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EXHIBIT 2.2
COMPROMISE AGREEMENT
This Agreement is entered into this 20th day of March, 2000, by and
between Wayne Gemas ("Gemas"), and College Bound Student Alliance, Inc. f/k/a
SportsStar Marketing, Inc., a Colorado corporation ("CBSA").
RECITALS:
WHEREAS, CBSA is obligated to Gemas pursuant to a Stock Purchase
Agreement, dated March 29, 1999 ("SPA"), as amended by a certain Addendum,
dated December 9, 1999 (collectively all of which shall hereinafter be
referred to as the "Obligations"); and
WHEREAS, certain disputes have risen between the parties as to the
Obligations; and
WHEREAS, to permit each of the parties to avoid disruption,
uncertainty and the cost and expenses incurred in the resolution of their
various disputes, the parties do hereby agree to resolve by compromise these
disputes relative to the Obligations without waiver by either party of their
rights accruing under the Obligations except pursuant to Paragraph 7 below.
AGREEMENT:
1. CBSA acknowledges receipt of the "bridge financing"
referenced in the SPA at Paragraph 1(b)(i) and will pay to Gemas within
24-hours of execution of this Agreement the sum of One Hundred Fifty Thousand
Dollars ($150,000.00).
2. Upon receipt of the One Hundred Fifty Thousand Dollars
$150,000.00 referred to above from CBSA, the parties hereby acknowledge that
receipt of that
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amount constitutes that portion of the purchase price under the SPA allocable
to paragraphs 1(b)(i)(A) and (B).
3.a. The balance of the consideration for the purchase price under
the SPA consisting of Four Hundred Fifty Thousand Dollars ($450,000.00) is
due to Gemas on March 15, 2001.
3.b. Payment of the unpaid balance of the One Hundred Seventy-Six
Thousand Dollar ($176,000.00) in notes granted to Gemas in consideration of
his noncompete pursuant to Section 4 of the SPA commenced December 15, 1999,
said notes being payable monthly for 35 months thereafter in accordance with
their terms.
4. Gemas shall take no action until March 15, 2001, to seek to
collect any of the Obligations provided CBSA pays fully and timely the
following amounts to him:
a. One Thousand Five Hundred Dollars ($1,500.00) commencing
April 1, 2000, as and for payments due Gemas under the Consulting Agreement
required by Paragraph 5(c) of the SPA.
b. The two (2) note payments under the SPA which aggregate
in the amount of Nine Thousand Three Hundred Thirty-Five Dollars and 47/100
($9,335.47) per month in accordance with the terms of those respective notes.
c. A one time payment of Ten Thousand Dollars ($10,000.00)
to Wayne Gemas made payable, on his behalf, to Godfrey, Braun & Frazier. The
allocation of this payment shall be as determined pursuant to Paragraph 6 of
this Agreement.
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d. Twenty Thousand Dollars ($20,000.00) on July 1, 2000, Twenty
Thousand Dollars ($20,000.00) on October 1, 2000, Twenty Thousand Dollars
($20,000.00) on January 1, 2001, and Twenty Thousand Dollars ($20,000.00)
on March 1, 2001, the allocation of which payments shall be as determined
below.
5. CBSA acknowledges that it is obligated to reimburse Gemas for the
following payments independent of its Obligations under the SPA:
a. Sixty Thousand Dollars ($60,000.00) for a line of credit
acquired by CBSA and assumed by Gemas at the closing of the SPA;
b. Fifteen Thousand Dollars ($15,000.00), plus interest at the
rate of 10% per annum commencing April 19, 1999, as and for a contribution
by Gemas to CBSA's working capital; and
c. In connection with the foregoing obligations, all monies paid to
Gemas pursuant to Paragraphs 4(c) and (d) of this Agreement shall be
allocated and applied first to the foregoing undisputed obligations and
thereafter as set forth below in Paragraph 6.
6. Gemas acknowledges that CBSA disputes the following obligations:
a. Interest accrued and owing on the Sixty Thousand Dollar
($60,000.00) obligation referred to in Paragraph 5(a) above; and
b. Attorney's fees expended by Gemas between March 29, 1999, and
the date of this Agreement for securing CBSA's various obligations under
the SPA, and Paragraph 5 of this Agreement; and
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c. Certain expenses of Gemas incurred by him on behalf of CBSA,
and listed as payables on the financial statements of CBSA prior to May
1, 1999, and expenses of Wayne Gemas incurred at the request of and for
the benefit of CBSA from the date of closing of the SPA to the date of
this Agreement.
d. With respect to these disputed obligations Gemas shall not seek
to prosecute his alleged rights thereunder or otherwise seek enforcement
of such remedies provided that the parties apply their respective best
good faith efforts to resolve these disputes by mutual agreement by
March 15, 2001. If and only if the parties fail to achieve mutual
agreement in writing as to these disputed obligations by March 15, 2001,
Gemas shall thereafter be permitted to prosecute his claims for all of the
disputed obligations without regard to this Agreement. Subject to the
foregoing, this Agreement shall not be evidence of any waiver of or laches
as to any of the disputed obligations by either party.
7. RESERVATION OF RIGHTS OF GEMAS AND CBSA. This Agreement shall not
prejudice any rights or remedies of Gemas or of CBSA, and shall not be deemed
a waiver of any remedy which Gemas or CBSA may have against the other under
the laws of the State of Colorado except as provided in this Agreement.
8. BINDING EFFECT. This Agreement shall be binding upon the parties
hereto and their legal representatives, successors and assigns.
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9. NOTICES. All notices, requests, demands, consents and other
communications which are required or may be given under this Agreement
(collectively, the "notices") shall be in writing and be given either
a. by personal delivery against a receipted copy,
b. upon receipt or refusal by certified U.S. Mail, return receipt
requested, postage prepaid, or
c. by facsimile against a confirmed receipt, to the following
address:
I. If to Gemas, to: Wayne Gemas
P.O. Box 156
Unit 4
464 South Lake Street
Elkhart Lake, WI 53020
Facsimile: 920-876-2061
with a copy to: Richard D. Riebel, Esq.
Godfrey, Braun & Frazier
16th Floor
735 North Water Street
Milwaukee, WI 53202-4188
Facsimile: 414-278-0421
II. If to CBSA, to: College Bound Student Alliance
Attn: Jerome Lapin
5375 DTC Parkway, Suite 110
Englewood, CO 80111
Facsimile: 303-304-0315
with a copy to: Paul A. Lester, Esq.
Fieldstone Lester Shear & Danberg
First Union Financial Center
Suite 2100
200 South Biscayne Boulevard
Miami, FL 33131
Facsimile: 305-982-1550
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or such other address of which at least five (5) days prior written
notice in accordance with this paragraph shall have been provided by
such party. Notices may only be given in an manner hereinabove
described in this Paragraph 9 and shall be deemed received when given
in such manner.
10. NON-WAIVER. No delay or failure by a party to assert any rights
under this Agreement, and no partial or single exercise of that right, shall
constitute a waiver of that or any other right unless otherwise expressly
provided herein.
11. HEADINGS. Headings in this Agreement are for convenience only and
shall not be used to interpret or construe its provisions.
12. GOVERNING LAW. This addendum shall be construed in accordance with
and governed by the laws of the State of Colorado before the appropriate
decider of fact and law in the City of Milwaukee, Wisconsin.
13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts each of which shall be deemed an original but all of which
together shall constitute one in the same instrument.
14. SEVERABILITY. If any portion of this agreement is held to be
invalid or unenforceable for any reason, it is agreed that this invalidity or
unenforceability shall not affect the other portions of this agreement, and
that the remaining covenants, terms, and conditions or portions thereof shall
remain in full force and any court of competent jurisdiction may so modify
the objectionable provision as to make it valid, reasonable, and enforceable.
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In Witness Whereof, the parties have signed and executed this Agreement
as of this 20th day of March, 2000.
COLLEGE BOUND STUDENT ALLIANCE, INC.
By: /s/ Janice A. Jones
------------------------------------
Name
Janice A. Jones
------------------------------------
Printed Name
Corporate Secretary
------------------------------------
Title
/s/ Wayne Gemas
------------------------------------
Wayne Gemas
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ADDENDUM TO STOCK PURCHASE AGREEMENT
This Addendum to the Stock Purchase Agreement dated March 29, 1999 (the
"Addendum") by and between College Bound Student Alliance, Inc., a/k/a
SportsStar Marketing, Inc., a Colorado corporation (the "CBSA") and Wayne O.
Gemas (the "Gemas"), is made on December 9, 1999.
RECITALS
WHEREAS, CBSA is indebted to Gemas pursuant to a promissory note for
the amount of $176,000.00 and a promissory note for the amount of
$208,887.30, both dated as of April 15, 1999 (collectively referred to as the
"Notes") for the amounts of the Notes plus interests accrued thereon (the
"Indebtedness"), said Notes were made as consideration for the purchase of
College Bound Student-Athletes, Inc. ("CBSA") by CBSA from Gemas pursuant
to that certain Stock Purchase Agreement dated as of March 29, 1999, by and
between CBSA and Gemas; and
WHEREAS, the parties desire to change the due date for the initial
payments of the principal balances and accrued interests on the Notes to
December 15, 1999 without impairing any of the Gemas's rights and remedies;
and
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the receipt and sufficiency of which are acknowledged, the
parties hereby agree as follows:
1. DELAY OF COLLECTION AND ACCELERATION. Gemas agrees to (i) delay
collection of the Indebtedness pursuant to the promissory note for the amount
of $176,000.00 and the promissory note for the amount of $208,887.30 delay
until December 15, 1999 and (ii) refrain from acceleration of the payment for
the entire amount of the Indebtedness for as long as this Addendum is in
effect notwithstanding any right of acceleration that may be exercised by
Gemas under the terms of the Notes due to the agreements contained herein.
2. CREDIT BACK FROM GEMAS. Gemas acknowledges that as of the date of
this Agreement, CBSA had advanced several payments to him in the total amount
of $8,511.00 under the direction of Kevin Gemas. Gemas agrees to credit the
$8,511.00 toward CBSA's first two payments due under the Note at the rate of
$4,255.00 in December 1999 and $4,255.00 in January 2000.
3. GEMAS'S OBLIGATIONS ON CREDIT CARDS. Gemas acknowledges that CBSA
had taken all necessary steps to assume liability for the corporate credit
cards of CBSA, and the credit card issuers for the corporate credit cards
recognize that CBSA has primary liability for the obligations on the
corporate credit cards. Gemas will use his best efforts to negotiate for
CBSA to obtain the lowest possible minimum monthly payments on CBSA's
corporate credit cards.
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4. TRANSFER OF PLEDGED SHARES AS COLLATERAL. Upon receipt by CBSA
of the Bank Documents (defined below) from Kevin Gemas as provided in Section 6
below, CBSA shall direct Hall and Evans, L.L.C (the "Escrow Agent") to
transfer 352,000 shares of common stock of College Bound Student Alliance,
Inc. pledged by CBSA to Gemas (the "Pledged Shares") pursuant to the Stock
Pledge Agreement dated as of April 15, 1999 by and between CBSA and Gemas as
security for the obligations of the CBSA under this Addendum. CBSA shall
direct the Escrow Agent to issue a stock certificate to Gemas for the Pledged
Shares in the name of Gemas and transfer possession of the stock certificate
to Gemas. Gemas shall not take any action to sell any of the Pledged Shares
held by Gemas as collateral under this Addendum prior to December 15, 1999.
Furthermore, CBSA's obligations to pledge and turn over the stock certificate
for the Pledged Shares shall cease if Kevin Gemas fails to transfer the Bank
Documents as required in Section 6 below.
5. GOING-FORWARD PAYMENT TO GEMAS. CBSA agrees to pay Gemas,
going forward, fifteen percent (15%) of all monies received by CBSA from any
debt-based capital (other than capital received from revolving lines of
credit) or equity-based capital from any source to CBSA, provided, however,
that the aggregate payment to Gemas shall not exceed the purchase money
obligations of CBSA set forth in the Stock Purchase Agreement.
6. TRANSFER OF BANK DOCUMENTS. Gemas will direct Kevin Gemas to,
pursuant to the Resolutions of the Board of Directors of CBSA attached as
Exhibit A hereto, turn over to CBSA immediately following the execution of this
Addendum, CBSA's bank stocks, signature cards for the checks, and all other
documents necessary for CBSA to obtain access to CBSA's corporate bank
account and all information in connection with the bank account (the "Bank
Documents") that are currently under the control and possession of Kevin
Gemas in the Wisconsin office of CBSA by transferring such Bank Documents to
the Denver officer of CBSA. If Kevin Gemas fails to turn over the Bank
Documents as provided under this Paragraph 6, this entire Addendum shall
become null and void, and CBSA shall be relieved of its obligations to
transfer the stock certificates of College Bound Student Alliance, Inc. to
Gemas as provided in Paragraph 4 above.
7. UNPAID WAGES AND EMPLOYMENT WITHHOLDING TAXES. CBSA shall hold
Gemas and Kevin Gemas harmless from any liability for claims or actions
arising from unpaid wages or unpaid employment withholding taxes incurred
subsequent to the transfer of the Bank Documents to the Denver office of
CBSA, provided, however, that CBSA's assumption of liability under this
Paragraph 5 shall be limited to the liability that CBSA would incur based on
the financial account data and information provided by Kevin Gemas under
Paragraph 4 of this Addendum.
8. PAYMENT BY CBSA PRIOR TO DECEMBER 15, 1999. CBSA shall begin
payments on the Indebtedness on or prior to December 15, 1999. Thereafter,
until CBSA fulfills its monthly payment obligations for five (5) consecutive
months, the terms of this Addendum shall remain in effect and Gemas will
continue to roll forward from month to month his agreement to delay
acceleration of full payment of the Indebtedness plus all interests accrued
under the Notes. If
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CBSA makes timely payment if its monthly obligations on the Indebtedness on or
before December 15, 1999 and for each of the for five (5) consecutive months
thereafter, CBSA's obligations under this Addendum shall become null, and the
terms and provisions of the Notes with regards to default and ours shall
apply for the purposes of determining the rights and obligations of CBSA and
Gemas in the event of future default by CBSA.
9. RESERVATION OF RIGHTS OF GEMAS. This Addendum shall not
prejudice any of the rights or remedies of Gemas, and shall not be deemed a
waiver of any remedy which Gemas may have against CBSA or under the laws of
the State of Colorado, except as herein specifically provided.
10. BINDING EFFECT. This Addendum shall be binding upon the
parties hereto, their legal representatives, successors, and assigns.
11. ENTIRE AGREEMENT. Except as herein specifically provided, this
Addendum constituted the entire agreement between the parties and supersedes
all agreements previously made between the parties relating to its subject
matter.
12. NOTICES. All notices, requests, demands, consents, and other
communications which are required or may be given under this Addendum
(collectively, the "Notices") shall be in writing and shall be given either
(a) by personal delivery against a receipted copy, (b) by certified U.S.
mail, return receipt requested, postage prepaid, or by (c) facsimile against
a confirmed receipt, to the following address:
(i) If to Gemas, to:
Wayne O. Gemas
P.O. Box 156
Elkhart Lake, Wisconsin 53020-0156
with a copy to:
Richard D. Riebel, Esquire
Godfrey, Braun & Frazier
700 North Water Street
700 First Financial Centre
Milwaukee, Wisconsin 53202-4278
Facsimile 414-278-0421
(ii) If to CBSA, to:
College Bound Student Alliance, Inc.
Attn: Jerome Lapin
5275 DTC Parkway
Suite 110
Englewood, CO 80111
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Facsimile 303-804-0315
with a copy to:
Samuel David Cheris, Esquire
Hall & Evans, L.L.C.
1200 17th Street, Suite 1700
Denver, Colorado 80202
Facsimile 303-628-3421
or to such other address of which written notice in accordance with this
paragraph shall have been provided by such party. Notices may only be given
in the manner hereinabove described in this Paragraph 10 and shall be deemed
received when given in such a manner.
13. NON-WAIVER. No delay or failure by a party to exercise any
right under this Addendum, and no partial or single exercise of that right,
shall constitute a waiver of that or any other right unless otherwise
expressly provided herein.
14. HEADINGS. Headings in this Addendum are for convenience only
and shall not be used to interpret or construe its provisions.
15. GOVERNING LAW. This Addendum shall be construed in accordance
with and governed by the laws of the State of Colorado.
16. COUNTERPARTS. This Addendum may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have signed and executed this
Addendum as of this 9TH day of December, 1999.
College Bound Student Alliance, Inc.
By: /s/ Janice Jones
-----------------------------------
Name: Janice Jones
---------------------------------
Title: Corporate Secretary
--------------------------------
/s/ Wayne O. Gemas
--------------------------------------
Wayne O. Gemas
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