the effectiveness of the
Transaction, and thereafter subject at all times to the discretion of the Board
of Directors of the Purchaser and their superior officers, if any, to whom the
power to terminate employment has been delegated; (iii) the Board of Directors
of the Company immediately prior to the effectiveness of the Transaction will be
the Board of Directors of the Purchaser immediately after the Transaction; and
(iv) the name of the Purchaser shall thereafter be changed to the name of the
Company as soon as practicable after the Closing.
2.2 Delivery of Consideration. Pursuant to the Transaction, each holder of
shares of $.001 common stock of the Company immediately prior to the Transaction
shall be entitled to receive, from and after the consummation of the
Transaction, in respect of each share of such common stock of the Company
outstanding immediately prior to the Transaction owned by such holder (and upon
surrender of the certificate(s) therefor, duly endorsed and in all respects in
proper form for transfer), nine (9) shares of $.0005 par value common stock of
the Purchaser.
2.3 Closing. The Closing of the Transaction shall take place at the offices
of Stepp & Beauchamp LLP, 1301 Dove Street, Suite 460, Newport Beach,
California, at 10:00 A.M. or at such other place and time as the Purchaser and
the Company may agree upon, on the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND KASSAM
The Purchaser and Kassam, and each of them, to the best of their knowledge,
hereby represent and warrant to the Company and the Sellers that as of the date
that Kassam
9
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<PAGE>
became President of the Purchaser that:
3.1 Organization And Qualification. The Purchaser is a corporation duly
organized, validly existing, and in good standing pursuant to the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to conduct business as that business is now being conducted. The
Purchaser is, or will prior to the Closing be, duly qualified as a foreign
corporation to do business, and in good standing, in each jurisdiction where the
character of the properties owned or leased by it, or the nature of its
activities, is such that qualification as a foreign corporation in that
jurisdiction is required by law.
3.2 Authority Relative to This Agreement. The Purchaser has the requisite
corporate power and authority to enter into this Agreement and to carry out its
obligations created by this Agreement. The execution and delivery of this
Agreement and the consummation of the Transaction have been duly authorized and
approved by the requisite corporate authority of Purchaser and no other
corporate proceedings on the part of the Purchaser are necessary to approve and
adopt this Agreement or to approve the consummation of the Transaction,
including issuance and delivery of the Consideration. This Agreement has been
duly and validly executed and delivered by the Purchaser and constitutes a valid
and binding obligation of the Purchaser, enforceable in accordance with its
terms.
3.3 Absence of Breach; No Consents. The execution, delivery and performance
of this Agreement, and the performance by Purchaser of its obligations created
by this Agreement (except for compliance with the HSR Act and compliance with
any and all regulatory or licensing laws applicable to the business of the
Purchaser, all of which, to the extent applicable to Purchaser (and to the
extent within its control), will be satisfied in all material respects prior to
the Closing) do not, except as disclosed in Schedule 3.3 to this Agreement, (i)
conflict with, and will not result in a breach of, any of the provisions of the
Articles of Incorporation or Bylaws of the Purchaser; (ii) contravene any law,
rule or regulation of any state or commonwealth or of the United States, or of
any applicable foreign jurisdiction, or any order, writ, judgment, injunction,
decree, determination, or award affecting or obligating the Purchaser, in such a
manner as to provide a basis for enjoining or otherwise preventing consummation
of the Transaction; (iii) conflict with or result in a material breach of or
default pursuant to any material indenture or loan or credit agreement or any
other material agreement or instrument to which Purchaser is a party, in such a
manner as to provide a basis for enjoining or otherwise preventing consummation
of the Transaction; or (iv) require the authorization, consent, approval or
license of any third party of such a nature that the failure to obtain the same
would provide a basis for
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enjoining or otherwise preventing consummation of the Transaction.
3.4 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with this Agreement
or the Transaction or any related transaction based upon any agreements, written
or oral, made by or on behalf of the Purchaser.
3.5 Taxes. The Purchaser has properly filed or caused to be filed all
federal, state, local, and foreign income and other tax returns, reports, and
declarations that are required by applicable law ro be filed by it, and has
paid, or made full and adequate provision for the payment of, all federal,
state, local, and foreign income and other taxes properly due for the periods
contemplated by such returns, reports, and declarations, except such taxes, if
any, as are adequately reserved against in the Purchaser Balance Sheet.
3.6 Litigation. No investigation or review by any governmental entity with
respect to the Purchaser is pending or threatened (other than inspections and
reviews customarily made of businesses such as those similar to that the
Purchaser), nor has any governmental entity indicated to the Purchaser an
intention to conduct any such investigation or review. There is no action,
litigation or proceeding pending or threatened against or affecting the
Purchaser, at law or in equity, or before any federal, state, municipal, or
other governmental department, commission, board, bureau, agency, or
instrumentality.
3.7 Employees, Etc. There are no collective bargaining, bonus, profit
sharing, compensation, or other plans, agreements, trusts, funds, or
arrangements maintained by the Purchaser for the benefit of directors, officers
or employees of, and there are no employment, consulting, severance, or
indemnification arrangements, agreements, or understandings between the
Purchaser, on the one hand, and any current or former directors, officers or
other employees (or Affiliates thereof) of the Purchaser, on the other hand. The
Purchaser is not, and following the Closing will not be, obligated by any
express or implied contract or agreement to employ, directly or as consultant or
otherwise, any person for any specific period of time or until any specific age.
3.8 Compliance With Laws. The Purchaser is in compliance with all, and has
received no notice of any violation of any, laws or regulations applicable to
its operations, including, without limitation, the laws and regulations relevant
to the use or utilization of premises, or with respect to which compliance is a
condition of engaging in any aspect of the business of the Purchaser, and the
Purchaser has all permits, licenses, zoning rights, and other governmental
authorizations necessary to conduct its business as presently conducted.
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3.9 Ownership of Assets. The Purchaser has good, marketable and insurable
title, or valid, effective and continuing leasehold rights in the case of leased
property, to all real property (as to which, in the case of owned property, such
title is fee simple) and all personal property owned or leased by the Purchaser
in such a manner as to create the appearance or reasonable expectation that such
property is owned or leased by the Purchaser; such ownership is free and clear
of all liens, claims, encumbrances and charges, except liens for taxes not yet
due and minor imperfections of title and encumbrances, if any, which, singly and
in the aggregate, are not substantial in amount and do not materially detract
from the value of the property subject thereto or materially impair the use
thereof; no other person has any ownership or similar right in, or contractual
or other right to acquire any such right in, any of such assets. The Purchaser
does not know of any potential action by any person and no proceedings with
respect thereto have been instituted of which the Purchaser has notice, that
would materially affect the Purchaser's ability to use and to utilize each of
its assets. The Purchaser has received no notices from any mortgagee regarding
any of its leased properties.
3.10 Proprietary Rights. The Purchaser possesses full and complete
ownership of, or adequate and enforceable long-term licenses or other rights to
use (without payment), all of its Proprietary Rights; the Purchaser has not
received any notice of conflict which asserts the rights of any other person
with respect thereto; and the Purchaser has in all material respects performed
all of the obligations required to be performed by it, and is not in default in
any material respect, pursuant to any agreement relating to any such Proprietary
Right.
3.11 Trade Names. Schedule 3.11 to this Agreement identifies each trade
name, fictitious business name, or other similar name under which the Purchaser
has conducted any part of its business during the ten (10) years preceding the
date of this Agreement.
3.12 Employee Benefit Plans. The Purchaser does not maintain or contribute
to any Pension Plan or any Welfare Plan, nor is the Purchaser presently, nor has
it been within the last six (6) years, a participating employer in any
Multiemployer Plan, affecting, in any case, employees of the Purchaser.
3.13 Facilities. The Purchaser's facilities are (as to physical plant and
structure) structurally sound, ordinary wear and tear excepted, and none of the
Purchaser's facilities, nor any of the vehicles or other equipment used by the
Purchaser in connection with its business, has any material defects and all of
them are in all material respects in good operating condition and repair and are
adequate for the uses to which they are utilized, ordinary wear and tear
excepted; none of Purchaser's facilities, vehicles or other equipment
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is in need of maintenance or repairs, except for ordinary, routine maintenance
and repairs which are not material in nature or cost. The Purchaser is not in
breach, violation or default of any lease affecting the Purchaser's assets with
respect to, or as a result of, which the other party (whether lessor, lessee,
sublessor, or sublessee) thereto has the right to terminate the same, and the
Purchaser has not received notice of any claim or assertion that it is or may be
in any such breach, violation or default.
3.14 Accounts Receivable. All accounts receivable of the Purchaser
represent transactions in the ordinary course of business, and are current and
collectible.
3.15 Inventories. All Inventories of the Purchaser are of a quality and
quantity usable and salable in the ordinary course of business, except for
obsolete items and items of below-standard quality, all of which, in the
aggregate, are immaterial in amount. Items included in such Inventories are
presented on the books and records of the Purchaser at the lower of cost or
market and, in any event, at not greater than their net realizable value, on an
item by item basis, after appropriate deduction for costs of completion,
marketing costs, transportation expense and allocation of overhead.
3.16 Accounts Payable. The accounts payable of the Purchaser at the time of
the Closing will be all amounts owed by the Purchaser in respect of trade
accounts due and other Payables of the Purchaser.
3.17 Labor Matters. There are no activities or controversies, including,
without limitation, any labor organizing activities, election petitions or
proceedings, proceedings preparatory thereto, unfair labor practice complaints,
labor strikes, disputes, slowdowns, or work stoppages, pending or, to the best
of the knowledge of the Purchaser, threatened, affecting employees of the
Purchaser.
3.18 Insurance. The Purchaser has insurance policies in full force and
effect insuring the assets of the Purchaser and such insurance policies provide
for coverages which are usual and customary in the business of the Purchaser as
to amount and scope, and are adequate to protect the assets of the Purchaser
against any reasonably foreseeable risk of loss, including business
interruption. The Purchaser has not within the past three (3) years received any
notice of cancellation of any insurance agreement affecting the assets of the
Purchaser.
3.19 Environmental Hazards regarding Real Properties. Each parcel of real
property by the Purchaser in its business is free of any and all hazardous
wastes, toxic substances, or other types of contamination or matters of
environmental concern, and the
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Purchaser is not subject to any Liability resulting from or related to any such
wastes, substances, contaminants, or matters of environmental concern in
connection with any such property.
3.20 Full Disclosure. The documents, certificates, and other writings
furnished or to be furnished by or on behalf of the Purchaser to the Company
pursuant to this Agreement, taken together in the aggregate, do not and will not
contain any untrue state ment of a material fact, or omit to specify any
material fact necessary to make the statements made, considering the
circumstances pursuant to which they are made, not misleading.
3.21 Capitalization; the Subject Stock; Related Matters. The authorized
capital stock of the Purchaser consists of (i) fifty million (50,000,000) shares
of $.0005 par value common stock and (ii) five million (5,000,000) shares of
$.0005 par value preferred stock. As of the date of this Agreement, there are
twelve million four hundred twenty-six thousand one hundred ninety-two
(12,426,192) shares of such common stock are issued and outstanding and no
shares of such preferred stock are issued and outstanding. The Purchaser's
Securities, when issued, will be duly, legally and validly issued and will be
non-assessable.
3.22 Options, Warrants and Other Rights and Agreements Affecting the
Purchaser's Capital Stock. The Purchaser has no authorized or outstanding
options, warrants, calls, subscriptions, rights, convertible securities or other
securities, as defined by the provisions of the Securities Act ("Securities"),
or any commitments, agreements, arrangement or understandings of any manner or
nature whatsoever obligating the Purchaser, in any such case, to issue shares of
the Purchaser's capital stock or other securities or securities convertible into
or evidencing the right to purchase shares of the Purchaser's capital stock or
other Securities. Neither the Purchaser nor any officer, director, or
shareholder of the Purchaser is a party to any agreement, understanding,
arrangement or commitment, or obligated by an provision which creates any rights
in any person with respect to the authorization, issuance, voting, sale or
transfer of any shares of the Purchaser's capital stock or other Securities.
3.23 Subsidiaries. All of the Subsidiaries of the Purchaser, direct or
indirect, have been identified to the Company, and the Purchaser has no other
Subsidiaries. All of the issued and outstanding shares of capital stock of each
Subsidiary of the Purchaser are owned of record and beneficially by the
Purchaser, are validly issued, fully paid and nonassessable and are owned free
and clear of all liens, charges, claims, pledges, security interests, equities,
encumbrances, reservations or contractual restrictions on transfer of any
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nature whatsoever; and no Subsidiary of the Purchaser has outstanding any
securities, warrants, options or other rights convertible into or exchangeable
or exercisable for any shares of its capital stock, and there are no contracts,
commitments, understandings, arrangements or restrictions by which any such
Subsidiary is obligated to issue shares of its capital stock.
3.24 Financial Statements. The Purchaser has heretofore delivered to the
Company the following:
1. Audited Financial Statements;
2. Unaudited Financial Statements; and
3. All documents of the Company filed with the SEC within the four (4)
years preceding the date of execution of this Agreement.
All of the historical financial statements contained in such documents were
prepared from the books and records of the Purchaser. The Audited Financial
Statements of the Purchaser were prepared in accordance with GAAP, and fairly
and accurately present the financial situation and condition of the Purchaser as
at the dates and for the periods indicated. Without limited the foregoing, at
the date of the Purchaser Balance Sheet, the Purchaser owned each of the assets
included in preparation of the Purchaser Balance Sheet, and the valuation of
such assets in the Purchaser Balance Sheet is not more than their fair saleable
value (on an item-by-item basis) at that date; and the Purchaser had no
Liabilities, other than those specified in the Purchaser Balance Sheet, nor any
Liabilities in amounts in excess of the amounts included for them in the
Purchaser Balance Sheet. The Unaudited Financial Statements of the Purchaser
were prepared in a manner consistent with the basis of presentation used in the
Audited Financial Statements of the Purchaser, and fairly present the financial
situation and condition of the Purchaser as at and for the periods indicated,
subject to normal year-end adjustments, none of which will be material. From the
date of this Agreement through the Closing Date the Purchaser will continue to
prepare financial statements on the same basis that it has done so in the past,
will promptly deliver the same to the Purchaser, and the foregoing
representations will be applicable to each financial statement so prepared and
delivered.
3.25 No Undisclosed Liabilities. The Purchaser has no Liabilities which are
not adequately presented or reserved against on the face of the Purchaser
Balance Sheet, except Liabilities incurred since the date of the Purchaser
Balance Sheet in the ordinary course of business and consistent with past
practice. Without limiting the foregoing, (a) there are no unpaid leasehold
improvements at any of the Purchaser's facilities or locations for which the
Purchaser is or will be responsible, and (b) there are no deferred rents due to
lessors
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at or with respect to any of such facilities or locations.
3.26 No Material Adverse Change, Etc. Since the date of the Purchaser
Balance Sheet, other than as contemplated or caused by this Agreement, there has
not been (i) any material adverse change in the business, condition (financial
or otherwise), operations, or prospects of the Purchaser; (ii) any damage,
destruction, or loss, whether covered by insurance or not, having a material
adverse effect on the business, condition (financial or otherwise), operations
or prospects of the Purchaser; (iii) any entry into or termination of any
material commitment, contract, agreement, or transaction (including, without
limitation, any material borrowing or capital expenditure or sale or other
disposition of any material asset or assets) of or involving the Purchaser,
other than this Agreement and agreements executed in the ordinary course of
business; (iv) any redemption, repurchase, or other acquisition for value of its
capital stock by the Purchaser, or any issuance of capital stock of the
Purchaser or of securities convertible into or rights to acquire any such
capital stock or any dividend or distribution declared, set aside, or paid on
capital stock of the Purchaser; (v) any transfer of or right granted under any
material lease, license, agreement, patent, trademark, trade name, or copyright
of the Purchaser; (vi) any sale or other disposition of any asset of the
Purchaser, or any mortgage, pledge, or imposition of any lien or other
encumbrance on any asset of the Purchaser, other than in the ordinary course of
business, or any agreement relating to any of the foregoing; of (vii) any
default or breach by the Purchaser in any material respect pursuant to any
contract, license or permit. Since the date of the Purchaser Balance Sheet, the
Purchaser has conducted its business only in the ordinary and usual course, and,
without limiting the foregoing, no changes have been made in (i) executive
compensation levels, (ii) the manner in which other employees of the Purchaser
are compensated, (iii) supplemental benefits provided to any such executives or
other employees, or (d) inventory levels in relation to sales levels, except, in
any such case, in the ordinary course of business and, in any event, without
material adverse effect on the business, condition (financial or otherwise),
operations, or prospects of the Purchaser.
3.27 Accounts Receivable. All accounts receivable of the Purchaser, whether
or not specified in the Purchaser Balance Sheet, represent transactions in the
ordinary course of business, and are current and collectible net of any reserves
specified on the Purchaser Balance Sheet (which reserves are adequate and were
calculated consistent with past practice).
3.28 Contracts. The Schedule 3.28 to this Agreement specifies all
contracts, agreements, or understandings, whether express or implied, written or
verbal, to which the company is a party. Schedule 3.28 to this Agreement also
specifies a brief summary of
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each such contract, agreement or understanding identified therein. Without in
any respect limiting the foregoing, Schedule 3.28 to this Agreement specifies a
description of all leases of properties by the Purchaser, including all
amendments, supplements, extensions and modification thereof, identifying, inter
alia, the date each such document was executed and its effective period. The
Purchaser is not a party to any executory contract to sell or transfer any part
of any leasehold interest of the Purchaser. True and accurate copies of all
leases, and of all amendments, supplements, extensions, modifications thereof,
have heretofore been delivered to the Company by the Purchaser.
3.29 Accounts Payable. The accounts payable specified on the Purchaser
Balance Sheet do, and those specified in the most recent balance sheet included
in the Unaudited Financial Statements of the Purchaser do, and those specified
on the books of the Purchaser at the time of the Closing will, specify all
amounts owed by the Purchaser in respect of trade accounts due and other
Payables, and the actual Liabilities of the Purchaser in respect of such
obligations was not, and will not be, on any of such dates, in excess of the
amounts so specified on the balance sheets or the books and records of the
Purchaser, as the case may be.
3.30 Actions Since Balance Sheet Date. Since the date of the Purchaser
Balance Sheet, the Purchaser has taken no actions that would be prohibited
pursuant to the provisions of this Agreement (without the prior consent of the
Company) after the date of this Agreement.
3.31 Year 2000 Compliance. The Purchaser has evaluated the potential impact
of the situation referred to commonly as "Year 2000 problem" or "Y2K", and the
Purchaser has completed its assessments of its computer systems and applications
regarding the Year 2000 problem. The Purchaser has implemented a Year 2000
compliance program designed to ensure that the Purchaser's computer systems and
applications will function properly beyond 1999, which program includes both
systems and applications operated by the Purchaser's business. The Purchaser has
completed the process of identifying, evaluating the implementing changes to its
computer programs necessary to eliminate any Year 2000 problem. The Purchaser
has also communicated with its dealers, suppliers, financial institutions and
other persons with which it conducts business to help them identify and resolve
the Year 2000 problem. The Purchaser has allocated and will continue to allocate
adequate resources to resolve any Year 2000 problem which may come to the
attention of the Purchaser after the date of this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers, and each of them, to the best of their knowledge, hereby represent
and warrant to the Purchaser the following:
4.1 Title and Ownership of Shares. Each Seller is the sole legal and
beneficial owner of five hundred thousand (500,000) shares of $.001 par value
common stock issued by the Company, free and clear of any and all liens, claims,
pledges, mortgages, encumbrances, security interests, voting trust arrangements,
restriction on sale or transfer, or other restrictions whatsoever, except for
restrictions on transfer pursuant to federal and state securities laws. Each
Seller has the full, complete and unrestricted right, power and authority to
sell, assign, transfer, and deliver all of such shares to the Purchaser, as
provided in this Agreement, and delivery thereof pursuant to this Agreement will
convey to the Purchaser or the Purchaser's successors and assigns, lawful, valid
and marketable title to all such shares. No other person has any direct or
indirect record or beneficial title or interest or claim of any nature
whatsoever to any of such shares.
4.2 Authority Relative to This Agreement. The Sellers have the requisite
power and authority to enter into this Agreement and to carry out their
obligations created by this Agreement. The execution and delivery of this
Agreement and the consummation of the Transaction have been duly authorized and
approved by the Sellers and no other action on the part of the Sellers are
necessary to approve and adopt this Agreement or to approve the consummation of
the Transaction. This Agreement has been duly and validly executed and delivered
by the Sellers and constitutes a valid and binding obligation of the Sellers,
enforceable in accordance with its terms.
4.3 Absence of Breach; No Consents. The execution, delivery and performance
of this Agreement, and the performance by the Sellers of their obligations
created by this Agreement do not, except as disclosed in Schedule 4.3 to this
Agreement, (i) contravene any law, rule or regulation of any state or
commonwealth or of the United States, or of any applicable foreign jurisdiction,
or any order, writ, judgment, injunction, decree, determination, or award
affecting or obligating the Sellers, or either of them, in such a manner as to
provide a basis for enjoining or otherwise preventing consummation of the
Transaction; (ii) conflict with or result in a material breach of or default
pursuant to any material indenture or loan or credit agreement or any other
material agreement or instrument to which the Sellers, or either of them, is a
party, in such a manner as to provide a basis for enjoining or otherwise
preventing consummation of the Transaction; or (iii) require the authorization,
consent, approval or license of any third party of such a
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nature that the failure to obtain the same would provide a basis for enjoining
or otherwise preventing consummation of the Transaction.
4.4 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with this Agreement
or the Transaction or any related transaction based upon any agreements, written
or oral, made by or on behalf of the Sellers, or either of them.
4.5 Litigation. No investigation or review by any governmental entity with
respect to the Sellers, or either of them, is pending or threatened which would
provide a basis for enjoining or otherwise preventing consummation of the
Transaction, nor has any governmental entity indicated to the Sellers, or either
of them, an intention to conduct any such investigation or review. There is no
action, litigation or proceeding pending or threatened against or affecting the
Sellers, or either of them, at law or in equity, or before any federal, state,
municipal, or other governmental department, commission, board, bu reau, agency,
or instrumentality which would provide a basis for enjoining or otherwise
preventing consummation of the Transaction.
4.6 Compliance With Laws. The Sellers, and each of them, are in compliance
with all, and has received no notice of any violation of any, laws or
regulations which would provide a basis for enjoining or otherwise preventing
consummation of the Transaction.
4.7 Full Disclosure. The documents, certificates, and other writings
furnished or to be furnished by or on behalf of the Sellers to the Purchaser
pursuant to this Agreement, taken together in the aggregate, do not and will not
contain any untrue statement of a material fact, or omit to specify any material
fact necessary to make the statements made, considering the circumstances
pursuant to which they are made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to the Purchaser and the Sellers as follows:
5.1 Organization and Qualification. The Company is a corporation duly
organized, validly existing and in good standing pursuant to the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to conduct its business as that business is now being conducted. The
Company is duly qualified as a foreign
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corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned or leased by it, or the nature of its
activities, is such that qualification as a foreign corporation in that
jurisdiction is required by law.
5.2 Capitalization. The authorized capital stock of the Company consists of
fifty million (50,000,000) shares of common stock, $.001 par value. There is no
other capital stock authorized for issuance. As of the date of the Company
Balance Sheet one million (1,000,000) shares of the Company's $.001 par value
common stock were validly issued and outstanding, fully paid, and nonassessable,
no shares of its common stock were held in the Company treasury, and no shares
were reserved for issuance, nor were there outstanding any options, warrants,
convertible instruments or other rights, agreements or commitments to acquire
common stock of the Company, except a fully and completely described on Schedule
5.2 to this Agreement. Since the date of the Company Balance Sheet, no shares of
the Company's capital stock, or options, warrants, or other rights, agreements
or commitments (contingent or otherwise) obligating the Company to issue shares
of capital stock, have been executed or issued.
5.3 Authority Relative to this Agreement. This Agreement has been duly and
validly executed and delivered by the Company and constitutes a valid and
binding Agreement of the Company enforceable in accordance with its terms. The
Company has all requisite corporate power and authority to enter into this
Agreement and to carry out the Transaction, and its doing so has been duly and
sufficiently authorized.
5.4 Absence of Breach; No Consents. The execution, delivery, and
performance of this Agreement, and the performance by the Company of its
obligations created by this Agreement, do not, except as disclosed in Schedule
5.4 to this Agreement, (i) conflict with or result in a breach of any of the
provisions of the Articles of Incorporation or Bylaws of the Company; (ii)
contravene any law, ordinance, rule, or regulation of any State or political
subdivision of either or of the United States (except for the HSR Act and
compliance with regulatory or licensing laws all of which, to the extent
applicable to the Company (and to the extent within the control of the Company),
will be satisfied in all material respects prior to the Closing), or of any
applicable foreign jurisdiction, or contravene any order, writ, judgment,
injunction, decree, determination, or award of any court or other authority
having jurisdiction, or cause the suspension or revocation of any authorization,
consent, approval, or license, presently in effect, which affects or obligated,
the Company or any of its material properties, except in any such case where
such contravention will not have a material adverse effect on the business,
condition (financial or otherwise), operations or prospects of the Company, and
will not have a material adverse effect on the validity of this Agreement or on
the validity of the consummation the
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Transaction; (iii) conflict with or result in a material breach of or default
pursuant to any material indenture or loan or credit agreement or any other
material agreement or instrument to which the Company is a party or by which it
may be affected or obligated; (iv) require the authorization, consent, approval,
or license of any third party; or (v) constitute any reason for the loss or
suspension of any permits, licenses, or other authorizations used in the
business of the Company.
5.5 Brokers. No broker, finder, or investment banker is entitled to any
brokerage, finder's, or other fee or commission in connection with this
Agreement or the Transaction or any related transaction based upon any
agreements, written or oral, made by or on behalf of the Company. The Company
does not have any obligation to pay finder's or broker's fees or commissions in
connection with the exercise of options to renew or extend real estate leases to
which the Company is a party.
5.6 Financial Statements. On or before the Closing, the Company will
deliver or cause to be delivered to the Purchaser the following:
1. Audited Financial Statements;
2. Unaudited Financial Statements;
3. All documents of the Company filed with the SEC within the four (4)
years preceding the date of execution of this Agreement; and
4. The Projections.
All of the historical financial statements contained in such documents were
prepared from the books and records of the Company. The Audited Financial
Statements were prepared in accordance with GAAP, and fairly and accurately
present the financial situation and condition of the Company as at the dates and
for the periods indicated. Without limited the foregoing, at the date of the
Company Balance Sheet, the Company owned each of the assets included in
preparation of the Company Balance Sheet, and the valuation of such assets in
the Company Balance Sheet is not more than their fair saleable value (on an
item-by-item basis) at that date; and the Company had no Liabilities, other than
those specified in the Company Balance Sheet, nor any Liabilities in amounts in
excess of the amounts included for them in the Company Balance Sheet. The
Unaudited Financial Statements were prepared in a manner consistent with the
basis of presentation used in the Audited Financial Statements, and fairly
present the financial situation and condition of the Company as at and for the
periods indicated, subject to normal year-end adjustments, none of which will be
material. The Projections reasonable anticipate the results of operations that
the Company expects it will achieve absent extraordinary events or unusual
conditions of which the Company is not presently on notice. From the date of
this Agreement through the Closing
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Date the Company will continue to prepare financial statements on the same basis
that it has done so in the past, will promptly deliver the same to the
Purchaser, and the foregoing representations will be applicable to each
financial statement so prepared and delivered.
5.7 No Undisclosed Liabilities. The Company has no Liabilities which are
not adequately presented or reserved against on the face of the Company Balance
Sheet, except Liabilities incurred since the date of the Company Balance Sheet
in the ordinary course of business and consistent with past practice. Without
limiting the foregoing, (a) there are no unpaid leasehold improvements at any of
the Company's facilities or locations for which the Company is or will be
responsible, and (b) there are no deferred rents due to lessors at or with
respect to any of such facilities or locations.
5.8 No Material Adverse Change, Etc. Since the date of the Company Balance
Sheet, other than as contemplated or caused by this Agreement, there has not
been (i) any material adverse change in the business, condition (financial or
otherwise), operations, or prospects of the Company; (ii) any damage,
destruction, or loss, whether covered by insurance or not, having a material
adverse effect on the business, condition (financial or otherwise), operations
or prospects of the Company; (iii) any entry into or termination of any material
commitment, contract, agreement, or transaction (including, without limitation,
any material borrowing or capital expenditure or sale or other disposition of
any material asset or assets) of or involving the Company, other than this
Agreement and agreements executed in the ordinary course of business; (iv) any
redemption, repurchase, or other acquisition for value of its capital stock by
the Company, or any issuance of capital stock of the Company or of securities
convertible into or rights to acquire any such capital stock or any dividend or
distribution declared, set aside, or paid on capital stock of the Company; (v)
any transfer of or right granted under any material lease, license, agreement,
patent, trademark, trade name, or copyright of the Company; (vi) any sale or
other disposition of any asset of the Company, or any mortgage, pledge, or
imposition of any lien or other encumbrance on any asset of the Company, other
than in the ordinary course of business, or any agreement relating to any of the
foregoing; of (vii) any default or breach by the Company in any material respect
pursuant to any contract, license or permit. Since the date of the Company
Balance Sheet, the Company has conducted its business only in the ordinary and
usual course, and, without limiting the foregoing, no changes have been made in
(i) executive compensation levels, (ii) the manner in which other employees of
the Company are compensated, (iii) supplemental benefits provided to any such
executives or other employees, or (d) inventory levels in relation to sales
levels, except, in any such case, in the ordinary course of business and, in any
event, without material adverse effect on the business, condition (financial or
otherwise), operations, or prospects of the Company.
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5.9 Taxes. The Company has properly filed or caused to be filed all
federal, state, local, and foreign income and other tax returns, reports, and
declarations that are required by applicable law ro be filed by it, and has
paid, or made full and adequate provision for the payment of, all federal,
state, local, and foreign income and other taxes properly due for the periods
contemplated by such returns, reports, and declarations, except such taxes, if
any, as are adequately reserved against in the Company Balance Sheet.
5.10 Litigation No material investigation or review by any governmental
entity with respect to the Company is pending or, to the best of the knowledge
of the Company, threatened (other than inspections and reviews customarily made
of businesses such as that of the Company), nor has any governmental entity
indicated to the Company an intention to conduct the same. There is no action,
litigation or proceeding pending or, to the best of the knowledge of the
Company, threatened against or affecting the Company at law or in equity, or
before any federal, state, municipal, or other governmental department,
commission, board, bureau, agency, or instrumentality.
5.11 Employees, Etc. There are no collective bargaining, bonus, profit
sharing, compensation, or other plans, agreements, trust, funds, or arrangements
maintained by the Company for the benefit of its directors, officers, or
employees, and there are no employment, consulting, severance, or
indemnification arrangements, agreements, or understandings between the Company,
on the one hand, and any current or former directors, officers, or other
employees (or Affiliates thereof) of the Company, on the other hand. The Company
is not, and following the Closing will not be, obligated by any express or
implied contract or agreement to employ, directly or as a consultant or
otherwise, any person for any specific period of time or until any specific age
except as executed pursuant to the provisions of this Agreement, if any.
5.12 Compliance With Laws. The Company is in substantial compliance with
all, and has received no notice of any violation of any, laws or regulations
applicable to its operations, including, without limitation, the use of premises
occupied by it, or with respect to which compliance is a condition of engaging
in any aspect of the business of the Company and has all permits, licenses,
zoning rights, and other governmental authorizations necessary to conduct its
business as presently conducted.
5.13 Ownership of Assets. The Company has good, marketable, and insurable
title, or valid, effective, and continuing leasehold rights in the case of
leased property, to all real property (as to which, in the case of owned
property, such title is fee simple) and all personal property owned or leased by
it or used by it in the conduct of its business in such a manner as to create
the appearance or reasonable expectation that such property is owned
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or leased by it, free and clear of all liens, claims, encumbrances, and charges,
except liens for taxes not yet due and minor imperfections of title and
encumbrances, if any, which singly and in the aggregate are not substantial in
amount and do not materially detract from the value of the property subject
thereto or materially impair the use thereof. The Company does not know of any
potential action by any person and no proceedings with respect thereto have been
instituted of which the Company has notice, that would materially affect the
Company's ability to use and to utilize each of such assets in its business. The
Company has received no notices from any mortgagee regarding any properties
leased by the Company.
5.14 Proprietary Rights. The Company possesses full ownership of, or
adequate and enforceable long-term licenses or other rights to use (without
payment), all Proprietary Rights owned by or registered in the name of the
Company or used in the business of the Company; the Company has not received any
notice of conflict which asserts the rights of other persons with respect
thereto; and the Company has in all material respects performed all of the
obligations required to be performed by it, and is not in default in any
material respect, pursuant to any agreement relating to any Proprietary Right.
5.15 Subsidiaries. The Company has no subsidiaries.
5.16 Trade Names. The Company has not utilized any fictitious business name
or similar name in the conduct of its business or in the utilization of the
Company's assets.
5.17 Employee Benefit Plans. The Company does not maintain or contribute to
any Pension Plan or any Welfare Plan, nor is the Company presently, nor has it
been within the last six (6) years, a participating employer in any
Multiemployer Plan, affecting, in any case, employees of the Company.
5.18 Facilities. The Company's facilities are (as to physical plant and
structure) structurally sound, ordinary wear and tear excepted, and none of the
Company's facilities, nor any of the vehicles or other equipment used by the
Company in connection with its business, has any material defects and all of
them are in all material respects in good operating condition and repair and are
adequate for the uses to which they are utilized, ordinary wear and tear
excepted; none of Company's facilities, vehicles or other equipment is in need
of maintenance or repairs, except for ordinary, routine maintenance and repairs
which are not material in nature or cost. The Company is not in breach,
violation or default of any lease affecting the Company's assets with respect
to, or as a result of, which the other party (whether lessor, lessee, sublessor,
or sublessee) thereto has the right to terminate the same, and the Company has
not received notice of any claim or assertion that
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it is or may be in any such breach, violation or default.
5.19 Accounts Receivable. All accounts receivable of the Company, whether
or not specified in the Company Balance Sheet, represent transactions in the
ordinary course of business, and are current and collectible net of any reserves
specified on the Balance Sheet (which reserves are adequate and were calculated
consistent with past practice).
5.20 Inventories. All Inventories of the Company, whether or not specified
in the Company Balance Sheet, are of a quality and quantity usable and saleable
in the ordinary course of business, except for obsolete items and items of
below-standard quality, all of which, in the aggregate, are immaterial in
amount. Items included in such Inventories are carried on the books of the
Company, and are valued on the Company Balance Sheet, at the lower of cost or
market and, in any event, at not greater than their net realizable value, on an
item by item basis, after appropriate deduction for costs of completion,
marketing costs, transportation expense, and allocation of overhead.
5.21 Contracts. The Schedule 5.21 to this Agreement specifies all
contracts, agreements, or understandings, whether express or implied, written or
verbal, to which the company is a party. Schedule 5.21 to this Agreement also
specifies a brief summary of each such contract, agreement or understanding
identified therein. Without in any respect limiting the foregoing, Schedule 5.21
to this Agreement specifies a description of all leases of properties by the
Company, including all amendments, supplements, extensions and modification
thereof, identifying, inter alia, the date each such document was executed and
its effective period. The Company is not a party to any executory contract to
sell or transfer any part of any leasehold interest of the Company. True and
accurate copies of all leases, and of all amendments, supplements, extensions,
modifications thereof, have heretofore been delivered to the Purchaser by the
Company.
5.22 Accounts Payable. The accounts payable specified on the Company
Balance Sheet do, and those specified in the most recent balance sheet included
in the Unaudited Financial Statements do, and those specified on the books of
the Company at the time of the Closing will, specify all amounts owed by the
Company in respect of trade accounts due and other Payables, and the actual
Liabilities of the Company in respect of such obligations was not, and will not
be, on any of such dates, in excess of the amounts so specified on the balance
sheets or the books and records of the Company, as the case may be.
5.23 Labor Matters. There are no activities or controversies, including,
without limitation, any labor organizing activities, election petitions or
proceedings, proceedings preparatory thereto, unfair labor practice complaints,
labor strikes, disputes, slowdowns,
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or work stoppages, pending or, to the best of the knowledge of the Company,
threatened, between the Company and any of its employees.
5.24 Insurance. The Company has insurance policies in full force and effect
which provide for coverages which are usual and customary in the business of the
Company as to amount and scope, and are adequate to protect the Company against
any reasonably foreseeable risk of loss, including business interruption.
Schedule 5.24 to this Agreement identifies each of the Company's insurance
policies, indicating the carrier, amount of coverage, annual premium, risks
covered, placing broker or agent and other relevant information as to each. The
Company has not within the past three (3) years received any notice of
cancellation of any insurance agreement.
5.25 Environmental Matters re: Real Properties. Each parcel of real
property owned or leased by the Company is free of any and all hazardous wastes,
toxic substances or other types of contamination or matters of environmental
concern, and the Company is not subject to any Liability resulting form or
related to any such wastes, substances, contaminants or matters or environmental
concern in connection with any such property.
5.26 Full Disclosure. The documents, certificates, and other writings
furnished or to be furnished by or on behalf of the Company to the Purchaser
pursuant to this Agreement, taken together in the aggregate, do not and will not
contain any untrue statement of a material fact, or omit to disclose or specify
any material fact necessary to make the statements made, considering the
circumstances pursuant to which they are made, not misleading.
5.27 Actions Since Company Balance Sheet Date. Since the date of the
Company Balance Sheet, the Company has taken no actions that would be prohibited
pursuant to the provisions of this Agreement (without the prior consent of the
Purchaser) after the date of this Agreement.
5.28 Year 2000 Compliance. The Company has evaluated the potential impact
of the situation referred to commonly as "Year 2000 problem" or "Y2K", and the
Company has completed its assessments of its computer systems and applications
regarding the Year 2000 problem. The Company has implemented a Year 2000
compliance program designed to ensure that the Company's computer systems and
applications will function properly beyond 1999, which program includes both
systems and applications operated by the Company's business. The Company has
completed the process of identifying, evaluating the implementing changes to its
computer programs necessary to eliminate any Year 2000 problem. The Company has
also communicated with its dealers, suppliers, financial
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institutions and other persons with which it conducts business to help them
identify and resolve the Year 2000 problem. The Company has allocated and will
continue to allocate adequate resources to resolve any Year 2000 problem which
may come to the attention of the Company after the date of this Agreement.
5.29 Options, Warrants and Other Rights and Agreements Affecting the
Purchaser's Capital Stock. The Purchaser has no authorized or outstanding
options, warrants, calls, subscriptions, rights, convertible securities or other
securities, as defined by the provisions of the Securities Act ("Securities"),
or any commitments, agreements, arrangement or understandings of any manner or
nature whatsoever obligating the Purchaser, in any such case, to issue shares of
the Purchaser's capital stock or other securities or securities convertible into
or evidencing the right to purchase shares of the Purchaser's capital stock or
other Securities. Neither the Purchaser nor any officer, director, or
shareholder of the Purchaser is a party to any agreement, understanding,
arrangement or commitment, or obligated by an provision which creates any rights
in any person with respect to the authorization, issuance, voting, sale or
transfer of any shares of the Purchaser's capital stock or other Securities.
ARTICLES VI
COVENANTS OF THE PURCHASER AND KASSAM
6.1 Affirmative Covenants. From the date of this Agreement through the
Closing Date, the Purchaser will take every action reasonably required of it in
order to satisfy the conditions to Closing set forth in this Agreement and
otherwise to ensure the prompt and expedient consummation of the Transaction
substantially as contemplated by the provisions of this Agreement, and the
Purchaser will exert all reasonable efforts to cause the Transaction to be
consummated; provided, however, in all instances that the representations and
warranties of the Company and the Sellers specified in this Agreement are true
and correct and that the conditions to the obligations of the Purchaser set
forth in this Agreement are not incapable of satisfaction.
6.2 Cooperation. The Purchaser shall cooperate with the Company and its
counsel, accountants and agents in every way in consummating the Transaction,
and in delivering all documents and instruments deemed reasonably necessary or
useful by counsel to the Company.
6.3 Expenses. Whether or not the Transaction is consummated, all costs and
expenses incurred by the Purchaser in connection with this Agreement and the
Transaction
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shall be paid by the Purchaser.
6.4 Publicity. Prior to the Closing any written news releases by the
Purchaser pertaining to this Agreement or the Transaction shall be submitted to
the Company for review and approval prior to release by the Purchaser, and shall
be released only in a form approved by the Company, provided, however, that (i)
such approval shall not be unreasonably withheld and (ii) such review and
approval shall not be required of releases by the Purchaser if prior review and
approval would prevent the timely and accurate dissemination of such press
release as required to comply, in the judgment of counsel, with any applicable
law, rule or policy
6.5 Updating of Exhibits. The Purchaser shall notify the Company of any
changes, additions or events which may cause any change in or addition or events
to any schedules or exhibits delivered by the Purchaser pursuant to this
Agreement, promptly after the occurrence of the same and at the Closing by the
delivery of updates of all schedules and exhibits. No notification made pursuant
to this section shall be deemed to cure any breach of any representation or
warranty made in this Agreement, unless the Company specifically agrees thereto
in writing nor shall any such notification be considered to constitute or give
rise to a waiver by the Company of any condition set forth in this Agreement.
6.6 Conduct of Business Pending the Transaction. Prior to the consummation
of the Transaction or the termination of this Agreement pursuant to its terms,
unless the Company shall otherwise consent in writing, which consent shall not
be unreasonably withheld or delayed, and except as otherwise contemplated by
this Agreement, the Purchaser will comply with each of the following:
(1) The business of the Purchaser will be conducted only in the ordinary
and usual course, the Purchaser shall keep intact the business
organization and goodwill of the its business, keep available the
services of the employees of the Purchaser and maintain good
relationships with suppliers, lenders, creditors, distributors,
employees, customers and others having business or financial
relationships with the Purchaser, and the Purchaser shall immediately
notify the Company of any event or occurrence or emergency material
to, and not in the ordinary and usual course of business of, the
Purchaser.
(2) The Purchaser shall not create, incur or assume any long-term or
short-term indebtedness for money borrowed or make any capital
expenditures or commitment for capital expenditures, affecting the
business of the Purchaser.
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(3) The Purchaser shall not (a) adopt, enter into, or amend any bonus,
profit sharing, compensation, stock option, warrant, pension,
retirement, deferred compensation, employment, severance, termination,
or other employee benefit plan, agreement, trust fund, or arrangement
for the benefit or welfare of any employees of the Purchaser or (b)
agree to any material (in relation to historical compensation)
increase in the compensation payable or to become payable to, or any
increase in the contractual term of employment of, any such employee.
(4) The Purchaser shall not sell, lease, mortgage, encumber, or otherwise
dispose of or grant any interest in any of its assets.
(5) The Purchaser shall not enter into, or terminate, any material
contract, agreement, commitment, or understanding relating to or
affecting the business of the Purchaser.
(6) The Purchaser shall not enter into any agreement, commitment, or
understanding, whether in writing or otherwise, with respect to any of
the matters referred to in subparagraphs (1) through (5), inclusive,
of this section.
(7) The Purchaser will continue properly and promptly to file when due all
federal, state, local, foreign, and other tax returns, reports, and
declarations required to be filed by it, and will pay, or make full
and adequate provision for the payment of, all taxes and governmental
charges due from or payable by it.
(8) The Purchaser will comply with all laws and regulations applicable to
the operations of the Purchaser.
(9) The Purchaser will maintain in full force and effect insurance
coverage relating to its business of a type and amount customary in
the business of the Purchaser (but not less than that presently in
effect).
6.7 Employment Contracts. Pending the Closing, and effective upon the
consummation of the Transaction, the Purchaser will exert its best efforts to
execute three (3) year employment contracts with Peacock and Briggs, and each of
them, in the form of Exhibits 6.7(A) and 6.7(B) to this Agreement, respectively;
such contracts shall provide that the Purchaser may terminate them at any time
for cause, or without cause may
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terminate them upon payment to the other party thereto of an amount equal to
three (3) months salary. The Purchaser will also execute a noncompetition
agreement with the form of which will be substantially as in Exhibit 6.7(C), and
will preclude such persons from engaging in business competitive with that of
the Purchaser, directly or indirectly, alone or in collaboration with others,
except with the written consent of the Purchaser or as a shareholder of less
than one percent (1%) of the common stock of a publicly held company engaged in
one or more of such businesses.
6.8 Indemnification Agreements. Pending the Closing, and effective upon the
consummation of the Transaction, the Purchaser will exert its best efforts to
execute indemnification agreements with Peacock and Briggs, and each of them, in
the form of Exhibits 6.8(A) and 6.8(B) to this Agreement, respectively.
6.9 Stock Option Plan. Pending the Closing, and effective upon the
consummation of the Transaction, the Purchaser will adopt a Qualified Stock
Option Plan and a NonQualified Stock Option Plan, in the form of Exhibits 6.9(A)
and 6.9(B) to this Agreement, respectively.
6.10 Delivery of Books, Records and Documents. On the Closing, Kassam, as
the sole, remaining director of the Purchaser, shall deliver to the Sellers all
the books, records, memoranda, logs, journals, ledgers, tapes, disks, records,
instruments and other writings which he has in his possession and which are the
property of, or in any way relate to, the Purchaser.
6.11 Issuance and delivery of the Consideration. On the Closing, the
Purchaser shall issue or cause to be issued to Briggs a certificate evidencing
and representing four million five hundred thousand (4,500,000) shares of the
Purchaser's $.0005 par value common stock, which certificate shall specify
appropriate legends regarding the restricted nature of those shares.
6.12 Issuance and delivery of the Consideration. On the Closing, the
Purchaser shall issue or cause to be issued to Peacock a certificate evidencing
and representing four million five hundred thousand (4,500,000) shares of the
Purchaser's $.0005 par value common stock, which certificate shall specify
appropriate legends regarding the restricted nature of those shares.
6.13 Appointment of Additional Directors. On the Closing, Kassam, in his
capacity as the sole, remaining member of the Board of Directors of the
Purchaser, shall appoint Peacock and Briggs, and each of them, as members of the
Board of Directors of
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the Purchaser.
6.14 Resignation from Board of Directors. On the Closing, after Kassam has
appointed Peacock and Briggs as members of the Board of Directors of the
Purchaser, Kassam shall resign as a member of the Board of Directors of the
Purchaser.
ARTICLES VII
COVENANTS OF THE SELLERS
7.1 Affirmative Covenants. From the date of this Agreement through the
Closing Date, the Sellers, and each of them, will take every action reasonably
required of them in order to satisfy the conditions to Closing set forth in this
Agreement and otherwise to ensure the prompt and expedient consummation of the
Transaction substantially as contemplated by the provisions of this Agreement,
and the Sellers, and each of them, will exert all reasonable efforts to cause
the Transaction to be consummated; provided, however, in all instances that the
representations and warranties of the Purchaser specified in this Agreement are
true and correct and that the conditions to the obligations of the Sellers set
forth in this Agreement are not incapable of satisfaction.
7.2 Cooperation. The Sellers, and each of them, shall cooperate with the
Purchaser and its counsel, accountants and agents in every way in consummating
the Transaction, and in delivering all documents and instruments deemed
reasonably necessary or useful by counsel to the Purchaser.
7.3 Expenses. Whether or not the Transaction is consummated, all costs and
expenses incurred by the Sellers in connection with this Agreement and the
Transaction shall be paid by the Sellers.
7.4 Publicity. Prior to the Closing any written news releases by the
Sellers, or either or them, pertaining to this Agreement or the Transaction
shall be submitted to the Purchaser for review and approval prior to release by
the Sellers, or either of them, and shall be released only in a form approved by
the Purchaser; provided, however, that (i) such approval shall not be
unreasonably withheld and (ii) such review and approval shall not be required of
releases by the Sellers, or either of them, if prior review and approval would
prevent the timely and accurate dissemination of such press release as required
to comply, in the judgment of counsel, with any applicable law, rule or policy.
7.5 Updating of Exhibits. The Sellers, or either of them, shall notify the
Purchaser of any changes, additions or events which may cause any change in or
addition or events
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to any schedules or exhibits delivered by the Sellers, or either of them,
pursuant to this Agreement, promptly after the occurrence of the same and at the
Closing by the delivery of updates of all schedules and exhibits. No
notification made pursuant to this section shall be deemed to cure any breach of
any representation or warranty made in this Agreement, unless the Purchaser
specifically agrees thereto in writing nor shall any such notification be
considered to constitute or give rise to a waiver by the Purchaser of any
condition set forth in this Agreement.
7.6 Delivery of Certificates. On the Closing, the Sellers, and each of
them, shall deliver or cause to be delivered to the Purchaser each and every
certificate representing the one million (1,000,000) shares of $.001 par value
common stock of the Company issued by the Company to the Sellers, which
certificates shall be duly endorsed by the Sellers for transfer of those shares
to the Purchaser.
7.7 Acceptance of Appointment to Board of Directors. On the Closing, the
Sellers, and each of them, shall accept the appointment by Kassam of the Sellers
as members of the Board of Directors of the Purchaser.
ARTICLE VIII
COVENANTS OF THE COMPANY
8.1 Affirmative Covenants. From the date hereof through the Closing, the
Company will take every action reasonably required of it to satisfy the
conditions to Closing set forth in this Agreement and otherwise to ensure the
prompt and expedient consummation of the Transaction substantially as
contemplated by the provisions of this Agreement, and will exert all reasonable
efforts to cause the Transaction to be consummated, provided in all instances
that the representations and warranties of the Purchaser in this Agreement are
and remain true and accurate and that the covenants and agreements of the
Purchaser in this Agreement are performed and that the conditions to the
obligations of the Company set forth in this Agreement are not incapable of
satisfaction and subject, at all times, to the right and ability of the
directors of the Company to satisfy their fiduciary obligations.
8.2 Access and Information. The Company shall afford to the Purchaser and
to the Purchaser's accountants, counsel and other representatives reasonable
access during normal business hours throughout the period prior to the Closing
to all of its properties, books, contracts, commitments, records (including, but
not limited to, tax returns), and personnel, and, during such period, the
Company shall furnish promptly to the Purchaser (i) all written communications
to its directors or to its shareholders generally, (ii) internal monthly
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financial statements when and as available, and (iii) all other information
concerning its business, properties, and personnel as the Purchaser may request,
but no investigation pursuant to this section shall affect any representations
or warranties of the Company, or the conditions to the obligations of the
Purchaser to consummate the Transaction specified in this Agreement. In the
event of the termination of this Agreement, the Purchaser will, and will cause
its representatives to, deliver to the Company or destroy all documents, work
papers, and other material, and all copies thereof, obtained by the Purchaser or
on its behalf from the Company as a result of this Agreement or in connection
with this Agreement, whether so obtained before or after the execution of this
Agreement, and the Purchaser will hold in confidence all confidential
information, that has been designated as such by the Company in writing or by
appropriate and obvious notation, and will not use any such confidential
information except in connection with the Transaction, until such time as such
information is otherwise publicly available. The Purchaser and its
representatives shall assert their rights pursuant to this Agreement in such
manner as to minimize interference with the business of the Company.
8.3 No Solicitation. The Company, and those acting on behalf of any of the
Company will not, and the Company shall use its best efforts to cause its
officers, employees, agents, and representatives (including any investment
banker) not, directly or indirectly, to solicit, encourage, or initiate any
discussions with, or negotiate or otherwise deal with, or provide any
information to, any person other than the Purchaser and its officers, employees,
and agents, concerning any merger, sale of substantial assets, or similar
transaction involving the company or division of the Company or any sale of any
of its capital stock or division of the Company. The Company will notify the
Purchaser immediately upon receipt of any inquiry, offer or proposal relating to
any of the foregoing. None of the foregoing shall prohibit providing information
to others in a manner in keeping with the ordinary conduct of the Company's
business, or providing information to government authorities.
8.4 Conduct of Business Pending the Transaction. The Company covenants and
agrees with the Purchaser that, prior to the consummation of the Transaction or
the termination of this Agreement pursuant to its terms, unless the Purchaser
shall otherwise consent in writing, and except as otherwise contemplated by this
Agreement, the Company will comply with each of the following:
(1) The business of the Company shall be conducted only in the ordinary
and usual course, it shall use reasonable efforts to use reasonable
efforts to keep intact its business organization and goodwill, keep
available the services of its officers and employees and maintain good
relationships with suppliers,
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lenders, creditors, distributors, employees, customers, and other
persons having business or financial relationships with the Company
and the Company shall immediately notify the Purchaser of any event or
occurrence or emergency material to, and not in the ordinary and usual
course of business of, the Company.
(2) The Company shall not (a) amend its Articles of Incorporation or
Bylaws, or (b) split, combine, or reclassify any of its outstanding
securities or declare, set aside, or pay any dividend or other
distribution on or make or agree or commit to make any exchange for or
redemption of any such securities payable in cash, stock, or property.
(3) The Company shall not issue or agree to issue any additional shares
of, or rights of any kind to acquire any shares of, its capital stock
of any class, or (b) enter into any contract, agreement, commitment,
or arrangement with respect to any of the foregoing.
(4) The Company shall not create, incur, or assume any long-term or
short-term indebtedness for money borrowed or make any capital
expenditures or commitment for capital expenditures, except in the
ordinary course of business and consistent with past practice.
(5) The Company shall not (a) adopt, enter into, or amend any bonus,
profit-sharing, compensation, stock option, warrant, pension,
retirement, deferred compensation, employment, severance, termination,
or other employee benefit plan, agreement, trust fund, or arrangement
for the benefit or welfare of any officer, director or employee; or
(b) agree to any material (in relation to historical compensation)
increase in the compensation payable or to become payable to, or any
increase in the contractual term of employment of, any officer,
director, or employee except, with respect to employees who are not
officers or directors, in the ordinary course of business in
accordance with past practice.
(6) The Company shall not sell, lease, mortgage, encumber, or otherwise
dispose of or grant any interest in any of the Company's assets or
properties, except for sales, encumbrances, and other dispositions or
grants in the ordinary course of business and consistent with past
practice and except for liens for taxes not yet due or liens or
encumbrances that are not material in amount or effect and do not
impair the use of the Company's property, or as specifically
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provided for or permitted in this Agreement.
(7) The Company shall not enter into, or terminate, any material contract,
agreement, commitment, or understanding.
(8) The Company shall not enter into any agreement, commitment, or
understanding, whether in writing or otherwise, with respect to any of
the matters referred to in subparagraphs (1) through (7), inclusive,
of this section.
(9) The Company will continue properly and promptly to file when due all
federal, state, local, foreign and other tax returns, reports, and
declarations required to be filed by the Company, and will pay, or
make full and adequate provision for the payment of, all taxes and
governmental charges due from or payable by the Company.
(10) The Company will comply with all laws and regulations applicable to
the Company and the Company's operations.
(11) The Company will maintain in full force and effect insurance coverage
of a type and amount customary in its business, but not less than that
presently in effect.
8.5 Cooperation. The Company will cooperate with the Purchaser and its
counsel, accountants and agents in every way in consummating the Transaction and
in delivering all documents and instruments deemed reasonably necessary or
useful by the Purchaser.
8.6 Expenses. Whether or not the Transaction in consummated, all costs and
expenses incurred by the Company in connection with this Agreement and the
Transaction shall be paid by the Company.
8.7 Publicity. Prior to the Closing, any written news releases by the
Company pertaining to this Agreement or the Transaction shall be submitted to
the Purchaser for review and approval prior to release by the Company, and shall
be released only in a form approved by the Purchaser, provided, however, that
(i) such approval shall not be unreasonably withheld and (ii) such review and
approval shall not be required of releases by the Company, if prior review and
approval would prevent the timely and accurate dissemination of such press
release as required to comply, in the judgment of counsel, with any applicable
law, rule, or policy.
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8.8 Updating of Exhibits and Schedules. The Company shall notify the
Purchaser of any changes, additions, or events which may cause any change in or
addition to any schedule or exhibits delivered by the Company pursuant to this
Agreement promptly after the occurrence of the same and again at the Closing by
delivery of appropriate updates to all such schedules and exhibits. No such
notification made pursuant to this section shall be deemed to cure any breach of
any representation or warranty made in this Agreement, unless the Purchaser
specifically agrees thereto in writing nor shall any such modification be
considered to constitute or result in a waiver by the Purchaser of any condition
specified in this Agreement.
8.9 Access and Information. The Company shall afford to the Purchaser and
to the Purchaser's accountants, counsel, and other representatives reasonable
access during normal business hours throughout the period prior to the Closing
to all of the Company's properties, books, contracts, commitments, records
(including, but not limited to, tax returns), and personnel and, during such
period, the Company shall promptly furnish to the Purchaser (1) all written
communications to its directors or to its shareholders generally, (2) internal
monthly financial statements when and as available, and (3) all other
information concerning its or any of its subsidiaries' business, properties, and
personnel as the Purchaser may reasonably request, but no investigation pursuant
to this Section 8.9 shall affect any representations or warranties of the
Company, or the conditions to the obligations of the Purchaser to consummate the
Transaction. In the event of the termination of this Agreement, the Purchaser
will, and will cause its representatives to, deliver to the Company or destroy
all documents, work papers, and other material, and all copies thereof, obtained
by it or on its behalf from the Company as a result of this Agreement or in
connection with this Agreement or the Transaction, whether so obtained before or
after the execution of this Agreement, and will hold in confidence all
confidential information that has been designated as such by the Company in
writing or by appropriate and obvious notation, and will not use any such
confidential information, except in connection with the Transaction, until such
time as such information is otherwise publicly available. Purchaser and its
representatives shall assert their rights pursuant to this Section 8.9 in such
manner as to minimize interference with the business of the Company.
ARTICLE IX
CONDITIONS TO CLOSING
9.1 Conditions to Obligation of Purchaser. The obligation of the Purchaser
to effect the Transaction shall be subject to the fulfillment at or prior to the
Closing of the following conditions, unless the Purchaser shall waive such
fulfillment in writing:
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(1) This Agreement and the Transaction shall have received all approvals,
consents, authorizations, and waivers from governmental and other
regulatory agencies and other third parties (including lenders,
holders of debt securities and lessors) required to consummate the
Transaction.
(2) There shall not be in effect a preliminary or permanent in junction or
other order by any federal or state court which prohibits the
consummation of the Transaction.
(3) The Company and the Sellers shall have performed in all material
respects each of its agreements and obligations specified in this
Agreement and required to be performed on or prior to the Closing and
shall have complied with all material requirements, rules, and
regulations of all regulatory authorities having jurisdiction relating
to the Transaction.
(4) No material adverse change shall, in the judgment of the Purchaser,
have taken place in the business condition (financial or otherwise),
operations, or prospects of the Company since the date of this
Agreement other than those, if any, that result from the changes
permitted by this Agreement.
(5) The representations and warranties of the Company and the Sellers set
forth in this Agreement shall be true in all material respects as of
the date of this Agreement and, except in such respects as, in the
judgment of the Purchaser, do not materially and adversely affect the
business, condition (financial or otherwise), operations, or prospects
of the Company, as of the Closing, as if made as of the Closing.
(6) The Purchaser shall have received from the Company an officers'
certificate, executed by the Chief Executive Officer and Chief
Financial Officer of the Company (in their capacities as such), dated
the Closing Date, as to the satisfaction of the conditions in
Paragraphs (3), (4), and (5) of this section.
9.2 Conditions to Obligation of the Company. The obligation of the Company
to effect the Transaction shall be subject to the fulfillment at or prior to the
Closing of the following conditions, unless the Company shall waive such
fulfillment in writing:
(1) This Agreement and the Transaction shall have received all approvals,
consents, authorizations, and waivers from governmental and other
regulatory agencies and other third parties (including lenders,
holders of debt securities
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and lessors required by law to consummate the Transaction.
(2) There shall not be in effect a preliminary or permanent injunction or
other order by any federal or state authority which prohibits the
consummation of the Transaction.
(3) The Purchaser and Kassam shall have performed in all material respects
its agreements and obligations specified in this Agreement required to
be performed on or prior to the Closing.
(4) The representations and warranties of the Purchaser and Kassam set
forth in this Agreement shall be true in all material respects as of
the date of this Agreement and, except in such respects as do not
materially and adversely affect the business of the Purchaser, as of
the Closing Date as if made as of the Closing Date.
(5) The Company shall have received from the Purchaser an officers'
certificate, executed by the Chief Financial Officer and the Chief
Executive Officer of the Purchaser (in their capacities as such),
dated the Closing Date, as to the satisfaction of the conditions of
Paragraphs (3) and (4) of this section (to the best of their
knowledge).
9.3 Conditions to Obligation of the Sellers. The obligation of the Sellers
to effect the Transaction shall be subject to the fulfillment at or prior to the
Closing of the following conditions, unless the Sellers shall waive such
fulfillment in writing:
(1) This Agreement and the Transaction shall have received all approvals,
consents, authorizations, and waivers from governmental and other
regulatory agencies and other third parties (including lenders,
holders of debt securities and lessors required by law to consummate
the Transaction.
(2) There shall not be in effect a preliminary or permanent injunction or
other order by any federal or state authority which prohibits the
consummation of the Transaction.
(3) The Purchaser and Kassam shall have performed in all material respects
its agreements and obligations specified in this Agreement required to
be performed on or prior to the Closing.
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(4) The representations and warranties of the Purchaser and Kassam set
forth in this Agreement shall be true in all material respects as of
the date of this Agreement and, except in such respects as do not
materially and adversely affect the business of the Purchaser, as of
the Closing Date as if made as of the Closing Date.
(5) The Sellers shall have received from the Purchaser an officers'
certificate, executed by the Chief Financial Officer and the Chief
Executive Officer of the Purchaser (in their capacities as such),
dated the Closing Date, as to the satisfaction of the conditions of
Paragraphs (3) and (4) of this section (to the best of their
knowledge).
9.4 Conditions to Obligation of Kassam. The obligation of Kassam to effect
the Transaction shall be subject to the fulfillment at or prior to the Closing
of the following conditions, unless Kassam shall waive such fulfillment in
writing:
(1) This Agreement and the Transaction shall have received all approvals,
consents, authorizations, and waivers from governmental and other
regulatory agencies and other third parties (including lenders,
holders of debt securities and lessors) required to consummate the
Transaction.
(2) There shall not be in effect a preliminary or permanent in junction or
other order by any federal or state court which prohibits the
consummation of the Transaction.
(3) The Company and the Sellers shall have performed in all material
respects each of its agreements and obligations specified in this
Agreement and required to be performed on or prior to the Closing and
shall have complied with all material requirements, rules, and
regulations of all regulatory authorities having jurisdiction relating
to the Transaction.
(4) No material adverse change shall, in the judgment of Kassam, have
taken place in the business condition (financial or otherwise),
operations, or prospects of the Company since the date of this
Agreement other than those, if any, that result from the changes
permitted by this Agreement.
(5) The representations and warranties of the Company and the Sellers set
forth in this Agreement shall be true in all material respects as of
the date of this Agreement and, except in such respects as, in the
judgment of the Purchaser,
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do not materially and adversely affect the business, condition
(financial or otherwise), operations, or prospects of the Company, as
of the Closing, as if made as of the Closing.
(6) The Purchaser shall have received from the Company an officers'
certificate, executed by the Chief Executive Officer and Chief
Financial Officer of the Company (in their capacities as such), dated
the Closing Date, as to the satisfaction of the conditions in
Paragraphs (3), (4), and (5) of this section.
ARTICLE X
DOCUMENTS TO BE DELIVERED AND INSTRUMENTS AT CLOSING
10.1 The Purchaser to the Sellers. On the Closing, the Purchaser shall
deliver or cause to be delivered the following instruments and documents to the
Sellers:
(1) A certificate evidencing and representing four million five hundred
thousand (4,500,000) shares of the Purchaser's $.0005 par value common
stock to Briggs.
(2) A certificate evidencing and representing four million five hundred
thousand (4,500,000) shares of the Purchaser's $.0005 par value common
stock to Peacock.
(3) The employment agreement attached to this Agreement marked Exhibit
6.7(A), pursuant to which Peacock is employed by the Purchaser.
(4) The employment agreement attached to this Agreement marked Exhibit
6.7(B), pursuant to which Briggs is employed by the Purchaser.
(5) The noncompetition agreement which is attached to this Agreement
marked Exhibit 6.7(C).
(6) The Indemnification Agreement attached to this Agreement marked
Exhibit 6.8(A), pursuant to the provisions of which the Purchaser
shall indemnify Peacock in his capacity as an officer and director of
the Purchaser.
(7) The Indemnification Agreement attached to this Agreement marked
Exhibit 6.8(B), pursuant to the provisions of which the Purchaser
shall indemnify
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Briggs in his capacity as an officer and director of the Purchaser.
(8) The Qualified Stock Option Plan attached to this Agreement marked
Exhibit 6.9(A).
(9) The Non-Qualified Stock Option Plan attached to this Agreement marked
Exhibit 6.9(B).
(10) All books, records, journals, disks, checks, minute books, documents,
memoranda and other instruments relating to the business of the
Purchaser which are necessary or appropriate to enable the Sellers, in
their capacities as officers and directors of the Purchaser, to carry
on and conduct the business and affairs of the Purchaser after the
Closing.
(11) The Officers' Certificate contemplated by the provisions of Paragraph
(5) of Section 9.3 of this Agreement.
(12) The Officers' Certificate contemplated by the provisions of Paragraph
(5) of Section 9.2 of this Agreement.
10.2 The Company to the Purchaser. On the Closing, the Company shall
deliver or cause to be delivered the following instruments and documents to the
Purchaser the Officers' Certificate contemplated by the provisions of Paragraph
(6) of Section 9.1 of this Agreement.
10.3 The Sellers to the Purchaser. On the Closing, the Sellers, and each of
them, shall deliver or cause to be delivered to the Purchaser the certificates
evidencing and representing the one million (1,000,000) shares of $.001 par
value common stock issued by the Company to the Sellers, which certificates
shall be duly endorsed by the Sellers for transfer of those shares to the
Purchaser.
10.4 Kassam to the Sellers. On the Closing, Kassam, in his capacity as the
sole, remaining member of the Board of Directors, shall deliver or cause to be
delivered to the Sellers (i) a resolution of the Purchaser appointing the
Sellers, and each of them, as members of the Board of Directors of the
Purchaser, and (ii) the books, records, memoranda, logs, journals, ledgers,
tapes, disks, records, instruments and other writings specified by the
provisions of Section 6.10 of this Agreement. Additionally, on the Closing,
after he has appointed the Sellers as members of the Board of Directors of the
Purchaser, Kassam shall deliver or cause to be delivered to the Sellers Kassam's
resignation
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as a member of the Board of Directors of the Purchaser.
ARTICLE XI
THE PURCHASER'S SECURITIES AND THE SELLERS
11.1 Investment Representation. Each of the Sellers, each a shareholder of
the Company who is signing this Agreement, severally and not jointly, represents
and confirms to the Purchaser that he (i) is an accredited investor within the
meaning of Rule 501(a) pursuant to the Securities Act or, if not such an
accredited investor, has, alone or together with a purchaser representative
within the meaning of Rule 501(h) pursuant to the Securities Act, such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of an investment in the Purchaser's securities; (ii) is
aware of the limits on resale of the Purchaser's Securities imposed because of
the nature of the Transaction (Rule 144); and (iii) is receiving the
Consideration without registration pursuant to the Securities Act, in reliance
on the exemption from registration specified in Section 4(2) of the Securities
Act for investment, and without any intent to sale, resale, or otherwise
distribute the Purchaser's Securities in any manner that is in violation of the
Securities Act. The certificates representing the Purchaser's Securities, when
delivered to the Sellers at the Closing, may have appropriate orders restricting
transfer placed against them on the records of the transfer agent for such
securities, and may have placed upon them the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION PURSUANT TO THE SECURITIES ACT OF 1933. THOSE SECURITIES MAY
NOT BE TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, UNLESS THE
TRANSFEROR FIRST SATISFIES THE ISSUER AND ITS COUNSEL THAT THE PROPOSED
TRANSFER, IN THE MANNER PROPOSED, DOES NOT VIOLATE THE REGISTRATION REQUIREMENTS
OF THAT ACT.
Each Seller agrees not to attempt any transfer of any the Purchaser's
Securities without first complying with the substance of that legend and agrees
that satisfaction of the Purchaser may, if the Purchaser so requests, depends in
part upon an opinion of counsel acceptable in form and substance to the
Purchaser, a no-action letter of the SEC, or equivalent evidence. Each of the
Sellers acknowledges, without limitation, that the foregoing agreement and
representation shall apply to the Purchaser's Securities issued to such Seller.
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ARTICLE XII
TERMINATION, AMENDMENT WAIVER
12.1 Termination. This Agreement and the Transaction may be terminated at
any time prior to the Closing:
(1) By mutual consent of the Purchaser and the Company; or
(2) By either Purchaser or the Company, upon written notice to the other,
if the conditions to such party's obligations to consummate the
Transaction, in the case of Purchaser, as specified in Section 9.1 of
this Agreement, or, in the case of the Company, as provided in Section
9.2 of this Agreement, were not, or cannot reasonably be, satisfied on
or before May 12, 1999, unless the failure of condition is the result
of the material breach of this Agreement by the party seeking to
terminate this Agreement.
12.2 Amendment. This Agreement may be amended by the Company and the
Purchaser by action taken at any time. This Agreement may not be amended, except
by an instrument in writing signed on behalf of the Company and the Purchaser.
12.3 Waiver. At any time prior to the Closing, the Purchaser or the Company
may (i) extend the time for the performance of any of the obligations or other
acts of the other party, (ii) waive any inaccuracies in the representations and
warranties specified in this Agreement or in any document delivered pursuant to
this Agreement, or (iii) waive compliance with any of the agreements or
conditions specified in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
ARTICLE XIII
GENERAL PROVISIONS
13.1. Notices. Any notice, direction or instrument required or permitted to
be given pursuant to this Agreement shall be given in writing by (a) telegram,
facsimile transmission or similar method, if confirmed by mail as herein
provided, by mail; (b) if mailed postage prepaid, by certified mail, return
receipt requested; or (iii) hand delivery to any party at the addresses of the
parties specified, below. If given by telegram or facsimile transmission or
similar method or by hand delivery, such notice, direction or instrument shall
be deemed to have been given or made on the day on which it was given, and if
mailed, shall be deemed to have been given or made on the second (2nd) business
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day following the day after which it was mailed. Any party may, from time to
time by similar notice, give notice of any change of address, and in such event,
the address of such party shall be deemed to be changed accordingly. The
address, telephone number and facsimile transmission number for the notice of
each party are:
If to the Company: CENTROCOM Corp.
3434 Via Lido, Suite 300
Newport Beach, California 92660
If to the Sellers: Vernon M. Briggs III
3434 Via Lido, Suite 300
Newport Beach, California 92660
Eric Peacock
3434 Via Lido, Suite 300
Newport Beach, California 92660
If to the Purchaser: FamilyWare International, Inc.
4418 Patterdale Drive
North Vancouver, British Columbia
Canada V7R 4L8
If to Kassam: Alnoor Kassam
4418 Patterdale Drive
North Vancouver, British Columbia
Canada V7R 4L8
13.2. Recovery of Enforcement Costs. In the event any party shall institute
any action or proceeding to enforce any provision of this Agreement to seek
relief from any violation of this Agreement, or to otherwise obtain any judgment
or order relating to or arising from the subject matter of this Agreement, each
prevailing party shall be entitled to receive from each losing party such
prevailing party's actual attorneys' fees and costs incurred to prosecute or
defend such action or proceeding.
13.3. Assignment. No party shall have the right, without the consent of the
other party, to assign, transfer, sell, pledge, hypothecate, delegate, or
otherwise transfer, whether voluntarily, involuntarily or by operation of law,
any of such party's rights or obligations created by the provisions of this
Agreement, nor shall the parties' rights be subject to encumbrance or the claim
of creditors. Any such purported assignment, transfer,
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or delegation shall be null and void.
13.4. Captions and Interpretations. Captions of the articles and sections
of this Agreement are for convenience and reference only, and the works
specified therein shall in no way be held to explain, modify, amplify or aid in
the interpretation, construction, or meaning of the provisions of this
Agreement. The language in all parts to this Agreement, in all cases, shall be
construed in accordance with the fair meaning of that language as if prepared by
all parties and not strictly for or against any party. Each party and counsel
for such party have reviewed this Agreement. The rule of construction which
requires a court to resolve any ambiguities against the drafting party shall not
apply in interpreting the provisions of this Agreement.
13.5. Entire Agreement. This Agreement and the exhibits to this Agreement
are the final written expression and the complete and exclusive statement of all
the agreements, conditions, promises, representations, warranties and covenants
between the parties with respect to the subject matter of this Agreement, and
this Agreement supersedes all prior or contemporaneous agreements, negotiations,
representations, warranties, covenants, understandings and discussions by and
between and among the parties, their respective representatives, and any other
person, with respect to the subject matter specified in this Agreement. No
provision of any exhibit or schedule to this Agreement shall supersede or annul
the terms and provisions of this Agreement, unless the matter specified in such
exhibit or schedules shall explicitly so provide to the contrary, in the event
of ambiguity in meaning or understanding between the provisions of this
Agreement proper and the appended exhibits, the provisions of this Agreement
shall prevail and control in all instances.
13.6 Waiver and Modification. No modification, supplement or amendment of
this Agreement or of any covenant, representation, warranty, condition, or
limitation specified in this Agreement shall be valid unless the same is made in
writing and duly executed by both parties. No waiver of any covenant,
representation, warranty, condition, or limitation specified in this Agreement
shall be valid unless the same is made in writing and duly executed by the party
making the waiver. No waiver of any provision of this Agreement shall be deemed,
or shall constitute, a waiver of any other provision, whether or not similar,
nor shall any waiver constitute a continuing waiver.
13.7 Further Assurances. The parties shall from time to time sign and
deliver any further instruments and take any further actions as may be necessary
to effectuate the intent and purposes of this Agreement.
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13.8 Number and Gender. Whenever the singular number is used in this
Agreement and, when required by the context, the same shall include the plural,
and vice versa; the masculine gender shall include the feminine and the neuter
genders, and vice versa, and the word "person" shall include individual,
company, sole proprietorship, corporation, joint venture, association, joint
stock company, fraternal order, cooperative, league, club, society,
organization, trust, estate, governmental agency, political subdivision or
authority, firm, municipality, congregation, partnership, or other form of
entity, whether active or passive.
13.9 Successors and Assigns. This Agreement and each of its provisions
shall obligate the heirs, executors, administrators, successors, and assigns of
each of the parties. Nothing specified in this section, however, shall be a
consent to the assignment or delegation by any party of such party's respective
rights and obligations created by the provisions of this Agreement.
13.10 Third Party Beneficiaries. Except as expressly specified by the
provisions of this Agreement, this Agreement shall not be construed to confer
upon or give to any person, other than the parties hereto, any right, remedy or
claim pursuant to, or by reason of, this Agreement or of any term or condition
of this Agreement.
13.11 Severability. In the event any part of this Agreement, for any
reason, is determined by a court of competent jurisdiction to be invalid, such
determination shall not affect the validity of any remaining portion of this
Agreement, which remaining portion shall remain in full force and effect as if
this Agreement had been executed with the invalid portion thereof eliminated. It
is hereby declared the intention of the parties that they would have executed
the remaining portion of this Agreement without including any such part, parts,
or portion which, for any reason, may be hereafter determined to be invalid.
13.12 Governmental Rules and Regulations. The Transaction is and shall
remain subject to any and all present and future orders, rules and regulations
of any duly constituted authority having jurisdiction of the Transaction.
13.13 Execution in Counterparts. This Agreement may be prepared in multiple
copies and forwarded to each of the parties for execution. All of the signatures
of the parties may be affixed to one copy or to separate copies of this
Agreement and when all such copies are received and signed by all the parties,
those copies shall constitute one agreement which is not otherwise separable or
divisible. Counsel for the Purchaser shall keep all of such signed copies and
shall conform one copy to show all of those signatures and the dates thereof and
shall mail a copy of such conformed copy to each of the parties
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within thirty (30) days after the receipt by such counsel of the last signed
copy, and such counsel shall cause one such conformed copy to be filed in the
principal office of such counsel.
13.14 Reservation of Rights. The failure of any party at any time or times
hereafter to require strict performance by any other party of any of the
warranties, representations, covenants, terms, conditions and provisions
specified in this Agreement shall not waive, affect of diminish any right of
such party failing to require strict performance to demand strict compliance and
performance therewith and with respect to any other provisions, warranties,
terms, and conditions specified in this Agreement. Any waiver of any default
shall not waive or affect any other default, whether prior or subsequent
thereto, and whether the same or of a different type.
13.15 Survival of Covenants, Representations and Warranties. All covenants,
representations, and warranties made by each party to this Agreement shall be
deemed made for the purpose of inducing the other party to enter into and
execute this Agreement. The representations, warranties, and covenants specified
in this Agreement shall survive the Closing and shall survive any investigation
by either party whether before or after the execution of this Agreement. The
covenants, representations, and warranties of the Company and the Sellers, on
the one hand, and the Purchaser, on the other hand, are made only to and for the
benefit of each other and shall not create or vest rights in other persons.
13.16 Concurrent Remedies. No right or remedy specified in this Agreement
conferred on or reserved to the parties is exclusive of any other right or
remedy specified in this Agreement or by law or equity provided or permitted;
but each such right and remedy shall be cumulative of, and in addition to, every
other right and remedy specified in this Agreement or now or hereafter existing
at law or in equity or by statute or otherwise, and may be enforced concurrently
therewith or from time to time. the termination of this Agreement for any reason
whatsoever shall not prejudice any right or remedy which any party may have,
either at law, in equity, or pursuant to the provisions of this Agreement.
13.17 Governing Law. This Agreement shall be deemed to have been entered
into in the County of Orange, State of California, and all questions concerning
the validity, interpretation, or performance of any of the terms, conditions and
provisions of this Agreement or of any of the rights or obligations of the
parties shall be governed by, and resolved in accordance with, the laws of the
State of California, without regard to conflicts of law principles. Any and all
actions or proceedings, at law or in equity, to enforce or interpret the
provisions of this Agreement shall be litigated in courts having situs within
the
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County of Orange, State of California. No claim, demand, action, proceeding,
litigation, hearing, motion or lawsuit resulting from or with respect to this
Agreement shall be commenced or prosecuted in any jurisdiction other than the
State of California, and any judgment, determination, finding or conclusion
reached or rendered in any other jurisdiction shall be null and void. Each party
hereby consents expressly to the jurisdiction of any local, state or federal
court located within the State of California and consents that any service of
process in such action or proceeding may be made by personal service upon such
party wherever such party may be then located, or by certified or registered
mail directed to such party at such party's last known address.
13.18 Force Majeure. If any party is rendered unable, completely or
partially, by the occurrence of an event of "force majeure" (hereinafter
defined) to perform such party's obligations created by the provisions of this
Agreement, such party shall give to the other party prompt written notice of the
event of "force majeure" with reasonably complete particulars concerning such
event; thereupon, the obligations of the party giving such notice, so far as
those obligations are affected by the event of "force majeure," shall be
suspended during, but no longer than, the continuance of the event of "force
majeure." The party affected by such event of "force majeure" shall use all
reasonable diligence to resolve, eliminate and terminate the event of "force
majeure" as quickly as practicable. The requirement that an event of "force
majeure" shall be remedied with all reasonable dispatch as hereinabove
specified, shall not require the settlement of strikes, lockouts or other labor
difficulties by the party involved, contrary to such party's wishes, and the
resolution of any and all such difficulties shall be handled entirely within the
discretion of the party concerned. The term "force majeure" as used in this
Agreement shall be defined as and mean any act of God, strike, civil
disturbance, lockout or other industrial disturbance, act of the public enemy,
war, blockage, public riot, earthquake, tornado, hurricane, lightening, fire,
public demonstration, storm, flood, explosion, governmental action, governmental
delay, restraint or inaction, unavailability of equipment, and any other cause
or event, whether of the type enumerated specifically in this section or
otherwise, which is not reasonably within the control of the party claiming such
suspension.
13.19 Consent to Agreement. By executing this Agreement, each party, for
itself represents such party has read or caused to be read this Agreement in all
particulars, and consents to the rights, conditions, duties and responsibilities
imposed upon such party as specified in this Agreement. Each party represents,
warrants and covenants that such party executes and delivers this Agreement of
its own free will and with no threat, undue influence, menace, coercion or
duress, whether economic or physical. Moreover, each party represents, warrants,
and covenants that such party executes this Agreement acting on such party's own
independent judgment and upon the advice of such party's counsel.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed on
the date first written above.
FamilyWare International, Inc.,
a Nevada corporation
By: /s/ Alnoor Kassam /s/ Eric Peacock
-------------------------------- ------------------------------
Eric Peacock
Its: President
By: /s/ Alnoor Kassam /s/ Vernon M. Briggs III
-------------------------------- ------------------------------
Vernon M. Briggs III
Its: Secretary
/s/ Alnoor Kassam
CENTROCOM Corp., ------------------------------
a Nevada corporation Alnoor Kassam
By: /s/ Eric Peacock
--------------------------------
Its: President
By: /s/ Vernon M. Briggs III
--------------------------------
Its: Secretary
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MUTUAL RESCISSION
THIS MUTUAL RESCISSION ("Agreement") is made and entered into on this 21st
day of October, 1999, by and between Centrocom Corp., a Nevada corporation
("Corporation") (formerly FamilyWare International, Inc.); Eric Peacock
("Peacock"); Vernon M. Briggs III ("Briggs"); and Centrocom Technologies
Corporation, a Nevada corporation ("CTC") (formerly Centrocom Corp.) and
provides for the rescission of that certain transaction specified by the
provisions of that Common Stock Exchange and Acquisition Agreement ("Acquisition
Agreement") dated May 7, 1999, and entered into between the Corporation,
Peacock, Briggs and CTC.
RECITALS
A. On or about May 7, 1999, the Corporation, CTC, Peacock and Briggs
entered into a Common Stock Exchange and Acquisition Agreement ("Acquisition
Agreement") whereby the Corporation acquired all of the issued and outstanding
$.001 par value common stock of CTC.
B. Corporation, Peacock and Briggs have determined that it is in their best
interests to rescind the Acquisition Agreement. Accordingly, Corporation,
Peacock, Briggs and CTC, and each of them, desire to rescind the transactions
specified by the provisions of the Acquisition Agreement and, therefore, forego
all rights and benefits specified by the provisions of the Acquisition
Agreement, and to return the respective parties to the status and position of
that existing prior to the closing of the Acquisition Agreement.
C. The rescission of the transaction specified by the provisions of the
Acquisition Agreement contemplates Corporation and CTC shall enter into (i) a
Software Licensing Agreement ("Licensing Agreement") whereby Corporation would
be granted a license to exploit the Zowwwie!.com website and related software
(collectively "Software") commercially, which license is more particularly
described in the Licensing Agreement; and (ii) a Software Maintenance and
Development Agreement providing for the development, maintenance and management
of the Software.
NOW, THEREFORE, IN CONSIDERATION OF THE RECITALS SPECIFIED ABOVE THAT SHALL BE
DEEMED TO BE A SUBSTANTIVE PART OF THIS AGREEMENT, AND THE MUTUAL COVENANTS,
PROMISES, UNDERTAKINGS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES SPECIFIED IN
THIS AGREEMENT AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, WITH THE INTENT TO BE OBLIGATED
LEGALLY AND EQUITABLY, THE PARTIES DO HEREBY COVENANT, PROMISE, AGREE, REPRESENT
AND WARRANT AS FOLLOWS:
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ARTICLE I
DEFINITIONS
As used in this Agreement, in addition to terms defined elsewhere in this
Agreement, the terms specified below in this Article I shall have the
definitions and meanings specified immediately after those terms, unless a
different and common meaning of the term is clearly indicated by the context,
and variants and derivatives of the following terms shall have correlative
meanings. To the extent that certain of the definitions and meanings specified
below suggest, indicate, or express agreements between or among parties to this
Agreement, or specify representations or warranties or covenants of a party, the
parties agree to the same by execution of this Agreement. The parties to this
Agreement agree that agreements, representations, warranties, and covenants
expressed in any part or provision of this Agreement shall for all purposes of
this Agreement be treated in the same manner as other such agreements,
representations, warranties, and covenants specified elsewhere in this
Agreement, and the article or section of this Agreement within which such an
agreement, representation, warranty, or covenant is specified shall have no
separate meaning or effect on the same.
1.1 "Agreement". This Agreement of Mutual Rescission, including all of its
schedules and exhibits and all other documents specifically referred to in this
Agreement that have been or are to be delivered by a party to this Agreement to
another such party in connection with the Transaction or this Agreement, and
including all duly adopted amendments, modifications, and supplements to or of
this Agreement and such schedules, exhibits, and other documents.
1.2 "Closing". The completion of the Transaction, to occur as contemplated
by the provisions of Article II of this Agreement.
1.3 "Closing Date". The date on which the Closing actually occurs.
1.4 "Closing Time". The time at which the Closing actually occurs. All
events that are to occur at the Closing Time shall, for all purposes, be deemed
to occur simultaneously, except to the extent, if at all, that a specific order
of occurrence is otherwise described.
1.5 "Corporation". Centrocom Corp., a Nevada corporation.
1.6 "CTC". Centrocom Technologies Corporation, a Nevada corporation, which
will, pursuant to the Transaction, cease to be a subsidiary of the Corporation..
1.7 "Consideration". One million (1,000,000) shares of $.001 par value
common stock of CTC, for which nine million (9,000,000) shares of $.0005 par
value common stock of the Corporation currently held by Peacock and Briggs will
be exchanged.
1.8 "Transaction". The rescission of the transaction specified by the
Acquisition Agreement pursuant to which CTC shall cease to be a subsidiary of
the Corporation.
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ARTICLE II
THE TRANSACTION
2.1 The Transaction. On the Closing Date, and at the Closing Time, subject
in all instances to each of the terms, conditions, provisions and limitations
specified in this Agreement (i) Peacock and Briggs shall transfer, convey,
assign, deliver and set over to the Corporation, free and clear of any and all
liens and charges, and the Corporation shall accept from Peacock and Briggs,
nine million (9,000,000) shares of $.0005 par value common stock of the
Corporation currently held by Peacock and Briggs; (ii) the Corporation will
transfer, convey, assign, deliver and set over to Peacock and Briggs, free and
clear of any and all liens and charges, and Peacock and Briggs shall accept from
the Corporation, one million (1,000,000) shares of $.001 par value common stock
of CTC held by the Corporation; and (iii) on the Closing, after Peacock and
Briggs have appointed David Smith as President, Chief Executive Officer,
Secretary and a director of the Corporation, Peacock and Briggs shall resign as
officers and directors of the Corporation.
2.2 Closing. The Closing of the Transaction shall take place at the offices
of Stepp & Beauchamp LLP, 1301 Dove Street, Suite 460, Newport Beach,
California, at 10:00 A.M. or at such other place and time as the Purchaser and
the Company may agree upon, on the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation, to the best of its knowledge, hereby represents and
warrants to Peacock and Briggs:
3.1 Organization And Qualification. The Corporation is a corporation
duly organized, validly existing, and in good standing pursuant to the laws
of its jurisdiction of incorporation and has the requisite corporate power
and authority to conduct business as that business is now being conducted.
The Corporation is duly qualified as a foreign corporation to do business,
and in good standing, in each jurisdiction where the character of the
properties owned or leased by it, or the nature of its activities, is such
that qualification as a foreign corporation in that jurisdiction is
required by law.
3.2 Authority Relative to This Agreement. The Corporation has the
requisite corporate power and authority to enter into this Agreement and to
carry out its obligations created by this Agreement. The execution and
delivery of this Agreement and the consummation of the Transaction have
been duly authorized and approved by the requisite corporate authority of
the Corporation and no other corporate proceedings on the part of the
Corporation are necessary to approve and adopt this Agreement or to approve
the consummation of the Transaction, including issuance and/or assignment
and delivery of the CTC shares of stock. This Agreement has been duly and
validly executed and delivered by the Corporation and constitutes a valid
and binding obligation of the Corporation, enforceable in accordance with
its terms.
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3.3 Absence of Breach; No Consents. The execution, delivery and
performance of this Agreement, and the performance by the Corporation of
its obligations created by this Agreement do not (i) conflict with, and
will not result in a breach of, any of the provisions of the Articles of
Incorporation or Bylaws of the Corporation; (ii) contravene any law, rule
or regulation of any state or commonwealth or of the United States, or of
any applicable foreign jurisdiction, or any order, writ, judgment,
injunction, decree, determination, or award affecting or obligating the
Corporation, in such a manner as to provide a basis for enjoining or
otherwise preventing consummation of the Transaction; (iii) conflict with
or result in a material breach of or default pursuant to any material
indenture or loan or credit agreement or any other material agreement or
instrument to which Corporation is a party, in such a manner as to provide
a basis for enjoining or otherwise preventing consummation of the
Transaction; or (iv) require the authorization, consent, approval or
license of any third party of such a nature that the failure to obtain the
same would provide a basis for enjoining or otherwise preventing
consummation of the Transaction.
3.4 Aknowledgement of Ownership. The Corporation does not have, and
will not now or in the future, assert an ownership interest in any of the
following:
(1) All intellectual property and other technology, copyrights,
patent rights and proprietary rights to all such technology of
any kind, type or nature (i) owned, or contemplated as owned, by
CTC prior to the execution of the Acquisition Agreement; and (ii)
developed, acquired or conceived after the execution of the
Acquisition Agreement.
(2) The real estate lease for the premises located at 3434 Via Lido,
Suite 300, Newport Beach, California 92630.
(3) Any and all machinery, equipment, appliances, personal or other
property of every kind, type and nature located at 3434 Via Lido,
Suite 300, Newport Beach, California 92630.
(4) All books, papers and materials, computer documents, software,
source codes and computer programs or other designs, regardless
of kind, type or nature.
(5) Those accounts designated as (i) Smith Barney Account Number
82601130-1-7; and (ii) Bank of America Accounts numbered
0202604709, 0202105881 and 0202707202. CTC, Briggs and Peacock
shall have the right to change the name of the accounts listed in
this Section 3.4, subsection (5) from Centrocom Corp. to
Centrocom Technologies Corporation. The Corporation will take
every action reasonably necessary in order to assist CTC, Briggs
and Peacock in the changing of the accounts listed in this
Section 3.4, subsection (5), to the name of CTC, such accounts
into the name of CTC.
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3.5 CTC Shares. Those one million shares of CTC assigned, transferred,
conveyed and returned to Peacock and Briggs represent and evidence the
absolute and entire ownership interest of the Corporation in CTC. The
Corporation has the full, complete and unrestricted right, power and
authority to sell, assign, transfer, and deliver those one million
(1,000,000) shares to Peacock and Briggs, as provided in this Agreement,
and delivery thereof pursuant to this Agreement will convey and return to
Peacock and Briggs legal and beneficial ownership to the CTC shares.
3.6 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with this
Agreement or the Transaction or any related transaction based upon any
agreements, written or oral, made by or on behalf of the Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PEACOCK AND BRIGGS
Peacock and Briggs, and each of them, to the best of their knowledge,
hereby represent and warrant to the Corporation the following:
4.1 Title and Ownership of Shares. Peacock and Briggs are the sole
legal and beneficial owners of those nine million (9,000,000) shares of
$.0005 par value common stock issued by the Corporation and held by Peacock
and Briggs, free and clear of any and all liens, claims, pledges,
mortgages, encumbrances, security interests, voting trust arrangements,
restriction on sale or transfer, or other restrictions whatsoever, except
for restrictions on transfer pursuant to federal and state securities laws.
Peacock and Briggs have the full, complete and unrestricted right, power
and authority to sell, assign, transfer, and deliver those nine million
(9,000,000) shares to the Corporation, as provided in this Agreement, and
delivery thereof pursuant to this Agreement will convey to the Corporation
lawful, valid and marketable title to all those shares. No other person has
any direct or indirect record or beneficial title or interest or claim of
any nature whatsoever to any of those shares.
4.2 Authority Relative to This Agreement. Peacock and Briggs have the
requisite power and authority to enter into this Agreement and to carry out
their obligations created by this Agreement. The execution and delivery of
this Agreement and the consummation of the Transaction have been duly
authorized and approved by Peacock and Briggs and no other action on the
part of Peacock and Briggs are necessary to approve and adopt this
Agreement or to approve the consummation of the Transaction. This Agreement
has been duly and validly executed and delivered by Peacock and Briggs and
constitutes a valid and binding obligation of Peacock and Briggs,
enforceable in accordance with its terms.
4.3 Absence of Breach; No Consents. The execution, delivery and
performance of this Agreement, and the performance by Peacock and Briggs of
their obligations created by this Agreement do not (i) contravene any law,
rule or regulation of any state or commonwealth or of the United States, or
of any applicable foreign jurisdiction, or any order, writ, judgment,
injunction, decree, determination, or award affecting or obligating Peacock
and Briggs, or either of
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them, in such a manner as to provide a basis for enjoining or otherwise
preventing consummation of the Transaction; (ii) conflict with or result in
a material breach of or default pursuant to any material indenture or loan
or credit agreement or any other material agreement or instrument to which
Peacock and Briggs, or either of them, is a party, in such a manner as to
provide a basis for enjoining or otherwise preventing consummation of the
Transaction; or (iii) require the authorization, consent, approval or
license of any third party of such a nature that the failure to obtain the
same would provide a basis for enjoining or otherwise preventing
consummation of the Transaction.
4.4 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with this
Agreement or the Transaction or any related transaction based upon any
agreements, written or oral, made by or on behalf of Peacock and Briggs, or
either of them.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CTC
CTC represents to the Corporation, Peacock and Briggs, as follows:
5.1 Authority Relative to this Agreement. This Agreement has been duly
and validly executed and delivered by CTC and constitutes a valid and
binding Agreement of the Company enforceable in accordance with its terms.
CTC has all requisite corporate power and authority to enter into this
Agreement and to carry out the Transaction, and its doing so has been duly
and sufficiently authorized.
5.2 Absence of Breach; No Consents. The execution, delivery, and
performance of that Consent To Recession, does not (i) conflict with or
result in a breach of any of the provisions of the Articles of
Incorporation or Bylaws of CTC; (ii) contravene any law, ordinance, rule,
or regulation of any State or political subdivision of either or of the
United States, will be satisfied in all material respects prior to the
Closing), or of any applicable foreign jurisdiction, or contravene any
order, writ, judgment, injunction, decree, determination, or award of any
court or other authority having jurisdiction, or cause the suspension or
revocation of any authorization, consent, approval, or license, presently
in effect, which affects or obligated, CTC or any of its material
properties, except in any such case where such contravention will not have
a material adverse effect on the business, condition (financial or
otherwise), operations or prospects of CTC, and will not have a material
adverse effect on the validity of this Agreement or on the validity of the
consummation the Transaction; (iii) conflict with or result in a material
breach of or default pursuant to any material indenture or loan or credit
agreement or any other material agreement or instrument to which CTC is a
party or by which it may be affected or obligated; (iv) require the
authorization, consent, approval, or license of any third party; or (v)
constitute any reason for the loss or suspension of any permits, licenses,
or other authorizations used in the business of CTC.
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5.3 Brokers. No broker, finder, or investment banker is entitled to
any brokerage, finder's, or other fee or commission in connection with this
Agreement or the Transaction or any related transaction based upon any
agreements, written or oral, made by or on behalf of CTC. CTC does not have
any obligation to pay finder's or broker's fees or commissions in
connection with the exercise of options to renew or extend real estate
leases to which CTC is a party.
ARTICLE VI
COVENANTS OF THE CORPORATION
6.1 Affirmative Covenants. From the date of this Agreement through the
Closing Date, the Corporation will take every action reasonably required of it
in order to satisfy the conditions to Closing set forth in this Agreement and
otherwise to ensure the prompt and expedient consummation of the Transaction
substantially as contemplated by the provisions of this Agreement, and the
Corporation will exert all reasonable efforts to cause the Transaction to be
consummated; provided, however, in all instances that the representations and
warranties of CTC, Peacock and Briggs specified in this Agreement are true and
correct and that the conditions to the obligations of the Corporation set forth
in this Agreement are not incapable of satisfaction.
6.2 Cooperation. The Corporation shall cooperate with CTC, Peacock and
Briggs and their counsel, accountants and agents in every way in consummating
the Transaction, and in delivering all documents and instruments deemed
reasonably necessary or useful by counsel to CTC, Peacock and Briggs.
6.3 Expenses. Whether or not the Transaction is consummated, all costs and
expenses incurred by the Corporation in connection with this Agreement and the
Transaction shall be paid by the Corporation.
6.4 Delivery of Certificates. On the Closing, the Corporation shall deliver
or cause to be delivered to Peacock and Briggs each and every certificate
representing those one million (1,000,000) shares of $.001 par value common
stock of CTC to which the Corporation is entitled as a result of the Acquisition
Agreement, which certificates shall be duly endorsed by the Corporation for
transfer of those shares to Peacock and Briggs.
6.5 Inspection of Books and Records. In order to assist CTC and its
attorneys, auditors, officers, directors and agents to complete its year-end
audit for the fiscal year ended December 31, 1999, CTC, Briggs and Peacock shall
have the right at any reasonable time to inspect all books, records and
documents of any kind of the Corporation for the period from May 7, 1999, to the
Closing Date. This inspection by CTC, Briggs and Peacock may be made in person
or by an agent or attorney, and the right of inspection includes the right to
copy and make extracts of documents. The right to inspection shall cease upon
completion of CTC's audit for the fiscal year ended December 31, 1999, as
reasonably determined by CTC. CTC and its officers, directors, employees, agents
and attorneys shall cooperate fully with the Corporation and its auditors,
attorneys, agents, officers, directors and employees in the preparation of the
Corporation's audit
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for the fiscal year ended December 31, 1999.
ARTICLES VII
COVENANTS OF PEACOCK AND BRIGGS
7.1 Affirmative Covenants. From the date of this Agreement through the
Closing Date, Peacock and Briggs, and each of them, will take every action
reasonably required of them in order to satisfy the conditions to Closing set
forth in this Agreement and otherwise to ensure the prompt and expedient
consummation of the Transaction substantially as contemplated by the provisions
of this Agreement, and Peacock and Briggs, and each of them, will exert all
reasonable efforts to cause the Transaction to be consummated; provided,
however, in all instances that the representations and warranties of the
Corporation and CTC specified in this Agreement are true and correct and that
the conditions to the obligations of Peacock and Briggs set forth in this
Agreement are not incapable of satisfaction.
7.2 Cooperation. Peacock and Briggs, and each of them, shall cooperate with
the Corporation and CTC and their counsel, accountants and agents in every way
in consummating the Transaction, and in delivering all documents and instruments
deemed reasonably necessary or useful by counsel to the Corporation.
7.3 Delivery of Certificates. On the Closing, Peacock and Briggs, and each
of them, shall deliver or cause to be delivered to the Corporation each and
every certificate representing those nine million (9,000,000) shares of $.0005
par value common stock of the Corporation issued by the Corporation to Peacock
and Briggs, which certificates shall be duly endorsed by Peacock and Briggs for
transfer of those shares to the Corporation.
7.4 Expenses. Whether or not the Transaction is consummated, all costs and
expenses incurred by Peacock and Briggs in connection with this Agreement and
the Transaction shall be paid by Peacock and Briggs.
7.5 Appointment of David Smith. On the Closing, Peacock and Briggs, in
their capacities as the only members of the Board of Directors of the
Corporation, shall appoint David Smith as President, Chief Executive Officer,
Secretary and a member of the Board of Directors of the Corporation.
7.6 Resignation as Officers and Directors. On the Closing, after Peacock
and Briggs have appointed David Smith as officers and a director of the
Corporation, as specified in Section 7.6 above, Peacock and Briggs, and each of
them, shall resign as officers and directors of the Corporation.
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ARTICLE VIII
COVENANTS OF CTC
8.1 Affirmative Covenants. From the date hereof through the Closing, CTC
will take every action reasonably required of it to satisfy the conditions to
Closing set forth in this Agreement and otherwise to ensure the prompt and
expedient consummation of the Transaction substantially as contemplated by the
provisions of this Agreement, and will exert all reasonable efforts to cause the
Transaction to be consummated, provided in all instances that the
representations and warranties of the Corporation, Briggs and Peacock in this
Agreement are and remain true and accurate and that the covenants and agreements
of the Corporation, Briggs and Peacock in this Agreement are performed and that
the conditions to the obligations of CTC set forth in this Agreement are not
incapable of satisfaction and subject, at all times, to the right and ability of
the directors of CTC to satisfy their fiduciary obligations.
8.2 Cooperation. CTC will cooperate with the Corporation, Briggs and
Peacock and their counsel, accountants and agents in every way in consummating
the Transaction and in delivering all documents and instruments deemed
reasonably necessary or useful by the Corporation.
8.3 Inspection of Books and Records. In order to assist the Corporation and
its attorneys, auditors, officers, directors and agents to complete its year-end
audit for the fiscal year ended December 31, 1999, the Corporation shall have
the right at any reasonable time to inspect all books, records and documents of
every kind of CTC for the period from May 7, 1999, to the Closing Date. This
inspection by the Corporation may be made in person or by an agent or attorney,
and the right of inspection includes the right to copy and make extracts of
documents. The right of inspection shall cease upon the completion of the
Corporation's year-end audit for the fiscal year ended December 31, 1999, as
reasonably determined by the Corporation. CTC and its officers, directors,
employees, agents and attorneys shall cooperate fully with the Corporation and
its auditors, attorneys, agents, officers, directors and employees in the
preparation of the Corporation's audit for the fiscal year ended December 31,
1999.
8.4 Expenses. Whether or not the Transaction in consummated, all costs and
expenses incurred by CTC in connection with this Agreement and the Transaction
shall be paid by CTC.
8.5 Publicity. Prior to the Closing, any written news releases by CTC
pertaining to this Agreement or the Transaction shall be submitted to the
Corporation, Briggs and Peacock for review and approval prior to release by CTC,
and shall be released only in a form approved by the Corporation, Briggs and
Peacock; provided, however, that (i) such approval shall not be unreasonably
withheld and (ii) such review and approval shall not be required of releases by
CTC, if prior review and approval would prevent the timely and accurate
dissemination of such press release as required to comply, in the judgment of
counsel, with any applicable law, rule, or policy.
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ARTICLE IX
CONDITIONS TO CLOSING
9.1 Conditions to Obligation of the Corporation. The obligation of the
Corporation to effect the Transaction shall be subject to the fulfillment at or
prior to the Closing of the following conditions, unless the Corporation shall
waive such fulfillment in writing:
(1) This Agreement and the Transaction shall have received all approvals,
consents, authorizations, and waivers from governmental and other
regulatory agencies and other third parties required to consummate the
Transaction.
(2) There shall not be in effect a preliminary or permanent in junction or
other order by any federal or state court which prohibits the
consummation of the Transaction.
(3) CTC, Peacock and Briggs shall have performed in all material respects
each of their agreements and obligations specified in this Agreement
and required to be performed on or prior to the Closing and shall have
complied with all material requirements, rules, and regulations of all
regulatory authorities having jurisdiction relating to the
Transaction.
(4) The representations and warranties of CTC, Peacock and Briggs set
forth in this Agreement shall be true in all material respects as of
the date of this Agreement.
9.2 Conditions to Obligation of CTC. The obligation of CTC to effect the
Transaction shall be subject to the fulfillment at or prior to the Closing of
the following conditions, unless CTC shall waive such fulfillment in writing:
(1) This Agreement and the Transaction shall have received all approvals,
consents, authorizations, and waivers from governmental and other
regulatory agencies and other third parties (including lenders,
holders of debt securities and lessors required by law to consummate
the Transaction.
(2) There shall not be in effect a preliminary or permanent injunction or
other order by any federal or state authority which prohibits the
consummation of the Transaction.
(3) The Corporation, Briggs and Peacock shall have performed in all
material respects their agreements and obligations specified in this
Agreement required to be performed on or prior to the Closing.
(4) The representations and warranties of the Corporation, Briggs and
Peacock set forth in this Agreement shall be true in all material
respects as of the date of this Agreement and, except in such respects
as do not materially and adversely affect the business of the
Corporation, as of the Closing Date as if made as of the Closing
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Date.
9.3 Conditions to Obligation of Peacock and Briggs. The obligation of
Peacock and Briggs to effect the Transaction shall be subject to the fulfillment
at or prior to the Closing of the following conditions, unless Peacock and
Briggs shall waive such fulfillment in writing:
(1) This Agreement and the Transaction shall have received all approvals,
consents, authorizations, and waivers from governmental and other
regulatory agencies and other third parties (including lenders,
holders of debt securities and lessors required by law to consummate
the Transaction.
(2) There shall not be in effect a preliminary or permanent injunction or
other order by any federal or state authority which prohibits the
consummation of the Transaction.
(3) The Corporation and CTC shall have performed in all material respects
their agreements and obligations specified in this Agreement required
to be performed on or prior to the Closing.
(4) The representations and warranties of the Corporation and CTC set
forth in this Agreement shall be true in all material respects as of
the date of this Agreement and, except in such respects as do not
materially and adversely affect the business of the Corporation, as of
the Closing Date as if made as of the Closing Date.
ARTICLE X
DOCUMENTS TO BE DELIVERED AND INSTRUMENTS AT CLOSING
10.1 The Corporation to Peacock and Briggs. On the Closing, the Corporation
shall deliver or cause to be delivered to Peacock and Briggs a certificate
evidencing and representing one million (1,000,000) shares of CTC's $.001 par
value common stock.
10.2 Peacock and Briggs to the Corporation. On the Closing, Peacock and
Briggs, and each of them, shall deliver or cause to be delivered to the
Corporation the certificates evidencing and representing those nine million
(9,000,000) shares of $.0005 par value common stock issued by the Corporation to
Peacock and Briggs pursuant to the Acquisition Agreement, which certificates
shall be duly endorsed by Peacock and Briggs for transfer of those shares to the
Corporation.
ARTICLE XI
INDEMNIFICATION
11.1 Indemnification of Corporation. Briggs, Peacock and CTC shall save
Corporation harmless from and against and shall indemnify Corporation for any
liability, loss, costs, expenses, or damages howsoever caused by reason of any
injury (whether to body, property, or personal or
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business character or reputation) sustained by any person or to property by
reason of any act, neglect, default or omission of Briggs, Peacock or CTC or any
of Briggs', Peacock's or CTC's agents, employees, or other representatives, and
Briggs, Peacock and CTC shall pay all amounts to be paid or discharged in case
of an action or any such damages or injuries. If Contractor is sued in any court
for damages by reason of any of the acts of Briggs, Peacock and/or CTC, Briggs,
Peacock and/or CTC party shall defend the resulting action (or cause same to be
defended) at Briggs', Peacock's and/or CTC's expense and shall pay and discharge
any judgment that may be rendered in any such action; if Briggs, Peacock or CTC
fail or neglect to so defend in such action, Corporation may defend such action
and any expenses, including reasonable attorneys' fees, which Corporation may
pay or incur in defending such action and the amount of any judgment which
Corporation may be required to pay shall be promptly reimbursed by Briggs,
Peacock and/or CTC upon demand by Corporation.
11.2 Indemnification of Briggs, Peacock and CTC. Corporation shall save
Briggs, Peacock and CTC harmless from and against and shall indemnify Briggs,
Peacock and CTC for any liability, loss, costs, expenses, or damages howsoever
caused by reason of any injury (whether to body, property, or personal or
business character or reputation) sustained by any person or to property by
reason of any act, neglect, default or omission of Corporation or any of
Corporation's agents, employees, or other representatives, and Corporation shall
pay all amounts to be paid or discharged in case of an action or any such
damages or injuries. If Briggs, Peacock or CTC are sued in any court for damages
by reason of any of the acts of Corporation, Corporation or such other party
shall defend the resulting action (or cause same to be defended) at
Corporation's expense and shall pay and discharge any judgment that may be
rendered in any such action; if Corporation fails or neglects to so defend in
such action, Briggs, Peacock and CTC may defend such action and any expenses,
including reasonable attorneys' fees, which Briggs, Peacock or CTC may pay or
incur in defending such action and the amount of any judgment which Briggs,
Peacock or CTC may be required to pay shall be promptly reimbursed by
Corporation upon demand by Briggs, Peacock or CTC.
ARTICLE XII
RELEASE OF CLAIMS
12.1 Release of Claims by Peacock.
(1) Subject to and except as to those claims contemplated by the
provisions of Article XI of this Agreement, Peacock, on behalf of
himself, his agents, relatives, associates, representatives,
employees, attorneys, joint venturers, affiliates, general and limited
partners, predecessors, affiliates, heirs, successors and assigns, and
all persons acting by, through, under or in concert with any of them,
hereby irrevocably and forever releases, acquits and discharges the
Corporation and the Corporation's agents, officers, directors,
shareholders, employees, attorneys, joint venturers, general and
limited partners, successors, predecessors, parent and subsidiary
corporations, affiliates, attorneys, accountants, representatives,
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contractors, and assigns and all persons acting by, through, under or
in concert with any of them, from any and all claims, charges,
complaints, injuries, liabilities, obligations, losses, debts, suits,
demands, grievances, costs, expenses (including, but not limited to,
attorneys' fees, receiver fees, accountant fees, and other
professional and expert fees) rights, actions and causes of action, of
any nature or manner whatsoever, known and unknown, suspected and
unsuspected, contingent or fixed, liquidated or unliquidated, past,
present or future, including, but not limited to, rights arising out
of alleged violations of any contracts, express or implied, any
covenant of good faith and fair dealing, express or implied, any tort,
or any federal, state or other governmental statute, regulation, law
or ordinance from the beginning of time to the date of execution of
this Agreement, which Peacock may have as to the Corporation, and as
to the Corporation's agents, officers, directors, shareholders,
employees, attorneys, joint venturers, affiliates, general and limited
partners, successors, predecessors, parent and subsidiary
corporations, accountants, attorneys, contractors, representatives,
successors and assigns and all persons acting by, through, under or in
concert with any of them.
(2) The only exceptions to the releases specified in this Agreement are
(i) the obligations created and evidenced by the terms, conditions and
provisions of this Agreement, as specified expressly in this
Agreement; and (ii) those claims contemplated by the provisions of
Article XI of this Agreement.
(3) It is understood that there is a risk that, subsequent to the
execution and delivery of this Agreement, losses, damages or injuries
might be incurred which are unknown or unanticipated, for whatever
reason, at the time of the execution and delivery of this Agreement.
It is none the less specifically agreed that the releases specified in
this Agreement are fully and completely effective regardless of any
present lack of knowledge on the part of any party as to any claims,
charges, complaints, liabilities, obligations, debts, suits, demands,
grievances, losses, damages, injuries costs, expenses, rights, actions
or causes of action, or as to any possible fact or circumstance
relating in any manner to the matters for which the releases specified
in this Agreement are made. Peacock voluntarily, intentionally and
expressly waives the benefits and provisions of Section 1542 of the
Civil Code of the State of California, and any similar law of any
state or territory of the United States of America or other
jurisdiction. Specifically, that Section 1542 specifies as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR
AT THE TIME OF EXECUTING THE RELEASE WHICH IF KNOWN BY
HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH
THE DEBTOR."
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12.2 Release of Claims by Briggs.
(1) Subject to and except as to those claims contemplated by the
provisions of Article XI of this Agreement, Briggs, on behalf of
himself, his agents, relatives, associates, representatives,
employees, attorneys, joint venturers, affiliates, general and limited
partners, predecessors, affiliates, heirs, successors and assigns, and
all persons acting by, through, under or in concert with any of them,
hereby irrevocably and forever releases, acquits and discharges the
Corporation and the Corporation's agents, officers, directors,
shareholders, employees, attorneys, joint venturers, general and
limited partners, successors, predecessors, parent and subsidiary
corporations, affiliates, attorneys, accountants, representatives,
contractors, and assigns and all persons acting by, through, under or
in concert with any of them, from any and all claims, charges,
complaints, injuries, liabilities, obligations, losses, debts, suits,
demands, grievances, costs, expenses (including, but not limited to,
attorneys' fees, receiver fees, accountant fees, and other
professional and expert fees) rights, actions and causes of action, of
any nature or manner whatsoever, known and unknown, suspected and
unsuspected, contingent or fixed, liquidated or unliquidated, past,
present or future, including, but not limited to, rights arising out
of alleged violations of any contracts, express or implied, any
covenant of good faith and fair dealing, express or implied, any tort,
or any federal, state or other governmental statute, regulation, law
or ordinance from the beginning of time to the date of execution of
this Agreement, which Briggs may have as to the Corporation, and as to
the Corporation's agents, officers, directors, shareholders,
employees, attorneys, joint venturers, affiliates, general and limited
partners, successors, predecessors, parent and subsidiary
corporations, accountants, attorneys, contractors, representatives,
successors and assigns and all persons acting by, through, under or in
concert with any of them.
(2) The only exceptions to the releases specified in this Agreement are
(i) the obligations created and evidenced by the terms, conditions and
provisions of this Agreement, as specified expressly in this
Agreement; and (ii) those claims contemplated by the provisions of
Article XI of this Agreement.
(3) It is understood that there is a risk that, subsequent to the
execution and delivery of this Agreement, losses, damages or injuries
might be incurred which are unknown or unanticipated, for whatever
reason, at the time of the execution and delivery of this Agreement.
It is none the less specifically agreed that the releases specified in
this Agreement are fully and completely effective regardless of any
present lack of knowledge on the part of any party as to any claims,
charges, complaints, liabilities, obligations, debts, suits, demands,
grievances, losses, damages, injuries costs, expenses, rights, actions
or causes of action, or as to any possible fact or circumstance
relating in any manner to the matters for which the releases specified
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in this Agreement are made. Briggs voluntarily, intentionally and
expressly waives the benefits and provisions of Section 1542 of the
Civil Code of the State of California, and any similar law of any
state or territory of the United States of America or other
jurisdiction. Specifically, that Section 1542 specifies as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR
AT THE TIME OF EXECUTING THE RELEASE WHICH IF KNOWN BY
HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH
THE DEBTOR."
12.3 Release of Claims by the Corporation.
(1) Subject to and except as to those claims contemplated by the
provisions of Article XI of this Agreement, the Corporation, on behalf
of itself, its agents, subsidiary companies, officers, directors,
associates, representatives, employees, attorneys, joint venturers,
affiliates, general and limited partners, predecessors, affiliates,
heirs, successors and assigns, and all persons acting by, through,
under or in concert with any of them, hereby irrevocably and forever
releases, acquits and discharges Briggs, Peacock and CTC and Briggs',
Peacocks' and CTC's agents, officers, directors, shareholders,
employees, attorneys, joint venturers, general and limited partners,
successors, predecessors, parent and subsidiary corporations,
affiliates, attorneys, accountants, representatives, contractors, and
assigns and all persons acting by, through, under or in concert with
any of any one or all of them, from any and all claims, charges,
complaints, injuries, liabilities, obligations, losses, debts, suits,
demands, grievances, costs, expenses (including, but not limited to,
attorneys' fees, receiver fees, accountant fees, and other
professional and expert fees) rights, actions and causes of action, of
any nature or manner whatsoever, known and unknown, suspected and
unsuspected, contingent or fixed, liquidated or unliquidated, past,
present or future, including, but not limited to, rights arising out
of alleged violations of any contracts, express or implied, any
covenant of good faith and fair dealing, express or implied, any tort,
or any federal, state or other governmental statute, regulation, law
or ordinance from the beginning of time to the date of execution of
this Agreement, which the Corporation may have as to CTC, Briggs or
Peacock , and as to CTC's, Briggs' and Peacocks' agents, officers,
directors, shareholders, employees, attorneys, joint venturers,
affiliates, general and limited partners, successors, predecessors,
parent and subsidiary corporations, accountants, attorneys,
contractors, representatives, successors and assigns and all persons
acting by, through, under or in concert with any of them.
(2) The only exceptions to the releases specified in this Agreement are
(i) the obligations created and evidenced by the terms, conditions and
provisions of this
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Agreement, as specified expressly in this Agreement; and (ii) those
claims contemplated by the provisions of Article XI of this Agreement.
(3) It is understood that there is a risk that, subsequent to the
execution and delivery of this Agreement, losses, damages or injuries
might be incurred which are unknown or unanticipated, for whatever
reason, at the time of the execution and delivery of this Agreement.
It is none the less specifically agreed that the releases specified in
this Agreement are fully and completely effective regardless of any
present lack of knowledge on the part of any party as to any claims,
charges, complaints, liabilities, obligations, debts, suits, demands,
grievances, losses, damages, injuries costs, expenses, rights, actions
or causes of action, or as to any possible fact or circumstance
relating in any manner to the matters for which the releases specified
in this Agreement are made. Corporation voluntarily, intentionally and
expressly waives the benefits and provisions of Section 1542 of the
Civil Code of the State of California, and any similar law of any
state or territory of the United States of America or other
jurisdiction. Specifically, that Section 1542 specifies as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR
AT THE TIME OF EXECUTING THE RELEASE WHICH IF KNOWN BY
HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH
THE DEBTOR."
12.4 Release of Claims by CTC.
(1) Subject to and except as to those claims contemplated by the
provisions of Article XI of this Agreement, CTC, on behalf of itself,
its agents, relatives, associates, representatives, employees,
attorneys, joint venturers, affiliates, general and limited partners,
predecessors, affiliates, heirs, successors and assigns, and all
persons acting by, through, under or in concert with any of them,
hereby irrevocably and forever releases, acquits and discharges the
Corporation and the Corporation's agents, officers, directors,
shareholders, employees, attorneys, joint venturers, general and
limited partners, successors, predecessors, parent and subsidiary
corporations, affiliates, attorneys, accountants, representatives,
contractors, and assigns and all persons acting by, through, under or
in concert with any of them, from any and all claims, charges,
complaints, injuries, liabilities, obligations, losses, debts, suits,
demands, grievances, costs, expenses (including, but not limited to,
attorneys' fees, receiver fees, accountant fees, and other
professional and expert fees) rights, actions and causes of action, of
any nature or manner whatsoever, known and unknown, suspected and
unsuspected, contingent or fixed, liquidated or unliquidated, past,
present or
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future, including, but not limited to, rights arising out of alleged
violations of any contracts, express or implied, any covenant of good
faith and fair dealing, express or implied, any tort, or any federal,
state or other governmental statute, regulation, law or ordinance from
the beginning of time to the date of execution of this Agreement,
which CTC may have as to the Corporation, and as to the Corporation's
agents, officers, directors, shareholders, employees, attorneys, joint
venturers, affiliates, general and limited partners, successors,
predecessors, parent and subsidiary corporations, accountants,
attorneys, contractors, representatives, successors and assigns and
all persons acting by, through, under or in concert with any of them.
(2) The only exceptions to the releases specified in this Agreement are
(i) the obligations created and evidenced by the terms, conditions and
provisions of this Agreement, as specified expressly in this
Agreement; and (ii) those claims contemplated by the provisions of
Article XI of this Agreement.
(3) It is understood that there is a risk that, subsequent to the
execution and delivery of this Agreement, losses, damages or injuries
might be incurred which are unknown or unanticipated, for whatever
reason, at the time of the execution and delivery of this Agreement.
It is none the less specifically agreed that the releases specified in
this Agreement are fully and completely effective regardless of any
present lack of knowledge on the part of any party as to any claims,
charges, complaints, liabilities, obligations, debts, suits, demands,
grievances, losses, damages, injuries costs, expenses, rights, actions
or causes of action, or as to any possible fact or circumstance
relating in any manner to the matters for which the releases specified
in this Agreement are made. CTC voluntarily, intentionally and
expressly waives the benefits and provisions of Section 1542 of the
Civil Code of the State of California, and any similar law of any
state or territory of the United States of America or other
jurisdiction. Specifically, that Section 1542 specifies as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE WHICH IF KNOWN BY HIM MUST
HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
ARTICLE XIII
GENERAL PROVISIONS
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13.1. Notices. Any notice, direction or instrument required or permitted to
be given pursuant to this Agreement shall be given in writing by (a) telegram,
facsimile transmission or similar method, if confirmed by mail as herein
provided, by mail; (b) if mailed postage prepaid, by certified mail, return
receipt requested; or (iii) hand delivery to any party at the addresses of the
parties specified, below. If given by telegram or facsimile transmission or
similar method or by hand delivery, such notice, direction or instrument shall
be deemed to have been given or made on the day on which it was given, and if
mailed, shall be deemed to have been given or made on the second (2nd) business
day following the day after which it was mailed. Any party may, from time to
time by similar notice, give notice of any change of address, and in such event,
the address of such party shall be deemed to be changed accordingly. The
address, telephone number and facsimile transmission number for the notice of
each party are:
If to the Corporation: Centrocom Corp.
1301 Dove Street, Suite 460
Newport Beach, California 92660
If to Peacock and Briggs: Vernon M. Briggs III
3434 Via Lido, Suite 300
Newport Beach, California 92660
Eric Peacock
3434 Via Lido, Suite 300
Newport Beach, California 92660
If to CTC: Centrocom Technologies Corporation
3434 Via Lido, Suite 300
Newport Beach, California 92660
13.2. Recovery of Enforcement Costs. In the event any party shall institute
any action or proceeding to enforce any provision of this Agreement to seek
relief from any violation of this Agreement, or to otherwise obtain any judgment
or order relating to or arising from the subject matter of this Agreement, each
prevailing party shall be entitled to receive from each losing party such
prevailing party's actual attorneys' fees and costs incurred to prosecute or
defend such action or proceeding.
13.3. Assignment. No party shall have the right, without the consent of the
other party, to assign, transfer, sell, pledge, hypothecate, delegate, or
otherwise transfer, whether voluntarily, involuntarily or by operation of law,
any of such party's rights or obligations created by the provisions of this
Agreement, nor shall the parties' rights be subject to encumbrance or the claim
of creditors. Any such purported assignment, transfer, or delegation shall be
null and void.
13.4. Captions and Interpretations. Captions of the articles and sections
of this Agreement are for convenience and reference only, and the works
specified therein shall in no way
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be held to explain, modify, amplify or aid in the interpretation, construction,
or meaning of the provisions of this Agreement. The language in all parts to
this Agreement, in all cases, shall be construed in accordance with the fair
meaning of that language as if prepared by all parties and not strictly for or
against any party. Each party and counsel for such party have reviewed this
Agreement. The rule of construction which requires a court to resolve any
ambiguities against the drafting party shall not apply in interpreting the
provisions of this Agreement.
13.5. Entire Agreement. This Agreement and the exhibits to this Agreement
are the final written expression and the complete and exclusive statement of all
the agreements, conditions, promises, representations, warranties and covenants
between the parties with respect to the subject matter of this Agreement, and
this Agreement supersedes all prior or contemporaneous agreements, negotiations,
representations, warranties, covenants, understandings and discussions by and
between and among the parties, their respective representatives, and any other
person, with respect to the subject matter specified in this Agreement. No
provision of any exhibit or schedule to this Agreement shall supersede or annul
the terms and provisions of this Agreement, unless the matter specified in such
exhibit or schedules shall explicitly so provide to the contrary, in the event
of ambiguity in meaning or understanding between the provisions of this
Agreement proper and the appended exhibits, the provisions of this Agreement
shall prevail and control in all instances.
13.6 Waiver and Modification. No modification, supplement or amendment of
this Agreement or of any covenant, representation, warranty, condition, or
limitation specified in this Agreement shall be valid unless the same is made in
writing and duly executed by both parties. No waiver of any covenant,
representation, warranty, condition, or limitation specified in this Agreement
shall be valid unless the same is made in writing and duly executed by the party
making the waiver. No waiver of any provision of this Agreement shall be deemed,
or shall constitute, a waiver of any other provision, whether or not similar,
nor shall any waiver constitute a continuing waiver.
13.7 Further Assurances. The parties shall from time to time sign and
deliver any further instruments and take any further actions as may be necessary
to effectuate the intent and purposes of this Agreement.
13.8 Number and Gender. Whenever the singular number is used in this
Agreement and, when required by the context, the same shall include the plural,
and vice versa; the masculine gender shall include the feminine and the neuter
genders, and vice versa, and the word "person" shall include individual,
company, sole proprietorship, corporation, joint venture, association, joint
stock company, fraternal order, cooperative, league, club, society,
organization, trust, estate, governmental agency, political subdivision or
authority, firm, municipality, congregation, partnership, or other form of
entity, whether active or passive.
13.9 Successors and Assigns. This Agreement and each of its provisions
shall obligate the heirs, executors, administrators, successors, and assigns of
each of the parties. Nothing specified in this section, however, shall be a
consent to the assignment or delegation by any party
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of such party's respective rights and obligations created by the provisions of
this Agreement.
13.10 Third Party Beneficiaries. Except as expressly specified by the
provisions of this Agreement, this Agreement shall not be construed to confer
upon or give to any person, other than the parties hereto, any right, remedy or
claim pursuant to, or by reason of, this Agreement or of any term or condition
of this Agreement.
13.11 Severability. In the event any part of this Agreement, for any
reason, is determined by a court of competent jurisdiction to be invalid, such
determination shall not affect the validity of any remaining portion of this
Agreement, which remaining portion shall remain in full force and effect as if
this Agreement had been executed with the invalid portion thereof eliminated. It
is hereby declared the intention of the parties that they would have executed
the remaining portion of this Agreement without including any such part, parts,
or portion which, for any reason, may be hereafter determined to be invalid.
13.12 Governmental Rules and Regulations. The Transaction is and shall
remain subject to any and all present and future orders, rules and regulations
of any duly constituted authority having jurisdiction of the Transaction.
13.13 Execution in Counterparts. This Agreement may be prepared in multiple
copies and forwarded to each of the parties for execution. All of the signatures
of the parties may be affixed to one copy or to separate copies of this
Agreement and when all such copies are received and signed by all the parties,
those copies shall constitute one agreement which is not otherwise separable or
divisible. Counsel for the Corporation shall keep all of such signed copies and
shall conform one copy to show all of those signatures and the dates thereof and
shall mail a copy of such conformed copy to each of the parties within thirty
(30) days after the receipt by such counsel of the last signed copy, and such
counsel shall cause one such conformed copy to be filed in the principal office
of such counsel.
13.14 Reservation of Rights. The failure of any party at any time or times
hereafter to require strict performance by any other party of any of the
warranties, representations, covenants, terms, conditions and provisions
specified in this Agreement shall not waive, affect of diminish any right of
such party failing to require strict performance to demand strict compliance and
performance therewith and with respect to any other provisions, warranties,
terms, and conditions specified in this Agreement. Any waiver of any default
shall not waive or affect any other default, whether prior or subsequent
thereto, and whether the same or of a different type.
13.15 Survival of Covenants, Representations and Warranties. All covenants,
representations, and warranties made by each party to this Agreement shall be
deemed made for the purpose of inducing the other party to enter into and
execute this Agreement. The representations, warranties, and covenants specified
in this Agreement shall survive the Closing and shall survive any investigation
by either party whether before or after the execution of this Agreement. The
covenants, representations, and warranties of CTC and Peacock and Briggs, on
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the one hand, and the Corporation, on the other hand, are made only to and for
the benefit of each other and shall not create or vest rights in other persons.
13.16 Concurrent Remedies. No right or remedy specified in this Agreement
conferred on or reserved to the parties is exclusive of any other right or
remedy specified in this Agreement or by law or equity provided or permitted;
but each such right and remedy shall be cumulative of, and in addition to, every
other right and remedy specified in this Agreement or now or hereafter existing
at law or in equity or by statute or otherwise, and may be enforced concurrently
therewith or from time to time. the termination of this Agreement for any reason
whatsoever shall not prejudice any right or remedy which any party may have,
either at law, in equity, or pursuant to the provisions of this Agreement.
13.17 Governing Law. This Agreement shall be deemed to have been entered
into in the County of Orange, State of California, and all questions concerning
the validity, interpretation, or performance of any of the terms, conditions and
provisions of this Agreement or of any of the rights or obligations of the
parties shall be governed by, and resolved in accordance with, the laws of the
State of California, without regard to conflicts of law principles. Any and all
actions or proceedings, at law or in equity, to enforce or interpret the
provisions of this Agreement shall be litigated in courts having situs within
the County of Orange, State of California. No claim, demand, action, proceeding,
litigation, hearing, motion or lawsuit resulting from or with respect to this
Agreement shall be commenced or prosecuted in any jurisdiction other than the
State of California, and any judgment, determination, finding or conclusion
reached or rendered in any other jurisdiction shall be null and void. Each party
hereby consents expressly to the jurisdiction of any local, state or federal
court located within the State of California and consents that any service of
process in such action or proceeding may be made by personal service upon such
party wherever such party may be then located, or by certified or registered
mail directed to such party at such party's last known address.
13.18 Force Majeure. If any party is rendered unable, completely or
partially, by the occurrence of an event of "force majeure" (hereinafter
defined) to perform such party's obligations created by the provisions of this
Agreement, such party shall give to the other party prompt written notice of the
event of "force majeure" with reasonably complete particulars concerning such
event; thereupon, the obligations of the party giving such notice, so far as
those obligations are affected by the event of "force majeure," shall be
suspended during, but no longer than, the continuance of the event of "force
majeure." The party affected by such event of "force majeure" shall use all
reasonable diligence to resolve, eliminate and terminate the event of "force
majeure" as quickly as practicable. The requirement that an event of "force
majeure" shall be remedied with all reasonable dispatch as hereinabove
specified, shall not require the settlement of strikes, lockouts or other labor
difficulties by the party involved, contrary to such party's wishes, and the
resolution of any and all such difficulties shall be handled entirely within the
discretion of the party concerned. The term "force majeure" as used in this
Agreement shall be defined as and mean any act of God, strike, civil
disturbance, lockout or other industrial disturbance, act of the public enemy,
war, blockage, public riot, earthquake, tornado, hurricane, lightening, fire,
public demonstration,
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storm, flood, explosion, governmental action, governmental delay, restraint or
inaction, unavailability of equipment, and any other cause or event, whether of
the type enumerated specifically in this section or otherwise, which is not
reasonably within the control of the party claiming such suspension.
13.19 Consent to Agreement. By executing this Agreement, each party, for
itself represents such party has read or caused to be read this Agreement in all
particulars, and consents to the rights, conditions, duties and responsibilities
imposed upon such party as specified in this Agreement. Each party represents,
warrants and covenants that such party executes and delivers this Agreement of
its own free will and with no threat, undue influence, menace, coercion or
duress, whether economic or physical. Moreover, each party represents, warrants,
and covenants that such party executes this Agreement acting on such party's own
independent judgment and upon the advice of such party's counsel.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed
on the date first written above.
Centrocom Corp.,
a Nevada corporation
By: /s/ David Smith /s/ Eric Peacock EP
-------------------------------- ----------------------------------------
David Smith Eric Peacock, in his individual capacity
Its: President and Secretary
/s/ Vernon M. Briggs III
----------------------------------------
Vernon M. Briggs III, in his individual
capacity VB
Centrocom Technologies Corporation,
a Nevada corporation
By: /s/ ERIC PEACOCK
--------------------------------
Its: President
By: /s/ VERNON M. BRIGGS III
--------------------------------
Its: Secretary
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