EXHIBIT NO. 2.3
STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT ("Agreement") has been entered into and
executed as of the close of business as of August 31, 2000, by and between those
persons shown on Exhibit "A" attached hereto and incorporated herein by this
reference ("Shareholders") ONLINE TELEVISION NETWORK SERVICES, a California
corporation ("Company") and DIGITAL BRIDGE, INC., a Nevada corporation
("Purchaser").
RECITALS:
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A. The Company has authorized 1,000,000 shares of common stock, having
no par value designated, of which 896,000 shares are outstanding and 104,000
have not been issued but are reserved for issuance pursuant to the Company's
stock option plans. Shareholders are the record and beneficial owners of eight
hundred ninety-six thousand (896,000) shares of the Company's common stock,
having no par value designated, and one hundred four thousand (104,000) options
to purchase common stock outstanding ("Options"), which vest or must be
exercised prior to Closing (as defined in paragraph 3, below), being one hundred
percent (100%) of the issued and outstanding common stock or common equivalents
of the Company as the same is constituted on the date hereof ("Stock");
B. Shareholders desire to sell the Stock to Purchaser, who desires to
purchase the Stock from Shareholders.
C. In consideration of debt forgiveness to Company, Purchaser agrees to
reimburse Company's debt holders (Kenneth A. Paganini, Mark Peterson and William
D. Spencer), with 300,000 shares of Purchaser's common stock ( "Extra Common
Stock").
NOW, THEREFORE, in consideration of the premises and of the mutual promises
herein, the parties covenant, agree, represent and warrant as follows:
1. Sale and Purchase of Stock. Subject to the terms, provisions and
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conditions of this Agreement, and at the Closing of the transactions
contemplated herein which is provided for in Section 3 hereof, Shareholders
shall deliver, or cause to be delivered, to Purchaser stock certificates
representing the Stock, duly endorsed in blank or accompanied by duly executed
stock powers, with signatures guaranteed by a national bank or member of the New
York Stock Exchange, and accompanied by requisite revenue stamps evidencing the
payments of any applicable transfer taxes.
2. Purchase Price; Registration Rights; Lock-Up. The aggregate
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purchase price to be paid by Purchaser to the Shareholders for the Stock shall
be a minimum of Two Million Nine Hundred Twelve Thousand (2,912,000) shares
(assuming that none of the Options are exercised prior to the Closing (as
defined in paragraph 3, below), and a maximum of Three Million Two Hundred Fifty
Thousand (3,250,000) shares of Purchaser's common stock ("Purchaser's Stock").
Purchaser agrees that the Purchaser's Stock and the Extra Common Stock shall be
entitled to piggy back registration rights in the event Purchaser shall
determine to file a registration statement for the public offering and sale of
any of its securities and/or securities of its equity holders in compliance with
the Securities Act of 1933, as amended. Purchaser will promptly give written
notice to each Shareholder of its intent to file a registration statement and
give each Shareholder an opportunity to request inclusion in such registration
and in any underwriting involved. In the event that Purchaser does not file a
registration statement on its own behalf or on behalf of other selling
shareholders within 90 days following the Closing (as defined in paragraph 3,
below), then the Shareholders shall have the right to demand in writing that the
Purchaser file a registration statement to register the Stock, or such portion
thereof as the Shareholders shall designate, whereupon the Purchaser shall
immediately (within 30 days of such demand) file a registration statement on SEC
From SB-2 for the purpose of registering part or all of the Stock as demanded.
Notwithstanding anything to the contrary in this paragraph, the
Shareholders shall be required to execute at or before the Closing lock-up
agreements, in the form attached hereto as Schedule 2 (i) and incorporatedherein
by this reference, similar to the lock-up agreements executed by the
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shareholders of 24x7 Development.com, Inc. ("24x7") and N2Plus.com,
Inc.("N2Plus"), copies of which are attached hereto as Schedule 2 (ii) and
incorporated herein by this reference, which agreement will restrict the number
of shares of Purchaser's Stock eligible for sale by the Shareholders, the 24x7
shareholders and the N2Plus shareholders to 10% of their respective holdings of
Purchaser's Stock for each 90 day period following the effective date of any
registration statement of Purchaser which includes as selling shareholders any
of Purchaser's shareholders who elect to piggy-back their shares therewith.
In addition to the foregoing Stock issuance, Purchaser agrees to issue the
Extra Stock to Company's debt holders (Kenneth A. Paganini, Mark Peterson and
William D. Spencer) in consideration for their forgiveness of debt. The Extra
Stock will be registered by Purchaser in accordance with this paragraph 2 and
subject to lock-up agreement described above, which shall permit the holders of
the Extra Stock to sell one-third of their shares of Extra Stock every 30 days
following the effective date of such registration statement.
3. Closing. Subject to the terms and conditions hereof and in exchange
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for the consideration set forth herein, the parties agree to consummate the
transactions contemplated by this Agreement at a Closing (the "Closing") which
shall occur at the offices of Purchaser at 1860 El Camino Real, Suite 100,
Burlingame, California 94010 on September 29, 2000, at 11:00 o'clock a.m.,
unless sooner agreed to by the parties. The parties hereto may, by written
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agreement, designate a different time or place for the Closing.
At the Closing, Shareholders shall deliver to Purchaser the following:
(a) Certificates representing the Stock, in proper form for
transfer, duly endorsed in blank or accompanied by duly endorsed stock
powers, so as to make Purchaser the sole owner thereof, free and clear
of all claims and encumbrances.
(b) Opinion of counsel to Company as required by paragraph
7(c) hereof.
(c) Satisfactory evidence of the performance of all
conditions to Purchaser's obligations to close.
(d) All certificates or schedules required by this Agreement.
(e) An investment letter in the form of Schedule 3 (d)
attached hereto and incorporated herein by this reference.
(f) And those Shareholders who have not already done so shall
sign this Agreement and deliver a copy hereof bearing their original
signatures.
(g) Releases of liability from the persons to whom the Extra
Stock is issued as described in paragraph 2, above.
Purchaser shall deliver to Shareholders the following:
(1) Certificates representing Purchaser's Stock issued pro
rata on the basis of each Shareholder's percentage ownership of the
Stock; and
(2) any other documents required hereby.
4. Representations and Warranties of Majority Shareholders. In
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order to induce Purchaser to consummate the transactions contemplated by this
Agreement, and for the consideration expressed herein, the sufficiency of which
is hereby acknowledged, those Shareholders who individually or jointly own
200,000 or more shares of the Company's common stock("Majority Shareholders") do
jointly and severally represent and warrant to Purchaser as follows (the truth
and accuracy of each of which representations and warranties shall constitute a
condition precedent to Purchaser's obligation to close hereunder):
(a) Organization and Standing of Company. Company is a
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corporation duly organized, validly existing and in good standing under the
laws of the State of California and has all requisite corporate power and
authority to own all of its properties and to carry on the business
presently being conducted by it. Company is duly qualified to transact
business and is in good standing in the jurisdictions indicated on Schedule
4(a) attached hereto and incorporated herein by this reference. Company has
received no notice or other communication from any governmental body or
agency to the effect that it should be qualified to do business in any
jurisdiction other than those indicated on Schedule 4(a) and Company does
not conduct business in any jurisdiction other than those indicated on
Schedule 4(a).
(b) No Subsidiaries. Company does not own or control, directly or
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indirectly, any corporation, association or business organization of any
nature.
(c) Capitalization. Company has an authorized capitalization of
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one million (1,000,000) shares of Common Stock, no par value, of which
eight hundred ninety-six thousand (896,000) shares are issued and
outstanding (or will be issued and outstanding at Closing), and 104,000
authorized shares which have not been issued but have been reserved for
issuance pursuant to the Company's stock option plans. Except for the
104,000 options to purchase its Common Stock, the Company has no securities
outstanding now, nor will it have at the date of Closing, which are
convertible into shares of any class of capital stock or any other security
of Company, nor any outstanding rights, options, warrants, subscriptions or
other instruments or understandings entitling the holders thereof to
purchase or receive any securities of Company of any kind. Company has no
contractual right or obligation to acquire any of the Stock from any of its
Shareholders. Unless assumed by Purchaser, the 104,000 options described
above will either be exercised prior to the Closing or will expire prior
thereto, it being understood that Purchaser will not assume such options or
convert them into options to buy Purchaser's securities. The exact terms of
any Option assumption by the Purchaser shall be evidenced in a separate
writing(s) between the Purchaser and the individual Option holders prior
to, and subject to, the Closing.
(d) Stock Ownership and Transfer. All participating
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Shareholders, whether Majority Shareholders or otherwise, shall warrant in
a Certificate identical to the form attached hereto as Schedule 4 (d) and
incorporated herein by this reference, that they each have good and
marketable title to and the unrestricted right and full power to exchange
and deliver to Purchaser the Stock pursuant to the provisions of this
Agreement. Such shares of Stock have been duly and validly issued and are
free and clear of all liens, encumbrances, claims, equities and liabilities
of every nature and represent one hundred percent (100%) of the issued and
outstanding voting securities of Company so that, at Closing, the Stock
will represent all of the issued and outstanding stock of Company. The
delivery of the Stock to Purchaser will vest in Purchaser all right, title
and interest in and to such shares free and clear of all liens,
encumbrances, claims, equities and liabilities of every nature. The Stock
has been validly authorized and issued and is fully paid and nonassessable.
(e) Financial Statements. The Company has delivered to Purchaser
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an unaudited balance sheet of Company as of July 31, 2000 (the "July 31
Balance Sheet"), a copy of which is attached hereto as Schedule 4(e)(1) and
incorporated herein by this reference, and unaudited profit and loss
statements of Company from inception through July 31, 2000 (the "July 31 P
& L") a copy of which is attached hereto as Schedule 4(e)(2) and
incorporated herein by this reference. The July 31 Balance Sheet and the
July P & L (sometimes collectively referred to herein as the "July 31
Financial statements") were prepared from the books and records of Company
in accordance with generally accepted accounting principles applied in a
manner consistent with accounting practices theretofore adopted and applied
by Company, and fairly present the financial position, assets, liabilities
and results of operations of Company as of such dates and for the periods
indicated, except as may be disclosed in any notes to the July 31 Financial
Statements. Such financial statements, including those for the period
ending, and as of July 31, 2000, contain and reflect all liabilities or
obligations of any nature, whether absolute, contingent or otherwise, and
for all reasonably anticipated losses and costs in excess of expected
receipts and contain and reflect all necessary adjustments so as to present
full, true and complete statements of the financial condition and results
of operations of Company. Shareholders shall deliver at Closing a
certificate signed by the President and Treasurer of Company warranting
that said financial statements were prepared in accordance with generally
accepted accounting principles, consistently applied, and fairly present
the financial position of Company as of such dates and the results of its
operation for the periods indicated, except as may be disclosed in any
notes to the July 31 Financial Statements.
(f) Liabilities. Shareholders do not know of any basis for the
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assertion against them or Company of any material liabilities or
obligations, either accrued, absolute, contingent or otherwise which would
materially and adversely affect the value and conduct of the business of
Company, other than those (i) reflected or reserved against in the July 31
Balance Sheet, (ii) incurred in the ordinary course of business since July
31, 2000, or (iii) expressly disclosed in writing to Purchaser in or
pursuant to this Agreement. Company does not have any liabilities, debts or
obligations not fully and properly reflected or reserved against in the
July 31 Balance Sheet, except liabilities and obligations incurred in the
ordinary course of business since July 31, 2000, which shall be expressly
disclosed in writing to Purchaser in or pursuant to this Agreement.
(g) Absence of Certain Changes. Since July 31, 2000, there has
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not occurred (i) any materially adverse change in the assets, liabilities,
capitalization, condition (financial or otherwise), business or prospects
of Company, (ii) any damage, destruction or loss (whether or not covered by
insurance) having a materially adverse effect on the assets, condition
(financial or otherwise), business or prospects of Company or (iii) any
event or condition, or threat thereof, which does, or reasonably might,
have a materially adverse effect on the assets, condition (financial or
otherwise), business or prospects of Company. Since said date, Company has
not, except as indicated on Schedule 4(g) attached hereto and incorporated
herein by this reference, directly or indirectly:
(i) Made any loan or advance to any person or entity;
(ii) Declared or paid any dividends on any shares of its
Common Stock or redeemed, purchased or otherwise acquired any shares
of its Common Stock;
(iii) Subjected any of its assets to any mortgage, deed of
trust, lien, pledge, conditional sales contract, lease, encumbrance or
charge;
(iv) Sold, leased or otherwise transferred any of its assets
other than in the ordinary course of business;
(v) Entered into any agreements whether or not in the
ordinary course of business involving consideration given by Company
in amounts in excess of One Thousand Dollars ($1,000.00) other than
those described in Schedules or Exhibits to this Agreement;
(vi) Modified, amended or terminated any agreement or waived
or released any right, other than in the ordinary course of business;
(vii) Incurred any obligation or liability for borrowed
money, or incurred any other obligation or liability except in the
ordinary course of business;
(viii) Issued or sold or agreed to issue or sell any equity
or debt securities, except for shares sold upon exercise of any or all
of the 104,000 Options described above;
(ix) Increased the salary, fringe benefits or other
compensation of, or paid any bonus or similar compensation to, any of
its officers or directors; or
(x) Agreed to do any of the things described in the preceding
clauses (i) through (ix).
(h) Accounts Receivable. Attached hereto as Schedule 4(h) and
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incorporated herein by this reference is a correct and complete aging of
all accounts receivable of Company as of July 31, 2000. Such accounts
receivable, as well as accounts receivable of Company arising between that
date and the Closing, are and will be valid and enforceable, incurred in
the ordinary course of business, and payable to and collectible in full by
Company, or its successors in interest, on demand when due without any
set-off or counterclaim or any reduction (directly or indirectly) for any
payment, credit or allowance made or given for any reason whatever, except
to the extent [indicated on Schedule 4(h)] of the reserves for bad accounts
set up by Company on its books and records in a manner consistent with the
manner in which the reserves for such purpose reflected in the financial
statements were established. The accounts receivable of Company on the date
of the Closing will be the same as set forth in said Schedule, except for
additions and reductions thereto made in the ordinary course of business
since July 31, 2000.
(i) Accounts Payable. Attached hereto as Schedule 4(i) and
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incorporated herein by this reference, is a correct and complete list of
accounts payable of Company as of July 31, 2000. The accounts payable on
Schedule 4(i) represent valid accounts payable incurred in the ordinary
course of business, and the accounts payable incurred by the Company
subsequent to July 31, 2000, shall be separately set forth in an addendum
to the Schedule and delivered to Purchaser on the date of the Closing.
(j) Inventory. Company has good and marketable title to all of
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its inventories and work in process, free and clear of all liens (except to
the extent of customer advances, which have been properly reflected in the
July 31 Financial Statements), leases, encumbrances, equities, conditional
sales contracts, security interests, charges and restrictions (except for
liens, if any, for personal property taxes not delinquent). The inventories
reflected in the July 31 Balance Sheet are based on quantities determined
from physical inventories taken as of July 31, 2000, valued at the lower of
cost (determined on a first-in first-out basis) or market value, and on a
basis consistent with that of prior practice. The values recorded in the
financial statements for inventories of raw materials and finished goods do
not include any obsolete or unsalable items, and the values shown for work
in process do not exceed, when added to the estimated cost to complete and
deliver such work, the contract prices therefore.
(k) Litigation, etc. There is no litigation, proceeding or
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investigation pending or threatened, other than that which is disclosed on
Schedule 4 (k) attached hereto and incorporated herein by this reference,
to the knowledge of Shareholders which might result in any material adverse
change in the business or financial condition of Company or its assets, or
any of the Shareholders, or in any materially adverse liability on the part
of Company; and there is none which questions the validity of this
Agreement or of any action taken or to be taken pursuant to or in
connection with the provisions of this Agreement, nor do Shareholders know
of any basis for any such litigation, proceedings or investigation.
(l) Ownership of Properties. Company has good and marketable
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title to and owns all of the property reflected in the July 31 Balance
Sheet and listed in detail in Schedule 4(l) attached hereto and
incorporated herein by this reference, except such property as has been
disposed of in the ordinary course of business since July 31, 2000, and
free and clear of all claims, liens (except for taxes not yet due and
payable), encumbrances and options of any nature. All leases pursuant to
which Company leases any substantial amount of real or personal property
are in good standing, valid and effective; and there is not, under any of
such leases, any existing or prospective default or event of default or
event which with notice or lapse of time, or both, would constitute a
default. The buildings, premises and equipment of Company that are
necessary to the operations of its business are suitable for their present
use.
(m) Taxes. All federal, state and local tax returns required by
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law to be filed by Company have been filed and all federal, state and local
taxes (including payroll taxes) have been paid to the extent that such
taxes have become due and payable. Company is not delinquent in the payment
of any tax assessment, has had no tax deficiencies assessed against it, has
received no notice of any such tax deficiencies, and has not executed any
waiver of any statute of limitations on the assessment or collection of any
tax.
(n) No Violation, etc. Neither the execution or delivery of this
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Agreement nor the consummation of the transactions contemplated hereby
conflicts or will conflict with or result in any breach or violation of or
default under any term or condition of the Articles of Incorporation, as
amended, of Company or the Bylaws, or any indenture, mortgage, lien, lease,
covenant, agreement, contract or other instrument to which Company is a
party or is bound, or any order, judgment, decree, ordinance, regulation,
or any requirement of law or of any governmental or judicial authority.
Company is not in material violation of its amended Articles of
Incorporation, its Bylaws or any such covenant, agreement, contract,
instrument or requirement.
(o) Brokers. No finder, broker, agent or other intermediary has
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acted for or on behalf of Majority Shareholders or Company in connection
with the negotiation or consummation of this Agreement or any of the
transactions contemplated hereby or with any other proposed acquisition of
the stock or assets of Company, nor have Majority Shareholders incurred or
caused to be incurred any liability for any fee or commission in the nature
of a finder's fee, originator's or broker's fee in connection with the
subject matter of this Agreement, and Majority Shareholders hereby
indemnify Purchaser and agree to hold it harmless, against all liabilities,
expenses, costs, losses and claims, if any, arising from the employment by
Majority Shareholders or services rendered by Majority Shareholders (or any
allegation of any such employment or services) of any finder, broker, agent
or other intermediary in such connection.
(p) Contracts and Agreements. Attached hereto as Schedule 4(p) and
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incorporated herein by this reference is a true and complete list and
description of any and all indentures, contracts, agreements, arrangements,
understandings and other material obligations, written or oral, to which
Company is, as of the date of this Agreement and as of the Closing date, a
party, or by which it is bound, except those contracts and agreements which
involve less than Five Thousand Dollars ($5,000.00) consideration. Upon
written request of Purchaser, Shareholders agree to cause Company to
deliver to Purchaser a true copy of any of such contracts or agreements.
All of the agreements and contracts listed in Schedule 4(p) are valid and
binding obligations of the parties thereto in accordance with their
respective terms, as of the Closing date, and there are no liabilities of
Company or to the knowledge of Majority Shareholders or any other party
thereto arising from any breach or default, prior to the date of this
Agreement and the Closing date, of any provision of any such contract or
agreement by Company or any other party; and no event has occurred which,
through the passage of time or the giving of notice, or both, would
constitute a breach or default by Company or any other party under any such
contract or agreement or would cause the acceleration of any obligation of
Company or any other party thereto or the creation of a lien or encumbrance
upon any asset of Company or any other party thereto. Company is not a
party to and no assets of Company are bound by any agreement which is
materially adverse to the business, assets or condition (financial or
otherwise) of Purchaser.
(q) Insurance. Attached hereto as Schedule 4(q) and
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incorporated herein by this reference is a correct and complete list and
description of all insurance policies owned by Company and all surety bonds
provided by Company for the benefit of others, all of which are in full
force and effect in the amounts set forth and described in said Schedule.
Such insurance policies cover Company's properties and assets in amounts
and against such losses and risks as are generally maintained for
comparably situated businesses and properties. Upon the written request of
Purchaser, Company will deliver to Purchaser a true copy of any of such
insurance policies. Such insurance policies and surety bonds will be kept
in full force and effect until the Closing. Upon Closing, or immediately
prior thereto, Purchaser shall be named as additional insured on all
property and casualty policies.
(r) Labor, Benefit and Employment Agreements. Attached hereto as
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Schedule 4(r) and incorporated herein by this reference, is a correct and
complete list and description of all employment agreements, collective
bargaining and other labor agreements, and pension, bonus, profit sharing,
stock option, deferred compensation, stock purchase, retainer, consulting,
retirement, welfare, incentive or fringe benefit plans or agreements to
which Company is a party or by which it is bound. No party to any such
agreement or arrangement is in default thereunder, and no event has
occurred which, with the passage of time or the giving of notice or both,
would constitute such default. Majority Shareholders will cause Company to
deliver to Purchaser upon request correct and complete copies of (i) all of
the agreements, plans and programs listed in said Schedule, (ii) any
descriptive literature concerning any of such agreements, plans and
programs which have been or are available for distribution to the employees
of Company, (iii) all approvals of any of such agreements, plans or
programs which have been obtained from the Internal Revenue Service, (iv)
the most recent valuation and list of assets contained in any trust funds
with respect to such agreements, plans and programs, (v) the most recent
actuary report (including method of funding, actuarial assumptions and
amounts of past service liability) and (vi) the names of each person
authorized to draw thereon or to have access thereto.
None of the (i) warranties and representations made by the Majority
Shareholders herein, or in the Schedules or documents related hereto, (ii)
financial statements furnished relating to Company or (iii) certificates or
memoranda furnished by Shareholders or by or on behalf of Company contains
or will contain any untrue statement of a material fact or omits or will
omit to state a material fact necessary in order to make the statements
contained herein or therein not misleading. Majority Shareholders agree (i)
to cause Company to deliver such additional information and documents to
Purchaser as Purchaser may reasonably request in writing and (ii) to
execute any and all documents necessary or appropriate in connection with
the transactions hereunder.
(s) Acquisition For Own Account. The shares of Purchaser's Stock
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are being acquired by the Shareholders, pursuant to this Agreement, for
investment purposes and not with a view to distribution and Shareholders
will not make any sale or distribution of any portion thereof except in
compliance with all applicable securities laws.
5. Representations and Warranties by Purchaser. Purchaser hereby
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represents and warrants to the Shareholders as follows:
(a) Brokers. No finder, broker, agent or other intermediary has
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acted for or on behalf of Purchaser in connection with the negotiations or
consummation of this Agreement or of any of the transactions contemplated
hereby or with any other acquisition of the stock or assets of Company nor
has Purchaser incurred or caused to be incurred any liability for any fee
or commission in the nature of a finder's fee, originator's fee or broker's
fee in connection with the subject matter of this Agreement, and Purchaser
hereby indemnifies Shareholders, and agrees to hold them harmless, against
all liabilities, expenses, costs, losses and claims, if any, arising from
the employment by Purchaser or services rendered to Purchaser (or any
allegation of any such employment or services) of any finder, broker, agent
or other intermediary in such connection.
(b) Acquisition For Own Account. The Stock is being acquired by
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Purchaser, pursuant to this Agreement, for investment and not with a view
to distribution and Purchaser will not make any sale or distribution of any
portion thereof except in compliance with all applicable securities laws.
(c) Organization and Standing of Purchaser. Purchaser is a
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corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada and has all requisite corporate power and
authority to own all of its properties and to carry on the business
presently being conducted by it. Purchaser is duly qualified to transact
business and is in good standing in the jurisdictions indicated on Schedule
5(c) attached hereto and incorporated herein by this reference. Purchaser
has received no notice or other communication from any governmental body or
agency to the effect that it should be qualified to do business in any
jurisdiction other than those indicated on Schedule 5(c) and Purchaser does
not conduct business in any jurisdiction other than those indicated on
Schedule 5 (c).
(d) Capitalization. Purchaser has an authorized capitalization of
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thirty-one million two hundred fifty thousand (31,250,000) shares of common
stock, $0.001 par value, of which twenty-seven million seven hundred fifty
thousand (27,750,000) and five million (5,000,000) shares of preferred
stock, $0.001 par value, none of which preferred shares are issued and
outstanding. Purchaser's shareholders have approved an amendment to its
Articles of Incorporation, as amended, which will increase the authorized
capitalization to fifty million (50,000,000) shares of common stock.
Purchaser may issue up to an additional 11,000,000 shares of common stock
to close the pending mergers with 24x7 Development.com, Inc. and
N2Plus.com, Inc., scheduled for September 2000. Purchaser is also presently
conducting a private placement offering 2,000,000 shares of common stock.
Except as set forth of Schedule 5(e) attached hereto and incorporated
herein by this reference, Purchaser has no securities outstanding now, nor
will it have at the date of Closing, which are convertible into shares of
any class of capital stock or any other security of Purchaser, nor any
outstanding rights, options, warrants, subscriptions or other instruments
or understandings entitling the holders thereof to purchase or receive any
securities of Purchaser of any kind. Purchaser has no contractual right or
obligation to acquire any of the common stock from any of its shareholders.
(e) Purchaser's Stock. Purchaser hereby warrants that the shares
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of Purchaser's Stock being exchanged for the common stock of the Company at
Closing has been duly authorized by it Board of Directors and that the
delivery of the Stock to shareholders will vest in Shareholders all right,
title and interest in and to such Stock, free and clear of all liens,
encumbrances, claims, equities and liabilities of every nature, and that
the Stock has been validly authorized and issued and upon issuance will be
fully paid and nonassessable.
(f) Absence of Certain Changes. Since July 31, 2000, there has
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not occurred (i) any materially adverse change in the assets, liabilities,
capitalization, condition (financial or otherwise), business or prospects
of Purchaser, (ii) any damage, destruction or loss (whether or not covered
by insurance) having a materially adverse effect on the assets, condition
(financial or otherwise), business or prospects of Purchaser or (iii) any
event or condition, or threat thereof, which does, or reasonably might,
have a materially adverse effect on the assets, condition (financial or
otherwise), business or prospects of Purchaser. Since said date, Purchaser
has not, except as indicated on Schedule 5 (f) attached hereto and
incorporated herein by this reference, directly or indirectly:
(i) Declared or paid any dividends on any shares of its
common stock or redeemed, purchased or otherwise acquired any shares
of its common stock;
(ii) Subjected any of its assets to any mortgage, deed of
trust, lien, pledge, conditional sales contract, lease, encumbrance or
charge;
(iii) Sold, leased or otherwise transferred any of its assets
other than in the ordinary course of business;
(iv) Modified, amended or terminated any agreement or waived
or released any right, other than in the ordinary course of business;
(v) Incurred any obligation or liability for borrowed money,
or incurred any other obligation or liability except in the ordinary
course of business;
(vi) Issued or sold or agreed to issue or sell any equity or
debt securities, except as described in paragraph 5 (d), above;
(vii) Agreed to do any of the things described in this
paragraph 5.
(g) Litigation, etc. There is no litigation, proceeding or
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investigation pending or threatened, other than that which is disclosed on
Schedule 5 (g) attached hereto and incorporated herein by this reference
which might result in any material adverse change in the business or
financial condition of Purchaser or its assets, or in any materially
adverse liability on the part of Purchaser; and there is none which
questions the validity of this Agreement or of any action taken or to be
taken pursuant to or in connection with the provisions of this Agreement,
nor does Purchaser know of any basis for any such litigation, proceedings
or investigation.
(h) No Violation, etc. Neither the execution or delivery of this
-------------------
Agreement nor the consummation of the transactions contemplated hereby
conflicts or will conflict with or result in any breach or violation of or
default under any term or condition of the Articles of Incorporation, as
amended, of Purchaser or the Bylaws, or any indenture, mortgage, lien,
lease, covenant, agreement, contract or other instrument to which Purchaser
is a party or is bound, or any order, judgment, decree, ordinance,
regulation, or any requirement of law or of any governmental or judicial
authority. Purchaser is not in material violation of its amended Articles
of Incorporation, its Bylaws or any such covenant, agreement, contract,
instrument or requirement.
6. Covenants and Agreements of the Majority Shareholders. In addition
------------------------------------------------------
to the covenants and agreements elsewhere set forth herein, Majority
Shareholders covenant and agree as follows:
(a) Conduct of Business Prior to Closing. Without Purchaser's
-------------------------------------
prior written consent to the contrary, prior to the date of Closing, which
shall not be unreasonably withheld, Majority Shareholders will cause
Company to operate so as:
(i) To carry on its business in substantially the same manner
as heretofore carried on, and not to make any purchase or sale, or
enter into any agreement or lease (whether as a lessor or lessee), or
introduce any new method of management or operation in respect of any
such business, except in the ordinary course of business and in a
manner not inconsistent with prior practice and with the terms of this
Agreement;
(ii) Not to declare or pay any dividend or make any other
distribution or payment with respect to its Common Stock, nor directly
or indirectly to redeem, purchase or otherwise acquire any of its
Common Stock;
(iii) Not to acquire, sell, transfer, lease, mortgage,
pledge, encumber or otherwise dispose of any fixed asset or personal
property (other than inventory, including work in process, in the
ordinary and usual course of business);
(iv) Not to discharge or satisfy any lien or encumbrance or
pay or perform any obligation or liability other than (i) current
liabilities set forth in the balance sheets included in the financial
statements, or (ii) current liabilities incurred in the ordinary
course of business since July 31, 2000;
(v) Not to change or alter the physical contents or character
of any of its inventory so as to affect the nature of any of its
business or result in a change of the total dollar valuation thereof,
other than as a result of transactions in the ordinary course of
business;
(vi) Not to do any of the acts specified in Subparagraph 4(g)
hereof;
(vii) To maintain and preserve its business organization and
goodwill intact and maintain its relationships with suppliers,
customers (including lessees), creditors, employees and others having
business relationships with it;
(viii) Not to make any changes or modifications in any
agreement to which it is a party or which affects it, except in the
ordinary course of business and in an amount not exceeding One
Thousand Dollars ($1,000.00) in any one transaction or as required by
this Agreement;
(ix) To take such action as may be necessary to maintain,
preserve, renew and keep in full force and effect its corporate
existence, rights and franchises;
(x) Not to make any commitment for any capital expenditures
for a single item exceeding One Thousand Dollars ($1,000.00) and not
to make commitments for capital expenditures exceeding Five Thousand
Dollars ($5,000.00) in the aggregate; and
(xi) Not to enter into any contracts, commitments or
proposals for the sale or lease of any of its products or sale of any
of its services which require the manufacture of new products costing
in the aggregate Five Thousand Dollars ($5,000.00) or more. In order
not to impede Company's sales, Purchaser agrees to approve or
disapprove all Company's proposed sales contracts within one (1)
business day of notice, pursuant to the notice provisions herein.
Purchaser agrees that its failure to notify Company of its decision
within the proscribed time shall be deemed an acceptance of the
proposed sales contract.
(b) Delivery of Schedules. Shareholders agree to cause Company
---------------------
to prepare and deliver to Purchaser as promptly as possible following the
date of this Agreement, but not later than three (3) business day prior to
the Closing, all Schedules not attached to this Agreement on the date of
execution hereof. Shareholders agree that where provisions of this
Agreement state or imply that Schedules are attached, the failure to have
such Schedules attached upon the date of execution hereof shall not act as
a waiver by Purchaser of the receipt of such Schedules or of any
representations or warranties relating to such schedules. Notwithstanding
language in this paragraph to the contrary, Schedule 4 (k) shall be
attached to this Agreement upon execution hereof by the Company and the
Majority Shareholders.
7. Conditions of the Obligations of Purchaser. The obligations of
--------------------------------------------
Purchaser hereunder are subject to the condition that prior to or
contemporaneously with the Closing:
(a) Representations and Warranties. Company shall have delivered
-------------------------------
to Purchaser an Officer's Certificate, dated the date of Closing and
executed by a duly authorized officer of Company, satisfactory to
Purchaser, certifying that the representations and warranties made by or on
behalf of Company in this Agreement are true, accurate and correct as of
the date thereof.
(b) Shareholders' Performance. Shareholders shall have
--------------------------
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing
and furnished Purchaser satisfactory evidence of such compliance.
(c) Opinion of Counsel to Company. Shareholders shall have
---------------------------------
delivered to Purchaser a favorable opinion of Company's counsel addressed
to Purchaser, satisfactory in substance and form to Purchaser and its
counsel and dated the date of Closing, at Company's or Majority
Shareholders' expense, to the following effect:
(i) Organization and Standing of Company. Company is a
----------------------------------------
corporation duly organized, validly existing and in good standing
under the laws of the State of California. Company does not transact
business in any other jurisdiction, and Company, to the knowledge of
counsel, has not received any notification from any governmental body
or agency that Company should be qualified to do business in any other
jurisdiction.
(ii) Capitalization of Company. The authorized Common Stock
-------------------------
and issued and outstanding securities of Company are as set forth
hereinabove.
(iii) This Agreement. Majority Shareholders have power to
--------------
execute and deliver this Agreement and this Agreement has been duly
authorized, executed and delivered by Majority Shareholders and
constitutes the legal, valid and binding obligation of Majority
Shareholders in accordance with its terms.
(iv) Shares of Company. The Stock being purchased by
-------------------
Purchaser from Shareholders pursuant to Section 1 hereof has been (or
at the Closing will have been) validly issued and is (or at the
Closing will be) outstanding, fully paid and nonassessable, and
constitutes one hundred percent (100%) of the issued and outstanding
shares of capital stock of Company, unless a lesser percentage is
accepted by Purchaser at Closing.
(v) Valid Title. The Stock has been properly assigned to
------------
Purchaser pursuant to this Agreement so as to enable Purchaser to
become the owner of record and, to the best of counsel's knowledge,
beneficially of such stock, subject to no claims, liens or
encumbrances (except any which may have been created by the
Purchaser).
(vi) Litigation. Counsel knows of no litigation,
----------
proceeding or investigation pending or threatened against Company
which might result in any materially adverse change in the assets,
liabilities, business prospects or financial conditions of Company.
(d) No Adverse Change Certificate. Purchaser shall have received
-----------------------------
a certificate dated the date of Closing, signed by the President of
Company, to the effect that no changes of the nature described in Paragraph
4(g) above have occurred.
(e) Obtaining of Consent. All necessary agreements and
----------------------
consents of any person or entity required in connection with the
transactions hereunder shall have been obtained by Purchaser and Majority
Shareholders.
(f) Approval of Documentation. The form and substance of all
---------------------------
opinions, certificates, instruments of transfer and all other documents
hereunder shall be satisfactory in all reasonable respects to Purchaser and
its counsel.
(g) Receipt of Schedules. All Schedules to this Agreement shall
---------------------
have been received by Purchaser, and Purchaser shall have given written
notice to Shareholders and Company after receipt of the last Schedule
delivered to Purchaser, that it has approved the Schedules and agrees to
complete the transaction on the date of Closing in accordance with this
Agreement.
(h) Absence of Material Change. The business and properties of
----------------------------
Company shall not have been, and shall not be threatened to be, materially
and adversely affected in any way as a result of fire, explosion,
earthquake, disaster, accident, labor disputes, change in technology,
obsolescence of products or service, resignation of key personnel, any
action by the United States or any other governmental authority, flood,
drought, embargo, riot, civil disturbance, uprising, activities of armed
forces or act of God or public enemy, and there shall not have occurred or
been threatened for any reason any material or unforeseeable change in the
financial condition of Company.
(i) Settlement of Debts, Suits and Other Obligations. All debts,
-------------------------------------------------
liabilities, lawsuits and other claims against Company described in
paragraph 4 of that certain memorandum from John Flanders to Ken Paganini
dated August 10, 2000, a copy of which is attached hereto as Schedule 7 (i)
and incorporated herein by this reference, shall have been duly settled and
executed releases of liability and settlements of lawsuits shall have been
delivered to Purchaser. In the event that settlement and release of the
debts, liabilities, lawsuits and other claims against Company described in
Schedule 7(i) shall not be obtained by the date of Closing, then Majority
Shareholders agree to indemnify the Company and Purchaser against such
debts, liabilities, lawsuits and other claims pursuant to Paragraph 10(b),
except that the $10,000 limit for triggering indemnity under Paragraph
10(b) shall not apply.
8. Conditions of the Obligations of Shareholders. The obligations of
-----------------------------------------------
Shareholders hereunder are subject to the conditions that, prior to or
contemporaneously with the Closing, Purchaser shall have performed and complied
with all agreements and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing.
9. Covenants and Agreements of the Purchaser. In addition to the
----------------------------------------------
covenants and agreements set forth elsewhere herein, Purchaser covenants and
agrees that after the Closing, it will abide by all terms of Company's leases
(identified in Schedule 4 (l) and to indemnify Majority Shareholders and hold
them harmless against and in respect of any and all damages, losses, expenses,
costs, obligations and liabilities including reasonable attorney's fees incurred
in connection with any asserted claim or loss which the Majority Shareholders
may incur or may suffer by reason of (I) any breach of, or failure of Purchaser
to perform, any of its representations, warranties, guarantees, commitments or
covenants contained in this Agreement, and (2) any act or omission of the
Purchaser which constitutes a breach or default hereunder.
10. Survival of Representations and Indemnification.
---------------------------------------------------
(a) Survival. All material statements contained in any
--------
Exhibit, Schedule, document, certificate or other instrument delivered by
or on behalf of any party hereto, or in connection with the transactions
contemplated hereby, shall be deemed to be representations and warranties
made pursuant to this Agreement by such party along with the
representations and warranties made pursuant to this Agreement, and shall
survive the consummation of the transactions contemplated by this Agreement
and the investigations made by or on behalf of any of the parties.
(b) Indemnification by Majority Shareholders. The Majority
-------------------------------------------
Shareholders agree to indemnify Purchaser and hold it harmless against and
in respect of any and all damages, losses, expenses, costs, obligations and
liabilities including reasonable attorney's fees incurred in connection
with any asserted claim or loss which Purchaser or Company may incur or may
suffer by reason of (i) any breach of, or failure of Shareholders to
perform, any of their representations, warranties, guarantees, commitments
or covenants contained in this Agreement, and (ii) any act or omission of
the Shareholders which constitutes a breach or default hereunder. For
purposes of this paragraph, excepting for those obligations described in
Schedule 7 (i)the indemnification shall not be triggered unless and until
the collective amount of such damages, claims, losses, expenses, costs or
obligations exceeds $10,000.
11. Notices. Any notice or other communication required or
-------
permitted hereunder shall be in writing and shall be deemed to have been given
if placed in the United States mail, registered or certified, postage prepaid
or, if personally delivered, addressed as follows:
If to Purchaser, to:
Digital Bridge, Inc.
1860 El Camino Real, Suite 100
Burlingame, California 94010
Attention: Aaron Lang, President
With a copy to:
David E. Wise, Esq.
Attorney at Law
1600 Glorietta Blvd.
Coronado, California 92118
If to Company to:
Kenneth A Paganini
Paganini Companies
190 Hubbell Street
San Francisco, California 94107-2278
If to Majority Shareholders, to:
Kenneth A. Paganini
c/oPaganini Companies
190 Hubbell Street
San Francisco, California 94107-2278
Jack Zwart
-
c/oSouthland Electric, Inc.
6550 Nancy Ridge Drive
San Diego, California 92121-3281
With a copy to:
Douglas N. Akay, Esq.
Akay & Associates
615 Battery Street, 6th Floor
San Francisco, California 94111-1808
And the persons at the addresses shown on Exhibit A
hereto.
Each of the foregoing shall be entitled to specify a different address by giving
written notice thereof to all the parties hereto.
12. Costs and Expenses. All costs and expenses incurred in
--------------------
conducting the purchase and sale described in this Agreement in the manner
prescribed by this Agreement shall be borne by Purchaser and Shareholders in the
following manner: Each party, Purchaser and Shareholders, shall pay the fee of
the attorney who represented it in negotiating this Agreement.
13. Entire Agreement; Modifications; Waiver. This Agreement
------------------------------------------
constitutes the entire agreement among the parties hereto pertaining to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
understandings, negotiations and discussions whether oral or written. No
supplement, modification, waiver or termination of this Agreement, or any
provision hereof, shall be binding unless executed in writing by the parties to
be bound thereby. No waiver of any of the provisions of this Agreement shall
constitute a waiver of any other provision (whether or not similar), nor shall
such waiver constitute a continuing waiver unless otherwise expressly provided.
14. Headings. Paragraph and Subparagraph headings are not to be
--------
considered part of this Agreement, are included solely for convenience and are
not intended to be full or accurate descriptions of the content hereof.
15. Attachments. Exhibits, Schedules and other documents referred to
-----------
in this Agreement are an integral part hereof.
16. Binding Effect. All of the terms and provisions of this
---------------
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto, their respective successors and assigns, and the heirs and legal
representatives of Purchaser.
17. Effect of Termination. Termination of this Agreement pursuant to
-----------------------
any of its provisions shall be without prejudice to any other rights or remedies
of the respective parties at law or in equity.
18. Severability. All clauses of this Agreement are distinct and
------------
severable and if any clause shall be held to be invalid or illegal, that
determination shall not affect the validity or legality of the remainder of this
Agreement.
19. Governing Law. This Agreement shall be governed by the laws of
--------------
the State of Nevada and shall be enforceable in the State of California.
20. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
21. Publicity. All notices to third parties and all other publicity
---------
concerning the transactions contemplated by this Agreement shall be released
only with the written consent of the parties.
22. No Assignment. Neither this Agreement nor any interest therein
--------------
shall be assigned by Purchaser or any Shareholder without the prior written
consent of the other parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be entered into on the date and year first set forth above.
PURCHASER:
---------
Digital Bridge, Inc.
By: /s/ Aaron Lang
-----------------------------------------
Aaron Lang, President
COMPANY:
Online Television Network Services
By: /s/ Kenneth A. Paganini
-----------------------------------------
Kenneth A. Paganini, President and CEO
Number of Shares of
MAJORITY SHAREHOLDERS: Stock Ownership
---------------------- ----------------
By: /s/ Jack Zwart
---------------------------- 310,000
Jack Zwart
By: /s/ Kenneth A. Paganini
----------------------------- 310,000
Kenneth A. Paganini
ADDITIONAL SHAREHOLDERS
By: /s/ Peter Niggeman
----------------------------
Peter Niggeman
20,000 (jointly held)
By: /s/ Kathy Niggeman
----------------------------
Kathy Niggeman
By: /s/ Ken Prokuski
----------------------------
Ken Prokuski
20,000 (jointly held)
By: /s/ Susan Prokuski
----------------------------
Susan Prokuski
By: /s/ William D. Spencer
----------------------------
William D. Spencer 100,000
By: /s/ Amy Henderson
---------------------------- 10,000
Amy Henderson
By: /s/ Douglas N. Akay
---------------------------- 20,000
Douglas N. Akay
SPOUSAL CONSENTS
The undersigned persons represent that they are the spouses of the persons
having the same last names on the preceding signature pages, that the
undersigned persons disclaim any direct or record ownership of the shares of
common stock of the Company set forth opposite their spouses names on the
signature pages above, and the undersigned persons consent to their spouses
assignment and transfer of such shares of common stock of the Company to Digital
Bridge, Inc. for the consideration indicated in the above Agreement.
By signing this Spousal Consent, Digital Bridge, Inc. covenants and agrees
that the signatories on this page shall not be deemed to be "Majority
Shareholders," as that term is defined in the above Agreement.
By: /s/ Jeannine Paganini
-------------------------------
Jeannine Paganini
By: /s/ E. Dayle Zwart
-------------------------------
E. Dayle Zwart
By: /s/ Claire Spencer
-------------------------------
Claire Spencer
By: /s/ Catherine Dennes Akay
-------------------------------
Catherine Dennes Akay
By: /s/ Richard E. Henderson
-------------------------------
Richard E. Henderson
