EXHIBIT 10(A)
SHARE EXCHANGE AGREEMENT
This Share Exchange Agreement (the "Agreement") is made and entered into
this 26th day of August, 2000, by and among Cimarron-Grandview Group, Inc., a
Washington corporation ("Cimarron" or the "Company"), Full Moon Universe, Inc.,
a California corporation ("Full Moon"), Charles Band, (Band) and Albert M.
Zlotnick ("Zlotnick").
RECITALS
A. Cimarron is a corporation organized and existing under the laws of
the State of Washington and has authorized capital consisting of 50,000,000
shares of no par value common stock ("Cimarron Common Stock"), of which
16,856,527 shares are issued and outstanding.
B. Full Moon is a corporation organized and existing under the laws of
the State of California and has authorized capital stock consisting of 1,000,000
shares of no par value common stock ("Full Moon Common Stock"), of which 100,000
shares are issued and outstanding.
C. The Boards of Directors of Cimarron and Full Moon deem it in the
best interests of the shareholders of their respective corporations that
Cimarron will acquire all of the outstanding shares of Full Moon Common Stock in
exchange for authorized but as yet unissued shares of Cimarron Common Stock (the
"Share Exchange") in accordance with the following terms:
ARTICLE 1
Share Exchange
1.1 Exchange Ratio. Each outstanding share of Full Moon Common Stock
shall be surrendered in exchange for shares of authorized but as yet unissued
Cimarron Common Stock. At the Effective Date (as defined herein) of the Share
Exchange, Cimarron shall be owned as follows:
(1) Current Full Moon shareholders 85 %
(2) Existing Cimarron shareholders 15 %
Due to the fact that additional Full Moon Common Stock may be issued prior
to Effective Date, there is no share exchange ratio set forth herein, but only
the relative percentages that shall be owned by the shareholders of Full Moon
and Cimarron upon Effective Date of the Share Exchange.
1.2 Treasury Shares. Any shares of Full Moon Common Stock held in the
treasury of Full Moon on the Effective Date will not be deemed to be issued or
outstanding for purposes of the Share Exchange. Such shares shall automatically
be cancelled, and no shares of the Cimarron Common Stock will be issued in
respect of such treasury shares.
1.3 Fractional Shares. No fractional shares of Cimarron Common Stock
will be issued. In lieu of any fractional share, Cimarron shall pay the
surrendering holder of Full Moon Common Stock cash equal to the value of the
fractional share, based upon the book value of one whole share of Full Moon
Common Stock on the Effective Date.
1.4 Exchange of Shares. On the Effective Date, each holder of one or
more shares of Full Moon Common Stock shall surrender any and all certificates
representing such shares to Cimarron, or its appointed agent, in such manner
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as Cimarron shall reasonably and legally require. Upon receipt of any such
certificate, Cimarron will issue in exchange therefore a certificate
representing the number of shares of Cimarron Common Stock the surrendering Full
Moon shareholder is entitled to receive pursuant to the provisions of Article
1.1, above.
1.5. Exchange Ratio Adjustment. The parties acknowledge that the
exchange ratios set forth in Article 1.1 are based on Full Moon's projected
after tax earnings. In the event that Full Moon's after tax earnings for the
period from January 1, 2001 through December 31, 2002 are less than $8,000,000
then the Exchange Ratio shall be adjusted using the following formula:
[1.00-(X/Y)] x .75 x Z = A
X = Actual after tax earnings
Y = Projected after tax earnings ($8,000,000)
Z = Shares issued to Full Moon in Share Exchange
A = Full Moon Shares to be cancelled
Any accreted after tax earnings attributable to business activities not
currently being undertaken by Full Moon (i.e. acquisition of other business
opportunities) shall not be counted in the calculation of after tax earnings for
the purposes of this Article 1.5.
ARTICLE 2
Representations and Warranties Regarding Cimarron
Cimarron hereby represents and warrants to Full Moon as follows:
2.1 Organization and Qualification. Cimarron is a corporation duly
organized, validly existing and in good standing under the laws of Washington
and has the requisite corporate power and authority to carry on its business as
it is now being conducted. Cimarron is duly qualified to do business and is in
good standing in each jurisdiction in which the character of its properties,
owned or leased, or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified or in good standing would
not have a material adverse effect on the business, financial condition or
results of operations of Cimarron taken as a whole (a "Material Adverse
Effect"). Copies of the Articles of Incorporation and By-Laws of Cimarron
heretofore delivered to Full Moon are accurate and complete as of the date
hereof.
2.2 Capitalization. As of the date hereof, the authorized capital
stock of Cimarron consists of 50,000,000 shares of no par value common stock, of
which 16,856,527 Shares are issued and outstanding. There are no options,
warrants, puts, calls or other rights, agreements or commitments of any
character whatsoever requiring the issuance, sale, transfer or repurchase by
Cimarron of any shares of capital stock of Cimarron or any securities
convertible into or exchangeable or exercisable for, or otherwise evidencing a
right to acquire, any shares of capital stock of Cimarron. All of the
outstanding shares of capital stock of the Cimarron have been duly authorized
and validly issued and are, except as set forth in Schedule 2.2, fully paid and
nonassessable and are not subject to, nor were they issued in violation of, any
preemptive rights.
2.3 Authority. Cimarron has the requisite corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by Cimarron's
Board of Directors and, except for Cimarron shareholder approval, no other
corporate proceedings on the part of Cimarron are necessary to authorize this
Agreement and the transactions contemplated hereby. This Agreement has been duly
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executed and delivered by Cimarron and constitutes the valid and legally binding
obligation of Cimarron enforceable against Cimarron in accordance with its
terms.
2.4 Financial Statements. The audited financial statements of Cimarron
for the fiscal years ended 1998 and 1999, which have been previously delivered
to Full Moon, present fairly in all material respects the financial position,
results of operations and changes in cash flow of Cimarron as of the dates
thereof and for the periods indicated therein in conformity with generally
accepted accounting principles (except as otherwise indicated in such financial
statements and the notes thereto) on a basis consistent with prior periods.
Except as and to the extent set forth on the balance sheet of Cimarron, at the
date thereof, Cimarron did not have any liabilities or obligations, direct, or
indirect, whether accrued, absolute, contingent or otherwise ("Liabilities"),
except for Liabilities that will not have a Material Adverse Effect and that
will not have a material adverse effect on the ability of Cimarron to consummate
the transactions contemplated hereby.
2.5 Absence of Certain Changes. Except as contemplated herein or set
forth on Schedule 2.5, since December 31, 1999, there has not occurred (i) any
material adverse change in the business, financial condition or results of
operations of Cimarron or (ii) any loss or damage to any of the properties of
Cimarron (whether or not covered by insurance) which has had or would be likely
to have a Material Adverse Effect. Except as set forth on Schedule 2.5, Cimarron
has not since December 31, 1999:
(a) paid or declared any dividends or other distributions upon its stock or
redeemed, purchased or otherwise acquired any of its shares of stock, except as
specifically contemplated by this Agreement;
(b) sold, assigned, transferred, mortgaged, pledged, subjected to any
material lien, adverse claim or other encumbrance or suffered any material lien,
adverse claim or other encumbrance on any of its material tangible or intangible
assets, including material copyrights, trademarks trade names, patents and
licenses, except in the ordinary course of business;
(c) made any material changes in employee compensation or benefit plans and
programs, except in the ordinary course of business and consistent with past
employment practices or as required by agreement or law;
(d) entered into any other material transaction, except in the ordinary
course of business or as specifically contemplated by this Agreement;
(e) paid or incurred any material obligation or liability (absolute or
contingent), except obligations or liabilities incurred in the ordinary course
of the operation of its business as carried on at and prior to the date of this
Agreement;
(f) Canceled without payment in full or compromised any material claim,
notes, loans or obligations or other rights of value receivable from any person,
except in the ordinary course of business;
(g) issued or authorized the issuance of additional shares of stock or any
options, warrants or rights to acquire any shares of its stock, as the case may
be, or made any contribution to the equity capital of any entity.
(h) terminated or made any material amendment to any material contract,
lease, license or any other material agreement, except in the ordinary course of
business; or
(i) entered into any agreement or understanding to do any of the
foregoing.
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2.6 No Violations; Consents.
(a) Neither the execution and delivery of this Agreement by Cimarron nor the
consummation of the transactions contemplated hereby, nor compliance by with any
of the provisions hereof will: (i) violate, conflict with, or result in breach
of any provision of, require any consent, approval or notice under, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) or result in a right of termination or acceleration
under any of the terms, conditions or provisions of (x) its charter or by-laws
or (y) any material note, bond, mortgage, indenture, deed of trust, agreement,
lien, contract or other instrument or obligation to which Cimarron or any of its
shareholders is a party or to which any of them, or any of their respective
properties or assets, may be subject or by which Cimarron is bound; or (ii)
subject to compliance with the statutes and regulations referred to in Section
2.4(b), violate any judgment, ruling, order, writ, injunction, determination,
award, decree, statute, ordinance, rule or regulation applicable to Cimarron or
any of its shareholders or any of their respective properties or assets (except,
in the case of each of clauses (i) and (ii) above, for such violations,
conflicts, breaches, defaults, terminations or accelerations which, or any
consents, approvals or notices which if not given or received, would not have
any Material Adverse Effect on the business, financial condition or results of
operations of Cimarron taken as a whole or on the ability of Cimarron to
consummate the transactions contemplated hereby).
(b) There is (i) no legal impediment to Cimarron's consummation of the
transactions contemplated by this Agreement, and (ii) no filing or registration
with, or authorization, consent or approval of, any domestic or foreign public
body or authority is necessary for the consummation by Cimarron of the
transactions contemplated by this Agreement; except (i) for such filings or
registrations which, if not made, or for such authorizations, consents or
approvals which, if not received, would not have any material adverse effect on
the business, financial condition or results of operations of Cimarron taken as
a whole or on the ability of Cimarron and to consummate the transactions
contemplated hereby, and (ii) for such filings, registration, authorization,
consent or approvals as may be required by the provisions of the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "Hart-Scott-Rodino Act"),
and the Washington Business Corporations Act.
2.7.1 Litigation. Except as disclosed on Schedule 2.7, there are no
actions, suits Cimarron or its officers or directors in their capacity as such
which are reasonably likely to have a Material Adverse Effect.
2.8 Taxes. Except as set forth on Schedule 2.8, Cimarron has timely filed
or caused to be timely filed with the appropriate Federal, state, local and
foreign governmental agencies, all material tax returns, information returns,
forms and reports required to be filed and have timely paid in full all taxes
shown to be due on or before the date hereof on such tax returns. For purposes
of this Agreement, the term "tax" shall include all interest, penalties and
additions to tax related thereto. Except as set forth in 2.8, no material tax
liens have been filed and no material claims are being asserted in writing with
respect to the assessment or collection of any taxes. Except as set forth in
Schedule 2.8, there are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any material tax returns required
to be filed with respect to Cimarron. The Federal income tax returns of Cimarron
have been examined for all taxable years through the year ended 1999. The
Federal income tax returns of Cimarron are not being audited as of the date of
the execution of this Agreement. Cimarron has not made any consent under
Section 341(f) of the Code. The accrued current liability for taxes (which shall
not include an accrual for the current portion of and deferred tax assets or
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liabilities) in the balance sheet of Cimarron at December 31, 1999 adequately
provides for all unpaid taxes relating to the business, assets, and activities
of Cimarron for periods ending on or prior to the date thereof.
2.9 Change of Domicile. In connection with the transactions
contemplated hereby Cimarron shall cause the domicile of the company to be
changed to the state of Nevada.
2.10 Brokerage Fees. Cimarron has not retained any financial adviser,
broker, agent or finder or paid or agreed to pay any financial adviser, broker,
agent or finder on account of this Agreement or any transaction contemplated
hereby.
2.11 Accuracy of Information Furnished. No statement by Cimarron
contained in this Agreement or furnished to Full Moon contains any untrue
statement of a material fact, or omits to state any material fact which is
necessary to make the statements contained herein, in light of the circumstances
under which they were made, not misleading.
ARTICLE 3
Representations and Warranties of Full Moon
Full Moon hereby represents and warrants to Cimarron as follows:
3.1 Organization and Qualification. Full Moon is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of California and has the requisite corporate power and authority to carry on
its business as it is now being conducted. Full Moon is duly qualified to do
business and is in good standing in each jurisdiction in which the character of
its properties, owned or leased, or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a material adverse effect on the business, financial
condition or results of operations of Full Moon taken as a whole (a "Material
Adverse Effect"). Copies of the Articles of Incorporation and By-Laws, as
amended, of Full Moon previously delivered to Cimarron are accurate and complete
as of the date hereof.
3.2 Capitalization. As of the date hereof, the authorized capital
stock of Full Moon consists of 1,000,000 shares of no par value common stock, of
which 100,000 shares are issued and outstanding. Except as set forth in Schedule
3.2, there are no options, warrants, puts, calls or other rights, agreements or
commitments of any character whatsoever requiring the issuance, sale, transfer
or repurchase by Full Moon of any shares of capital stock of Full Moon or any
securities convertible into, or exchangeable or exercisable for, or otherwise
evidencing a right to acquire, any shares of capital stock of Full Moon. All of
the outstanding shares of capital stock of Full Moon have been duly authorized
and validly issued and are fully paid and non-assessable and are not subject to,
nor were they issued in violation of, any preemptive rights.
3.3 Authority. Full Moon has the requisite corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. Full Moon's Board of Directors has duly authorized the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby. Except for the approval by Full Moon's shareholders, no other corporate
proceedings on the part of Full Moon are necessary to authorize this Agreement
and the transactions contemplated hereby or thereby. This Agreement has been
duly executed and delivered by Full Moon and constitutes the valid and legally
binding obligation of Full Moon enforceable against Full Moon in accordance with
its terms.
<PAGE> 11
3.4 Financial Statements. The unaudited financial statements of Full
Moon for the six month period ended June 30, 2000, which have been previously
delivered to Cimarron, present fairly in all material respects the financial
position, results of operations and changes in cash flow of Full Moon as of the
dates thereof and for the periods indicated therein in conformity with generally
accepted accounting principles (except as otherwise indicated in such financial
statements and the notes thereto) on a basis consistent with prior periods.
Except as set forth in Schedule 3.4 and except as and to the extent set forth on
the balance sheet of Full Moon, at June 30, 2000, Full Moon did not have any
liabilities or obligations, direct, or indirect, whether accrued, absolute,
contingent or otherwise ("Liabilities"), except for Liabilities that will not
have a Material Adverse Effect and that will not have a Material Adverse Effect
on the ability of Full Moon to consummate the transactions contemplated hereby.
3.5 Absence of Certain Changes. Except as contemplated herein or set
forth on Schedule 3.5, since June 30, 2000, there has not occurred (i) any
material adverse change in the business, financial condition or results of
operations of Full Moon or (ii) any loss or damage to any of the properties of
Full Moon (whether or not covered by insurance) which has had or would be likely
to have a Material Adverse Effect. Except as set forth on Schedule 3.5, Full
Moon has not since June 30, 2000:
(a) paid or declared any dividends or other distributions upon its stock or
redeemed, purchased or otherwise acquired any of its shares of stock, except as
specifically contemplated by this Agreement;
(b) sold, assigned, transferred, mortgaged, pledged, subjected to any
material lien, adverse claim or other encumbrance or suffered any material lien,
adverse claim or other encumbrance on any of its material tangible or intangible
assets, including material copyrights, trademarks trade names, patents and
licenses, except in the ordinary course of business;
(c) made any material changes in employee compensation or benefit plans and
programs, except in the ordinary course of business and consistent with past
employment practices or as required by agreement or law;
(d) entered into any other material transaction, except in the ordinary
course of business or as specifically contemplated by this Agreement;
(e) paid or incurred any material obligation or liability (absolute or
contingent), except obligations or liabilities incurred in the ordinary course
of the operation of its business as carried on at and prior to the date of this
Agreement;
(f) canceled without payment in full or compromised any material claim,
notes, loans or obligations or other rights of value receivable from any person,
except in the ordinary course of business;
(g) issued or authorized the issuance of additional shares of stock or any
options, warrants or rights to acquire any shares of its stock, as the case may
be, or made any contribution to the equity capital of any entity.
(h) terminated or made any material amendment to any material contract,
lease, license or any other material agreement, except in the ordinary course of
business; or
(i) entered into any agreement or understanding to do any of the
foregoing.
3.6 No Violations; Consents.
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(a) Except as set forth in Schedule 3.6, neither the execution and delivery
of this Agreement by Full Moon nor the consummation of the transactions
contemplated hereby, nor compliance by Full Moon with any of the provisions
hereof will: (i) violate, conflict with, or result in a breach of any provision
of, require any consent, approval or notice under, or constitute a default (or
in event which, with notice or lapse of time or both, would constitute a
default) or result in a right of termination or acceleration under, or result in
the creation of any lien, security interest, charge or encumbrance upon any of
the properties or assets of Full Moon under any of the terms, conditions or
provisions of (x) its Articles of Incorporation or by-laws or (y) any note,
bond, mortgage, indenture, deed of trust, agreement, lien, contract or other
instrument or obligation to which Full Moon is a party or to which any of its
respective properties or assets may be subject or by which Full Moon is bound;
(ii) subject to compliance with the statutes and regulations referred to in
Section 3.6(b), violate any judgment, ruling, order, writ, injunction,
determination, award, decree, statute, ordinance, rule or regulation applicable
to Full Moon or any of its properties or assets (except, in the case of each of
clauses (i) and (ii) above, for such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens, security interests, charges
or encumbrances which, or any consents, approvals or notices which if not given
or received, individually or in the aggregate, would not have a Material Adverse
Effect); or (iii) subject to compliance with the statutes and regulations
referred to in Section 3.6(b), cause the suspension or revocation of any
authorization, consent, approval or License (as hereinafter defined) currently
in effect which would have a Material Adverse Effect.
(b) (i) there is no legal impediment to Full Moon's consummation of the
transactions contemplated by this Agreement and (ii) no filing or registration
with, or authorization, consent or approval of, any public body or authority is
necessary for the execution, delivery or consummation by Full Moon of the
transactions contemplated by this Agreement; except (i) for such filings or
registrations which, if not made, or for such authorizations, consents or
approvals which, if not received, would not have a Material Adverse Effect or
would not materially adversely affect the ability of Full Moon to consummate the
transactions contemplated hereby, and (ii) for such filings, registration,
authorization, consent or approvals as may be required by the provisions the
Hart-Scott-Rodino Act and the California Business Corporations Act.
3.7 Litigation. Except as disclosed on Schedule 3.7, there are no
actions, suits or proceedings pending or, to the knowledge of the management of
Full Moon, threatened against Full Moon or its officers or directors in their
capacity as such which are reasonably likely to have a Material Adverse Effect.
3.8 Taxes. Except as set forth on Schedule 3.8, Full Moon has timely
filed or caused to be timely filed with the appropriate Federal, state, local
and foreign governmental agencies, all material tax returns, information
returns, forms and reports required to be filed and have timely paid in full all
taxes shown to be due on or before the date hereof on such tax returns. For
purposes of this Agreement, the term "tax" shall include all interest, penalties
and additions to tax related thereto. Except as set forth in Schedule 3.8, no
material tax liens have been filed and no material claims are being asserted in
writing with respect to the assessment or collection of any taxes. Except as set
forth in Schedule 3.8, there are no outstanding agreements or waivers extending
the statutory period of limitation applicable to any material tax returns
required to be filed with respect to Full Moon. The Federal income tax returns
of Full Moon have been examined for all taxable years through the year ended
1999. The Federal income tax returns of Full Moon are not being audited as of
the date of the execution of this Agreement. Full Moon has not made any consent
under Section 341(f) of the Code. The accrued current liability for taxes (which
shall not include an accrual for the current portion of and deferred tax assets
or liabilities) in the balance sheet of Full Moon at June 30, 2000, adequately
<PAGE> 13
provides for all unpaid taxes relating to the business, assets, and activities
of Full Moon for periods ending on or prior to the date thereof.
3.9 Licenses. Full Moon (the "License Holder") duly hold all licenses,
franchises, authorizations, permits, ordinances, certificates, consents and
approvals (collectively, the "Licenses") of all governmental or regulatory
agencies, whether Federal, state or local, necessary or appropriate to enable it
to continue to conduct its business in all material respects as presently
conducted. Schedule 3.9 reasonably identifies each material License in effect on
the date of this Agreement. Each of the foregoing Licenses is in full force and
effect and there are no pending modifications, amendments or revocation
proceedings that would have a Material Adverse Effect. All material fees,
including material franchise fees, due and payable to governmental authorities
pursuant to the Licenses have been paid and no event has occurred which,
individually or in the aggregate, and with or without the giving of notice or
the lapse of time or both, would constitute grounds for revocation thereof and
would have a Material Adverse Effect. The License Holder is in compliance with
all of the terms of the Licenses and the operation its business has been and is
being conducted in accordance with all applicable provisions of such Licenses,
except in each case for such matters of non-compliance which, individually or in
the aggregate, would not have a Material Adverse Effect. The License Holder is
not in material default under any License, and there is no material condition,
event or occurrence existing, or, to the best of Full Moon's knowledge after due
investigation, any proceeding threatened or being conducted, which would cause
the termination, suspension, cancellation or non-renewal of any of the Licenses
and which termination, suspension, cancellation or non-renewal would have a
Material Adverse Effect.
3.10 Intellectual Properties. Schedule 3.10 sets forth a list of all
trademarks, trade names, service marks, copyrights or patents that Full Moon has
registered with the United States Patent and Trademark Office and the United
States Copyright Office (collectively, "Intellectual Properties"). Except as set
forth on Schedule 3.10, no proceedings have been instituted or, to the knowledge
of Full Moon, are threatened which challenge the validity or the ownership of
the Intellectual Properties. The Intellectual Properties owned by Full Moon are
in full force and effect and, to the knowledge of Full Moon, are valid.
3.11 Title to its Property. Full Moon leases or has good and
marketable title to real properties and leases and has good title to each of
their other material properties, operating assets and the film inventory as
reflected in the balance sheet of Full Moon or acquired by Full Moon after such
date. In each case the is title free and clear of all liens, claims and
encumbrances, other than (i) as set forth on Schedule 3.11 or (ii) such liens,
claims and encumbrances as do not materially interfere with the present use of
such properties or which do not materially impair the ability of Full Moon to
conduct its business. Full Moon owns or leases all of the rights, properties and
assets for the conduct of its business as presently conducted. Schedule 3.11
contains a brief identification of all real property, categorized by record
owner, owned or leased by Full Moon, including all buildings, plant,
improvements or important structures located thereon and the complete Full Moon
film inventory, including any royalties payable on such films. To the best of
Full Moon's knowledge, the buildings, plant and improvements located on the
premises identified in Schedule 3.11 and the present use thereof, comply with
all zoning laws, ordinances and regulations of governmental authorities having
jurisdiction thereof, except for such matters of non-compliance which,
individually or in the aggregate, would not have a Material Adverse Effect.
3.12 Brokerage Fees. Full Moon has not retained any financial advisor,
broker, agent or finder or paid or agreed to pay any financial advisor, broker,
agent or finder on account of this Agreement or any transaction contemplated
hereby.
<PAGE> 14
3.13 Compliance with Laws. Except as previously disclosed to Cimarron,
Full Moon is in compliance with all federal, state, local and foreign laws,
ordinances, rules, regulations and orders currently applicable to the businesses
or properties of Full Moon including, without limitation, all rules, regulations
and administrative orders relating to anti-competitive practices,
discrimination, employment, health, and safety, except for such matters of
non-compliance which, individually or in the aggregate, would not have a
Material Adverse Effect. Schedule 3.13 contains a list of all judicial consents,
orders or decrees under which Full Moon is operating or by which it is bound,
copies of which have been furnished to Cimarron.
3.14 Accuracy of Information Furnished. No statement by Full Moon
contained in this Agreement or provided to Cimarron contains any untrue
statement of a material fact, or omits to state any material fact which is
necessary to make the statements contained herein, in light of the circumstances
under which they were made, not misleading.
ARTICLE 4
Conduct of Business Pending the Share Exchange
4.1 Conduct of Business Prior to the Effective Date. Except as set
forth on Schedule 4.1, Full Moon and Cimarron each covenant and agree that,
prior to the Effective Date, unless the other party shall otherwise agree in
writing (which agreement shall not be unreasonably withheld or delayed) or as
otherwise expressly permitted or specifically contemplated by this Agreement:
(a) The business of Full Moon shall be conducted only in, and Full Moon
shall not take any action except in, the ordinary course of business, and Full
Moon shall use its best efforts to maintain and preserve its business
organization, assets, employees and business relationships; and
(b) The business of Cimarron shall be conducted only in, and Cimarron shall
not take any action except in, the ordinary course of business, and Cimarron
shall use its best efforts to maintain and preserve its business organization,
assets, employees and business relationships.
ARTICLE 5
Access to Information
5.1 Access to Information; Confidentiality. From the date hereof until
the Effective Date, Each party hereto shall cause it officers, directors,
employees and agents to afford to the other party and to the officers,
employees, agents and financing sources of the other party reasonable access
during normal business hours to their officers, employees, agents, properties,
books records and contracts, and shall furnish the other party all existing
financial, operating and other data and information as may be reasonably
requested; provided, however, that all such requests shall initially be directed
to Full Moon's executive officers. Cimarron shall give Full Moon at least two
business days' notice prior to any visit to Full Moon's facilities.
ARTICLE 6
Conditions to the Share Exchange
6.1 Conditions to the Obligation of Each Party to Effect the Share Exchange.
The respective obligations of each party to effect the Share Exchange shall
be subject to the fulfillment at or prior to the Effective Date of each of the
following conditions:
(a) This Agreement shall have been approved and adopted by the
requisite vote of the shareholders of Full Moon at the meeting referred to in
Article 7.1.
<PAGE> 15
(b) The Company shall have caused a one-for-thirty reverse stock split
of the Company's outstanding Common Stock.
(c) The shareholders of Cimarron shall have elected a Board of Directors
consisting of persons nominated by management of Full Moon.
(d) The Cimarron Articles of Incorporation shall have been amended to, among
other things, increase the number of common shares authorized, authorize the
creation of preferred shares, change the name of the Company to Full Moon,
eliminate cumulative voting for election of directors, eliminate shareholders
preemptive rights, and modify the statutory two-thirds of the shares entitled to
vote requirement.
(e) No preliminary or permanent injunction or other order, decree or ruling
issued by a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission nor any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority shall be in
effect which would (i) make the acquisition or holding by Cimarron or its
affiliates of the shares of Full Moon Common Stock illegal or (ii) otherwise
prevent the consummation of the Share Exchange.
(f) Moon shall have entered into employment contracts with Charles Band and
Mickey Kaiserman on terms acceptable to management of Cimarron. Mr. Band's
salary of $480,000 shall be subject to adjustment in the event that the
company's pre-tax profits for the year ended December 31, 2001 shall be less
than $2.5 million. Mr. Kaiserman's salary shall be set at an annual equivalent
to $3,500 per week.
6.2 Additional Conditions to the Obligation of Full Moon. The
obligation of Full Moon to effect the Share Exchange is also subject to each of
the following conditions:
(a) Cimarron shall have performed in all material respects each material
obligation to be performed by it hereunder on or prior to the Closing.
(b) The representations and warranties of Cimarron set forth in this
Agreement shall be true and correct in all material respects at and as of the
Effective Date as if made at and as of such time, except as affected by
transactions contemplated or permitted by this Agreement and except to the
extent that any such representation or warranty is made as of a specified date,
in which case such representation or warranty shall have been true and correct
as of such date; provided, however, that the representations and warranties
shall be true and correct only to the extent that neither individually nor in
the aggregate do the facts underlying the breaches thereof have a material
adverse effect on the financial condition, business or results of operations of
Cimarron taken as a whole.
6.3 Additional Conditions to the Obligations of Cimarron. The
obligations of Cimarron to effect the Merger are also subject to each of the
following conditions:
(a) Full Moon shall have performed in all material respects each material
obligation to be performed by it hereunder on or prior to the Closing.
(b) The representations and warranties of Full Moon set forth in this
Agreement shall be true and correct in all material respects at and as of the
Effective Date as if made at and as of such time, except as affected by
transactions contemplated or permitted by this Agreement and except to the
extent that any such representation or warranty is made as of a specified date,
in which case such representation or warranty shall have been true and correct
as of such date; provided, however, that the representations and warranties
<PAGE> 16
shall be true and correct only to the extent that neither individually nor in
the aggregate do the facts underlying the breaches thereof have a Material
Adverse Effect.
ARTICLE 7
7.1 Payment of certain indebtedness. Charles Band, the principal shareholder
of Full Moon has represented that there exists approximately $5.7 million of
indebtedness (the "Indebtedness") owed by certain non-operating corporations in
which he is the sole shareholder. Cimarron has agreed to assist Band in the
repayment of the Indebtedness under the following terms and conditions:
(a) Cimarron will undertake to Band to make the monthly payments due on the
Indebtedness.
(b) Band will pledge 20% of the Cimarron Shares he receives in the Share
Exchange to repay the Indebtedness (the "Pledged Shares"). At such time as the
Pledged Shares are eligible for resale, Band will sell such Pledged Shares as
may be legally sold to pay the balance of the Indebtedness and to repay Cimarron
(with interest at the Prime Rate) for all payments made on the Indebtedness in
excess of $700,000. Band shall pay all Indebtedness and repayments to Cimarron
within 24 months of the Effective Date.
(c) If necessary to facilitate the repayment of the Indebtedness, Cimarron
will undertake to register the Pledged Shares upon Band's written request.
(d) In the event that the proceeds from the sale of the Pledged Shares are
not adequate to repay all of the Indebtedness, then Cimarron shall be
responsible for the payment of the balance of the Indebtedness after application
of the proceeds from the sale of the Pledged Shares.
ARTICLE 8
8.1 Shareholder Approval. This Share Exchange Agreement shall be
submitted to the shareholders of Cimarron and Full Moon for their approval in
the manner provided by the corporate laws of their respective domiciles, at
meetings to be held on or before October 31, 2000, or such other time as the
Boards of Directors of Cimarron and Full Moon shall agree. The parties
acknowledge that this date is flexible due to the uncertainty of the timing of
any Proxy Statement review by the Securities and Exchange Commission. Promptly
after the Agreement has been approved by the shareholders of both Cimarron and
Full Moon, the officers of each company shall deliver Articles of Share Exchange
(a copy of which is attached hereto and by this reference incorporated herein)
for filing to the to their respective Secretary of State, as required under the
applicable law.
ARTICLE 9
9.1 Rights of Dissenting Shareholders. Any shareholder of Cimarron who
has the right to dissent from this Share Exchange as provided in RCW 23B.13.020,
and who so dissents in accordance with the requirements of RCW 23B.13.200
through .280, shall be entitled, upon surrender of the certificate or
certificates representing the shares with respect to which the shareholder has
the right to dissent, to receive payment of the fair value of such shares as
provided pursuant to RCW 23B.13.250.
ARTICLE 10
10.1 "Market Stand-Off" Agreement. Zlotnick hereby agrees that, during
a period of one year following the Effective Date, he shall not sell, offer to
sell, contract to sell (including, without limitation, any short sale), grant
<PAGE> 17
any option to purchase or otherwise transfer of dispose of (other than to a
donee who agrees to be similarly bound) any securities of the Company held by
him anytime during such period. Provided, however, that the Board of Directors,
by majority vote, may permit the sale of Mr. Zlotnick's shares for the purpose
of maintaining an orderly market for the Company's stock.
ARTICLE 11
11.1 Voting Trust Agreement Upon the Effective Date Zlotnick and Band
shall enter into a Voting Trust Agreement in substantially the same form as set
forth in Exhibit "B", attached hereto and by this reference incorporated herein.
ARTICLE 12
12.1 Effective Date. The Share Exchange shall be effective upon the
last to occur of the filing of the Articles of Share Exchange with the Secretary
of State of the State of Washington and the filing of the Articles of Share
Exchange with the Secretary of State of the State of California.
ARTICLE 13
13.1 Termination of Agreement. This Agreement may be abandoned at any
time prior to filing of the Articles of Share Exchange, upon a vote of a
majority of the Board of Directors of both Cimarron and Full Moon. If Full Moon
terminates the Share Exchange without cause, Full Moon agrees (a) to pay
Cimarron for all fees and costs incurred in connection with the transactions
contemplated hereby, (b) that all monies advanced ot loaned to the Company by
Zlotnick shall becaome immediately due and payable, and (c) to pay Cimarron
Liquidated damages of one million dollars ($1,000,000). For the purposes of this
Article, "for cause" shall be deemed to mean a material breach of any of
Cimarron's Representations and Warranties.
ARTICLE 14
14.1 Counterparts. This Agreement may be executed in any number of
counterparts and all of such counterparts and copies shall be and constitute an
original instrument.
ARTICLE 15
15.1 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Washington.
IN WITNESS WHEREOF, this Share Exchange Agreement has been adopted by the
undersigned corporations as of this 26th day of August, 2000.
Full Moon Universe, Inc.
By:___________________________
Charles Band, President
Cimarron-Grandview Group, Inc.
By:___________________________
Gregory B. Lipsker, President
By:___________________________
Albert M. Zlotnick
Charles Band, Individually
<PAGE> 18
EXHIBIT A
ARTICLES OF EXCHANGE
Pursuant to the provisions of the Washington Business Corporation Act,
Chapter 23B.11 RCW, the undersigned corporation hereby submits the following
Articles of Exchange for filing for the purpose of exchanging the shares of Full
Moon Universe, Inc., a California corporation ("Full Moon"), for those of
Cimarron Grandview Group, Inc., a Washington corporation ("Cimarron").
ARTICLE I
The Plan of Exchange of Cimarron's shares for those of Full Moon is
attached as Exhibit A.
ARTICLE II
The share exchange was duly approved by the shareholders of Full Moon and
Cimarron.
DATED this XX day of YYY, 2000.
Cimarron Grandview Group, Inc.
By:_________________________
Gregory B. Lipsker, President
<PAGE> 19
EXHIBIT B
ALBERT M. ZLOTNICK - CHARLES BAND
VOTING TRUST AGREEMENT
THIS VOTING TRUST AGREEMENT (the "Agreement") is made this 22nd day of
August, 2000 by and between Albert M. Zlotnick (the "Voting Trustee"), and
Charles Band (the "Shareholder").
RECITALS
A. Cimarron Grandview Group, Inc., a Washington Corporation and Full Moon
Universe, a California corporation have entered into a Share Exchange Agreement
whereby all of the outstanding Full Moon Universe shares will be exchanged for a
majority of the issued and outstanding shares of Cimarron. In connection
therewith Cimarron shall merge with and into a wholly-owned subsidiary of
Cimarron to be named Full Moon Universe, a Nevada corporation (the
"Corporation") which will be the surviving entity.
B. Zlotnick will be a minority shareholder and a creditor of the
Corporation.
C. The Shareholder will be the beneficial owner and the owner of record of a
majority of the common stock of the Corporation.
D. In order to promote their mutual interests and the interests of the
Corporation, the Shareholder desires to enter into this Agreement with the
Voting Trustee and, subject to the terms and conditions contained herein, to
transfer voting rights of the shares of common stock that he owns to the Voting
Trustee.
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
Transfer of Shares to the Voting Trustee
1.1 Assignment and Transfer of Shares. The Shareholder hereby assigns and
transfers to the Voting Trustee the number and class of shares shown opposite
his name at the end of this Agreement (collectively, the "Shares").
1.2 Endorsement and Delivery of stock Certificates. At the date hereof, and
concurrently with the execution of this Agreement by any Shareholder, the stock
certificates of the Corporation representing the Shares of such Shareholder
shall be endorsed in blank and, as so endorsed, shall be delivered to the Voting
Trustee. Upon receipt of the stock certificates, the Voting Trustee shall cause
the Shares represented thereby to be transferred of record to him on the books
of the Corporation as Voting Trustee.
1.3 Preparation of List and Delivery to Corporation. Immediately after the
execution of this Agreement, the Voting Trustee shall prepare a list containing
the name and address of the Shareholder, together with the number and class of
shares of the Shareholder transferred to the Voting Trustee pursuant to the
Agreement, and shall deliver copies of the list and this Agreement to the
Corporation's principal office. In addition, the Voting Trustee shall maintain
such list and this Agreement at its principal office. The list and Agreement
shall be available for inspection during normal business hours at the principal
office of the Corporation and the principal office of the Voting Trustee by any
shareholders of the Corporation.
<PAGE> 20
ARTICLE 2
Term of Voting Trust
2.1 Effective Date. The voting trust declared and created (the "Voting
Trust") shall become effective on the date the first shares subject to the trust
are registered in the name of the Voting Trustee (the "Effective Date").
2.2 Original Term of Voting Trust. The Voting Trust shall, subject to
earlier termination as hereinafter provided, continue for a full term of three
(3) years from the Effective Date. However, after twelve (12) months from the
Effective Date, the Voting Trustee shall release up to twenty percent of the
Shares upon the written request of the Voting Trust Certificate Holder for the
sole purpose of permitting the Shareholder to satisfy the payment of certain
indebtedness provisions of Article 7 of the Share Exchange Agreement.
ARTICLE 3
Purpose and Powers of the Voting Trustee
3.1 Exclusive Right to Vote Shares. During the term of the Agreement the
Voting Trustee shall have the exclusive right to vote such shares for the
election of the Corporation's directors so as to accomplish the purpose of the
Agreement as set forth in Article 3.1, or to give written consent in lieu of
voting thereon; provided, however, that the Voting Trustee' right to act in
respect of the Shares, shall be subject to any limitations contained in the
Articles of Incorporation of the Corporation and to this Agreement.
3.2 Voting in Person or by Proxy. The Voting Trustee may act or vote in
person or by proxy at any and all meetings of the Shareholders of the
Corporation, to effect the purpose of the Agreement
3.3 Purpose for which Share May Be Voted and Permitted Acts of the Voting
Trustee. The purpose of this Agreement is to provide that all shares of the
Corporation held by the Shareholder will be voted in support of a Board of
Directors comprised one-half as to nominees of Albert M. Zlotnick and one-half
as to nominees of the Shareholder. Except as expressly limited by, and until the
termination of, this Agreement, the Voting Trustee shall possess and be entitled
to exercise the right to vote any and all of the Shares held by him pursuant to
this Agreement only for the election of Directors. Voting of the Shares for any
purpose other than the election of Directors shall be considered an
Extraordinary Corporate Action
3.4 Voting Trustee as Shareholder, Etc. A Voting Trustee may also be a
Shareholder or a registered holder of one or more Voting Trust Certificates, and
may vote for himself as director or officer of the Corporation. A Voting
Trustee, or his successor as hereinafter provided for, may directly or
indirectly transact any lawful business with the Corporation, notwithstanding
his position as a voting trustee.
3.5 Waiver of Bond. The Voting Trustee is hereby excused from the necessity
of posting bonds in connection with his service as voting trustee.
ARTICLE 4
Extraordinary Corporate Actions
4.1 Meeting of Voting Trust Certificate Holders. In the event the Board of
Directors of the Corporation shall have duly authorized, approved and advised
the Voting Trustee, as required by law, of any Extraordinary Corporate Action
(as such term is defined in Section 4.3), the Voting Trustee shall promptly call
a meeting of all holders of the Voting Trust Certificates ("Voting Trust
Certificate Holders") by giving written notice of a meeting not less than ten
(10) days prior to the date of the meeting. Such notice shall specify the time,
<PAGE> 21
date, place and purpose of the meeting and shall provide a summary of such
information regarding the Extraordinary Corporate Action as is available to the
Voting Trustee.
4.2 Voting by Voting Trust Certificate Holders. The Voting Trustee shall
deliver to each Voting Trust Certificate Holder, or to his attorney-in-fact, in
attendance at the meeting described in Section 4.1 a proxy of the Voting Trustee
for the specific purpose of permitting such persons to vote upon the
Extraordinary Corporate Action specified in the notice of the meeting and,
anything in this Agreement to the contrary notwithstanding, each Voting Trust
Certificate Holder who shall have received a proxy shall be entitled to cast,
with respect to the Extraordinary Corporate Action, that number of votes equal
to the number of Shares of the Voting Trust Certificate. The Voting Trustee
shall be entitled to cast all votes, in accordance with their best judgment,
represented by Shares with respect to which they are not required to deliver a
proxy pursuant to this Section 4.2.
4.3 Extraordinary Corporate Action. As used herein, the term "Extraordinary
Corporate Action" means any action upon which the Corporation's shareholders
shall be entitled to vote except for the election of Directors.
4.4 Surrender of Shares upon Reclassification of Stock of the Corporation.
In case the stock of the Corporation is reclassified, the Voting Trustee is
hereby authorized to surrender as may be required under the terms of the
reclassification, and to receive and hold any and all shares of the Corporation
issued in exchange for such surrendered Shares. Following any reclassification,
the Voting Trust Certificates issued and outstanding pursuant to this Agreement
shall be deemed to represent a proportionate number of Shares or other
securities received by the Voting Trustee in exchange.
4.5 Surrender of Shares upon Merger, Etc. Upon the occurrence of any duly
authorized consolidation, merger or share exchange, the Voting Trustee is
authorized to surrender as may be required by such consolidation, merger or
share exchange the Shares of the Corporation held by it pursuant to this
Agreement, and to receive and hold hereunder any and all shares or other
securities issued to it in exchange for such surrendered Shares. The Voting
Trust Certificates shall thereupon be deemed to represent a proportionate number
of the Shares or other securities then received by the Voting Trustee in
exchange.
4.6 Surrender of Share upon Dissolution. In the event the assets of the
Corporation are distributed in connection with the dissolution of the
Corporation, the Voting Trustee shall promptly distribute any amounts received
by him, according to the interests of each Voting Trust Certificate Holder. The
obligation of the Voting Trustee to make the distribution described in the
immediately preceding sentence to a Shareholder shall be subject to the
surrender of the Voting Trust Certificate held by such Shareholder, duly
endorsed in blank. Upon the complete distribution of such assets by the Voting
Trustee, this Agreement shall terminate and the Voting Trustee shall have no
further obligation to deliver stock certificates representing the Shares held by
the Voting Trustee.
4.7 Surrender of Less Than All Shares. In the event the Voting Trustee is
required to surrender less than all the Shares held by him pursuant to this
Agreement, he shall be deemed to have surrendered, with respect to any
Shareholder, a number of Shares equal to the total number of Shares required to
be surrendered multiplied by a fraction, the numerator of which is the total
number of Shares of the Shareholder held by the Voting Trustee pursuant to this
Agreement, and the denominator of which is the total number of Shares of all
Shareholders held by the Voting Trustee pursuant to this Agreement.
<PAGE> 22
ARTICLE 5
Voting Trust Certificates
Upon delivery to the Corporation of the stock certificates representing all
of the Shares owned of record and beneficially by a Shareholder, the
cancellation of such stock certificates and the issuance by the Corporation to
the Voting Trustee of a new stock certificate or certificates representing such
Shares registered in the name of the Voting Trustee, the Voting Trustee shall
issue and deliver to such Shareholder a voting trust certificate or certificates
for the number of Shares transferred by the Shareholder to the Voting Trustee
(the "Voting Trust Certificate"). The Voting Trust Certificate shall be in
substantially the following form:
FULL MOON UNIVERSE
VOTING TRUST CERTIFICATE
No.^ ^Shares
This certifies that Charles Band has deposited ^ shares of the common
stock without par value of the above Full Moon Universe, Inc., a Nevada
Corporation, with the undersigned (the "Voting Trustee") under an agreement,
dated August 22, 2000 between Charles Band and the Voting Trustee (the
"Agreement"). This voting trust certificate and the interest represented thereby
is transferable only on the books of the voting trustee upon the presentation
and surrender hereof. The holder of this voting trust certificate takes the
certificate subject to all the terms and conditions of the Agreement and becomes
a party to the Agreement.
IN WITNESS WHEREOF, the Voting Trustee has caused this voting trust
certificate to be signed this XX day of ^, 2000
Voting Trustee
Albert M. Zlotnick
ARTICLE 6
Transfer of Voting Trust Certificates
6.1 Transfer on Books. The Voting Trust Certificates issued by the Voting
Trustee pursuant to this Agreement may be transferred on the books of the Voting
Trustee upon the surrender and cancellation of such certificates duly endorsed
by the registered holder thereof.
6.2 Rights upon Transfer. Subject to any restrictions on transfer described
in this Article 6, delivery of a Voting Trust Certificate, duly endorsed in
blank, by the registered holder thereof shall vest title in, and all rights
under, such certificate in the transferee to the same extent and for all
purposes as would delivery under like circumstances of negotiable instruments
payable to bearer.
6.3 Party to Agreement. Every transferee of a Voting Trust Certificate
issued hereunder shall, by the acceptance of such certificate, become a party to
this Agreement as though such transferee were an original party hereto.
6.4 Payment of Tax. As a condition to making or permitting any transfer or
delivery of any Voting Trust Certificates under any provision of this Agreement,
the Voting Trustee may require the payment of a sum sufficient to pay or
reimburse them for any tax required to be paid or withheld by the Voting
Trustee.
<PAGE> 23
6.5 Legend on Voting Trust Certificates. Anything contained herein to the
contrary notwithstanding, the Shareholder covenants and consents to the
placement of the following legend on all Voting Trust Certificates, and agrees
that such certificates shall be subject to terms of the such legend:
This Voting Trust Certificate is subject to the terms, restrictions and
conditions of a Voting Trust Agreement, dated ^, 2000 on file with Full Moon
Universe and with the Voting Trustee named in such agreement. The securities
represented by this Voting Trust Certificate have not been registered under the
Securities Act of 1933 or applicable state securities laws, and may not be
offered, sold, pledged, hypothecated, donated or otherwise transferred (whether
or not for consideration), except upon satisfaction of certain conditions and
upon the issuance to the Voting Trustee of a favorable opinion of his counsel
and/or submission to the Voting Trustee of such other evidence as may be
satisfactory to counsel to the Voting Trustee, to the effect that any such
transfer shall not be in violation of the Securities Act of 1933 and the
applicable state securities laws.
6.6 Investment Representations and Warranties. The Shareholder warrants and
represents that the Voting Trust Certificate being acquired by him pursuant to
this Agreement are being acquired by the Shareholder for investment purposes
only, and not with a view to or for the resale, distribution, subdivision or
fractionalization thereof. The Shareholder further warrants and represents that
he has no contract, undertaking, understanding, agreement or arrangement, formal
or informal, with any person to sell, transfer or pledge to any person the
Voting Trust Certificates, or any part thereof, and Shareholder has no present
plans to enter into any such contract, undertaking, agreement or arrangement.
6.7 Nonregistration of Voting Trust Certificates. The Shareholder
acknowledges and represents that he understands that the Voting Trust
Certificates are not registered under the Securities Act of 1933, as amended;
and that the Voting Trustee is neither presently required to file, nor does it
presently intend to voluntarily register, under Section 12 of the Securities and
Exchange Act of 1934 or file periodic reports with the Securities Exchange
Commission pursuant to Sections 13 or 15(d) of the Securities Exchange Act of
1934. The Shareholder further warrants and represents that he understands that
the Voting Trustee has not agreed with the Shareholder to register any or all of
the Voting Trust Certificates for distribution in accordance with the Securities
Act of 1933, and that Voting Trustee has not agreed with the Shareholder to
comply with any rule or other provision providing for an exemption from the
requirements of such act with respect to sale or other transfer for
consideration of the Voting Trust Certificates. The Voting Trustee has not
agreed to supply the Shareholder with such information as shall be required to
enable the Shareholder to make routine sales of any or all of the Voting Trust
Certificates under applicable provisions of Federal or state securities laws
respecting "restricted securities." Accordingly, the Shareholder warrants and
represents that he understands that the Voting Trust Certificates being acquired
hereby must be held by such Shareholder indefinitely, unless and until
subsequently registered under the ,Securities Act of 1933 and applicable state
securities law or unless an exemption from such registration is available.
ARTICLE 7
Compensation and Indemnity of Voting Trustee
7.1 Compensation. The Voting Trustee shall not be entitled to compensation
for services as voting trustee, unless such compensation is authorized by a
majority vote of the Voting Trust Certificate Holders. For purposes of this
Section 7.1 each Voting Trust Certificate Holder shall be entitled to the same
number of votes as are represented by the Voting Trust Certificate of which he
is a holder.
<PAGE> 24
7.2 Indemnification. The Voting Trust Certificate Holder agrees to defend,
indemnity and hold the Voting Trustee harmless from and against any and all
losses, costs, damages, expenses and liabilities (including reasonable
attorneys' fees) reasonably incurred by him in connection with, or arising out
of the performance of his duties under, this Agreement, and the Voting Trustee
shall be entitled from time to time to seek reimbursement from the Voting Trust
Certificate Holders for such losses, costs, damages, expenses and liabilities.
Each Voting Trust Certificate Holder shall be responsible for paying a pro rata
share of any loss, cost, damage, expense or liability based on the percentage of
all Shares subject to this Agreement represented by his Voting Trust
Certificate. In addition to, and not in lieu of, such actions in law or equity
as may be available to him, the Voting Trustee may deduct any unreimbursed item
of loss, cost, damage, expense or liability from dividends on the Shares
received by the Voting Trustee or from any other payments to which Voting Trust
Certificate Holders are entitled from the Corporation.
7.3 Willful Misconduct of the Voting Trustee. Anything in Section 7.2 to
the contrary notwithstanding, the Voting Trustee shall not be indemnified for
any act judicially determined to have been an act of willful misconduct on the
part of the Voting Trustee.
ARTICLE 8
Termination of Voting Trust
8.1 Events of Termination. Anything in this Agreement to the contrary
notwithstanding, this Agreement shall terminate upon the first to occur of the
following events:
(a) The expiration of the term set forth in Article 2 of this
Agreement;
(b) The filing, at any time, by the Voting Trustee of a declaration
with the Corporation that this Voting Trust is terminated and the sending of a
copy of such declaration to each Voting Trust Certificate Holder.
8.2 Effects of Termination. Upon the termination of this Agreement, the
Voting Trustee shall deliver to the Voting Trust Certificate Holders, in
accordance with the terms of, and out of the stock held by him pursuant to, this
Agreement, certificates of stock of the Corporation. The obligation of the
Voting Trustee to deliver certificates of stock to a Voting Trust Certificate
Holder under this Section 8.2 shall be subject to the Voting Trust Certificate
Holder surrendering, with all necessary endorsements, any Voting Trust
Certificate held by him. Upon delivery by the Voting Trustee of certificates of
stocks of the Corporation as provided herein, all liability of the Voting
Trustee for the delivery of said stock certificates shall terminate.
ARTICLE 9
Successor Trustee
In the event of the death, resignation or other permanent inability to
serve of a Voting Trustee, the vacancy resulting therefrom shall be filled by
the appointment of a successor by the remaining voting Trustees. If the
remaining Voting Trustee are unable to agree upon a person to fill the vacancy,
or if there are more than one vacancy to be filled, any Voting Trust Certificate
Holder may call a meeting, pursuant to notice given as provided in the bylaws of
the Corporation for the noticing of a shareholders' meeting, and the vacancy or
vacancies may be filled by a majority vote of those present at the meeting. The
authority, powers, duties, obligations, and limitations of the original Voting
Trustee shall devolve upon the successor Voting Trustee with the same effect as
if such successor had been named as an original Voting Trustee.
<PAGE> 25
ARTICLE 10
Standard of Care
The Voting Trustee shall exercise his best judgment in voting the Shares
represented by the stock certificate or certificates issued to him, and shall
act in the best. interest of the Shareholder. However, the Voting Trustee shall
not assume any responsibility or liability in respect of the management of the
Company, or in respect of any action that they take, or is taken pursuant to
their consent or vote, and they shall not incur any responsibility or liability,
as Shareholders, Voting Trustee or otherwise, by reason of any error of fact or
law and/or of any matter or thing done or omitted to be done, except for his
own willful misconduct.
ARTICLE 11
Notices
All notices or other communications to the Voting Trust Certificate Holders
shall be given in writing and shall be considered duly given on the date of (1)
actual receipt, or (2) three days after deposit in the first-class certified
U.S. mail, postage prepaid, return receipt requested, addressed to the Voting
Certificate Holders at the addresses furnished by such holders to the Voting
Trustee. Mailing as provided herein shall be deemed to satisfy the notice
requirement of any provision of this Agreement requiring the giving of notice.
ARTICLE 12
Additional Securities
In the event the Voting Trustee shall receive any additional securities (as
defined by the Federal Securities Act of 1933) of the Corporation, including
stock dividends upon stock held by the Voting Trustee pursuant to this
Agreement, the Voting Trustee shall hold such stock certificates subject to the
terms of this Agreement, and shall issue Voting Trust Certificates representing
such stock certificates to the Voting Trust Certificate Holder entitled to such
issuance.
ARTICLE 13
Dividend and Other Payments
13.1 Right to Payments. Subject to the terms and conditions of this
Agreement and until the termination of this Agreement, each Voting Trust
Certificate Holder shall be entitled to receive promptly from the Voting Trustee
(i) payments equal to the amount of the dividends (other than stock dividends)
or other distributions, if any, collected by the Voting Trustee upon the number
of Shares standing in the name of such Voting Trust Certificate Holder, and (ii)
any payment representing the amount received upon redemption or sale of any
Shares represented by the Voting Trust Certificate held by him or her. The
Voting Trust Certificate Holders on the dates fixed as record dates by the
Corporation for dividends and for the allotment of rights to shareholders shall
be entitled to such payments and to such rights.
13.2 Closing of Voting Trust Certificate Transfer Book. The Voting Trustee
may from time to time close the Voting Trust Certificate books against transfers
of Voting Trust Certificates for the purpose of determining the Voting Trust
Certificate Holders entitled to the payments described in Section 13.1, or for
the purpose of determining the Voting Trust Certificate Holders entitled to vote
at any meeting.
<PAGE> 26
ARTICLE 14
Amendment of Agreement
If the Voting Trustee deems it advisable to amend this Agreement, he shall
call a meeting of the Voting Trust Certificate Holders and shall submit the
proposed amendment to the Voting Trust Certificate Holders for approval, with
his recommendation that the amendment be adopted. The approval at such meeting
of two-thirds of the Shares subject to this Agreement shall be required to
approve the amendment. If the amendment is approved, a certificate to that
effect shall be made by the Voting Trustee, and such certificate, together with
a copy of the amended Agreement, shall be filed in the principal office of the
Corporation. The Voting Trustee shall also maintain a copy of the certificate of
amendment and the amended Agreement in his principal office. Upon filing the
certificate and the amended Agreement with the Corporation, the amendment shall
become effective.
ARTICLE 15
Miscellaneous
15.1 Captions. The captions set forth herein are for convenience and
reference only and are not intended to modify, limit, describe or affect in any
way the contents, scope or intent of this Agreement.
15.2 Definition. All terms used herein which are defined in this Agreement
shall have the meaning set forth in this Agreement, unless the context clearly
indicates otherwise. Other capitalized words shall have the meaning set forth in
the Share Exchange Agreement.
15.3 Gender and Plural. Whenever the sense of this Agreement so requires,
the masculine and/or feminine gender shall be substituted for or deemed to
include the neuter and the plural the singular, and vice versa.
15.4 Counterparts. This Agreement may be executed in several counterparts,
each of which so executed shall be deemed to be an original, and such
counterparts shall together constitute one and the same instrument.
15.5 Governing Law. This Agreement was made in the State of Washington and
shall be governed by and construed in all respects in accordance with the laws
of the State of Washington.
15.6 "Corporation". The term "Corporation" ' for the purposes of this
Agreement and of all rights hereunder, including the issue and delivery of stock
certificates, shall be taken to mean Cimarron-Grandview Group, Inc., a
Washington corporation, or any corporation successor to it.
15.7 Heirs, Legatees, Personal Representatives, Etc. Each and all of the
terms and provisions of this Agreement shall be and are hereby made binding upon
the Shareholder, his heirs, legatees, personal representatives, guardians and
permitted assigns.
15.8 Meetings of Voting Trust Certificate Holders. Except as provided in
Article 22, the Voting Trustee shall have no duty to hold meetings of holders of
voting trust certificates. Ten (10) days' prior written notice of every meeting
of Voting Trust Certificate Holders shall be given and such notice shall state
the place, day and hour and the purpose, if any, of such meeting. Any Voting
Trust Certificate Holder may waive such notice in writing, either before or
after the holding of the meeting. No notice of any adjourned meeting need be
given. Every such meeting shall be held at a place designated by the Voting
Trustee, unless the Voting Trust Certificate Holders representing two-thirds of
the stock held by the Voting Trustee consent in writing to the holding of a
meeting at another place.
<PAGE> 27
15.9 Financial Statements. The Voting Trustee shall furnish copies of such
financial statements of the Corporation as shall be furnished the Voting Trustee
by the accountants regularly servicing the Corporation and such other notices
and communications as are directed to stockholders of the Corporation.
15.10 Mutilation, Loss, or Destruction of Voting Trust Certificate. The
holder of any voting trust certificate shall immediately notify the Voting
Trustee of any mutilation, loss or destruction thereof, and the Voting Trustee
may, in his discretion, cause one or more new certificates representing the same
number of Shares in the aggregate, to be issued to such holder upon the
surrender of the mutilated certificates, or in case of loss or destruction, upon
satisfactory proof of such loss or destruction, and the deposit of indemnity by
way of bond or otherwise, in such form and amount and with such surety or
sureties as the Voting Trustee may require to indemnity him against loss or
liability by reason of the issuance of such new certificates; provided, however,
that the Voting Trustee may, in his discretion, refuse to issue such new
certificates, except upon the order of a court having jurisdiction in such
matters.
15.11 Amendment of Agreement. This Voting Trust Agreement may be amended by
the written agreement of Voting Trust Certificate Holders representing not less
than two-thirds of the Shares entitled to vote.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date above stated.
_______________________________
Albert M. Zlotnick, Voting Trustee
________________________________
Charles Band, Shareholder
Class of Shares Held: Common
Number of Shares held:
<PAGE> 28
Schedule 2.2
------------
CAPITALIZATION
800,000 shares of the Company's common stock are not fully paid. The shares were
issued pursuant to two promissory notes due January 26, 2001. The Company is
currently holding the share certificates as security for payment of the notes.
SCHEDULE 2.5
Absence of Certain Changes
None
SCHEDULE 2.7
LITIGATION
None
SCHEDULE 2.8
TAXES
NOT APPLICABLE
Schedule 3.2
Capitalization
IN CONNECTION WITH THE LOAN AND SECURITY AGREEMENT BETWEEN FULL MOON AND COAST
CAPITAL PARTNERS ("CCP"), CCP HAS THE RIGHT TO PURCHASE UP TO 200,000 SHARES OF
FULL MOON COMMON STOCK AT ANY TIME FROM DECEMBER 31, 2000 UNTIL DECEMBER 31,
2001. THE PURCHASE PRICE OF THE SHARES SHALL BE IN THE FORM OF DEBT FORGIVENESS
OR, IN THE EVENT THAT FULL MOON OWES CCP LESS THAN $200,000 AT THE TIME OF
CONVERSION, THEN PAYMENT SHALL BE MADE IN THE FORM OF DEBT FORGIVENESS, IF ANY,
AND CASH. THE PURCHASE PRICE FOR THE SHARES SHALL BE AT A 25% DISCOUNT TO THE
CLOSING BID PRICE FOR THE SHARES FOR THE 30 DAYS PRIOR TO CONVERSION.
SCHEDULE 3.4
FINANCIAL STATEMENTS
THE FINANCIAL STATEMENTS DO NOT HAVE ANY PROVISION FOR ACCRUED FEDERAL OR
CALIFORNIA STATE TAXES
SCHEDULE 3.5
ABSENCE OF CERTAIN CHANGES
NONE
SCHEDULE 3.6
NO VIOLATIONS; CONSENTS
NONE
SCHEDULE 3.7
LITIGATION
NONE
SCHEDULE 3.8
TAXES
THE FINANCIAL STATEMENTS HAVE NO PROVISION FOR ACCRUED FEDERAL OR CALIFORNIA
STATE INCOME TAXES
<PAGE> 29
SCHEDULE 3.9
LICENSES
NONE
SCHEDULE 3.10
INTELLECTUAL PROPERTIES
Trademarks, Trade Names, Service Marks
--------------------------------------
FULL MOON UNIVERSE
FULL MOON PICTURES
FULL MOON TOYS
FULL MOON INTERNATIONAL
FULL MOON MERCHANDISING
FULL MOON RELEASING
MONSTER ISLAND ENTERTAINMENT
BIG CITY PICTURES
BIG CITY RECORDS
ALCHEMY ENTERTAINMENT
PULSEPOUNDERS
CULTVIDEO
FILMONSTERS
TANA PRODUCTIONS
TANA 3000
SURRENDER CINMEA
SURRENDER RELEASING
SURRENDER PRODUCTIONS
SURRENDER CINEMA PRODUCTIONS
SURRENDER MERCHANDISING
<PAGE> 30
SCHEDULE 3.11
TITLE TO PROPERTIES
AND FILM INVENTORY
The assignment of the lease for the Company's business offices has not been
completed at the date hereof.
Film Inventory
1. PUPPETMASTER
2. SHADOWZONE
3. MERIDIAN
4. CRASH & BURN
5. PUPPETMASTER II
6. PIT & THE PENDULUM
7. SUBSPECIES
8. TRANCERS II
9. DOLLMAN
10. NETHERWORLD
11. DEMONIC TOYS
12. PUPPETMASTER III
13. DR. MORDRID
14. TRANCERS II
15. SEEDPEOPLE
16. BAD CHANNELS
17. SUBSPECIES 2
18. ROBOTWARS
19. MANDROID
20. DOLLMAN VS. THE DEMONIC TOYS
21. PUPPETMASTER 4
22. TRANCERS 4
23. SUBSPECIES 3
24. ARCADE
25. INVISIBLE
26. LURKING FEAR
27. DARKANGEL
28. PUPPETMASTER 5
29. TRANCERS 5
30. OBLIVION
31. SHRUNKEN HEADS
32. BEACH BABES FROM BEYOND
33. TEST TUBE TEENS
34. HUNTRESS (SPIRIT OF THE NIGHT)
35. BEACH BABES 2: CAVE GIRL ISLAND
36. BLONDE HEAVEN
37. PETTICOAT PLANET (DENIM & LACE)
38. LURID TALES OF THE CASTLE QUEEN
39. FORBIDDEN ZONE: ALIEN ABDUCTION
40. ASSAULT OF THE KILLER BIMBOS
41. CEMETERY HIGH
42. CREEPOZOIDS
43. GALACTIC GIGOLO
44. THE OCCULTIST
45. SLAVE GIRLS FROM BEYOND INFINITY
46. SORORITY BABES IN THE SLIMEBALL BOWL-O-RAMA
47. CANNIBAL WOMEN IN THE AVOCADO JUNGLE OF DEATH
48. DR. ALIEN
49. INTRUDER
50. THE DAY TIME ENDED
51. LASERBLAST
<PAGE> 31
52. PARASITE
53. TOURIST TRAP
54. FAIRYTALES
55. END OF THE WORLD
56. TRANCERS
57. ZARKORR! THE INVADER
58. KRAA! THE SEA MONSTER *
59. HEAD OF THE FAMILY
60. CASTLE FREAK
61. OBLIVION 2
62. PRIMEVALS
63. VAMPIRE JOURNALS
64. HIDEOUS! *
65. THE CREEPS *
66. MYSTERY MONSTERS *
67. SHRUNKEN CITY *
68. SECRET KINGDOM *
69. CLOCKMAKER *
70. PHANTOM TOWN *
71. WEREWOLF REBORN *
72. BIMBO MOVIE BASH *
73. SHRIEKER *
74. CURSE OF THE PUPPETMASTER
75. FRANKENSTEIN REBORN *
76. TALISMAN
77. PLANET PATROL
78. BLOODSTORM: SUBSPECIES 4 *
79. KILLER EYE
80. MURDERCYCLE
81. ALIEN ARSENAL
82. WITCHOUSE *
83. BLOODOLLS *
84. RETROPUPPETMASTER
85. TOTEM
86. SUBHUMAN/VOODOO ACADEMY
87. MYSTERIOUS MUSEUM
88. THE BOY WITH THE X-RAY EYES
89. TEEN TASK FORCE
90. MISCROSCOPIC BOY
91. ADVENTURE EXPRESS
92. DEAD HATE THE LIVING
93. RAGDOLL
94. HORRIBLE DR. BONES
95. SIDESHOW
96. WITCHOUSE 2
97. PRISON OF THE DEAD
98. KILLJOY
99. HORRORVISION
100. VIRTUAL ENCOUNTERS
101. FEMALIEN
102. EROTIC HOUSE OF WAX*
103. LOLITA 2000 *
104. GIRLS OF SURRENDER CINEMA
105. VIRTUAL ENCOUNTERS 2
106. EXOTIC TIME MACHINE
107. FEMALIEN 2
108. HOTEL EXOTICA
109. VERONICA 2030
110. HIDDEN BEAUTIES
111. PLEASURECRAFT
112. TIMEGATE: TALES OF THE SADDLE TRAMPS
<PAGE> 32
113. AUDITIONS FROM BEYOND
114. SHANDRA: THE JUNGLE GIRL
115. DUNGEON OF DESIRE
116. L.I.P. SERVICE
117. MISTRESS CLUB
118. PASSIONS OBSESSION
119. PHANTOM LOVE
120. DIARY OF LUST
121. ZORRITA: PASSIONS AVENGER
122. THE CASTING COUCH
123. ANDROMINA: THE PLEASURE PLANET
124. VIRGINS OF SHERWOOD FOREST
125. REGINA PIERCE AFFAIR
126. EXOTIC TIME MACHINE 2
127. THE NAKED THIEF
128. PLATINUM BLONDE
129. LOVE EXCHANGE
130. FLESH TV
131. MADAME HOLLYWOOD
132. NOANGELS.COM
* denotes film with a five percent (5%) gross receipts royalty payable to an
unaffiliated third party for a period of 10 years expiring in 2010
SCHEDULE 3.13
COMPLIANCE WITH LAWS
NONE
SCHEDULE 4.1
CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE DATE
Cimarron : No Exception
Full Moon: No Exception
