Contribution Agreement - IBuyDigital Inc., Elliot Antebi, Steven Szklarz, Mark Antebi and Barry Antebi
CONTRIBUTION AGREEMENT dated as of December 14, 2004 by and among IBuyDigital, Inc., a Delaware corporation (hereinafter referred to as the Corporation), and Elliot Antebi, Steven Szklarz, Mark Antebi and Barry Antebi (each hereinafter referred to as a Securityholder and collectively as the Securityholders).
W I T N E S S E T H:
WHEREAS, the Securityholders currently own, and as of the Closing Date (as hereinafter defined) will own, in the aggregate, 100% of the issued and outstanding shares of capital stock of each of the entities set forth on Schedule I attached hereto (the Entities); and
WHEREAS, each of the Securityholders desires to transfer and assign to the Corporation all of his respective interest in and to the issued and outstanding shares of capital stock of each of the Entities; and
WHEREAS, the Corporation desires to issue to the Securityholders, and the Securityholders desire to acquire from the Corporation, in exchange for the aforesaid, an aggregate of 12,000,000 shares (collectively, the Shares) of the common stock, $.0l par value (Common Stock), of the Corporation.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter set forth, the parties hereto hereby agree as follows:
EXCHANGE OF THE SHARES
Subject to the terms and conditions of this Agreement and on the basis of the representations, warranties, covenants and agreements herein contained, the Corporation hereby agrees to issue and convey to each of the Securityholders, and each of the Securityholders subscribes for and agrees to acquire and accept from the Corporation, such number of the Shares as is set forth opposite such Securityholders name on Schedule II attached hereto.
In exchange for the aforesaid issuance, conveyance and delivery of such Shares, each of the Securityholders, individually and not in the aggregate, hereby agrees to transfer and assign to the Corporation such shares of capital stock in each of the Entities as is owned by each of the Securityholders as of the Closing Date, in each instance as is set forth on Schedule II attached hereto, all such shares of capital stock together representing, as of the Closing Date, 100% of the issued and outstanding shares of capital stock of each of the Entities.
The Securityholders and the Corporation intend that the transactions contemplated by this Agreement be treated as a tax-free transfer under Section 351 of the Internal Revenue Code of 1986, as amended. The Securityholders and the Corporation hereto agree to file all applicable tax returns on a consistent basis with such treatment.
REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF THE CORPORATION
The Corporation represents and warrants to, and covenants and agrees with, the Securityholders, as of the date hereof, that:
A. Organization; Good Standing. The Corporation is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has full corporate power and authority to own its properties and to conduct the businesses in which it is now engaged.
B. Authority. The Corporation has full corporate power and authority to execute and deliver this Agreement and to perform all of its obligations hereunder, and no consent or approval of any other person or governmental authority is required therefor. The execution and delivery of this Agreement by the Corporation, the performance by the Corporation of its covenants and agreements hereunder and the consummation by the Corporation of the transactions contemplated hereby have been duly authorized by all necessary corporate action. This Agreement constitutes a valid and legally binding obligation of the Corporation, enforceable against the Corporation in accordance with its terms.
C. No Legal Bar; Conflicts. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, violates any provision of the Certificate of Incorporation or By-Laws of the Corporation or any law, statute, ordinance, regulation, order, judgment or decree of any court or governmental agency, or conflicts with or results in any breach of any of the terms of or constitutes a default under or results in the termination of or the creation of any lien pursuant to the terms of any contact or agreement to which the Corporation is a party or by which the Corporation or any of its assets is bound.
D. Capitalization. The authorized capital stock of the Corporation consists of 50,000,000 shares of Common Stock, $0.01 par value per share, and 5,000,000 shares of undesignated Preferred Stock, $0.01 par value per share (the Preferred Stock). Immediately following the issuances contemplated hereby, there will be 12,000,000 shares of Common Stock issued and outstanding and no shares of Preferred Stock issued and outstanding. In addition, immediately following the issuances contemplated hereby, there will be no issued or outstanding options, warrants, contracts, calls, commitments or demands of any nature relating to the Corporations Common Stock or Preferred Stock. The Shares being issued hereunder have been duly authorized and, when issued to the Securityholders for the consideration herein provided, will be validly issued, fully paid and nonassessable.
- 2 -
REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF THE SECURITYHOLDERS
Each of the Securityholders, individually and not in the aggregate, represents and warrants to, and covenants and agrees with, the Corporation, as of the date hereof, that:
A. Authority. Such Securityholder has the full power, authority and legal right to execute and deliver this Agreement, and to perform his respective covenants and agreements hereunder, and this Agreement constitutes a valid and legally binding obligation of each of them enforceable against each of them in accordance with its terms.
B. Title to Shares. Such Securityholder is, and as of the Closing Date will be, the lawful record and beneficial owner of all of the shares of capital stock of each of the Entities set forth opposite his name on Schedule II attached hereto, free and clear of all pledges, security interests, liens, charges, encumbrances, equities, claims, options or limitations affecting his ability to vote such shares of capital stock or to transfer such shares of capital stock to the Corporation. The shares of capital stock set forth on Schedule II attached hereto constitute, as of the Closing Date, 100% of the issued and outstanding shares of capital stock of each of the Entities. There are no issued or outstanding options, warrants, contracts, calls, commitments or demands of any nature relating to such shares of capital stock. At the Closing, the Corporation will acquire good title to such shares of capital stock free and clear of all pledges, security interests, liens, charges, encumbrances, equities, claims, options or limitations of whatever nature.
C. No Legal Bar; Conflicts. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, violates or will violate any law, statute, ordinance, regulation, order, judgment or decree of any court or governmental agency, or violates or will violate, or conflicts with or will conflict with or will result in any breach of any of the terms of, or constitutes or will constitute a default under or result in the termination of or the creation of any lien pursuant to the terms of any contract, commitment, agreement, understanding or arrangement of any kind to which such Securityholder is a party or by which such Securityholder or any of such Securityholders assets is bound.
D. No Litigation. No action, suit or proceeding against such Securityholder relating to the consummation of any of the transactions contemplated by this Agreement nor any governmental action seeking to delay or enjoin any such transactions is pending or threatened.
E. Access to Public Information. Such Securityholder has been given access to all public information relating to the business and affairs of the Corporation which such Securityholder has requested and all additional information which such Securityholder has considered necessary to verify the accuracy of the information so received.
F. Investment Intent. Such Securityholder (i) is an accredited investor within the meaning of Rule 501(a) under the Securities Act of 1933, as amended (the 1933 Act) or, if not
- 3 -
such an accredited investor, has, alone or together with a purchaser representative within the meaning of Rule 501(h) under the 1933 Act, such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in securities in general and to an investment in the Corporation in particular, (ii) is aware of the limits on resale imposed by virtue of the nature of the transactions contemplated by this Agreement and (iii) is acquiring the shares of the Corporation hereunder without registration under the 1933 Act in reliance on the exemption from registration contained in Section 4(2) of the 1933 Act, for investment, and not with a view toward, or for sale in connection with, any distribution thereof, nor with any present intention of distributing or selling such shares.
G. Economic Risk. Such Securityholder recognizes that the investment in the Common Stock involves a number of significant risks. Such Securityholder is able to bear the substantial economic risks of an investment in the Common Stock for an indefinite period of time, has no need for liquidity in such investment and, at the present time, can afford a complete loss of such investment.
A. Time and Place of the Closing. The closing shall be held at the offices of Morgan, Lewis & Bockius LLP, 502 Carnegie Center, Princeton, New Jersey 08540 at 10:00 A.M., local time, on a date (the Closing Date) to be determined by agreement of the parties hereto, but in no event later than the day before the effective date of the Corporations proposed initial public offering, or such other time, place and date as the Securityholders and the Corporation may agree.
B. Delivery by the Corporation. Delivery of the Shares shall be made by the Corporation to the Securityholders on the Closing Date by delivering certificates representing the Shares registered in the name of each of the Securityholders, as applicable, each such certificate to be accompanied by any requisite documentary or transfer tax stamps.
C. Delivery by the Securityholders. On the Closing Date, each of the Securityholders shall deliver to the Corporation certificates representing the shares of capital stock of each Entity owned by each of the Securityholders, as set forth on Schedule II attached hereto, duly endorsed in blank or accompanied by duly executed instruments of transfers and (ii) any other documents that are necessary to transfer to the Corporation good and marketable title to all the shares of capital stock of each of the Entities.
CONDITIONS TO THE CORPORATIONS
OBLIGATION TO CLOSE
The obligation of the Corporation to issue the Shares and otherwise consummate the transaction contemplated by this Agreement on the Closing Date is subject to the following conditions precedent, which may be waived by the Corporation in its sole discretion:
Representations and Warranties. The representations and warranties of each of the Securityholders contained herein shall be true and correct at and as of the Closing Date with the same effect as though all such representations and warranties were made at and as of the Closing Date.
- 4 -
CONDITIONS TO THE SECURITYHOLDERS
OBLIGATION TO CLOSE
The obligation of each of the Securityholders to acquire the Shares being acquired by such person and the obligations of each of the Securityholders to otherwise consummate the transaction contemplated by this Agreement on the Closing Date is subject to the following condition precedent, which may be waived by the Securityholders in their sole discretion:
Representations and Warranties. The representations and warranties of the Corporation contained herein shall be true and correct at and as of the Closing Date with the same effect as though all such representations and warranties were made at and as of the Closing Date and the Corporation shall have complied with all its covenants contained herein.
A. Notices. All notices required or permitted under this Agreement shall be in writing and delivered, by any method providing for proof of delivery, to the address of the party or parties set forth on Schedule I, attached hereto. Any notice shall be deemed to have been given on the date of receipt.
B. Survival of Representations. Each representation, warranty, covenant and agreement of the parties hereto herein contained shall survive the date hereof, notwithstanding any investigation at any time made by or on behalf of any party hereto.
C. Entire Agreement. This Agreement and the documents referred to herein contain the entire agreement between the parties hereto with respect to the transactions contemplated hereby, and no modification hereof shall be effective unless in writing and signed by the party against which it is sought to be enforced.
D. Assignment. Other than as provided herein, this Agreement shall not be assignable by any of the parties hereto except pursuant to a writing executed by all of the parties hereto.
E. Invalidity, Etc. If any provision of this Agreement, or the application of any such provision to any person or circumstance, shall be held invalid by a court of competent
- 5 -
jurisdiction, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby.
F. Headings. The headings of this Agreement are for convenience of reference only and are not part of the substance of this Agreement.
G. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
H. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable in the case of agreements made and to be performed entirely within such State.
I. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.
* * * * * * * * * * * * * * * *
- 6 -
IN WITNESS WHEREOF this Contribution Agreement has been duly executed by the parties hereto as of the date first above written.
|By:||/s/ ELLIOT ANTEBI|
|President and Chief Executive Officer|
|/s/ ELLIOT ANTEBI|
|/s/ STEVEN SZKLARZ|
|/s/ MARK ANTEBI|
|/s/ BARRY ANTEBI|
- 7 -
Name and Address of Entity
State of Incorporation
CENTRAL DIGITAL INC.
DIGITAL MEGASTORE.COM INC.
- 8 -
No. of Shares Owned in each Entity
Name of Securityholder
Shares to be
- 9 -