Agreement
Dated as of the 20th day of December 2000, by and among
Fifth Digit Technologies, LLC, a New York limited liability company,
with an office at 401 East 80th Street, Suite 25A, New York, New York 10021
(hereinafter, "5D");
Henry Seidner, presently residing at 401 East 80th Street, Suite 25A,
New York, New York 10021 ("Henry");
Alpay O. Kasal, presently residing at 1916 Avenue K, Apartment 1A,
Brooklyn, New York 11230 ("Alpay");
Daniel Osorio, presently residing at 32-03 83rd Street, East Elmhurst,
New York 11370 ("Danny");
Collette Maria Horrell, presently residing at 34 Watts Street,
Apartment 5, New York, New York 10013 ("Collette"); and
Videolocity International, Inc., a Nevada corporation, with an office
at 136 Heber Avenue, Suite 209, Park City, Utah 84060 ("Video").
Whereas, 5D is the assignee and owner of certain intellectual property
relating to a video on demand system designed for specialty markets, to wit, a
certain Open-Architecture Set Top Box Providing Full and Upgradable Multimedia
Functionality (the "Box"), which Box is the subject of a preliminary application
for Letters Patent of the United States of America filed in the US Patent and
Trademark Office on August 21, 2000 and given US serial number 60/226,575;
a certain Webcaster (the "Webcaster"), which Webcaster is the subject
of a preliminary application for Letters Patent of the United States of
America filed in the US Patent and Trademark Office on September 8,
2000 and given US serial number 60/233,447; and
a certain Enhanced Video Compression Method (the "Method"), which
Method is the subject of a preliminary application for Letters Patent
of the United States of America filed in the US Patent and Trademark
Office on July 7, 2000 and given US serial number 60/218,528;
which applications must be completed by the first anniversary date of
filing, together with any and all other improvements to, changes in,
derivations from or know-how associated with any of the items listed
above, and any and all other concepts, designs, products, processes,
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ideas or other intangible rights pertaining to video on demand
solutions and products which are or were conceived of or developed by
5D or Alpay and Danny (all of which are collectively referred to as the
"IP");
Whereas, Video desires to acquire 5D, and 5D desires to be acquired by
Video, pursuant to a share-for-share tax free exchange; and
Whereas, Henry, Alpay, Danny, and Collette own all the equity interests
in 5D and are sometimes referred to collectively in this Agreement as "Seller";
Now, therefore, the parties hereto, in consideration of the premises
and other good and valuable consideration, the legal sufficiency and receipt of
which are hereby acknowledged, agree as follows:
1. Video's Acquisition of 5D. At the Closing, Video shall issue and
deliver to Seller 950,000 shares of its Series A Voting Preferred Stock
(the "Series A Stock"), in exchange for shares constituting 100% of the
equity interests in 5D (the "Shares"). The Series A Stock shall have
the terms and conditions more particularly set forth in Exhibit A
attached hereto and incorporated herein by reference. The Closing shall
take place at a mutually agreed upon time and location on or prior to
December 30, 2000. At the Closing, Seller shall deliver to Video
certificates representing all of the Shares and Video shall deliver to
Seller the 950,000 shares of Series A Stock allocated among Seller as
set forth in Exhibit B attached hereto and incorporated herein by
reference. Seller shall deliver customary investment representation
letters to Video.
2. Liabilities of 5D. At Closing, Video shall loan 5D the amount of
$100,000 pursuant to a promissory note, which funds shall be used to
pay 5D's outstanding obligations. Prior to Closing, 5D shall submit a
list of all such obligations to Video and payment of such obligations
shall be made at Closing by checks signed by Henry and Collette. 5D
shall pay Henry a consulting fee in an amount equal to the difference,
if any, between $100,000 and the obligations of 5D outstanding as of
the date hereof or incurred up to and including the date of Closing. At
the time of Closing, 5D shall have no liabilities of any kind or nature
except as set forth below and, to the extent the liabilities of 5D
exceed such items, the excess shall be paid by Henry.
(i) The $100,000.00 note payable to Video, which is referred
to above.
(ii) The contingent liability of the 5D employment agreements
entered or to be entered into between 5D and each of the noted
individuals, which agreements include the annualized salaries
set forth below:
Alpay - $87,500.00
Danny - $87,500.00
Collette - $48,000.00
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(iii) The contingent liability of the 5D consulting agreement
entered or to be entered into between 5D and Henry, which
agreement engages Henry as a consultant to 5D through March
31, 2001 in consideration of the sum of $100,000 payable on or
before March 31, 2001.
3. Management Changes. At the Closing Henry shall resign his offices
with 5D, whereupon he shall be held harmless from and against any
future obligations to pay or advance monies to 5D, and Henry and 5D
shall execute mutual releases of all claims each may have against the
other.
4. Representations.
(i) Each party hereto represents and warrants to the each of the
others and all of them that he or she is fully able to enter into
this agreement and to perform all of the duties and
responsibilities contemplated herein and that he or she is not
under any disability or reservation of right which, to the best of
his or her knowledge, would prevent or prohibit him or her from
entering into this agreement and/or from performing all of his or
her obligations on his or her part to be performed hereunder. Each
of the persons comprising Seller is acquiring the shares of Video
solely for his or her own account and not with a view to a sale or
distribution thereof in violation of any securities laws.
(ii) 5D represents that it is a Limited Liability Company duly
formed, validly existing and in good standing under the laws of
New York, has all requisite power and authority to own or lease
and operate its properties and to carry on its business as
presently conducted. 5D is duly qualified as a foreign corporation
and is in good standing in each jurisdiction where the character
of its properties owned or held under lease require it to be so
qualified. Prior to Closing, 5D shall deliver to Video a complete
and correct copy of 5D's Certificate of Formation, as amended to
date, and 5D's Operating Agreement, as currently in effect. 5D
does not have any subsidiaries and owns no equity or other
interest in any other person, firm or corporation. 5D represents
that it is the sole owner of the IP and owns other miscellaneous
parts and equipment.
(iii) Video represents that it is a corporation duly formed,
validly existing and in good standing under the laws of Nevada,
has all requisite power and authority to own or lease and operate
its properties and to carry on its business as presently
conducted. Video is duly qualified as a foreign corporation and is
in good standing in each jurisdiction where the character of its
properties owned or held under lease require it to be so
qualified. Prior to Closing, Video shall deliver to 5D a complete
and correct copies of Video's articles of incorporation and
bylaws, as amended to date. Except for its wholly-owned
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subsidiary, Videolocity, Inc., Video does not have any
subsidiaries and owns no equity or other interest in any other
person, firm or corporation.
(iv) (a) 5D owns or possess adequate licenses or other valid
rights to use all United States and foreign patents, trademarks,
trade names, service marks, copyrights, and applications therefor
which are material to its business, operations or financial
condition (the "Patent and Trademark Rights"); (b) the validity of
the Patent and Trademark Rights and the title thereto of 5D were
not being questioned in any litigation to which 5D was a party;
and (c) the conduct of the business of 5D as now conducted does
not conflict with any valid patents, trademarks, trade names,
service marks or copyrights of others. The consummation of the
transactions contemplated hereby will not result in the loss or
impairment of any of the Patent and Trademark Rights.
(v) Video and 5D each represent, as applicable to them, that: the
execution, delivery and performance of this Agreement by Video and
5D and the consummation of the transactions contemplated hereby
will not conflict with, or constitute or result in a breach,
default or violation of (with or without the giving of notice or
the passage of time) any of the terms, provisions or conditions
of, (aa) the Certificate of Formation or Operating Agreement of 5D
or the articles or incorporation or bylaws of Video; (bb) any law,
ordinance, regulation or rule applicable to Video or 5D; (cc) any
order, judgment, injunction or other decree by which Video or 5D
or any of their respective assets or properties is bound; or (dd)
any written or oral contract, agreement, or commitment to which
Video or 5D is a party or by which they or any of their respective
assets or properties is bound; nor will such execution, delivery
and performance result in the creation of any material Encumbrance
upon any properties, assets or rights of Video or 5D.
(vi) 5D and Seller represent that the sale and delivery of the
Shares to Video pursuant to this Agreement will vest in Video
legal and valid title to the Shares, free and clear of all liens,
security interests, adverse claims or other encumbrances of any
character whatsoever ("Encumbrances") (other than Encumbrances
created by Video and restrictions on resales of the Shares under
applicable securities laws).
(vii) Video and 5D each represent that there is no action,
proceeding or investigation in any court or before any
governmental or regulatory authority pending or threatened against
Video or 5D, as applicable, or to the knowledge of Video or 5D, as
applicable, orally threatened, except the action filed by Video
against iStreamTV in the Third District Court for the District of
Utah.
5. Entire Agreement. This Agreement constitutes the sole understanding
of the parties with respect to the subject matter hereof. No amendment,
modification or alteration of the terms or provisions of this Agreement
shall be binding unless the same shall be in writing and duly executed
by the parties hereto.
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6. Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective
successors of the parties hereto; provided, however, that this
Agreement may not be assigned by any party without the prior written
consent of the other party hereto.
7. Expenses. Seller, 5D and Video shall each pay all costs and expenses
incurred by it or on its behalf in connection with this Agreement and
the transactions contemplated hereby, including, without limiting the
generality of the foregoing, fees and expenses of its own financial
consultants, accountants and counsel.
8. Notices. Any notice, request, instruction or other document (each, a
"notice") to be given hereunder by any party hereto to any other party
hereto shall be in writing and shall be deemed to have been delivered
and given for all purposes (i) on the delivery date if delivered
personally to the party to whom the same is directed; (ii) one business
day after deposit with a commercial overnight carrier, with written
verification of receipt; or (iii) five business days after the mailing
date, whether or not actually received, if sent by U.S. mail, return
receipt requested, postage and charges prepaid, or any other means of
rapid mail delivery for which a receipt is available. Such notices
shall be addressed as follows:
if to 5D or Seller to: Henry Seidner
Managing Director
5th Digit Technologies LLC
401 East 80th Street, Apt. 25A
New York, NY 10021
if to Video to: Jerry E. Romney, Jr.
President
Videolocity International, Inc.
P.O. Box 4108
136 Heber Avenue, Suite 209
Park City, Utah 84060
9. Public Announcements. Video and 5D shall consult with each other
before issuing any press releases or otherwise making any public
statements with respect to this Agreement and the transactions
contemplated hereby and shall not issue any such press release or make
any public statement prior to such consultation.
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Wherefore, the parties hereto, intending to be bound, have set their
hands and seals as of the day and date noted above.
5th Digit Technologies, LLC Videolocity
International, Inc.
By: /s/ Henry Seider By: /s/ Jerry E. Romney, Jr.
------------------- --------------------------
Henry Seidner Jerry E. Romney, Jr.
President
/s/ Henry Seidner
-------------------
Henry Seidner
/s/ Alpay O. Kasal
-------------------
Alpay O. Kasal
/s/ Daniel Osorio
-------------------
Daniel Osorio
/s/ Collette Maria Horrell
----------------------------
Collette Maria Horrell
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Acknowledgment
State of Utah :
County of Salt Lake : ss.
On the 20th Day of December, 2000 before me appeared Henry Seidner,
Alpay O. Kasal, Daniel Osorio and Collette Maria Horrell, known to me and to me
known as the individuals referred to in the above Agreement, each of whom
acknowledged to me that he or she executed the said Key Points Agreement as his
or her free and voluntary act for the uses and purposes set forth therein.
/s/ Julie Davis
Notary Public
Limited Liability Company Acknowledgment
State of Utah :
County of Salt Lake : ss.
On the 20th Day of December, 2000 before me appeared Henry Seidner, the
managing member of 5th Digit Technologies, LLC, known to me and to me known as
the managing member of the company, who acknowledged to me that he executed the
said Agreement as the authorized free and voluntary act of the company for the
uses and purposes set forth therein.
/s/ Julie Davis
Notary Public
Corporate Acknowledgment
State of Utah :
County of Salt Lake : ss.
On the 20th Day of December, 2000 before me appeared Jerry E. Romney,
Jr., known to me and to me known as the President of Videolocity International,
Inc., who acknowledged to me that he executed the said Agreement as the
authorized free and voluntary act of the corporation for the uses and purposes
set forth therein.
/s/ Julie Davis
Notary Public
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