EXHIBIT 10.4
OPTION AND DISTRIBUTION AGREEMENT
THIS OPTION AND DISTRIBUTION AGREEMENT ("Agreement"), dated the 19th day of
July, 2001, is by and between Berens Industries, a Nevada Corporation
("Parent"), Artmovement.com, Inc., a Nevada corporation and wholly-owned
subsidiary of the Parent ("Subsidiary"), Yolana Partnership, Ltd. ("Yolana"),
and Manfred Steinberg, Robert Davis, and Jeff Olexa (the "Majority
Shareholders").
RECITALS
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WHEREAS, Parent owns 100% of the capital stock of Subsidiary which consists
of 12,960,000 shares of Subsidiary common stock (the "Sub Common Stock");
WHEREAS, Parent and Subsidiary have determined that they may, in the
future, elect to distribute the shares of Sub Common Stock to the stockholders
of Parent (the "Distribution");
WHEREAS, Parent and Subsidiary have determined that if they elect to
distribute the shares of Sub Common Stock to the stockholders that they will
register with the Securities and Exchange Commission ("Commission") the Sub
Common Stock under the Securities Act of 1933, as amended ("Securities Act") or
the Securities Exchange Act of 1934, as amended ("Exchange Act"), as determined
by the Parent (the "Registration"), upon the occurrence of certain conditions
provided herein;
WHEREAS, Manfred Steinberg, Robert Davis, and Jeff Olexa will own all of
the Series A Preferred Stock ("Preferred Stock") of the Parent ("Parent
Preferred Stock") upon the Closing of the Stock Exchange Agreement (the
"Majority Shareholders");
WHEREAS, the Majority Shareholders each desire to grant to Yolana an option
to purchase shares of Sub Common Stock to which they may be entitled to receive
in the Distribution which are derived from the Preferred Stock; and
WHEREAS, this Agreement is contemplated in the Stock Exchange Agreement by
and between the
Parent, Solis Communications Corporation ("Solis"), the Majority Shareholders,
and Marc I. Berens dated July
19, 2001 ("Stock Exchange Agreement"), and the Escrow Agreement by and between
the Parent, Yolana and
Robert D. Axelrod, P. C., dated July 19, 2001 ("Escrow Agreement").
NOW, THEREFORE, in consideration of the premises and the respective
representations, covenants, agreements and conditions hereinafter set forth, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
All terms not defined herein shall have the meanings set forth in the Stock
Exchange Agreement and Escrow Agreement.
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ARTICLE II
DISTRIBUTION OF SUB COMMON STOCK
Section 2.1. CAPITAL RAISING EFFORTS. In the event that Parent receives
prior to January 10, 2002:
(a) $600,000 (including amounts received by the Parent pursuant to Section
2(a) of the Escrow Agreement) in debt or equity financing or from
litigation initiated by the Parent prior to the Closing Date
(excluding any litigation initiated by the Subsidiary or any funds
received from George Speaks), or
(b) $75,000 from litigation initiated by Subsidiary prior to the Closing
Date (as defined in the Stock Exchange Agreement),
Parent shall (i) file within forty-five (45) days of January 10,2002 and use its
best efforts to render an effective registration statement under the Securities
Act or Exchange Act for the purpose of distributing the Sub Common Stock to the
shareholders of the Parent ("Registration Statement") and (ii) shall use its
best efforts to answer all comments received from the Commission with respect to
the Registration Statement or any amendment thereto as soon as commercially
reasonable. If the Parent is required to file a Registration Statement pursuant
to this Section 2.1, Yolana shall reimburse the Parent for all expenses incurred
in connection with the Registration and Distribution of the Sub Common Stock,
including but not limited to professional fees, distribution fees, blue sky
fees, and all filing fees not later than the effective date of the Registration
Statement ("Effective Date").
Section 2.2. RECORD DATE. In the event that the conditions provided in
Sections 2.1 is completed, Parent shall establish a record date for the
determination of shareholders entitled to receive shares of Sub Common Stock in
the Distribution ("Record Date").
ARTICLE III
TERMS OF DISTRIBUTION
Section 3.1. COOPERATION. Parent and Subsidiary shall cooperate in
preparing, filing with the Commission and causing to become effective any
registration statements or amendments thereto that are appropriate.
Section 3.2. BLUE SKY LAWS. Parent and Subsidiary shall take all such
action as may be necessary or appropriate under the securities or blue sky laws
of states or other political subdivisions of the United States in connection
with the transactions contemplated by this Agreement.
Section 3.3. DISTRIBUTION DATE. Subsidiary's board of directors may, in its
discretion, establish the distribution date and any appropriate procedures in
connection with the Distribution.
Section 3.4. DELIVERY OF CERTIFICATES. On the distribution date, Parent
shall deliver to the distribution agent, as determined by Subsidiary, a
certificate or certificates representing all of the then outstanding shares of
Sub Common Stock held by Parent, endorsed in blank, and shall instruct the
distribution agent to distribute to each holder of record of Parent Common Stock
on the Record Date a certificate or certificates representing such holder of
record's allotted share(s) of Sub Common Stock as determined by Subsidiary's
board of directors. Subsidiary agrees to provide all certificates for shares of
Sub Common Stock that the distribution agent shall require in order to effect
the Distribution.
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Section 3.5. INDEMNIFICATION. Subsidiary agrees to indemnify and hold
harmless Parent from all claims, demands or causes of action arising out of the
Distribution hereunder.
ARTICLE 1V
OPTION TO PURCHASE SHARES
Section 4.1. OPTION. Each Majority Shareholder grants to Yolana, or its
assigns, the option to purchase all the Sub Common Stock which it may be
entitled to receive by reason of its ownership of shares of the Parent Preferred
Stock (including shares of Parent Preferred Stock which it receives by reason of
dividend or stock split), for an aggregate exercise price equal to the par value
of the Sub Common Stock to be distributed to the Majority Shareholder (the
"Option").
Section 4.2. VESTING; TERMINATION OF OPTION. The Option set forth herein
shall vest and be valid only in the event that (i) the conditions set forth in
Section 2.1(a) or (b) are met and (ii) Yolana has reimbursed the Parent in full
for all of the expenses of the Registration and Distribution of the Sub Common
Stock as required by Section 2.1 not later than the Effective Date of the
Registration Statement. The Option, if vested, will expire ten (10) days after
the Effective Date of the Registration Statement.
Section 4.3. EXERCISE OF OPTION. Yolana may exercise the Option by
providing written notice to each of the Majority Shareholders of its intent to
exercise the Option, along with payment in an amount equal to (i) the par value
of the Sub Common Stock ($.001 per share) times (ii) the number of shares of Sub
Common Stock which are to be distributed to the Majority Shareholders based upon
their ownership of the Parent Preferred Stock.
Section 4.4. RESTRICTIONS ON TRANSFER. Each Majority Shareholder hereby
agrees not to offer, sell, contract to sell or otherwise transfer, pledge or
dispose of, directly or indirectly, any Parent Preferred Stock for a period of
six months from the Closing Date ("Lock Up Period"), and represents and warrants
that he will keep his shares of Parent Preferred Stock, free and clear of any
interests, security interest, claims, liens, pledges, penalties, charges,
encumbrances, buy-sell agreements, and any other rights of any party whatsoever
of every kind and character during the Lock Up Period. If Parent is required to
file a Registration Statement pursuant to Section 2.1, each Majority Shareholder
agrees to extend the Lock Up Period for the lesser of (a) three (3) months from
the initial filing date of the Registration Statement or (b) ten (10) days after
the Effective Date of the Registration Statement ("Extended Lock Up Period").
After the Lock Up Period or the Extended Lock Up Period, if applicable, has
expired any stop transfer orders placed on the Majority Shareholders' Parent
securities shall be removed and the Majority Shareholders may dispose of their
shares.
Section 4.5. STOP TRANSFER ORDER. Each Majority Shareholder consents to
placing stop-transfer orders with the transfer agent of the Parent's securities
with respect to any Parent Preferred Stock which are registered in such
shareholder's name, or which are beneficially owned or controlled by such
shareholder, during the Lock Up Period or Extended Lock Period.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF the undersigned hereby executes this agreement the ___ day of
July, 2001.
BERENS INDUSTRIES, INC. MAJORITY SHAREHOLDER:
By: /S/ Marc I. Berens By: /S/ Jeff Olexa
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Marc I. Berens, President Jeff Olexa
ARTMOVEMENT.COM, INC. By: /S/ Robert Davis
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Robert Davis
By: /S/ Marc I. Berens By: /S/ Manfred Sternberg
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Marc I. Berens, President Manfred Sternberg
Yolana Partnership, Ltd.
By: ______________________________
Jeffrey Hansen, President of
Simkova, LLC, General Partner
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