STOCK EXCHANGE AGREEMENT
Agreement dated as of February 29, 2000 between iLive, Inc., a Nevada
Corporation, ("iLive"), on the one hand, and M. Richard Cutler ("Cutler"), Brian
A. Lebrecht ("Lebrecht") and Vi Bui ("Bui") on the other hand. Each of Cutler,
Lebrecht, and Bui shall be referred to as a "Shareholder" and collectively as
the "Shareholders."
1. THE ACQUISITION.
1.1_ Purchase and Sale Subject to the Terms and Conditions of this
Agreement. At the Closing to be held as provided in Section 2, iLive shall sell
the iLive Shares (defined below) to the Shareholders and the Shareholders shall
purchase the iLive Shares from iLive, free and clear of all Encumbrances other
than restrictions imposed by Federal and State securities laws.
1.2 Purchase Price. iLive will exchange 200,000 shares of its
restricted common stock (the "iLive Shares") for 100,000 shares of the Common
Stock of Society of Economic Assurance, Inc. ("SEA"), representing 100% of the
outstanding common shares of SEA (the "SEA Shares"). The iLive Shares shall be
issued and delivered to the Shareholders as set forth in Exhibit "A" hereto.
2. THE CLOSING.
2.1 Place and Time. The closing of the sale and exchange of the iLive
Shares for the SEA Shares (the "Closing") shall take place at the offices of the
Cutler Law Group, 610 Newport Center Drive, Suite 800, Newport Beach, CA 92660
no later than the close of business (Orange County California time) on March
1, 2000 or at such other place, date and time as the parties may agree in
writing.
2.2 Deliveries by the Shareholders. At the Closing, the Shareholders
shall deliver the following to iLive:
1. Certificates representing the SEA Shares, duly endorsed for transfer to
iLive and accompanied by appropriate stock powers; the Shareholders shall
immediately change those certificates for, and to deliver to iLive at the
Closing, a certificate representing the SEA Shares registered in the name of
iLive (without any legend or other reference to any Encumbrance other than
appropriate federal securities law limitations).
2. The documents contemplated by Section 3.
3. All other documents, instruments and writings required by this Agreement
to be delivered by the Shareholders at the Closing and any other documents or
records relating to SEA's business reasonably requested by iLive in connection
with this Agreement.
2.3 Deliveries by iLive. At the Closing, iLive shall deliver the
following to the Shareholders:
a. The iLive Shares for further delivery to the Shareholders as contemplated
by section 1.
b. The documents contemplated by Section 4.
c. All other documents, instruments and writings required by this Agreement
to be delivered by iLive at the Closing.
d. CONDITIONS TO ILIVE'S OBLIGATIONS.
The obligations of iLive to effect the Closing shall be subject to the
satisfaction at or prior to the Closing of the following conditions, any one or
more of which may be waived by iLive:
3.1 No Injunction. There shall not be in effect any injunction, order
or decree of a court of competent jurisdiction that prevents the consummation of
the transactions contemplated by this Agreement, that prohibits iLive's
acquisition of the SEA Shares or the iLive Shares or that will require any
divestiture as a result of iLive's acquisition of the SEA Shares or that will
require all or any part of the business of iLive to be held separate and no
litigation or proceedings seeking the issuance of such an injunction, order or
decree or seeking to impose substantial penalties on iLive or SEA if this
Agreement is consummated shall be pending.
3.2 Representations, Warranties and Agreements. (a) The
representations and warranties of the Shareholders set forth in this Agreement
shall be true and complete in all material respects as of the Closing Date as
though made at such time, and (b) the Shareholders shall have performed and
complied in all material respects with the agreements contained in this
Agreement required to be performed and complied with by it at or prior to the
Closing.
3.3 Regulatory Approvals. All licenses, authorizations, consents,
orders and regulatory approvals of Governmental Bodies necessary for the
consummation of iLive's acquisition of the SEA Shares shall have been obtained
and shall be in full force and effect.
3.4 Resignations of Director. Effective on the Closing Date, the
Shareholders, and each of them, shall have resigned as an officer, director and
employee of SEA.
4. CONDITIONS TO THE SHAREHOLDER'S OBLIGATIONS.
The obligations of the Shareholders to effect the Closing shall be subject
to the satisfaction at or prior to the Closing of the following conditions, any
one or more of which may be waived by the Shareholders:
4.1 No Injunction. There shall not be in effect any injunction, order
or decree of a court of competent jurisdiction that prevents the consummation of
the transactions contemplated by this Agreement, that prohibits iLive's
acquisition of the SEA Shares or the Shareholder's acquisition of the iLive
Shares or that will require any divestiture as a result of iLive's acquisition
of the Shares or the Shareholder's acquisition of the iLive Shares or that will
require all or any part of the business of iLive or SEA to be held separate and
no litigation or proceedings seeking the issuance of such an injunction, order
or decree or seeking to impose substantial penalties on iLive or SEA if this
Agreement is consummated shall be pending.
4.2 Representations, Warranties and Agreements. (a) The
representations and warranties of iLive set forth in this Agreement shall be
true and complete in all material respects as of the Closing Date as though made
at such time, and (b) iLive shall have performed and complied in all material
respects with the agreements contained in this Agreement required to be
performed and complied with by it at or prior to the Closing.
4.3 Regulatory Approvals. All licenses, authorizations, consents,
orders and regulatory approvals of Governmental Bodies necessary for the
consummation of iLive's acquisition of the SEA Shares and the Shareholder's
acquisition of the iLive Shares shall have been obtained and shall be in full
force and effect.
5. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.
The Shareholders represent and warrant to iLive that, to the Knowledge of
the Shareholders (which limitation shall not apply to Section 5.3), and except
as set forth in an SEA Disclosure Letter:
5.1 Organization of SEA; Authorization. SEA is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Nevada. This Agreement constitutes a valid and binding obligation of the
Shareholders, enforceable against them in accordance with its terms.
5.2 Capitalization. The authorized capital stock of SEA consists of
2,000,000 authorized shares, consisting of 1,000,000 common stock, par value
$.001, and 1,000,000 preferred shares, no par $.001, of which 100,000 common
shares and no preferred shares are presently issued and outstanding. No shares
have been registered under state or federal securities laws. As of the Closing
Date, all of the issued and outstanding shares of common stock of SEA are
validly issued, fully paid and non-assessable. As of the Closing Date there
will not be outstanding any warrants, options or other agreements on the part of
SEA obligating SEA to issue any additional shares of common or preferred stock
or any of its securities of any kind. Except as otherwise set forth herein, SEA
will not issue any shares of capital stock from the date of this Agreement
through the Closing Date.
5.3 No Conflict as to SEA. Neither the execution and delivery of this
Agreement nor the consummation of the sale of the SEA Shares to iLive will (a)
violate any provision of the certificate of incorporation or by-laws of SEA or
(b) violate, be in conflict with, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under any
agreement to which SEA is a party or (c) violate any statute or law or any
judgment, decree, order, regulation or rule of any court or other Governmental
Body applicable to SEA.
5.4 Ownership of SEA Shares. The delivery of certificates to iLive
provided in Section 2.2 will result in iLive's immediate acquisition of record
and beneficial ownership of the SEA Shares, free and clear of all Encumbrances
subject to applicable State and Federal securities laws. There are no
outstanding options, rights, conversion rights, agreements or commitments of any
kind relating to the issuance, sale or transfer of any Equity Securities or
other securities of SEA.
5.5 No Conflict as to SEA and Subsidiaries. Neither the execution and
delivery of this Agreement nor the consummation of the sale of the SEA Shares to
iLive will (a) violate any provision of the certificate of incorporation or
by-laws (or other governing instrument) of SEA or any of its Subsidiaries or
(b) violate, or be in conflict with, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
excuse performance by any Person of any of its obligations under, or cause the
acceleration of the maturity of any debt or obligation pursuant to, or result in
the creation or imposition of any Encumbrance upon any property or assets of
SEA or any of its Subsidiaries under, any material agreement or commitment to
which SEA or any of its Subsidiaries is a party or by which any of their
respective property or assets is bound, or to which any of the property or
assets of SEA or any of its Subsidiaries is subject, or (c) violate any statute
or law or any judgment, decree, order, regulation or rule of any court or other
Governmental Body applicable to SEA or any of its Subsidiaries except, in the
case of violations, conflicts, defaults, terminations, accelerations or
Encumbrances described in clause (b) of this Section 5.5, for such matters which
are not likely to have a material adverse effect on the business or financial
condition of SEA and its Subsidiaries, taken as a whole.
5.6 Consents and Approvals of Governmental Authorities. Except with
respect to applicable State and Federal securities laws, no consent, approval or
authorization of, or declaration, filing or registration with, any Governmental
Body is required to be made or obtained by SEA or iLive or any of its
Subsidiaries in connection with the execution, delivery and performance of this
Agreement by SEA or the consummation of the sale of the SEA Shares to iLive.
5.7 Other Consents. No consent of any Person is required to be obtained
by SEA or iLive to the execution, delivery and performance of this Agreement or
the consummation of the sale of the SEA Shares to iLive, including, but not
limited to, consents from parties to leases or other agreements or commitments,
except for any consent which the failure to obtain would not be likely to have a
material adverse effect on the business and financial condition of SEA or iLive.
5.8 Financial Statements. SEA has delivered to iLive consolidated
balance sheets of SEA and its Subsidiaries as at December 31, 1999, and
statements of income and changes in financial position for the period from
inception to the period then ended, together with the report thereon of SEA's
independent accountant (the "SEA Financial Statements").
5.9 Title to Properties. Either SEA or one of its Subsidiaries owns
all the material properties and assets that they purport to own (real, personal
and mixed, tangible and intangible), including, without limitation, all the
material properties and assets reflected in the SEA Financial Statements, and
all the material properties and assets purchased or otherwise acquired by SEA
or any of its Subsidiaries since the date of the SEA Financial Statements. All
properties and assets reflected in the SEA Financial Statements are free and
clear of all material Encumbrances and are not, in the case of real property,
subject to any material rights of way, building use restrictions, exceptions,
variances, reservations or limitations of any nature whatsoever except, with
respect to all such properties and assets, (a) mortgages or security interests
shown on the SEA Financial Statements as securing specified liabilities or
obligations, with respect to which no default (or event which, with notice or
lapse of time or both, would constitute a default) exists, and all of which are
listed in the SEA Disclosure Letter, (b) mortgages or security interests
incurred in connection with the purchase of property or assets after the date of
the SEA Financial Statements (such mortgages and security interests being
limited to the property or assets so acquired), with respect to which no default
(or event which, with notice or lapse of time or both, would constitute a
default) exists, (c) as to real property, (i) imperfections of title, if any,
none of which materially detracts from the value or impairs the use of the
property subject thereto, or impairs the operations of SEA or any of its
Subsidiaries and (ii) zoning laws that do not impair the present or anticipated
use of the property subject thereto, and (d) liens for current taxes not yet
due. The properties and assets of SEA and its Subsidiaries include all rights,
properties and other assets necessary to permit SEA and its Subsidiaries to
conduct SEA's business in all material respects in the same manner as it is
conducted on the date of this Agreement.
5.10 Buildings, Plants and Equipment. The buildings, plants, structures and
material items of equipment and other personal property owned or leased by SEA
or its Subsidiaries are, in all respects material to the business or financial
condition of SEA and its Subsidiaries, taken as a whole, in good operating
condition and repair (ordinary wear and tear excepted) and are adequate in all
such respects for the purposes for which they are being used. SEA has not
received notification that it or any of its Subsidiaries is in violation of any
applicable building, zoning, anti-pollution, health, safety or other law,
ordinance or regulation in respect of its buildings, plants or structures or
their operations, which violation is likely to have a material adverse effect on
the business or financial condition of SEA and its Subsidiaries, taken as a
whole or which would require a payment by SEA or iLive or any of their
subsidiaries in excess of $2,000 in the aggregate, and which has not been
cured.
5.11 No Condemnation or Expropriation. Neither the whole nor any portion of
the property or leaseholds owned or held by SEA or any of its Subsidiaries is
subject to any governmental decree or order to be sold or is being condemned,
expropriated or otherwise taken by any Governmental Body or other Person with or
without payment of compensation therefor, which action is likely to have a
material adverse effect on the business or financial condition of iLive and its
Subsidiaries, taken as a whole.
5.12 Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any court or Governmental Body pending or threatened
in writing against or involving SEA or any of its Subsidiaries which is likely
to have a material adverse effect on the business or financial condition of
SEA, iLive and any of their Subsidiaries, taken as whole, or which would require
a payment by SEA or its subsidiaries in excess of $2,000 in the aggregate or
which questions or challenges the validity of this Agreement. Neither SEA nor
any or its Subsidiaries is subject to any judgment, order or decree that is
likely to have a material adverse effect on the business or financial condition
of SEA, iLive or any of their Subsidiaries, taken as a whole, or which would
require a payment by SEA or its subsidiaries in excess of $2,000 in the
aggregate.
5.13 Absence of Certain Changes. Since the date of the SEA Financial
Statements, neither SEA nor any of its Subsidiaries has:
a. suffered the damage or destruction of any of its properties or assets
(whether or not covered by insurance) which is materially adverse to the
business or financial condition of SEA and its Subsidiaries, taken as a whole,
or made any disposition of any of its material properties or assets other than
in the ordinary course of business;
b. made any change or amendment in its certificate of incorporation or
by-laws, or other governing instruments;
c. issued or sold any Equity Securities or other securities, acquired,
directly or indirectly, by redemption or otherwise, any such Equity Securities,
reclassified, split-up or otherwise changed any such Equity Security, or granted
or entered into any options, warrants, calls or commitments of any kind with
respect thereto;
d. organized any new Subsidiary or acquired any Equity Securities of any
Person or any equity or ownership interest in any business;
e. borrowed any funds or incurred, or assumed or become subject to, whether
directly or by way of guarantee or otherwise, any obligation or liability with
respect to any such indebtedness for borrowed money;
f. paid, discharged or satisfied any material claim, liability or obligation
(absolute, accrued, contingent or otherwise), other than in the ordinary course
of business;
g. prepaid any material obligation having a maturity of more than 90 days
from the date such obligation was issued or incurred;
h. canceled any material debts or waived any material claims or rights,
except in the ordinary course of business;
i. disposed of or permitted to lapse any rights to the use of any material
patent or registered trademark or copyright or other intellectual property owned
or used by it;
j. granted any general increase in the compensation of officers or employees
(including any such increase pursuant to any employee benefit plan);
k. purchased or entered into any contract or commitment to purchase any
material quantity of raw materials or supplies, or sold or entered into any
contract or commitment to sell any material quantity of property or assets,
except (i) normal contracts or commitments for the purchase of, and normal
purchases of, raw materials or supplies, made in the ordinary course business,
(ii) normal contracts or commitments for the sale of, and normal sales of,
inventory in the ordinary course of business, and (iii) other contracts,
commitments, purchases or sales in the ordinary course of business;
l. made any capital expenditures or additions to property, plant or
equipment or acquired any other property or assets (other than raw materials and
supplies) at a cost in excess of $100,000 in the aggregate;
m. written off or been required to write off any notes or accounts
receivable in an aggregate amount in excess of $2,000;
n. written down or been required to write down any inventory in an aggregate
amount in excess of $ 2,000;
o. entered into any collective bargaining or union contract or agreement; or
p. other than the ordinary course of business, incurred any liability
required by generally accepted accounting principles to be reflected on a
balance sheet and material to the business or financial condition of SEA and
its subsidiaries taken as a whole.
5.14 No Material Adverse Change. Since the date of the SEA Financial
Statements, there has not been any material adverse change in the business or
financial condition of SEA and its Subsidiaries taken as a whole, other than
changes resulting from economic conditions prevailing in the United States
precious coins, collectibles and metals industry.
5.15 Contracts and Commitments. Neither SEA nor any of its Subsidiaries is a
party to any:
a. Contract or agreement (other than purchase or sales orders entered into
in the ordinary course of business) involving any liability on the part of SEA
or one of its Subsidiaries of more than $25,000 and not cancelable by SEA or
the relevant Subsidiary (without liability to SEA or such Subsidiary) within 60
days;
b. Except with respect to the lease on its business location, lease of
personal property involving annual rental payments in excess of $25,000 and not
cancelable by SEA or the relevant Subsidiary (without liability to SEA or such
Subsidiary) within 90 days;
c. Except with respect to the options referenced above, Employee bonus,
stock option or stock purchase, performance unit, profit-sharing, pension,
savings, retirement, health, deferred or incentive compensation, insurance or
other material employee benefit plan (as defined in Section 2(3) of ERISA) or
program for any of the employees, former employees or retired employees of SEA
or any of its Subsidiaries;
d. Commitment, contract or agreement that is currently expected by the
management of SEA to result in any material loss upon completion or performance
thereof;
e. Contract, agreement or commitment that is material to the business of
SEA and its Subsidiaries, taken as a whole, with any officer, employee, agent,
consultant, advisor, salesman, sales representative, value added reseller,
distributor or dealer; or
f. Employment agreement or other similar agreement that contains any
severance or termination pay, liabilities or obligations.
All such contracts and agreements are in full force and effect. Neither SEA nor
any or its Subsidiaries is in breach of, in violation of or in default under,
any agreement, instrument, indenture, deed of trust, commitment, contract or
other obligation of any type to which SEA or any of its Subsidiaries is a party
or is or may be bound that relates to the business of SEA or any of its
Subsidiaries or to which any of the assets or properties of SEA or any of its
Subsidiaries is subject, the effect of which breach, violation or default is
likely to materially and adversely affect the business or financial condition of
SEA and its Subsidiaries, taken as a whole. iLive has not guaranteed or assumed
and specifically does not guarantee or assume any obligations of SEA or any of
its Subsidiaries.
5.16 Labor Relations. Neither SEA nor any of its Subsidiaries is a party to
any collective bargaining agreement. Except for any matter which is not likely
to have a material adverse effect on the business or financial condition of SEA
and its Subsidiaries, taken as a whole, (a) SEA and each of its Subsidiaries is
in compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and is not
engaged in any unfair labor practice, (b) there is no unfair labor practice
complaint against SEA or any of its Subsidiaries pending before the National
Labor Relations Board, (c) there is no labor strike, dispute, slowdown or
stoppage actually pending or threatened against SEA or any of its Subsidiaries,
(d) no representation question exists respecting the employees of SEA or any of
its Subsidiaries, (e) neither SEA nor any of its Subsidiaries has experienced
any strike, work stoppage or other labor difficulty, and (f) no collective
bargaining agreement relating to employees of SEA or any of its Subsidiaries is
currently being negotiated.
5.17 Employee Benefit Plans. No material employee pension and welfare
benefit plans covering employees of SEA is (1) a multi-employer plan as defined
in Section 3(37) of ERISA, or (2) a defined benefit plan as defined in Section
3(35) of ERISA, any listed individual account pension plan is duly qualified as
tax exempt under the applicable sections of the Code, each listed benefit plan
and related funding arrangement, if any, has been maintained in all material
respects in compliance with its terms and the provisions of ERISA and the Code.
5.18 Compliance with Law. The operations of SEA and its Subsidiaries have
been conducted in accordance with all applicable laws and regulations of all
Governmental Bodies having jurisdiction over them, except for violations thereof
which are not likely to have a material adverse effect on the business or
financial condition of SEA and its Subsidiaries, taken as a whole, or which
would not require a payment by SEA or its Subsidiaries in excess of $2,000 in
the aggregate, or which have been cured. Neither SEA nor any of its Subsidiaries
has received any notification of any asserted present or past failure by it to
comply with any such applicable laws or regulations. SEA and its Subsidiaries
have all material licenses, permits, orders or approvals from the Governmental
Bodies required for the conduct of their businesses, and are not in material
violation of any such licenses, permits, orders and approvals. All such
licenses, permits, orders and approvals are in full force and effect, and no
suspension or cancellation of any thereof has been threatened.
5.19 Tax Matters.
a. SEA and each of its Subsidiaries (1) has filed all nonconsolidated and
noncombined Tax Returns and all consolidated or combined Tax Returns that
include only SEA and/or its Subsidiaries and not Seller or its other Affiliates
(for the purposes of this Section 5.19, such tax Returns shall be considered
nonconsolidated and noncombined Tax Returns) required to be filed through the
date hereof and has paid any Tax due through the date hereof with respect to the
time periods covered by such nonconsolidated and noncombined Tax Returns and
shall timely pay any such Taxes required to be paid by it after the date hereof
with respect to such Tax Returns and (2) shall prepare and timely file all such
nonconsolidated and noncombined Tax Returns required to be filed after the date
hereof and through the Closing Date and pay all Taxes required to be paid by it
with respect to the periods covered by such Tax Returns; (B) all such Tax
Returns filed pursuant to clause (A) after the date hereof shall, in each case,
be prepared and filed in a manner consistent in all material respects (including
elections and accounting methods and conventions) with such Tax Return most
recently filed in the relevant jurisdiction prior to the date hereof, except as
otherwise required by law or regulation. Any such Tax Return filed or required
to be filed after the date hereof shall not reflect any new elections or the
adoption of any new accounting methods or conventions or other similar items,
except to the extent such particular reflection or adoption is required to
comply with any law or regulation.
b. All consolidated or combined Tax Returns (except those described in
subparagraph (a) above) required to be filed by any person through the date
hereof that are required or permitted to include the income, or reflect the
activities, operations and transactions, of SEA or any of its Subsidiaries for
any taxable period have been timely filed, and the income, activities,
operations and transactions of SEA and Subsidiaries have been properly included
and reflected thereon. SEA shall prepare and file, or cause to be prepared and
filed, all such consolidated or combined Tax Returns that are required or
permitted to include the income, or reflect the activities, operations and
transactions, of SEA or any Subsidiary, with respect to any taxable year or the
portion thereof ending on or prior to the Closing Date, including, without
limitation, SEA's consolidated federal income tax return for such taxable years.
SEA will timely file a consolidated federal income tax return for the taxable
year ended December 31, 1998 and such return shall include and reflect the
income, activities, operations and transactions of SEA and Subsidiaries for the
taxable period then ended, and hereby expressly covenants and agrees to file a
consolidated federal income tax return, and to include and reflect thereon the
income, activities, operations and transactions of SEA and Subsidiaries for the
taxable period through the Closing Date. All Tax Returns filed pursuant to this
subparagraph (b) after the date hereof shall, in each case, to the extent that
such Tax Returns specifically relate to SEA or any of its Subsidiaries and do
not generally relate to matters affecting other members of SEA's consolidated
group, be prepared and filed in a manner consistent in all material respects
(including elections and accounting methods and conventions) with the Tax Return
most recently filed in the relevant jurisdictions prior to the date hereof,
except as otherwise required by law or regulation. SEA has paid or will pay all
Taxes that may now or hereafter be due with respect to the taxable periods
covered by such consolidated or combined Tax Returns.
c. Neither SEA nor any of its Subsidiaries has agreed, or is required, to
make any adjustment (x) under Section 481(a) of the Code by reason of a change
in accounting method or otherwise or (y) pursuant to any provision of the Tax
Reform Act of 1986, the Revenue Act of 1987 or the Technical and Miscellaneous
Revenue Act of 1988.
d. Neither SEA nor any of its Subsidiaries or any predecessor or Affiliate
of the foregoing has, at any time, filed a consent under Section 341(f)(1) of
the Code, or agreed under Section 341(f)(3) of the Code, to have the provisions
of Section 341(f)(2) of the Code apply to any sale of its stock.
e. There is no (nor has there been any request for an) agreement, waiver or
consent providing for an extension of time with respect to the assessment of any
Taxes attributable to SEA or its Subsidiaries, or their assets or operations and
no power of attorney granted by SEA or any of its Subsidiaries with respect to
any Tax matter is currently in force.
f. There is no action, suit, proceeding, investigation, audit, claim,
demand, deficiency or additional assessment in progress, pending or threatened
against or with respect to any Tax attributable to SEA, its Subsidiaries or
their assets or operations.
g. All amounts required to be withheld as of the Closing Date for Taxes or
otherwise have been withheld and paid when due to the appropriate agency or
authority.
h. No property of SEA is "tax-exempt use property " within the meaning of
Section 168(h) of the Code nor property that SEA and/or its Subsidiaries will be
required to treat as being owned by another person pursuant to Section 168(f)(8)
of the Internal Revenue Code of 1954, as amended and in effect immediately
prior to the enactment of the Tax Reform Act of 1986.
i. There have been delivered or made available to iLive true and complete
copies of all income Tax Returns (or with respect to consolidated or combined
returns, the portion thereof) and any other Tax Returns requested by iLive as
may be relevant to SEA, its Subsidiaries, or their assets or operations for any
and all periods ending after December 31, 1998, or for any Tax years which are
subject to audit or investigation by any taxing authority or entity.
j. There is no contract, agreement, plan or arrangement, including but not
limited to the provisions of this Agreement, covering any employee or former
employee of SEA or its Subsidiaries that, individually or collectively, could
give rise to the payment of any amount that would not be deductible pursuant to
Section 280G or 162 of the Code.
5.20 Environmental Matters.
a. At all times prior to the date hereof, SEA and its Subsidiaries have
complied in all material respects with applicable environmental laws, orders,
regulations, rules and ordinances relating to the Properties (as hereinafter
defined), the violation of which would have a material adverse effect on the
business or financial condition of SEA and its Subsidiaries, taken as a whole,
or which would require a payment by SEA or its Subsidiaries in excess of
$2,000 in the aggregate, and which have been duly adopted, imposed or
promulgated by any legislative, executive, administrative or judicial body or
officer of any Governmental Body.
b. The environmental licenses, permits and authorizations that are material
to the operations of SEA and its Subsidiaries, taken as a whole, are in full
force and effect.
c. Neither SEA nor any of its Subsidiaries has released or caused to be
released on or about the properties currently owned or leased by SEA or any of
its Subsidiaries (the "Properties") any (i) pollutants, (ii) contaminants, (iii)
"Hazardous Substances," as that term is defined in Section 101(14) of the
Comprehensive Environmental Response Act, as amended or (iv) "Regulated
Substances," as that term in defined in Section 9001 of the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as amended,
which would be required to be remediated by any governmental agency with
jurisdiction over the Properties under the authority of laws, regulations and
ordinances as in effect and currently interpreted on the date hereof, which
remediation would have a material adverse effect on the business or financial
condition of SEA and its Subsidiaries, taken as a whole.
5.21 Brokers or Finders. SEA and the Shareholders have not employed any
broker or finder or incurred any liability for any brokerage or finder's fees or
commissions or similar payments in connection with the sale of the SEA Shares to
iLive.
5.22 Absence of Certain Commercial Practices. Neither SEA nor any of its
Subsidiaries has, directly or indirectly, paid or delivered any fee, commission
or other sum of money or item of property, however characterized, to any finder,
agent, government official or other party, in the United States or any other
country, which is in any manner related to the business or operations of SEA or
its Subsidiaries, which SEA or one of its Subsidiaries knows or has reason to
believe to have been illegal under any federal, state or local laws of the
United States or any other country having jurisdiction; and neither SEA nor any
of its Subsidiaries has participated, directly or indirectly, in any boycotts or
other similar practices affecting any of its actual or potential customers in
violation of any applicable law or regulation.
5.23 Transactions with Directors and Officers. SEA and its Subsidiaries do
not engage in business with any Person in which any of SEA's directors or
officers has a material equity interest. No director or officer of SEA owns any
property, asset or right which is material to the business of SEA and its
Subsidiaries, taken as a whole.
5.24 Borrowing and Guarantees. SEA and its Subsidiaries (a) do not have any
indebtedness for borrowed money, (b) are not lending or committed to lend any
money (except for advances to employees in the ordinary course of business), and
(c) are not guarantors or sureties with respect to the obligations of any
Person.
6. REPRESENTATIONS AND WARRANTIES OF ILIVE.
iLive represents and warrants to the Shareholders that, to the Knowledge of
iLive (which limitation shall not apply to Section 6.3), and except as set forth
in a iLive Disclosure Letter:
6.1 Organization of iLive; Authorization. iLive is a corporation duly
organized, validly existing and in good standing under the laws of Nevada with
full corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate action of
iLive and this Agreement constitutes a valid and binding obligation of iLive;
enforceable against it in accordance with its terms.
6.2 Capitalization. The authorized capital stock of iLive consists of
100,000,000 shares of common stock, par value $.001 per share, and 10,000,000
shares of preferred stock, par value $.001 per share. As of January 31, 2000,
iLive had 15,053,334 shares of common stock issued and outstanding and no shares
of Preferred Stock issued and outstanding. As of the Closing Date, all of the
issued and outstanding shares of common stock of iLive are validly issued, fully
paid and non-assessable. The Common Stock of iLive is presently listed and
trading on the Nasdaq Over-the-Counter Bulletin Board under the symbol "LIVE."
6.3 Ownership of iLive Shares. The delivery of certificates to SEA
provided in Section 2.3 will result in the Shareholders immediate acquisition of
record and beneficial ownership of the iLive Shares, free and clear of all
Encumbrances other than as required by Federal and State securities laws.
6.4 No Conflict as to iLive and Subsidiaries. Neither the execution
and delivery of this Agreement nor the consummation of the sale of the iLive
Shares to the Shareholders will (a) violate any provision of the certificate of
incorporation or by-laws (or other governing instrument) of iLive or any of its
Subsidiaries or (b) violate, or be in conflict with, or constitute a default (or
an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or excuse performance by any Person of any of its obligations
under, or cause the acceleration of the maturity of any debt or obligation
pursuant to, or result in the creation or imposition of any Encumbrance upon any
property or assets of iLive or any of its Subsidiaries under, any material
agreement or commitment to which iLive or any of its Subsidiaries is a party or
by which any of their respective property or assets is bound, or to which any of
the property or assets of iLive or any of its Subsidiaries is subject, or (c)
violate any statute or law or any judgment, decree, order, regulation or rule of
any court or other Governmental Body applicable to iLive or any of its
Subsidiaries except, in the case of violations, conflicts, defaults,
terminations, accelerations or Encumbrances described in clause (b) of this
Section 6.4, for such matters which are not likely to have a material adverse
effect on the business or financial condition of iLive and its Subsidiaries,
taken as a whole.
6.5 Consents and Approvals of Governmental Authorities. No consent,
approval or authorization of, or declaration, filing or registration with, any
Governmental Body is required to be made or obtained by iLive or SEA or any of
either of their Subsidiaries in connection with the execution, delivery and
performance of this Agreement by iLive or the consummation of the sale of the
iLive Shares to the Shareholders.
6.6 Other Consents. No consent of any Person is required to be obtained
by SEA or iLive to the execution, delivery and performance of this Agreement or
the consummation of the sale of the iLive Shares to the Shareholders, including,
but not limited to, consents from parties to leases or other agreements or
commitments, except for any consent which the failure to obtain would not be
likely to have a material adverse effect on the business and financial condition
of SEA or iLive.
6.7 Financial Statements. iLive has delivered to the Shareholders
consolidated balance sheets of iLive and its Subsidiaries as at December 31,
1998 and June 30, 1999, and statements of income and changes in financial
position for each of the years in the two-year period then ended, together with
the report thereon of iLive's independent accountant (the "iLive Financial
Statements"). Such iLive Financial Statements and notes fairly present the
consolidated financial condition and results of operations of iLive and its
Subsidiaries as at the respective dates thereof and for the periods therein
referred to, all in accordance with generally accepted United States accounting
principles consistently applied throughout the periods involved, except as set
forth in the notes thereto, and shall be utilizable in any SEC filing in
compliance with Rule 310 of Regulation S-B promulgated under the Securities Act.
6.8 Brokers or Finders. Other than M. Richard Cutler, Brian A.
Lebrecht, and Vi Bui, iLive has not employed any broker or finder or incurred
any liability for any brokerage or finder's fees or commissions or similar
payments in connection with the sale of the iLive Shares to the Shareholders.
6.9 Purchase for Investment. iLive is purchasing the SEA Shares solely
for its own account for the purpose of investment and not with a view to, or for
sale in connection with, any distribution of any portion thereof in violation of
any applicable securities law.
7. Access and Reporting; Filings With Governmental Authorities; Other
Covenants.
7.1 Access Between the date of this Agreement and the Closing Date.
Each of the Shareholders and iLive shall (a) give to the other and its
authorized representatives reasonable access to all plants, offices, warehouse
and other facilities and properties of SEA or iLive, as the case may be, and to
its books and records, (b) permit the other to make inspections thereof, and (c)
cause its officers and its advisors to furnish the other with such financial and
operating data and other information with respect to the business and properties
of such party and its Subsidiaries and to discuss with such and its authorized
representatives its affairs and those of its Subsidiaries, all as the other may
from time to time reasonably request.
7.3 Exclusivity. From the date hereof until the earlier of the Closing
or the termination of this Agreement, the Shareholders shall not solicit or
negotiate or enter into any agreement with any other Person with respect to or
in furtherance of any proposal for a merger or business combination involving,
or acquisition of any interest in, or (except in the ordinary course of
business) sale of assets by, SEA, except for the exchange of the iLive Shares
for the SEA Shares from the Shareholders.
7.4 Regulatory Matters. The Shareholders and iLive shall (a) file with
applicable regulatory authorities any applications and related documents
required to be filed by them in order to consummate the contemplated transaction
and (b) cooperate with each other as they may reasonably request in connection
with the foregoing.
8. CONDUCT OF SEA'S BUSINESS PRIOR TO THE CLOSING. The Shareholder shall
use their best efforts to ensure the following:
8.1 Operation in Ordinary Course. Between the date of this Agreement
and the Closing Date, SEA shall cause conduct its businesses in all material
respects in the ordinary course.
8.2 Business Organization. Between the date of this Agreement and the
Closing Date, SEA shall (a) preserve substantially intact the business
organization of SEA; and (b) preserve in all material respects the present
business relationships and good will of SEA and each of its Subsidiaries.
8.3 Corporate Organization. Between the date of this Agreement and the
Closing Date, SEA shall not cause or permit any amendment of its certificate of
incorporation or by-laws (or other governing instrument) and shall not:
a. issue, sell or otherwise dispose of any of its Equity Securities, or
create, sell or otherwise dispose of any options, rights, conversion rights or
other agreements or commitments of any kind relating to the issuance, sale or
disposition of any of its Equity Securities;
b. create or suffer to be created any Encumbrance thereon, or create, sell
or otherwise dispose of any options, rights, conversion rights or other
agreements or commitments of any kind relating to the sale or disposition of any
Equity Securities;
c. reclassify, split up or otherwise change any of its Equity Securities;
d. be party to any merger, consolidation or other business combination;\
e. sell, lease, license or otherwise dispose of any of its properties or
assets (including, but not limited to rights with respect to patents and
registered trademarks and copyrights or other proprietary rights), in an amount
which is material to the business or financial condition of SEA and its
Subsidiaries, taken as a whole, except in the ordinary course of business; or
f. organize any new Subsidiary or acquire any Equity Securities of any
Person or any equity or ownership interest in any business.
8.4 Other Restrictions. Between the date of this Agreement and the
Closing Date, SEA shall not:
a. borrow any funds or otherwise become subject to, whether directly or by
way of guarantee or otherwise, any indebtedness for borrowed money;
b. create any material Encumbrance on any of its material properties or
assets;
c increase in any manner the compensation of any director or officer or
increase in any manner the compensation of any class of employees;
d. create or materially modify any material bonus, deferred compensation,
pension, profit sharing, retirement, insurance, stock purchase, stock option, or
other fringe benefit plan, arrangement or practice or any other employee benefit
plan (as defined in section 3(3) of ERISA);
e. make any capital expenditure or acquire any property or assets;
f. enter into any agreement that materially restricts iLive, SEA or any of
their Subsidiaries from carrying on business;
g. pay, discharge or satisfy any material claim, liability or obligation,
absolute, accrued, contingent or otherwise, other than the payment, discharge or
satisfaction in the ordinary course of business of liabilities or obligations
reflected in the SEA Financial Statements or incurred in the ordinary course of
business and consistent with past practice since the date of the SEA Financial
Statements; or
h. cancel any material debts or waive any material claims or rights.
9. DEFINITIONS.
As used in this Agreement, the following terms have the meanings specified
or referred to in this Section 9.
9.1 "Business Day" C Any day that is not a Saturday or Sunday or a day
on which banks located in the City of New York are authorized or required to be
closed.
9.2 "Code" C The Internal Revenue Code of 1986, as amended.
9.3 "Encumbrances" C Any security interest, mortgage, lien, charge,
adverse claim or restriction of any kind, including, but not limited to, any
restriction on the use, voting, transfer, receipt of income or other exercise of
any attributes of ownership, other than a restriction on transfer arising under
Federal or state securities laws.
9.4 "Equity Securities" C See Rule 3aB11B1 under the Securities
Exchange Act of 1934.
9.5 "ERISA" C The Employee Retirement Income Security Act of 1974, as
amended.
9.6 "Governmental Body" C Any domestic or foreign national, state or
municipal or other local government or multi-national body (including, but not
limited to, the European Economic Community), any subdivision, agency,
commission or authority thereof.
9.7 "Knowledge" C Actual knowledge, after reasonable investigation.
9.8 "Person" C Any individual, corporation, partnership, joint venture,
trust, association, unincorporated organization, other entity, or Governmental
Body.
9.9 "Subsidiary" C With respect to any Person, any corporation of which
securities having the power to elect a majority of that corporation's Board of
Directors (other than securities having that power only upon the happening of a
contingency that has not occurred) are held by such Person or one or more of its
Subsidiaries.
10. TERMINATION.
10.1 Termination. This Agreement may be terminated before the Closing
occurs only as follows:
a. By written agreement of the Shareholders and iLive at any time.
b. By iLive, by notice to the Shareholders at any time, if one or more of
the conditions specified in Section 4 is not satisfied at the time at which the
Closing (as it may be deferred pursuant to Section 2.1) would otherwise occur or
if satisfaction of such a condition is or becomes impossible.
c. By the Shareholders, by notice to iLive at any time, if one or more of
the conditions specified in Section 3 is not satisfied at the time at which the
Closing (as it may be deferred pursuant to Section 2.1), would otherwise occur
of if satisfaction of such a condition is or becomes impossible.
d. By either the Shareholders or iLive, by notice to the other at any time
after February 29, 2000.
10.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 10.1, this Agreement shall terminate without any liability or further
obligation of any party to another.
13. NOTICES. All notices, consents, assignments and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given when (a) delivered by hand, (b) sent by telex or facsimile (with receipt
confirmed), provided that a copy is mailed by registered mail, return receipt
requested, or (c) received by the delivery service (receipt requested), in each
case to the appropriate addresses, telex numbers and facsimile numbers set forth
below (or to such other addresses, telex numbers and facsimile numbers as a
party may designate as to itself by notice to the other parties).
(a) If to iLive:
282 N. Canon Dr., 3rd Floor
Beverly Hills, CA 90210
Attn: Marcia Allen, President
Facsimile (310) 285-0966
(b) If to the Shareholders:
c/o Cutler Law Group
610 Newport Center Drive, Suite 800
Newport Beach, CA 92660
Facsimile No.: (949) 719-1988
Attention: M. Richard Cutler, Esq.
14. MISCELLANEOUS.
14.2 Expenses. Each party shall bear its own expenses incident to the
preparation, negotiation, execution and delivery of this Agreement and the
performance of its obligations hereunder.
14.3 Captions. The captions in this Agreement are for convenience of
reference only and shall not be given any effect in the interpretation of this
agreement.
14.4 No Waiver. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
14.5 Exclusive Agreement; Amendment. This Agreement supersedes all prior
agreements among the parties with respect to its subject matter with respect
thereto and cannot be changed or terminated orally.
14.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be considered an original, but all of which
together shall constitute the same instrument.
14.7 Governing Law, Venue. This Agreement and (unless otherwise provided)
all amendments hereof and waivers and consents hereunder shall be governed by
the internal law of the State of California, without regard to the conflicts of
law principles thereof. Venue for any cause of action brought to enforce any
part of this Agreement shall be in Orange County, California.
14.8 Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns,
provided that neither party may assign its rights hereunder without the consent
of the other, provided that, after the Closing, no consent of SEA shall be
needed in connection with any merger or consolidation of iLive with or into
another entity.
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to
be executed by their respective offi-cers, hereunto duly authorized, and entered
into as of the date first above written.
ILIVE, INC.
a Nevada corporation
/s/ Marcia Allen /s/ M. Richard Cutler
By: Marcia Allen, President M. Richard Cutler
/s/ Anatasia Cronin /s/ Brian A. Lebrecht
Anatasia Cronin, Secretary Brian A. Lebrecht
/s/ Marcia Allen /s/ Vi Bui
By: Marcia Allen, on behalf of the Vi Bui
iLive Board of Directors
EXHIBIT A
SEA SHAREHOLDERS
SHAREHOLDER NUMBER OF SHARES
----------- ----------------
MRC Legal Services LLC 130,000
Brian A. Lebrecht 40,000
Vi Bui 30,000