Stock Purchase Agreement - Nebulous Records Inc. and Open Door Online Inc.
STOCK PURCHASE AGREEMENT
This Agreement is entered into this 26th day of September 2002, by and
between NEBULOUS RECORDS, INC., a Florida corporation (collectively "NRI") and
OPEN DOOR ONLINE, INC., a New Jersey corporation (called "ODOL").
In consideration of the mutual benefits to be derived and the mutual
agreements contained herein, NRI and ODOL approve and adopt this agreement and
mutually covenant and agree with each other as follows:
1. SHARES TO BE TRANSFERRED AND SHARES TO BE ISSUED.
1.1 On the closing date ODOL shall cause to be transferred to NRI
certificates for 18,000,000 common shares of ODOL said shares shall be issued
per instructions from NRI.
1.2 In exchange for ODOL stock being transferred pursuant to
subparagraph 1.1, NRI shall deliver all issued and outstanding stock to ODOL
duly endorsed by the holder to ODOL.
2. REPRESENTATIONS AND WARRANTIES OF ODOL.
2.1 OWNERSHIP OF STOCK. ODOL has available the authorized number of
shares of common stock to issue as discussed in subparagraph 1.1. All and common
shares issued on the closing date are free and clear of all liens, encumbrances,
charges and assessments of every nature and subject to restrictions of rule 144
of the Securities and Exchange Act of 1933, as amended. The proper restrictive
legend will be placed on each common share certificate issued at the closing.
2.2 ORGANIZATION AND AUTHORITY.
a. ODOL is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Jersey
with all requisite corporate power and authority to own,
operate and lease its properties and to carry on its
business as now being conducted, and is duly qualified and
in good standing in every jurisdiction in which the
property owned, leased or operated by it or the nature of
the business conducted by it makes qualification
necessary. ODOL is currently authorized to issue a total
of 50,000,000 common shares. Approximately 39,843,000
common shares are outstanding after the issuance of shares
in this agreement. This corrects the amount agreed to in
the letter of intent signed by the parties.
b. The execution and delivery of this agreement does not,
and, the consummation of the transaction contemplated will
not violate any provision in of ODOL articles of
incorporation or bylaws, or any provisions of, or result
in the acceleration of any obligation under, any mortgage,
lien, lease, agreement, instrument, court order,
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arbitration award, judgment or decree to which ODOL is a
party or by which it or any of them is bound and will not
violate any other restriction of any kind or character to
which it or any of them is subject.
2.3 FINANCIALS.
a. ODOL has provided true copies of the ODOL financial
statements for the period ended December 31, 2001 and the
six-month period ended June 30, 2002.
2.4 CHANGES SINCE SPECIFIED DATE. Since the date of the financial
statement there has not been:
a. Any material adverse change in the financial condition or
business operation of ODOL
b. Any change in the compensation pattern of ODOL, nor any
material increase in the compensation payable or to become
payable to any of their officers, directors, employees or
agents, except as disclosed to NRI in writing;
c. Any labor dispute or disturbance, litigation, event or
condition of any character, which materially adversely
affects the business or future prospects of ODOL;
d. The issuance of additional shares of stock or other
securities by ODOL except those known by NRI and included
true copies of the minutes of the meetings of the board of
directors since December 31, 2001;
e. Any distribution of assets, by way of dividends or
purchase or otherwise by ODOL;
f. Any borrowings from financial institutions except for
those known by NRI;
g. Any sale, transfer or other disposition of assets of ODOL,
except in the normal course of business.
2.5 LIABILITIES.
a. There are no liabilities of ODOL, whether accrued,
absolute, contingent or otherwise, which arose or relate
to any transaction of ODOL, their agents or servants which
are not disclosed by or reflected in the financial
statements. There are no liabilities of ODOL which have
arisen or relate to any transaction of ODOL, their agents
or servants, other than normal liabilities incurred in the
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normal conduct of the business of ODOL. As of this date
there are no known circumstances, conditions, happenings,
events or arrangements, contractual or otherwise, which
may give rise to liabilities, except in the normal course
of ODOL business or those disclosed in the notes to the
financial statements provided.
b. All federal, state, county and local income, ad valorem,
excise, sales, use, gross receipts and other taxes and
assessments which are due and payable have been duly
reported, fully paid and discharged as reported by ODOL
and there are no unpaid taxes which are or could become a
lien on the properties and assets of ODOL, except as
provided for in the financial statements, or have been
incurred in the normal course of ODOL business. All tax
returns except Federal Form 1120 for the year ended
December 31, 2001, have been filed and the taxes paid or
accrued. There is no tax liability for the unfilled
return.
c. All parties with whom ODOL has contractual arrangements
are in substantial compliance with those arrangements.
ODOL is not in default in any material respect under any
contracts to which they are a party, except as noted in
the financial statements.
d. All corporate acts required of ODOL have been taken and
all reports and returns required, with any governmental
agency have been filed. ODOL is in substantial compliance
with all, and has no notice of any claimed violation of
any, applicable federal, state, county and local laws,
ordinances or regulations, including those applicable to
discrimination in employment, pollution and safety.
e. There are no legal, administrative or other proceedings,
investigations or inquiries, product liability or other
claims, judgments, injunctions or restrictions, either
threatened, pending or outstanding against or involving
ODOL or any of its assets, properties, or business, nor
does ODOL know, or have reasonable grounds to know, of any
basis for any proceedings, investigations or inquiries,
product liability or other claims, judgments, injunctions
or restrictions.
f. ODOL has no contract with any governmental body that is
subject to renegotiation.
g. The past and anticipated future operations of ODOL do not
infringe or violate any patents, patent rights,
trademarks, trade names, copyrights and/or licenses of
others.
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h. To the knowledge of the officers of ODOL, there is no
event, condition or trend of any character that might
materially and adversely affect its financial condition,
business, properties or assets of ODOL.
i. ODOL has not engaged, consented to or authorized any
broker, investment banker or third party to act on its
behalf directly as broker in connection with the
transactions contemplated by this agreement. A finders fee
of $7,500 is payable to Rick Papaleo.
j. There are no inquiries, investigations or pending claims
or litigation challenging or threatening to challenge ODOL
right, title and interest with respect to their continued
use, or right to preclude others from using, any patent,
patent application, invention, discovery, trademark, trade
name or copyright of ODOL.
k. To the knowledge of the officers of ODOL, it is not a
party to or bound by any agreement, deed, lease or other
instrument, which is so burdensome as to materially affect
or impair its operations.
2.6 ACCURACY OF ALL STATEMENTS MADE BY ODOL. No representation or
warranty by ODOL in this agreement, nor any statement, certificate, schedule or
exhibit furnished or to be furnished by or on behalf of ODOL pursuant to this
agreement, nor any document or certificate delivered to NRI pursuant to this
agreement or in connection with actions contemplated, contains or shall contain
any untrue statement of material fact or omits or shall omit a material fact
necessary to make the statement contained not misleading.
3. REPRESENTATIONS AND WARRANTIES OF NRI. NRI represents and warrants as
follows:
3.1 ORGANIZATION AND GOOD STANDING. NRI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida.
3.2 PERFORMANCE OF THIS AGREEMENT. The execution and performance of
this agreement and the issuance of stock contemplated has been ratified by the
shareholders and accepted by the board of directors of NRI.
3.3 LEGALITY OF SHARES TO BE ISSUED. The shares of NRI common stock to
be delivered pursuant to this agreement, when delivered, will have been duly and
validly authorized and issued by NRI and will be fully paid and non-assessable.
3.4 NO COVENANT AS TO TAX CONSEQUENCES. It is expressly understood and
agreed that neither NRI nor its officers or agents has made any warranty or
agreement, expressed or implied, as to the tax consequences of the transactions
contemplated by this agreement or the tax consequences of any action pursuant to
or growing out of this agreement.
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3.5 DISCLOSURE. No representation or warranty by NRI in this Agreement,
nor any document, written information, statement or certificate furnished or to
be furnished by NRI to ODOL pursuant hereto or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements contained herein or therein not misleading.
3.6 BROKERS. In the event NRI has engaged or otherwise used the
services of any broker or finder in connection with the Agreement or the
transactions contemplated hereby, then NRI agrees to indemnify and hold harmless
ODOL from and against any liability for any fee, compensation, commission or
expense (including attorneys' fees) arising out of any claim by any person
acting or claiming to act on behalf of NRI for fees, compensation, commission or
expense with respect to the Agreement or the transactions contemplated hereby.
4. COVENANTS OF NRI. NRI covenants and agrees as follows:
4.1 DOCUMENTS TO BE FURNISHED. NRI will furnish to ODOL, no later than
September 26, 2002, the following documents, lists and schedules certified by a
principal officer of NRI as being accurate and complete:
a. A list of the states of incorporation and the states in
which NRI is authorized to do business;
b. A list of the authorized and outstanding securities of
NRI;
c. A list of the officers, directors and shareholders of NRI;
d. Copies of the articles of incorporation and bylaws
currently in effect of NRI;
e. A list of the legal descriptions of all real property
owned of record or beneficially, or held under lease, or
option, or similar agreements by NRI;
f. Copies of all surveys and policies of title insurance
relating to real property owned by NRI;
g. Copies of all leases to which NRI is a party;
h. Copies of all contracts, agreements or commitments of NRI,
whether involving purchases, sales or otherwise, which
expire more than one year from the date of this agreement
or which involve an amount or value in excess of $5,000;
i. Copies of all employment contracts to which NRI or any of
its subsidiaries is a party;
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j. Copies of all pension, retirement and profit sharing plans
to which NRI is a party;
k. A list of all fringe benefit plans and programs applying
to employees of NRI, including but not limited to,
pension, profit sharing, life insurance, medical, bonus,
incentive and similar plans and the approximate annual
cost of each;
l. Copies of all financing or loan agreements, mortgages or
similar agreements to which NRI is a party;
m. A list of all NRI bank accounts, brokerage accounts,
safety deposit boxes, with the authorized signers
indicated;
n. A list of each insurance policy owned by NRI, with the
name of the insurance carrier, the policy number, a brief
description of the coverage, the annual premium, the
corporate owner and any claims pending;
5. ACTIONS PRIOR TO CLOSING. From and after the date of this agreement and until
October 1, 2002:
a. ODOL and its authorized representatives shall have full
access during normal business hours to all properties,
books, records, contracts and documents of NRI, and NRI
shall furnish or cause to be furnished to ODOL and its
authorized representatives all information with respect to
its affairs and business of NRI as ODOL may reasonably
request.
b. Except with the prior written consent of ODOL, NRI shall
carry on their business diligently and substantially in
the same manner as before.
c. Without the prior written consent of ODOL, NRI will not
grant any general or uniform increase in the rates of pay
of its employees, nor grant any general or uniform
increase in the benefits under any pension plan or other
contract or commitment, nor increase the compensation
payable or to become payable to officers or key salaried
employees, insurance, pension or other benefit plan,
payment or arrangement made to, for or with any of the
officers, key salaried employees or agents.
d. NRI shall not enter into any contract or commitment or
engage in any transaction not in the usual and ordinary
course of business and consistent with NRI business
practices without the prior written consent of ODOL.
e. NRI shall not create any indebtedness other than that
incurred in the usual and ordinary course of business,
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that incurred pursuant to existing contracts disclosed in
the exhibits submitted, and that reasonably incurred in
doing the acts and things contemplated by this agreement.
f. NRI shall maintain current insurance and any additional
insurance in effect as may be reasonably required by
increased business and risks; and all property shall be
used, operated, maintained and repaired in a normal
business manner.
g. NRI shall use their best efforts (without making any
commitments on behalf of ODOL) to preserve their business
organization intact, to keep available to ODOL the present
key officers and employees of NRI, and to preserve for
ODOL the present relationships of NRI with their suppliers
and customers and others having business relations with
them.
h. NRI shall not do any act or omit to do any act, or permit
any act or omission to act, which will cause a material
breach of any material contract, commitment or obligation
of NRI.
i. NRI shall duly comply with all applicable laws as may be
required for the valid and effective transfer of property,
assets and business contemplated by this agreement, except
that ODOL waives compliance with the provisions of any
bulk sales act.
j. NRI shall not sell or dispose of any property or assets
except products sold in the ordinary course of business.
k. NRI shall promptly notify ODOL of any lawsuits, claims,
proceedings or investigations that may be threatened,
brought, asserted or commenced against them, their
officers or directors involving in any way the business,
properties or assets of NRI.
l. NRI will provide ODOL with interim monthly financial
statements and any other management reports as and when
they are available.
6. CONDITIONS PRECEDENT TO ODOL OBLIGATIONS. Each and every obligation of ODOL
to be performed on the closing date shall be subject to the prior satisfaction
of the following conditions:
6.1 TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by ODOL in this agreement or given on its behalf shall be
substantially accurate in all material respects on and as of the closing date.
6.2 COMPLIANCE WITH COVENANTS. ODOL shall have performed and complied
with all its obligations under this agreement which are to be performed or
complied with by it prior to or on the closing date including the delivery of
its documents specified previously.
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6.3 ABSENCE OF SUIT. No suit or proceeding shall be threatened or
pending in which it will be or it is sought, by anyone, to restrain, prohibit,
challenge or obtain damages or other relief in connection with this agreement or
the consummation of the transactions contemplated, or in connection with any
material claim against ODOL.
6.4 NO MATERIAL ADVERSE CHANGE. As of the closing date there shall not
have occurred any material adverse change, which materially impairs the ability
of ODOL to conduct its business or the earning power on the same basis as in the
past.
6.5 ACCURACY OF FINANCIAL STATEMENTS. ODOL and its representatives
shall be satisfied as to the substantial accuracy of all balance sheets,
statements of income and other financial statements of NRI furnished to ODOL.
6.6 APPROVAL OF THE ODOL BOARD OF DIRECTORS. This agreement shall have
been ratified and approved by the ODOL Board of Directors immediately prior to
closing.
6.7 TIME LIMIT ON CLOSING. Signing shall take place on or before
September 24, 2002. Operational control and accounting functions and physical
possession shall be deemed effective as of October 1, 2002, the date of final
closing. The signing of this document provides for the commitment of all parties
for the effectiveness of these terms.
6.8 LEGAL OPINION. ODOL shall have received an opinion of counsel for
NRI referred to in subparagraph 12.2(d).
7. CONDITIONS PRECEDENT TO NRI OBLIGATIONS. Each and every obligation of NRI to
be performed on the closing date shall be subject to the prior satisfaction of
the following conditions:
7.1 TRUTH OF REPRESENTATIONS AND WARRANTIES. NRI representations and
warranties contained in this agreement shall be true at and as of the closing
date as though the representations and warranties were made at and as of the
transfer date.
7.2 NRI COMPLIANCE WITH COVENANTS. NRI shall have performed and
complied with its obligations under this agreement which are to be performed or
complied with by it prior to or on the closing date.
7.3 LIMITATION ON SURVIVAL AND EFFECT OF CERTAIN WARRANTIES,
REPRESENTATIONS AND COVENANTS. All statements contained in any certificate,
instrument or document delivered by or on behalf of any of the parties pursuant
to this agreement and the transactions contemplated shall be deemed
representations and warranties by the respective parties.
7.4 NRI OBLIGATIONS. The representations and warranties and covenants
of NRI contained in this agreement shall survive the closing date, and any
investigation made by ODOL or its agents, and all representations, warranties
and covenants surviving shall be deemed joint and several. The conveyance of the
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common stock shares by NRI will be deemed to be acceptance of all
representations, warranties and covenants contained herein, on their behalf.
7.5 ODOL OBLIGATIONS. The representations, warranties and covenants of
ODOL contained in this agreement shall survive the closing date.
8. INDEMNIFICATION.
8.1 REQUIREMENT OF INDEMNIFICATION. NRI shall indemnify ODOL for any
loss, cost, expense or other damage suffered by ODOL resulting from, arising out
of, or incurred with respect to the falsity or the breach of any representation,
warranty or covenant made by NRI. Without limiting the generality of the above,
ODOL shall be deemed to suffer loss, costs, expense or other damage if NRI
suffers loss, costs, expense or other damage.
8.2 NOTICE. ODOL shall assert any right to indemnification by
furnishing Michael Muzio, or any other person as may be designated in writing by
NRI, with a written notice and list of charges detailed by item showing the
nature of any breach of any representation, warranty or covenant, date of
payment or assertion of claim, summary of settlement or litigation procedures,
and the amount of the loss, cost or expense. If the right to indemnification is
based on a claim of a third party, NRI shall give the notice within 60 days
after NRI has notice of any claim by a third party.
8.3 RESOLUTION OF CLAIM. Except in the event that the claim for
indemnification is based upon a claim of a third party and NRI shall have
notified NRI as provided in paragraph 8.2 that they will contest the claim,
unless shareholders object to the determination or computation of the total
amount of the indemnification as shown on the written notice specified in
subparagraph 8.2 within 60 days after receipt, the total amount of
indemnification shown by notice shall be paid by shareholders to NRI. If NRI
objects to the determination contained in the written notice specified in
subparagraph 8.2 within 60 days after receipt, they shall have the right to
submit any claim for indemnification not brought by a third party to the
American Arbitration Association for binding arbitration in accordance with its
rules, and the expenses of the American Arbitration Association shall be borne
equally by the parties.
8.4 TIME LIMIT ON INDEMNIFICATION. No claim for indemnification may be
asserted by ODOL after 90 days of notice of claim by a third party.
8.5 AMOUNT LIMIT ON INDEMNIFICATION. Notwithstanding any other
provision to the contrary, shareholders shall not be charged with any loss, cost
or expense that in the aggregate does not exceed $ 5,000.
9. AGREEMENTS, CONSULTING AGREEMENTS AND NON-COMPETE AGREEMENTS. The
key employees of NRI shall enter into either an employment or consulting
agreement with NRI dependant on their future function, subject to satisfaction
in form and substance to the ODOL Board of Directors. Further, the key employees
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of NRI shall enter into non-competition agreements, for a period not to exceed
two (2) years. The key employees of NRI will be required to enter into contracts
equivalent in form and substance to those of ODOL except the salaries are to be
$5,000 per month.
The Board of Directors of ODOL will consist of David N. DeBaene, Norman
J. Birmingham, Ed Lonergan (to be replaced by a nominee of n NRI), Robert
Johnson and Mark Laisure. The term of ODOL directors is one year.
10. SECURITIES ACT PROVISIONS.
10.1 RESTRICTIONS ON DISPOSITION OF SHARES. NRI, its agents or assigns
covenant and warrant that the shares of common stock of ODOL to be received by
them pursuant to this agreement are being acquired for their own account and for
investment and not with the present view toward sale or distribution and will
not be disposed of except (i) pursuant to an effective registration statement
under the Securities Act of 1933, as amended, or (ii) any other transaction
which, in the opinion of counsel acceptable to ODOL, is exempt from registration
under the Securities Act of 1933, as amended, or the rules and regulations of
the Securities and Exchange Commission. In order to effectuate the covenants of
this subparagraph 10.1, an appropriate endorsement will be placed on the
certificates for shares of common stock of ODOL delivered to NRI or its
designees pursuant to this agreement and such instructions shall be placed with
the transfer agent for the securities.
10.2 EVIDENCE OF COMPLIANCE WITH PRIVATE OFFERING EXEMPTION. NRI agrees
to supply ODOL with evidence of its financial sophistication, or evidence of
appointment of a sophisticated investment representative, and any other items,
which counsel for ODOL may require in order to evidence the private offering
character of the distribution of shares made pursuant to this agreement.
10.3 NOTICE OF LIMITATION ON DISTRIBUTION. NRI is aware that the shares
distributed will not have been registered pursuant to the Securities Act of
1933, as amended; and, therefore, under current interpretations and applicable
rules, and that they must be converted to shares of common stock. It may be
possible that NRI will be required to retain the shares for a period of at least
one year from October 1, 2002 and at the expiration of the one-year period sales
may be confined to brokerage transactions of limited amounts requiring certain
notification or filings with the Securities and Exchange Commission. The
disposition of shares may be available only if ODOL is current with all required
filings with the Securities and Exchange Commission; and NRI is aware of Rule
144 issued by the Securities and Exchange Commission under the Securities Act of
1933, as amended, and the other limitations imposed on their disposition of ODOL
shares.
10.4 PIGGYBACK RIGHTS. In the event ODOL files a registration statement
under the Securities Act of 1933, as amended, with respect to shares of the
common shares into which this preferred stock may be converted, prior to two
years after the signing of this agreement, on a form appropriate for registering
shareholders' common stock, NRI shall give written notice to shareholders prior
to filing, and shareholders shall have the right to request to have included
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such shares of ODOL common stock as shall be specified in the request; provided,
however, that the inclusion of the shares shall not interfere with ODOL
registration of its shares and that in no event shall NRI be obligated (i) to
file a registration statement at any time other than during the period ended
September 30, 2003, or (ii) to keep the prospectus with respect to the stock
current for more than 30 days after the effective date of the registration
statement; and provided, further, that all shares sold pursuant to the
registration statement are effected within the 30 day period. If NRI or its
designees do not make a request for registration within 20 days after receipt of
notice from ODOL, ODOL shall have no obligation to include any shares of ODOL
common stock owned by NRI or its designees in the registration statement.
10.5 ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION OR MERGER. In case of
any reorganization or securities adjustments of ODOL all common stock or
warrants issued to NRI or its designees shall be adjusted, ratably with all
other ODOL common stock or warrant holders. In the event of a consolidation or
merger and upon the exercise of warrants issued by this agreement the NRI or its
designees shall share, ratably in all proceeds or adjustments required.
11. PAYMENT OF EXPENSES. In the event of a registration under paragraph 10, ODOL
shall pay and bear the direct selling fees, disbursements and expenses,
including without limitation all underwriters' discounts, commissions and
expenses, but no other cost of registration.
12. SIGNING
12.1 TIME AND PLACE. The closing of this transaction ("closing") shall
take place at the offices of NRI in Tampa, FL, on September 26, 2002, or at any
other time or place, as the parties shall agree upon. This date is referred to
in this agreement as the "closing date."
12.2 DOCUMENTS TO BE DELIVERED BY NRI. At the closing, NRI shall
deliver to ODOL the following documents:
a. Certificates for all outstanding shares of NRI common
stock in the manner and form required by subparagraph 1.2.
These shares represent all of the issued and outstanding
shares of NRI.
b. The minute book, stock transfer book, all books of
account, records, contracts, and other documents of NRI as
ODOL may request in writing;
c. A general release, in form and substance satisfactory to
ODOL and its counsel, of all claims shareholders may have
to the date of closing against any of NRI and the
directors, officers, agents and employees of NRI except as
may be expressed in written contract and expressly
described and excepted in the release;
d. A written opinion from counsel for NRI stated as of the
closing date addressed to ODOL satisfactory in form and
substance to ODOL to the effect that:
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1. Ownership of NRI common stock is as stated in the
representations of officers of NRI;
2. The corporate existence and good standing,
qualification of NRI and authorized and issued stock
of NRI are as stated in paragraph 3;
3. This agreement has been duly executed and duly
delivered by NRI and constitutes a legal, valid and
binding obligation of each shareholder enforceable in
accordance with its terms;
4. To the best of counsel's knowledge NRI is in
compliance with all statutes, regulations, rules and
executive orders of all government authority, and
e. Certificates or letters from NRI or its designees
evidencing the taking of shares in accordance with the
provisions of paragraph 10 and their understanding of the
restrictions;
f. Any other documents of transfer, certificates of
authority, and other documents as ODOL may reasonably
request.
13. DOCUMENTS TO BE DELIVERED BY ODOL. At the closing ODOL shall deliver to NRI
the following documents:
a. Certificates for the number of shares of ODOL common stock
as determined in subparagraph 1.2. These shares are to be
registered in the name and denominations as NRI may
specify.
b. A written opinion of counsel for ODOL dated as of the
closing date, addressed to the NRI and satisfactory in
form and substance to counsel for NRI, to the effect that:
c. ODOL corporate existence and good standing are as set
forth in subparagraph 2.1;
d. This agreement has been duly authorized, executed and
delivered by ODOL and is a valid and legally binding
obligation of ODOL enforceable in accordance with its
terms; and
1. ODOL has taken the corporate action necessary to
authorize the performance of the obligations imposed
upon it by this agreement.
e. A certified copy of the duly adopted resolutions of the
ODOL board of directors or executive committee authorizing
or ratifying the execution, delivery and performance of
this agreement and authorizing or ratifying the acts of
its officers and employees in carrying out its terms and
provisions.
f. Concurrent with the closing of the transaction, NRI will
cause its current assets, liabilities and business
operations to become a newly formed, wholly owned
subsidiary of the ODOL parent. The Officers and Directors
of the wholly owned subsidiary will remain as they were
prior to the restructuring.
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14. DISENGAGEMENT. In the event this transaction must be unwound for any
purpose, including but not limited to regulatory action, the inability to raise
sufficient capital or a drastic and unacceptable change to NRI management prior
to December 1, 2002 or actions of any parties making the continuation of the
business combination nonviable, the parties will restore themselves to their
relative positions on the date of closing. In the event that NRI fails to meet
the terms and conditions of the letter of intent, as attached in Exhibit 14 by
November 30, 2002, including but not limited to the payment of $75,000 on a note
held by David N. DeBaene and completion of the remaining terms of the letter of
intent the transaction will be unwound with all sums paid to or on behalf of
ODOL by NRI forfeit.
15. POST CLOSING. The parties acknowledge that immediately after the closing,
the Board of Directors shall cause a proxy for an annual meeting to be filed
including all items specified in the letter of intent attached at Exhibit 14.
The meeting date may be changed to meet the requirements of the Securities and
Exchange Commission and the by-laws of ODOL.
15.1 LAW GOVERNING. This agreement may not be modified or terminated
orally, and shall be construed and interpreted according to the laws of the
State of Rhode Island.
15.2 ASSIGNMENT. This agreement shall not be assigned by any party
without the written consent of the other.
15.3 AMENDMENT AND MODIFICATION. NRI and ODOL may amend, modify and
supplement this agreement in any manner as may be agreed upon by them in
writing. In the event any requirement pertaining to SEC, NASDAQ or OTCBB
regulations or any securities laws of the State of New Jersey or Florida has
been omitted such terms shall be added by amendment and attached hereto.
16. NOTICES. All notices, requests, demands and other communications shall be
deemed to have been duly given, if delivered by hand or mailed, certified or
registered mail with postage prepaid:
a. If to ODOL, to:
MAIL: David N. DeBaene
46 Old Flat River Rd.
Coventry, RI 02816
or to such other person and place as ODOL shall have specified to NRI
in writing; or
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b. If to NRI, to:
Michael Muzio
4957 Garland Branch Rd.
Dover, FL 33527
or to such other person and place as NRI shall have specified to ODOL
in writing.
17. ANNOUNCEMENTS. Any and all announcements concerning the transactions
provided for in this agreement must be mutually agreed to by the parties.
18. ENTIRE AGREEMENT. This instrument embodies the entire agreement between the
parties with respect to the transactions contemplated, and there have been and
are no agreements, representations or warranties between the parties other than
those set forth or provided for.
19. COUNTERPARTS. This agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Facsimile signatures are
acceptable and valid.
20. HEADINGS. The headings in the paragraphs of this agreement are inserted for
convenience only and shall not constitute a part of the agreement.
21. FURTHER DOCUMENTS. NRI and ODOL agree to execute any and all other
documents, and to take any other action or corporate proceedings, which may be
necessary or desirable to carry out the terms of this agreement.
14
<PAGE>
IN WITNESS OF, the parties have caused this agreement to be duly
executed all as of the day and year first written above.
NEBULOUS RECORDS, INC.
a Florida corporation
By: /s/ Michael Muzio
-----------------------------------------
Michael Muzio, President
ATTEST:
/s/
------------------------------
, Secretary
OPEN DOOR ONLINE, INC.
a New Jersey corporation
By: /s/ David N. DeBaene
-----------------------------------------
David N. DeBaene, President
ATTEST:
By: /s/ Norman J. Birmingham
-----------------------------------------
Norman J. Birmingham, Secretary
15
<PAGE>
Exhibit 14
September 19, 2002
The Board of Directors of
Nebulous Records, Inc.
4957 Garland Branch Rd.
Dover, FL 33527
Via E-mail
Dear Members:
Open Door Online, Inc. (OTCBB: NTER) wishes to offer this binding
letter of intent for the acquisition of all the issued and outstanding shares of
Nebulous Records, Inc. (NEB) a Florida corporation. The terms and conditions for
this transaction are as follows:
1. The shareholders of NEB wish to sell and the NTER wishes buy
all of the issued and outstanding shares in a stock purchase
agreement whereby NEB will receive eighteen million common
shares of NTER with the proper restrictive legend adhering to
section 144 of the Securities Act of 1933 as to their
tradability.
2. NEB agrees to immediately, pay up to $100,000 of legal,
accounting and public company expenses as a loan as evidenced
in the attached Exhibit A.
3. NTER agrees to hold its annual meeting within thirty (30) days
of this agreement. The meeting shall require the approval of a
name change to and re-domicile of the corporation to Blue Moon
Records, Inc, a Delaware corporation. A further requirement is
that the re-domicile include the authorization of one hundred
million (100,000,000) common shares and ten million
(10,000,000) blank check preferred shares and a reverse stock
split of a maximum of 1/20 to be concluded as a New Jersey
corporation. NTER acknowledges that upon conclusion of this
transaction approximately thirty-seven million four hundred
thousand (37,400,000) common shares would be outstanding prior
to any reverse. Additionally, the meeting must approve
Weinberg and Co. as the auditors of record.
4. The NTER Board of Directors will have three members replaced
immediately after closing with members to be selected and
qualified by NEB with David N. DeBaene and Rick Papaleo being
the remaining members.
5. A payment of a minimum of $75,000 and note for the balance of
all amounts due David N. DeBaene @ 10% interest with monthly
payments of $5,000 and the balance remaining at the
effectiveness of an SB-2 registration to be paid in full and
an indemnification provision from the corporation and personal
guarantee of Michael Muzio for payment of short term loans and
loans to David N. DeBaene and family as evidenced in the
attached Exhibit A.
6. Upon the signing of this letter of intent NTER and NEB will
allow the immediate and unfettered access to all books and
records for due diligence requirements.
7. Disengagement is allowed by NTER only in the event that it is
found that the books and records of NEB are unable to be
audited for compliance purposes or that NEB fails to comply
with paragraph 2 or 7. Disengagement is allowed by NEB only in
the event NTER cannot deliver all items in paragraph 3.
8. The parties acknowledge that consulting or employment
agreements will be offered to David N. DeBaene, Norman J.
Birmingham and Rick Papaleo with minimum annual compensation
at $40,000 for two years with two (2) two year extensions to
each individual.
9. A stock exchange agreement will be prepared and executed not
later than September 26, 2002.
Signed this 19th day of September 2002.
/s/ David N. DeBaene
---------------------------
David N. DeBaene, President
Open Door Online, Inc.
Accepted by:
/s/ Michael Muzio
------------------------
Michael Muzio, President
Nebulous Records, Inc.
16
<PAGE>
EXHIBIT A
Short Term Notes
30-Jun-02
Payee Note Interest
Therrien $ 2,000.00 $ 900.00 *
Bookbinder $ 21,113.76 $ 1,190.90 *
Ahlborg $ 12,500.00 $ 2,812.50 *
A. DeBaene $ 15,811.00 $ 4,847.80 *F
M. Miller $ 16,000.00 $ 5,585.75 *
Edwards $ 7,500.00 $ 2,578.25
Farlow $ 2,500.00 $ 833.73
M. Haas $ 10,000.00 $ 3,255.00 *
Klingsat $ 25,000.00 $ 7,812.50
Jd American RI $ 6,517.84 $ 733.84 *
D. Sweet $ 4,508.00 $ 676.10 *F
AACS $ (9,390.70)
Beimel $ 2,500.00 $ 1,337.50 *
D. DeBaene $ 45,022.68 $ 8,253.40 F
Greene $ 2,000.00 Loans for litigation
Marshall $ 2,000.00 Loans for litigation
Fl Atl St Trans $ 2,000.00 Loans for litigation
Lonergan $ 1,000.00 Loans for litigation
--------------
Total $ 168,582.58 $ 40,817.27
* Guaranteed F=Family of David DeBaene
Stockholder Loans
30-Jun-02
Beimel $ 33,000.00 $ 6,999.80 *
D. DeBaene $ 106,555.27 $ 9,818.48 *
-------------- -------------
Total $ 139,555.27 $ 16,818.28
Other Liabilities
30-Jun-02
Ex Settle
Birmingham $ 35,000.00 $ 10,00000 X will require full pay
Papaleo $ 2,579.00 $ 2,579.00 X
Marshall $ 51,063.00 $ 30,000.00 X
Reed Smith $ 27,042.86 $ 20,000.00 X
Fl Atl St Transfer $ 1,610.10 $ 1,610.10 X
Imperial Fin Printing $ 722.00 $ 800.00 X prepay 14A
D. DeBaene AP $ 20,000.00 $ 10,000.00 X
CIC $ 2,745.37 $ 2,745.37 X
-------------
$ 77,734.47
X Due Now
Annual Meeting
mailing and Prep $ 10,000.00 X
Papaleo Commission $ 7,500.00 X
17