AGREEMENT AND PLAN OF ACQUISITION
by and among
LIVESTAR Entertainment Group, Inc.
a Nevada corporation,
1485684 Ontario Limited
an Ontario corporation,
and
Mr. Terrance Lall
an individual.
Effective as of July 29th, 2003
AGREEMENT AND PLAN OF ACQUISITION
THIS AGREEMENT AND PLAN OF ACQUISITION (this Agreement) is made and
entered into to be effective the 29th day of July, 2003, by and among
LIVESTAR Entertainment Group Inc., a Nevada corporation (LIVESTAR),
1485684 Ontario Limited, an Ontario corporation doing business as The Sequel
Nightclub (Sequel), and Mr. Terrance Lall, an individual (Mr. Lall).
Premises
A. This Agreement provides for the acquisition of Sequel by
LIVESTAR, with LIVESTAR acquiring 100% of the issued and outstanding capital
shares and Shareholder?s Loans of Sequel in exchange for the consideration
set forth herein.
B. The board of directors of Sequel with respect to Sequel, and the
board or directors of LIVESTAR with respect to LIVESTAR, have determined,
subject to the terms and conditions set forth in this Agreement, that the
acquisition of the shares of Sequel by LIVESTAR contemplated hereby, is
desirable and in the best interests of the stockholders of Sequel and
LIVESTAR. This Agreement is being entered into for the purpose of setting
forth the terms and conditions of the proposed acquisition.
Agreement
NOW, THEREFORE, on the stated premises and for and in consideration of
the mutual covenants and agreements hereinafter set forth and the mutual
benefits to the parties to be derived herefrom, it is hereby agreed as
follows:
ARTICLE I
REPRESENTATIONS, COVENANTS AND WARRANTIES
OF SEQUEL AND MR. LALL
As an inducement to and to obtain the reliance of LIVESTAR, Sequel and
Mr. Lall represent and warrant as follows:
Section 1.1 Organization. Sequel is a corporation
duly organized, validly existing, and in good standing
under the laws of the Province of Ontario and has the
corporate power and is duly authorized, qualified,
franchised and licensed under all applicable laws,
regulations, ordinances and orders of public authorities to
own all of its properties and assets and to carry on its
business in all material respects as it is now being
conducted including the right to operate as a nightclub
offering services to the public customary to that industry.
Included in Schedule 1.1 are complete and correct copies of
the articles of incorporation, bylaws and amendments
thereto of Sequel as in effect on the date hereof. The
execution and delivery of this Agreement do not and the
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consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not
violate any provision of Sequels articles of incorporation
or bylaws. Sequel has full power, authority and legal
right and has taken all action required by law, its
articles of incorporation, its bylaws or otherwise to
authorize the execution and delivery of this Agreement.
Section 1.2 Capitalization. All issued and
outstanding shares of Sequel (the Sequel Shares) are
legally issued, fully paid and nonassessable and are not
issued in violation of the preemptive or other rights of
any person. Sequel has no other securities, warrants or
options issued other than as set forth in the Schedule 1.2.
Section 1.3 Subsidiaries. Sequel does not have any
subsidiaries and does not own, beneficially or of record,
any shares of any other corporation.
Section 1.4 Financial Information. The books and records, financial
and otherwise, of Sequel are in all material respects complete and correct
and have been maintained in accordance with good business accounting
practices. Relevant thereto:
(a) Sequel has filed or is preparing to file all provincial,
federal and local income tax returns required to be filed by it
from inception to the date hereof, if any;
(b) the books and records, financial and others, of Sequel
are in all material respects complete and correct and have been
maintained in accordance with good business accounting practices.
Sequel will provide to LIVESTAR on or before August 15, 2003,
Financial Statements of Sequel for the year ended December 31,
2002 and interim financial statements for the six month period
ended June 30, 2003 (the ?Interim Financial Statements?)
prepared by Paul Babber & Associates, Chartered Accountants, to
the level of Notice to Reader (collectively, the ?Financial
Statements?).
Mr. Lall represents and warrants that the Financial Statements
will have been prepared in accordance will Generally Accepted
Accounting Principals on a basis consistent with prior years, are
correct and complete and present fairly the assets, liabilities
(whether accrued, absolute, conditional, contingent or otherwise)
and financial condition of Sequel as at the respective dates of
the Financial Statements and the sales, expenses, earnings, and
results of operations of Sequel for the respective periods covered
by the Financial Statements.
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Section 1.5 Information. The information concerning
Sequel set forth in this Agreement including any schedules
is complete and accurate in all material respects and does
not contain any untrue statement of a material fact or omit
to state a material fact required to make the statements
made, in light of the circumstances under which they were
made, not misleading.
Section 1.6 Shareholders. Mr. Lall owns 100% of the
issued and outstanding capital shares of Sequel and 100% of
all Shareholder Loans.
Section 1.7 Absence of Certain Changes or Events.
Except as set forth in this Agreement, the Schedules, or as
otherwise disclosed to LIVESTAR:
(a) Except as reflected in the Financial Statements there has
not been: (i) any material adverse change in the business,
operations, properties, assets or condition of Sequel; or (ii) any
damage, destruction or loss to Sequel (whether or not covered by
insurance) materially and adversely affecting the business,
operations, properties, assets or condition of Sequel; or (iii)
any material adverse change to the revenues and expenses that
would be greatly lower than those presented in the Financial
Statements.
(b) Except as reflected in the Financial Statements or in any
schedules hereto, Sequel has not: (i) amended its articles of
incorporation or bylaws; (ii) declared or made, or agreed to
declare or make, any payment of dividends or distributions of any
assets of any kind whatsoever to stockholders or purchased or
redeemed or agreed to purchase or redeem any of its capital stock;
(iii) waived any rights of value which in the aggregate are
extraordinary or material considering the business of Sequel; (iv)
made any material change in its method of management, operation or
accounting; (v) entered into any other material transaction;
(vi) made any accrual or arrangement for or payment of bonuses or
special compensation of any kind or any severance or termination
pay to any present or former officer or employee; (vii) increased
the rate of compensation payable or to become payable by it to any
of its officers or directors or any of its employees whose monthly
compensation exceeds $5,000; or (viii) made any increase in any
profit sharing, bonus, deferred compensation, insurance, pension,
retirement or other employee benefit plan, payment or arrangement
made to, for, or with its officers, directors or employees;
(c) Except as reflected in the Financial Statements or in any
schedules hereto, Sequel has not: (i) granted or agreed to grant
any options, warrants or other rights for its stocks, bonds or
other corporate securities calling for the issuance thereof;
(ii) borrowed or agreed to borrow any funds or incurred or become
subject to, any material obligation or liability (absolute or
contingent)
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except liabilities incurred in the ordinary course of
business; (iii) paid any material obligation or liability
(absolute or contingent) other than current liabilities reflected
in or shown on the most recent Sequel balance sheet and current
liabilities incurred since that date in the ordinary course of
business; (iv) sold or transferred, or agreed to sell or transfer,
any of its assets, properties or rights (except assets, properties
or rights not used or useful in its business which, in the
aggregate have a value of less than $5,000); (v) made or permitted
any amendment or termination of any contract, agreement or license
to which it is a party if such amendment or termination is
material, considering the business of Sequel; or (vi) issued,
delivered or agreed to issue or deliver any stock, bonds or other
corporate securities, including debentures (whether authorized and
unissued or held as treasury stock); and
(d) to the best knowledge of Sequel, it has not become
subject to any law or regulation which materially and adversely
affects, or in the future may adversely affect, the business,
operations, properties, assets or condition of Sequel.
Section 1.8 Title and Related Matters. Sequel has
good and marketable title to and is the sole and exclusive
owner of all of its properties, inventory, interests in
properties and assets, real and personal (collectively, the
?Assets?) which are reflected in the Sequel balance sheet
or acquired after that date (except properties, interests
in properties and assets sold or otherwise disposed of
since such date in the ordinary course of business), free
and clear of all liens, pledges, charges or encumbrances
except: (a) statutory liens or claims not yet delinquent;
and (b) such imperfections of title and easements as do not
and will not, materially detract from or interfere with the
present or proposed use of the properties subject thereto
or affected thereby or otherwise materially impair present
business operations on such properties (c) any equipment
leases, security interests and encumbrances reflected in
the Financial Statements. Except as set forth in the
Schedules, Sequel owns free and clear of any liens, claims,
encumbrances, royalty interests or other restrictions or
limitations of any nature whatsoever any and all
procedures, techniques, marketing plans, business plans,
methods of management or other information utilized in
connection with Sequel?s business. No third party has any
right to, and Sequel has not received any notice of
infringement of or conflict with asserted rights of others
with respect to any product, technology, data, trade
secrets, know-how, proprietary techniques, trademarks,
service marks, trade names or copyrights which, singly or
in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a materially
adverse effect on the business, operations, financial
conditions or income of Sequel or any material portion of
its properties, assets or rights.
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Section 1.9 Litigation and Proceedings. Except as
set forth in Schedule 1.9, to the best of Sequel?s
knowledge and belief, there are no actions, suits,
proceedings or investigations pending or threatened by or
against Sequel or affecting Sequel or its properties, at
law or in equity, before any court or other governmental
agency or instrumentality, domestic or foreign or before
any arbitrator of any kind that would have a material
adverse effect on the business, operations, financial
condition or income of Sequel. Sequel does not have any
knowledge of any default on its part with respect to any
judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator or governmental agency
or instrumentality or of any circumstances which, after
reasonable investigation, would result in the discovery of
such a default.
Section 1.10 Contracts.
(a) Except as included in Schedule 1.10, there are no
material contracts, agreements, franchises, license agreements or
other commitments to which Sequel is a party or by which it or any
of its assets, products, technology or properties are bound;
(b) except as included or described in the Schedules or
reflected in the Financial Statements, Sequel is not a party to
any oral or written: (i) contract for the employment of any
officer or employee which is not terminable on thirty (30) days or
less notice; (ii) profit sharing, bonus, deferred compensation,
stock option, severance pay, pension benefit or retirement plan,
agreement or arrangement; (iii) agreement, contract or indenture
relating to the borrowing of money; (iv) guaranty of any
obligation, other than one on which Sequel is a primary obligor,
for collection and other guaranties of obligations, which, in the
aggregate do not exceed more than one year or providing for
payments in excess of $5,000 in the aggregate; (v) consulting or
other similar contracts with an unexpired term of more than one
year or providing for payments in excess of $5,000 in the
aggregate; (vi) collective bargaining agreements; (vii) agreement
with any present or former officer or director of Sequel; or
(viii) contract, agreement or other commitment involving payments
by it of more than $5,000 in the aggregate; and
(c) to Sequels knowledge, all contracts, agreements,
franchises, license agreements and other commitments to which
Sequel is a party or by which its properties are bound and which
are material to the operations of Sequel taken as a whole, are
valid and enforceable by Sequel in all respects, except as limited
by bankruptcy and insolvency laws and by other laws affecting the
rights of creditors generally.
Section 1.11 Material Contract Defaults. To the best
of Sequels knowledge and belief, Sequel is not in default
in any material
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respect under the terms of any outstanding
contract, agreement, lease or other commitment which is
material to the business, operations, properties, assets or
condition of Sequel, including the premises lease and all
equipment leases, and there is no event of default in any
material respect under any such contract, agreement, lease
or other commitment in respect of which Sequel has not
taken adequate steps to cure any such a default.
Section 1.12 No Conflict With Other Instruments. The
execution of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result
in the breach of any term or provision of, or constitute an
event of default under, any material indenture, mortgage,
deed of trust or other material contract, agreement or
instrument to which Sequel is a party or to which any of
its properties or operations are subject, except that the
consent of the landlord of the Sequel business premises and
the consent of any equipment lessors may be required on or
before closing.
Section 1.13 Governmental Authorizations. To the best
of Sequels knowledge, Sequel has all licenses including
liquor licenses, franchises, permits or other governmental
authorizations legally required to enable Sequel to conduct
its business in all material respects as conducted on the
date hereof. Except for compliance with provincial, federal
and state securities and corporation laws, as hereinafter
provided, no authorization, approval, consent or order of,
or registration, declaration or filing with, any court or
other governmental body is required in connection with the
execution and delivery by Sequel of this Agreement and the
consummation by Sequel of the transactions contemplated
hereby, except that the approval of the Alcohol and Gaming
Commission of Ontario (?AGCO?) will be required the
transfer of the liquor license in connection with the
transfer of ownership of the Sequel Shares from Mr. Lall to
LIVESTAR . The parties will on closing execute and deliver
a 90 day carry over agreement with respect to the existing
Sequel Liquor License.
Section 1.14 Compliance With Laws and Regulations. To
the best of Sequels knowledge, Sequel has complied with
all applicable statutes and regulations of any provincial,
federal, or other governmental entity or agency thereof,
except to the extent that noncompliance would not
materially and adversely affect the business, operations,
properties, assets or condition of Sequel or would not
result in Sequels incurring any material liability.
Section 1.15 Insurance. All of the insurable
properties owned either directly or indirectly by Sequel
are insured for Sequels benefit
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under valid and
enforceable policies issued by insurers of recognized
responsibility.
Section 1.16 Approval of Agreement The board of
directors of Sequel has authorized the execution and
delivery of this Agreement by Sequel and have approved the
transactions contemplated hereby.
Section 1.17 Material Transactions or Affiliations.
Except for the Shareholder Loans there exists no material
contract, agreement or arrangement between Sequel or any
predecessor and any person who was at the time of such
contract, agreement or arrangement an officer, director or
person owning of record, or known by Sequel to own
beneficially, ten percent (10%) or more of the issued and
outstanding common shares of Sequel and which is to be
performed in whole or in part after the date hereof. In
all of such transactions, the amount paid or received,
whether in cash, in services or in kind, has been during
the full term thereof, and is required to be during the
unexpired portion of the term thereof, no less favorable to
Sequel than terms available from otherwise unrelated
parties in arms-length transactions. There are no
commitments by Sequel, whether written or oral, to lend any
funds to, borrow any money from or enter into any other
material transactions with, any such affiliated person.
Section 1.18 Labor Relations. Sequel has never had a
work stoppage resulting from labor problems. To the best
knowledge of Sequel, no union or other collective
bargaining organization is organizing or attempting to
organize any employee of Sequel.
Section 1.19 Special Warranties. The financial
position of Sequel as reflected in the Financial Statements
is accurate in all material respects. Sequel is not
subject to any litigation and is in compliance with all
regulatory requirements including tax filings and
compliance with liquor license permits.
Section 1.20 Debts at Closing. At the time of
Closing, Sequel will not have any debts or liabilities
other than debts and obligations reflected in the Financial
Statements, ordinary trade debts accrued from July 1, 2003
to and including the Closing Date and equipment lease
obligations. Contingent liabilities for retail sales tax,
goods and services tax and income tax not due as of the
Closing Date will be accrued on the Closing Financial
Statements described in Section 4.10 and LIVESTAR will
cause the Sequel to pay such amounts as and when due.
Section 1.21 Shareholders Loans. All Shareholder
Loans represent actual advances from Mr. Lall to the Sequel
or amounts paid by Lall on behalf of the Sequel or amounts
owed to Mr. Lall for services
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rendered to Sequel and are
bona fide debt obligations of the Sequel to Mr. Lall. The
Shareholder Loans as of the date of this Agreement total
approximately $350,000 USD. The final outstanding amount of
the Shareholder Loans will be reflected in the Financial
Statements. (the Shareholder Loans)
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES OF LIVESTAR
As an inducement to, and to obtain the reliance of Sequel
and Mr. Lall, LIVESTAR represents and warrants as follows:
Section 2.1 Organization. LIVESTAR is a corporation
duly organized, validly existing and in good standing under
the laws of the state of Nevada and has the corporate power
and is duly authorized, qualified, franchised and licensed
under all applicable laws, regulations, ordinances and
orders of public authorities to own all of its properties
and assets and to carry on its business in all material
respects as it are now being conducted. The execution and
delivery of this Agreement does not and the consummation of
the transactions contemplated by this Agreement in
accordance with the terms hereof will not, violate any
provision of LIVESTARs articles of incorporation or
bylaws. LIVESTAR has taken all action required by law, its
articles of incorporation, its bylaws or otherwise to
authorize the execution and delivery of this Agreement.
LIVESTAR has full power, authority and legal right and has
taken all action required by law, its articles of
incorporation, bylaws or otherwise to consummate the
transactions herein contemplated.
Section 2.2 Capitalization. The authorized
capitalization of LIVESTAR consists of 250,000,000 shares
of common stock, par value $0.0001 per share and
200,000,000 shares of preferred stock par value $0.0001 per
share. As of July 7, 2003 there are 94,794,923 common
shares of LIVESTAR issued and outstanding and 105,499,073
fully diluted.
Section 2.3 Financial Statements.
(a) Included in the EDGAR data base of the Securities and
Exchange Commission are the audited balance sheets of LIVESTAR for
the fiscal years ended December 31, 2002 and 2001, and the related
statements of operations and deficit, changes in stockholders?
equity and cash flows for the years then ended, and the unaudited
balance sheet and related statement of operations and deficit,
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changes in stockholders equity and cash flow for the three month
period ended March 31, 2003.
(b) All such financial statements have been prepared in
accordance with generally accepted accounting principles
consistently applied throughout the periods involved. The
LIVESTAR balance sheets present fairly as of their respective
dates the financial condition of LIVESTAR. LIVESTAR did not have
as of the date of any of such LIVESTAR balance sheets, any
liabilities or obligations (absolute or contingent) which should
be reflected in a balance sheet or the notes thereto prepared in
accordance with generally accepted accounting principles other
than as listed herein, and all assets reflected therein are
properly reported and present fairly the value of the assets of
LIVESTAR, in accordance with generally accepted accounting
principles. The statements of operations and deficit, changes in
stockholders? equity and cash flow reflect fairly the information
required to be set forth therein by generally accepted accounting
principles.
(c) The books and records, financial and others, of LIVESTAR
are in all material respects complete and correct and have been
maintained in accordance with good business accounting practices.
(d) To the best of LIVESTARs knowledge, LIVESTAR has no
liabilities with respect to the payment of any federal,
provincial, state, county, local or other taxes (including any
deficiencies, interest or penalties).
Section 2.4 Information. The information concerning
LIVESTAR as set forth in this Agreement is accurate in all
material respects and does not contain any untrue statement
of a material fact or omit to state a material fact
required to make the statements made, in light of the
circumstances under which they were made, not misleading.
Section 2.5 Absence of Certain Changes or Events.
Except as described herein:
(a) LIVESTAR has not: (i) amended its articles of
incorporation or bylaws; (ii) waived any rights of value which in
the aggregate are extraordinary or material considering the
business of LIVESTAR; (iii) made any material change in its method
of management, operation or accounting; or (iv) made any accrual
or arrangement for or payment of bonuses or special compensation
of any kind or any severance or termination pay to any present or
former officer or employee;
(b) to the best knowledge of LIVESTAR, it has not become
subject to any law or regulation which materially and adversely
affects, or in the future may
9
adversely affect, the business,
operations, properties, assets or condition of LIVESTAR.
Section 2.6 Litigation and Proceedings. There are no
actions, suits or proceedings pending or, to the best of
LIVESTARs knowledge and belief, threatened by or against
or affecting LIVESTAR, at law or in equity, before any
court or other governmental agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind
that would have a material adverse effect on the business,
operations, financial condition, income or business
prospects of LIVESTAR except as described in its filings
with the Securities and Exchange Commission.
Section 2.7 No Conflict With Other Instruments. The
execution of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result
in the breach of any term or provision of, or constitute an
event of default under, any material indenture, mortgage,
deed of trust or other material contract, agreement or
instrument to which LIVESTAR is a party or to which any of
its properties or operations are subject.
Section 2.8 Governmental Authorizations. To the best
of LIVESTARs knowledge, LIVESTAR has all licenses,
franchises, permits and other governmental authorizations
that are legally required to enable it to conduct its
business operations in all material respects as conducted
on the date hereof. Except for compliance with federal and
state securities or corporation laws, no authorization,
approval, consent or order of, or registration, declaration
or filing with, any court or other governmental body is
required in connection with the execution and delivery by
LIVESTAR of the transactions contemplated hereby.
Section 2.9 Compliance With Laws and Regulations. To
the best of LIVESTARs knowledge and belief, LIVESTAR has
complied with all applicable statutes and regulations of
any federal, state, provincial or other governmental entity
or agency thereof, except to the extent that noncompliance
would not materially and adversely affect the business,
operations, or condition of LIVESTAR or would not result in
LIVESTARs incurring any material liability. Further,
LIVESTAR is, as of the date of this Agreement, a reporting
company under Section 12 of the Securities Exchange Act of
1934, as amended, and is current in filing all reports
required to be filed pursuant to said Act.
Section 2.10 Approval of Agreement. The board of
directors of LIVESTAR have authorized the execution and
delivery of this Agreement by LIVESTAR and have approved
the transactions contemplated hereby.
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Section 2.11 Special Warranties. LIVESTAR warrants:
(i) that it is subject to the reporting requirements of
Section 12(g) of the Securities Exchange Act of 1934 and
that it is current in filing all required reports pursuant
to such requirements; (ii) that its public filings with the
Securities and Exchange Commission disclose in all material
respects its financial position and material contracts; and
(iii) its shares are listed on the OTC Bulletin Board under
the symbol LIVESTAR.
ARTICLE III
ACQUISITION CONSIDERATION AND PROCEDURE
Section 3.1 Consideration. The total purchase price
of the Sequel Shares and the Shareholder Loans of the
Sequel by LIVESTAR is US$500,000.00 to be applied firstly
to the Shareholder Loans and the balance to the Sequel
Shares. (Unless designated otherwise, all monetary amounts
stated in this Agreement shall be in US dollars even if not
specifically designated as such in each instance.) The
purchase price shall consist of cash consideration of
$300,000.00 payable as set forth in Section 3.2 herein.
The balance of the purchase price shall consist of
1,000,000 shares of preferred stock of LIVESTAR as
described in Sections 3.4 and 3.6 herein.
Section 3.2 Cash Consideration. LIVESTAR shall pay
to Mr. Lall U.S.$300,000.00 on the Closing Date. The
$300,000.00 shall be paid by bank draft or certified check.
In the event payment is not made when due, Mr. Lall shall
have the option in his sole discretion, to amend the
payment terms within which time LIVESTAR shall be allowed
to make the payment or to declare in writing to LIVESTAR
the payment to be in default. In the event the default is
not cured and Mr. Lall does not extend the terms of
payment, LIVESTAR shall no longer be obligated to make
payment in the amount of U.S.$300,000.00, however, the
provision of Sections 3.4, 3.6, 4.1. and 4.2 hereof shall
continue to apply.
Section 3.3 Delivery of Sequel Shares. Upon Closing
Mr. Lall shall deliver to LIVESTAR a certificate or
certificates duly executed for transfer, representing 100%
of the issued and outstanding capital shares of Sequel (the
Sequel Shares) and an absolute assignment of the
Shareholder Loans.
Section 3.4 Delivery of LIVESTAR Shares. Within five
business days of the signing of this Agreement, LIVESTAR
shall deliver
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to Mr. Lall, as a deposit the sum of
$200,000.00 in the form of share certificates representing
1,000,000 shares of preferred stock of LIVESTAR (the
LIVESTAR Shares). The LIVESTAR Shares shall have the
rights and preferences set forth in Section 3.6. The
LIVESTAR Shares shall be issued at the declared value of
$0.20 per share. The LIVESTAR Shares shall be issued to Mr.
Lall or one or more corporations designated by Mr. Lall in
writing. Notwithstanding any other provision or provisions
of this Agreement, the issuance of the LIVESTAR Shares
pursuant to this Section 3.4 is nonrefundable and LIVESTAR
shall continue to be bound by its obligations under this
section 3.4 and under Section 3.6, 4.1 and 4.2 hereof, in
event the purchase and sale contemplated is not completed
for any reason.
Section 3.5 Directors of Sequel. Upon Closing, Mr.
Lall and his nominees will resign as directors and officers
of Sequel and will be replaced with nominees of LIVESTAR
which may include Mr. Lall as set forth in Section 4.7
hereof. Prior to Closing, Mr. Lall shall have full
business management authority over Sequel and the
operations of its assets in a manner consistent with past
practice.
Section 3.6 Rights and Preferences of LIVESTAR
Shares. The LIVESTAR Shares shall be issued from a series
of preferred shares designated by the LIVESTAR directors as
Series A Convertible Preferred Stock. The LIVESTAR Shares
shall have the following rights and preferences:
The class of Series A Convertible Preferred Stock, $0.0001
par value per share, of LIVESTAR Entertainment Group Inc.
shall be referred to hereinafter in this Section 3.6 as
?Series A Stock?.
The holders of outstanding shares of Series A Stock shall
have conversion rights as follows:
Any shares of Series A Stock may, at the option of the
holder, be converted at any time into such number of fully
paid and non-assessable shares of common stock at a ratio
of forty shares of common stock for every share of Series A
Stock.
If the shares of common stock issuable upon the conversion
of shares of Series A Stock shall be changed into the same
or a different number of shares of any class or classes of
stock, whether by capital reorganization, reclassification
or otherwise, then and in each such event, the holder of
each share of Series A Stock shall have the right
thereafter to convert such share into the kind and amount
of shares of stock and other securities and property
receivable upon such reorganization,
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reclassification or
other change by holders of the number of shares of common
stock into which such share of Series A Stock might have
been converted immediately prior to such reorganization,
reclassification or change. Without limiting the
generality of the forgoing, upon the reverse split, if any,
of the common shares of LIVESTAR, an anti-dilution right
will exist in the Series A Stock so that the percentage
ownership of common stock of LIVESTAR into which the Series
A Stock was convertible immediately prior to the split will
be equal to the percentage ownership of common stock of
LIVESTAR into which the Series A Stock is convertible
following the split.
Before any holder of shares of Series A Stock shall be
entitled to convert the same into shares of common stock,
such holder shall surrender the certificate or certificates
therefore, duly endorsed, at the principal executive office
of the corporation or of any transfer agent for such
shares, and shall give written notice by mail, postage
prepaid, to the corporation at its principal executive
office, of the election to convert the same and shall state
therein the name or names in which the certificate or
certificates for shares of common stock are to be issued.
The corporation shall, as soon as practicable thereafter,
issue and deliver at such office to such holder of shares
of Series A Stock, a certificate or certificates for the
number of shares of common stock to which each holder shall
be entitled as aforesaid. Such conversion shall be deemed
to have been made immediately prior to the close of
business on the date of such surrender of the certificate
or certificates representing the shares of Series A Stock
to be converted, and the person or persons entitled to
receive the shares of common stock issuable upon such
conversion shall be treated for all purposes as the record
holder or holders of such shares of common stock as of such
date.
In the event some but not all of the shares of Series A
Stock represented by a certificate or certificates
surrendered by a holder are converted, the corporation
shall execute and deliver to the holder or to such other
person as the holder may request in writing, at the expense
of the corporation, a new certificate representing the
number of shares of Series A Stock which were not
converted.
If at any time, or from time to time, there shall be a
reorganization, recapitalization, transfer of assets,
consolidation, merger, dissolution, issuance or sale of
securities of the corporation (the, ?Corporate
Transaction?), provisions shall be made so that the holders
of the Series A Stock shall thereafter be entitled to
receive, upon conversion of their Series A Stock, such
shares or other securities or property of the corporation
or otherwise to which a holder of the common stock
deliverable upon conversion of the Series A Stock would
have been
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entitled upon such Corporate Transaction. In any
such case, appropriate adjustment shall be made in the
application of the provisions of this paragraph with
respect
to the rights of the holders of the Series A Stock
after the Corporate Transaction, to the end that the
provisions of this paragraph shall be applicable after the
Corporate Transaction in as nearly equivalent a manner as
may be practicable.
Dividends shall be declared and set aside out of funds or
assets of LIVESTAR legally available therefore for any
shares of Series A Stock only upon resolution of the Board
of Directors. If the Board of Directors declares a
dividend payable upon shares of common stock, the holders
of Series A Stock shall be entitled to dividends per the
shares of Series A Stock as would be declared payable on
the number of shares of common stock into which the shares
of Series A Stock held by each holder thereof could be
converted.
The corporation will not, by amendment of its Articles of
Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation,
merger, dissolution, issuance or sale of securities or any
other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be
observed or performed hereunder by the corporation, but
will at all times in good faith assist in the carrying out
of all the provisions of this section and in the taking of
all such action as may be reasonably necessary or
appropriate in order to protect the conversion rights of
the holders of the Series A Stock against impairment.
No fractional shares shall be issued upon conversion of
shares of Series A Stock. In lieu of fractional shares,
the corporation shall pay cash equal to such fraction
multiplied by the then fair market value of the shares of
common stock, as determined by the board of directors.
The corporation shall at all times reserve and keep
available out of its authorized but unissued shares of
common stock solely for the purpose of effecting the
conversion of the shares of Series A Stock, such number of
its shares of common stock as shall from time to time be
sufficient to effect the conversion of all outstanding
shares of Series A Stock; and if at any time, the number of
authorized, but unissued and unreserved, shares of common
stock shall not be sufficient to effect the conversion of
all then outstanding shares of Series A Stock, the
corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its
authorized, but unissued and unreserved, shares of common
stock to such number of shares as shall be sufficient for
such
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purposes. Such common shares held for conversion
shall be registered for sale with the Securities and
Exchange Commission as set forth in Section 4.1 herein,
which registration shall be kept effective by LIVESTAR for
a reasonable period of time as determined by LIVESTAR in
consultation with the holder of the Series A Stock or the
common stock in which it was converted.
The holders of record of outstanding shares of Series A
Stock shall be entitled to cast on any matter to be voted
upon by the holders of common stock of the corporation, that
number of votes which the number of shares of common stock
into which such outstanding Series A Stock is then
convertible would be entitled to cast.
ARTICLE IV
SPECIAL COVENANTS
Section 4.1 Availability of Rule 144 and Registration
of LIVESTAR Shares. Each of the parties acknowledge that
the LIVESTAR Shares and any common shares, into which the
LIVESTAR Shares are converted prior to the registration
thereof, will be ?restricted securities,? as that term is
defined in Rule 144 as promulgated pursuant to the
Securities Act. As soon as possible after the execution of
this Agreement, and in any event on or before Closing,
LIVESTAR will file with the U.S. Securities and Exchange
Commission a registration statement for the purpose of
registering for sale all of the common shares into which
the LIVESTAR Shares may be converted. All costs of the
registration shall be paid by LIVESTAR. LIVESTAR agrees to
make reasonably diligent effort in answering any comments
from the staff of the Securities and Exchange Commission
for the purpose of obtaining the approval of the Commission
for the registration to be declared effective. LIVESTAR
may register securities in the registration in addition to
the common shares underlying the LIVESTAR Shares if it has
bone-fide purposes for doing so.
Section 4.2 Option to Redeem LIVESTAR Shares. In the
event a default is declared in the payment of the
consideration discussed in Section 3.2 and the default is
not cured within ten (10) days, a first right option shall
automatically issue for the redemption by LIVESTAR of the
LIVESTAR Shares at a redemption price of $0.60 USD per
share. If prior to that time, some or all of the LIVESTAR
Shares have been converted into common shares, a first
right option shall automatically issue for the redemption
by LIVESTAR of the common shares into which any LIVESTAR
Shares were converted at a redemption price of $0.015 USD
per share. Any such purchase for redemption will be
15
completed within twenty (20) days after date of exercise of
such election and the purchase price thereof paid in full
by certified cheque. The option for redemption shall exist
for (6) six months from the date of default and in the
interim LIVESTAR will continue to be bound by its
obligations in Section 4.1.
Section 4.3 Change of Control. If prior to Closing
there is a change in control of LIVESTAR whereby LIVESTAR
is purchased and/or controlled by another entity or persons
not contemplated at the present time, or if Ray Hawkins
ceases to be an officer and a director of LIVESTAR (each a
change of control event), Mr. Lall shall have the right
to unilaterally declare this Agreement null and void and
cancel the transactions contemplated by this Agreement
except that the provision of Sections 3.2, 3,4, 3.6, 4.1
and 4.2 hereof shall continue in full force and effect.
Section 4.4 Liquor License. Upon Closing, LIVESTAR
will file an application with the Alcohol and Gaming
Commission (Ontario) at its expense for approval to the
liquor license transfer to LIVESTAR. The parties to this
Agreement agree to individually and collectively make
reasonably diligent effort to supply information and
documentation as necessary to obtain approval of the liquor
license transfer.
Section 4.5 Acquisition Costs. All reasonable costs
incurred and paid by Mr. Lall necessary to accomplish the
transactions set forth in this Agreement shall be
considered a loan by Mr. Lall to LIVESTAR. Accordingly,
all such costs shall be repaid to Mr. Lall by LIVESTAR as
long as they were pre-approved by LIVESTAR. All such costs
shall be repaid to Mr. Lall on Closing. Such costs shall
include reimbursement for legal costs incurred by Sequel
and Mr. Lall in connection with the transactions
contemplated by this Agreement to a maximum of
CDN$15,000.00 plus disbursements and gst.
Section 4.6 Sequel Dividends. LIVESTAR is not
entitled to either the payment or to the accrual of any
dividends on the Sequel Shares until after Closing.
Section 4.7 Management Agreement. LIVESTAR shall on
Closing enter into a management agreement with Mr. Lall
whereby Mr. Lall shall be engaged as the president and CEO
of Sequel for a term of years to be determined and to be
paid a salary to be determined. Under the management
agreement, Mr. Lall shall also be entitled to receive as a
bonus equal to a percentage of the net revenues of Sequel
calculated on a quarterly basis.
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Section 4.8 Operations Agreement. Sequel shall on
Closing enter into an operations agreement with LIVESTAR
outlining standards and procedures by which Sequel will
operate as a subsidiary of LIVESTAR and pursuant to which
LIVESTAR shall be paid management fees for services
provided to Sequel. LIVESTAR shall not be entitled to
receive any management fees, however, until after Closing.
Section 4.9 Audited Financial Statements. The
parties to this Agreement understand that LIVESTAR is
required to provide Audited Financial Statements of Sequel
in conformity with the guidelines of Item 310 of Regulation
S-B promulgated under the Securities Act of 1933 within 75
days of the date of this Agreement (the ?Audited Financial
Statements?). In addition, the parties to this Agreement
agree to individually and collectively make reasonably
diligent effort to supply information and documentation as
necessary to meet the Audited Financial Statements
requirements set forth in this Section 4.9. The cost of
completing the Audited Financial Statements shall be the
sole responsibility of LIVESTAR.
Section 4.10 Closing Financial Statements. The
accountant of Sequel will as soon as possible after Closing
complete the Closing Financial Statements of Sequel for the
period January 1, 2003 to the Closing Date prepared to the
level of Notice to Reader (the ?Closing Financial
Statements?) and will circulate them to the parties for
their review and approval. The cost of completing the
Closing Financial Statements shall be the sole
responsibility of the Sequel.
Section 4.11 Holding of Sequel Shares. On
Closing and thereafter, LIVESTAR shall have the option of
holding the Sequel Shares in a subsidiary of LIVESTAR which
is either now existing or newly created for that purpose.
LIVESTAR also has the right to assign this Agreement to a
subsidiary of LIVESTAR to be formed specifically for the
acquisition contemplated herein, except that any such
assignment shall not extend to any obligations of LIVESTAR
under Sections 3.2, 3.4, 3.6, 4.1 or 4.2.
ARTICLE V
MISCELLANEOUS
Section 5.1 Brokers and Finders. The parties each
agree to indemnify the other against any claim by any third
person for any commission, brokerage or finders fee or
other payment with respect to this Agreement or the
transactions contemplated hereby based on any
17
alleged agreement or understanding between the indemnifying party
and such third person, whether express or implied from the
actions of the indemnifying party.
Section 5.2 Law. This Agreement shall be construed
and
interpreted in accordance with the laws of the State of Nevada.
Section 5.3 Notices. Any notices or other
communications required or permitted hereunder shall be
sufficiently given if personally delivered to it or sent by
registered mail or certified mail, postage prepaid, or by
overnight courier addressed as follows:
If to Sequel or Mr. Lall:
69 Yorkville Ave.
Toronto, Canada M5R 188
If to LIVESTAR :
4th floor 62 W. 8th Avenue
Vancouver, BC V5Y 1M7
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication
shall be deemed to have been given as of the date so delivered, mailed, or
couriered.
Section 5.4 Attorneys Fees. In the event that any
party institutes any action or suit to enforce this
Agreement or to secure relief from any default hereunder or
breach hereof, the breaching party or parties shall
reimburse the non-breaching party or parties for all costs,
including reasonable attorneys? fees, incurred in
connection therewith and in enforcing or collecting any
judgment rendered therein.
Section 5.5 Confidentiality. Each party hereto
agrees with the other parties that, unless and until the
acquisition contemplated by this Agreement has been
consummated, they and their representatives will hold in
strict confidence all data and information obtained with
respect to another party or any subsidiary thereof from any
representative, officer, director or employee, or from any
books or records or from personal inspection, of such other
party, and shall not use such data or information or
disclose the same to others, except: (i) to the extent
such data is a matter of public knowledge or is required by
law to be published; (ii) to the extent that such data or
information must be used or disclosed in order to
consummate the transactions contemplated by this Agreement;
and (iii) as permitted by Section 5.16 herein.
Section 5.6 Schedules; Knowledge. Each party is
presumed to have full knowledge of all information set
forth in the other party?s Schedules delivered pursuant to
this Agreement.
18
Section 5.7 Third Party Beneficiaries. This contract
is solely among Sequel, Mr. Lall and LIVESTAR and, except
as specifically provided, no director, officer,
stockholder, employee, agent, independent contractor or any
other person or entity shall be deemed to be a third party
beneficiary of this Agreement.
Section 5.8 Entire Agreement This Agreement
represents the entire agreement between the parties
relating to the subject matter hereof. This Agreement
alone fully and completely expresses the agreement of the
parties relating to the subject matter hereof. There are
no other courses of dealing, understandings, agreements,
representations or warranties, written or oral, except as
set forth herein. This Agreement may not be amended or
modified, except by a written agreement signed by all
parties hereto.
Section 5.9 Survival. Except as otherwise provided
herein, the representations and warranties of the
respective parties shall survive the consummation of the
transactions herein contemplated for a period of one year
after the Closing Date. The covenants of the parties shall
survive Closing until satisfied in full.
Section 5.10 Counterparts Facsimile Execution. For
purposes of this Agreement, a document (or signature page
thereto) signed and transmitted by facsimile machine or
telecopier is to be treated as an original document. The
signature of any party thereon, for purposes hereof, is to
be considered as an original signature, and the document
transmitted is to be considered to have the same binding
effect as an original signature on an original document.
At the request of any party, a facsimile or telecopy
document is to be re-executed in original form by the
parties who executed the facsimile or telecopy document.
No party may raise the use of a facsimile machine or
telecopier machine as a defense to the enforcement of the
Agreement or any amendment or other document executed in
compliance with this Section.
Section 5.11 Amendment or Waiver. Every right and
remedy provided herein shall be cumulative with every other
right and remedy, whether conferred herein, at law, or in
equity, and may be enforced concurrently herewith, and no
waiver by any party of the performance of any obligation by
the other shall be construed as a waiver of the same or any
other default then, theretofore, or thereafter occurring or
existing. This Agreement may be amended by a writing
signed by all parties hereto, with respect to any of the
terms contained herein, and any term or condition of this
Agreement may be waived or the time for performance hereof
may be extended by a writing signed by the party or parties
for whose benefit the provision is intended.
19
Section 5.12 Incorporation of Recitals. All of the
recitals hereof are incorporated by this reference and are
made a part hereof as though set forth at length herein.
Section 5.13 Expenses. Except as expressly set forth
herein, each party shall bear all of their respective costs
and expenses incurred in connection with the negotiation of
this Agreement and in the consummation of the transactions
provided for herein and the preparation therefore.
Section 5.14 Headings; Context. The headings of the
sections and paragraphs contained in this Agreement are for
convenience of reference only and do not form a part hereof
and in no way modify, interpret or construe the meaning of
this Agreement.
Section 5.15 Benefit. This Agreement shall be binding
upon and shall inure only to the benefit of the parties
hereto, and their permitted assigns hereunder. This
Agreement shall not be assigned by any party without the
prior written consent of the other party.
Section 5.16 Public Announcements. LIVESTAR shall
have the right to issue press releases regarding this
Agreement and the business operations of Sequel. LIVESTAR
shall also have the right to make other public disclosure
in accordance with its reporting requirements with the
Securities and Exchange Commission and its duties as a
listed company on the OTC Bulletin Board.
Section 5.17 Severability. In the event that any
particular provision or provisions of this Agreement shall
for any reason hereafter be determined to be unenforceable,
or in violation of any law, governmental order or
regulation, such unenforceability or violation shall not
affect the remaining provisions of this Agreement, which
shall continue in full force and effect and be binding upon
the parties hereto.
Section 5.18 No Strict Construction. The language of
this Agreement shall be construed as a whole, according to
its fair meaning and intendment, and not strictly for or
against either party hereto, regardless of who drafted or
was principally responsible for drafting the Agreement or
terms or conditions hereof.
Section 5.19 Execution Knowing and Voluntary. In
executing this Agreement, the parties severally acknowledge
and represent that each: (a) has fully and carefully read
and considered this Agreement; (b) has been or has had the
opportunity to be fully apprised by its attorneys of the
legal effect and meaning of this document and all terms
20
and conditions hereof; and (c) is executing this Agreement
voluntarily, free from any influence, coercion or duress of
any kind.
Section 5.20 Default. Should any party to this
Agreement be considered to be in default under the terms
and conditions of this Agreement by any other party to this
Agreement, the non-defaulting party shall give the
defaulting party written notice of the alleged default.
The party alleged to be in default shall then have ten (10)
within which to cure the default. This Section 5.20 shall
not apply to a default by LIVESTAR to pay the consideration
under Section 3.3, which default provisions for nonpayment
are well defined elsewhere in this Agreement.
Section 5.21 Closing. The transactions contemplated under this
Agreement shall close upon payment of the cash consideration assuming
concurrent delivery of the Sequel Shares and an absolute assignment of the
Shareholder Loans to LIVESTAR and the prior delivery of the LIVESTAR Shares
to Mr. Lall or his designees (the ?Closing?). The Closing shall take place
on September 29, 2003, that date being 60 days following the execution of
this Agreement unless extended by Mr. Lall as set forth herein. Any duty or
responsibility of any party to this Agreement called for in this Agreement
that is not performed prior to Closing shall survive the Closing, including
without limitation, the duty to register the LIVESTAR Shares and the joint
duties to support the transfer of the liquor license and to complete
necessary audits and financial statements.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and entered into as of the date first above written.
LIVESTAR Entertainment Group,
Inc., a Nevada corporation
By: /s/ Ray Hawkins
-------------------------------------
Ray Hawkins
Its: CEO
1485684 Ontario Limited, an Ontario
corporation
By: /s/ Terrance Lall
-----------------------------------
Terrance Lall
Its: CEO
/s/ Terrance Lall
- ---------------------------------------
Terrance Lall, Individual
21
SCHEDULES
- ----------
Schedule 1.1
Articles of Incorporation of Sequel
Bylaws of Sequel
Schedule 1.2
The authorized capitalization of Sequel consists of an unlimited number of
shares of common shares and an unlimited number of Class A special shares.
As of the date hereof there are 100 common shares of Sequel issued and
outstanding.
Schedule 1.9
The Sequel was charged with allowing underaged customers onto its premises.
Under the AGCO act the Sequel should have shown due diligence when checking
customers identification prior to admittance to its facilities.
The Sequel is confident it followed all protocol of the AGCO requirements.
The Sequel was offered a settlement by the AGCO of seven days suspension.
This was rejected by The Sequel and its solicitors who have requested a
heating to argue its case. The Sequel is confident it has a good defense and
should not face suspension.
Schedule 1.10
1. Premises Lease Agreement dated March 31, 1994
2. Lease Amendment and Consent to Assignment of Lease dated September 26,
2001.
3. Sound and Lighting Lease Agreement dated November 3, 2001
4. P.O.S./Inventory Control System Lease Agreement dated November 28, 2001
and subsequent renewal dated June 4, 2002.
5. Liquor License granted from the AGCO dated April 29, 2002
22