Exhibit 10.2
PROJECT MANAGEMENT AGREEMENT
THIS PROJECT MANAGEMENT AGREEMENT is made and entered into and effective
this 1st day of April, 2000, by and between Capston Network Company, a Delaware
corporation with an office ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
hereinafter called "Manager," Smart Games Interactive, Inc. an inactive Delaware
corporation with an office at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
hereinafter called the "Company," and Tobem Investments Ltd., a Cayman Islands
Corporation with an office at Genesis Building, P.O. Box 2097, Georgetown, Grand
Cayman, B.W.I.
W I T N E S S E T H
WHEREAS, the Company is an inactive Delaware corporation that has been
insolvent, as that terms is generally understood, since September 1997; and
WHEREAS, the Company has no active management or ongoing operations and
has not engaged in any business activities since September 1997; and
WHEREAS, the Company is delinquent in its reporting obligations with the
Securities and Exchange Commission (the "SEC") pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); and
WHEREAS, Tobem has recently purchased a controlling interest in the
Company for a total of $75,000 in cash, an amount which will probably
insufficient to fully discharge the outstanding liabilities of the Company; and
WHEREAS, Tobem and the Company believe it is in the best interest of its
stockholders for the Company to develop a restructuring plan ("Plan") whereby
the Company will be restructured as a "public shell" for the purpose of
effecting a business combination transaction with a suitable privately-held
company that has both business history and operating assets (a "Target
Company"); and
WHEREAS, Capston has significant experience in the development and
implementation of corporate restructuring plans and has offered to (a) develop a
restructuring plan for the Company, (b) arrange for the contribution of
additional cash to the Company if required, (c) negotiate the settlement or
payment of the Company's indebtedness, (d) take such actions as may be necessary
to bring the Company into compliance with the applicable rules and regulations
of the SEC, (e) take such actions as may be necessary to position the Company
for a business combination with a suitable privately-held enterprise, and (f)
negotiate and close a business combination between the Company and a suitable
privately-held enterprise; and
WHEREAS, the parties hereto desire to enter into a formal agreement for
the operation and management of the Company's affairs and the implementation of
the Plan;
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained, it is agreed that the Company shall be managed by Capston in
accordance with the terms and provisions of this agreement, which are as
follows, to-wit:
Article I
Compensation to Manager
1.1 As its sole compensation for services to be rendered in connection
with the development and implementation of the Plan and the operation of the
Company pursuant to this agreement, Tobem agrees to sell to the Manager or its
designees 12,000,000 shares of the Company's $0.002 par value common stock at a
price of $0.005 per share, or $60,000 in the aggregate. The purchase price for
such shares shall be paid to Tobem in cash on before the closing date of a
business combination of the type contemplated by this Agreement. Except as
specifically provided in this Agreement, the Manager shall not be entitled to
receive any common stock or other securities of the Company, or any other
options, warrants appreciation rights or similar instruments that will or might
entitle the Manager to receive additional shares of common stock in the future.
1.2 It is expressly agreed between the parties that the full fair market
value of the Common Stock issuable to the Manger pursuant to Section 1.1 shall
be $.005 per share, or $60,000 in the aggregate.
Article II
Powers of Manager
2.1 Subject at all times to the supervision, direction and control of the
Company's board of directors, Manager shall have all necessary power and
authority to, manage, supervise and administer the day-to-day business affairs
of the Company and shall use reasonable commercial efforts to seek, investigate
and, if the results of such investigation warrant, negotiate a business
combination with a suitable company or business opportunity that seeks the
perceived advantages of a business combination with a publicly held corporation.
2.2 The Manager is expressly authorized to negotiate the payment and/or
compromise of the outstanding liabilities of the Company on such terms as shall,
in the discretion of the Manager, seem appropriate under the circumstances.
Notwithstanding the foregoing, in the event that the Manager causes the Company
to issue shares of its common stock to a creditor in settlement of a claim
against the Company, the Manager will be required to return to the Company for
cancellation a like number of shares.
2.3 The Manager may, with the consent of Tobem and without notice to the
other stockholders of the Company, effect such corporate changes as the Manager
deems appropriate under the circumstances. In particular, the Manager is
expressly authorized to vote with Tobem to amend the Company's certificate of
incorporation to (a) effect a reverse split of the Company's outstanding common
stock, provided that the ultimate reverse split ratio may not exceed 1 for 42,
(b) modify the authorized capitalization of the Company, (c) change the name of
the Company to a name selected by the Manager, and (d) effect any other
corporate changes that may under applicable law be effected by a written consent
signed by majority of the Company's stockholders.
2.4 The Manager may, with the consent of Tobem and without notice to the
other stockholders of the Company, adopt and implement an Incentive Stock Plan
for the benefit of the Company's future employees provided, however, that the
total number of shares reserved for incentive grants under the Incentive Stock
Plan shall not exceed 10% of the total number of shares issued and outstanding
immediately after the closing of a business combination with a Target Company.
2.5 In the event that the available cash resources of the Company are
insufficient to provide for the payment and/or compromise of the outstanding
liabilities of the Company, the Manager shall be entitled to purchase or arrange
for the sale of sufficient additional shares of the Company's common stock to
provide sufficient cash resources for the complete satisfaction of the Company's
outstanding obligations. Notwithstanding the generality of the foregoing, the
net purchase price payable by the Manager for the issuance of additional shares
shall not be less than $0.01 per share.
Article III
Operations
3.1 All operations conducted on behalf of the Company by the Manager shall
be conducted by competent personnel who have been selected by the Manager and
approved by Company's board of directors. All such operations shall be performed
in a good and professional manner and in connection with all such operations the
Manager shall adhere to the standard of care that is customary and usual in the
activities of similarly situated publicly-held companies who are seeking to
effect a business combination with a Target Company.
3.2 The number of employees, the selection of such employee, the hours of
labor and the compensation for services to be paid any and all such employees
shall be determined by Manager, and all such employees shall be the employees of
Manager.
3.3 The Manager shall retain such consultants, subcontractors, employees
and agents as may be necessary to discharge the duties set forth in this Article
III in a prompt, professional and timely manner. Except as specifically set
forth herein, all fees, wages, charges and expenses incurred by the Manager in
connection with the performance of its duties hereunder shall be the
responsibility and obligation of, and paid by, the Manager, and the Manager
hereby expressly agrees to indemnify and hold the Company harmless from and
against all costs and expenses, including attorney's fees, judgments and amounts
paid in settlement, which may be paid or incurred by any such person in
connection with or as a result of any claim, demand, action or right of action
which in any way arises from or relates to the performance of any duty of the
Manager under the terms of this Agreement.
Article IV
Employment of Professionals and Finders
4.1 In connection with the implementation of the Plan and consummation of
a business combination transaction with at Target Company, the Manager shall be
authorized, subject to the approval of the Company's Board of Directors, to
retain such attorneys, accountants and other professionals to represent and
assist the Company as it deems reasonable and prudent under the circumstances.
The fees of such professionals shall be treated as operating expenses of the
Company and paid by the Company from its available cash resources, provided,
however, that no cash fees may be paid to professionals retained by the Manager
until all of the liabilities of the Company existing at the date of this
agreement have been compromised or paid.
4.2 In connection with the implementation of the Plan and consummation of
a business combination transaction with at Target Company, the Manager shall be
authorized, subject to the approval of the Company's Board of Directors, to
enter into such agreements with third party finders as it deems reasonable and
prudent under the circumstances. In connection with the engagement of such
finders, and subject at all times to the approval of the Company's Board of
Directors, the Manager may negotiate fee agreements that provide the payment of
fees to unrelated third party finders who introduce the Company to a suitable
acquisition prospect. All finder's fees shall be treated as operating expenses
of the Company and paid by the Company from its available cash resources,
provided, however, that no cash fees may be paid to any finders retained by the
Manager until all of the liabilities of the Company existing at the date of this
agreement have been compromised or paid.
4.3 Notwithstanding the generality of Sections 4.1 and 4,2, in the event
that any professional fees or finders fees to be paid in shares of the Company's
common stock, then the Manager shall be required to pay one-half of all
professional and finder's fees associated with the proposed business combination
from the shares issued to the Manger pursuant to Article I hereof.
Article V
Specific Duties of Manager
5.1 The Manager shall have the primary responsibility for conducting all
of the Company's existing and proposed operations in a good and professional
manner with due regard for the rights and interests of all of the Company's
Stockholders In furtherance, and not in limitation of the foregoing, the Manager
shall:
a. conduct all of the Company's existing and proposed operations in
accordance with applicable law and the provisions of this Agreement;
b. conduct all of the Company's existing and proposed operations in a
good and workmanlike manner as would a prudent manager under the
same or similar circumstances;
c. keep the Company's Board of Directors informed with respect to all
operations of the Company, all investigations of or negotiations with
potential Target Companies, all other matters which they are entitled
to know under applicable law and all additional matters it deems to be
important under the circumstances;
d. keep the Company's Stockholders informed of all matters which they
are entitled to know under applicable law and all additional matters
it deems to be important under the circumstances;
e. keep the Company and its properties, if any, free from all liens and
encumbrances occasioned by the operations contemplated hereby;
f. retain at its sole cost, risk and expense such employees, experts
and consultants as may be necessary or desirable in the discharge of
the duties of the Manager set forth in this Agreement;
g. maintain complete, correct and accurate books, records and accounts and
furnish to the Company's Board of Directors periodic reports in such
detail as may be reasonably required to permit the Company to fully
discharge its reporting obligations under the Exchange Act and other
applicable law;
i. make all information concerning the Company available for inspection
by the Board of Directors or the authorized representatives of the
Stockholders.
Article VI
Payment of Liabilities and Expenses
6.1 All liabilities of the Company existing at the date of this agreement
shall be paid or fully compromised from the existing capital resources of the
Company. In the event that the available cash resources of the Company are
insufficient to provide for the payment and/or compromise of the outstanding
liabilities of the Company, the Manager shall be required to either purchase or
arrange for the sale of sufficient additional shares of the Company's common
stock to provide sufficient cash resources for the complete satisfaction of the
Company's outstanding obligations. All sales of additional common stock shall be
effected at a net purchase price of not be less than $0.02 per share.
6.2 All other costs, expenses and liabilities accruing or resulting from
the operation of the Company pursuant to this agreement and the implementation
of the Plan shall be advanced and paid by Manager at its sole cost, risk and
expense. All such costs, expenses and related charges shall be accounted for by
Manager in accordance with generally accepted accounting principles ("GAAP") and
shall be treated as contributions to the Company's capital by the Manager. The
Company shall not be obligated to reimburse the Manager for any costs and
expenses incurred or to be incurred in connection with the preparation and
filing of the Company's reports under the Exchange Act and the investigation of
business opportunities on behalf of the Company. Notwithstanding the foregoing,
the Manger shall be entitled to negotiate a reasonable " acquisition fee" or
"non-accountable expense allowance" that will be payable to the Manager solely
by or for the benefit of the Target Company and neither the Company nor any of
its Stockholders shall have any claim to or interest in any fees or expense
allowances that are paid to Manager by or for the benefit of any Target Company.
Article VII
Rights of the Company
7.1 The Company's Board of Directors shall have access to Manager and its
employees at all reasonable times to inspect and supervise the operations of the
Company and shall have access at all reasonable times to all information
pertaining to the operation thereof. Manager, upon request, shall furnish the
Board of Directors with any information that may be reasonably requested
pertaining to operations of the Company, including copies of accounting records,
correspondence, due diligence materials provided by potential Target Companies,
and reports on the status of discussions and negotiations with potential Target
Companies. The Company's Board of Directors shall have the right to inspect at
all reasonable times during business hours, the books and records of Manager
pertaining to the Company; provided, however, that Manager may destroy or
otherwise dispose of any books and records relating to matters that are more
than seven years old, except records with respect to items in dispute.
Article VIII
Liability of Manager
8.1 The judgment and discretion of Manager exercised in good faith shall
be the limit of the liability of Manager to Company. Manager shall never be
liable to Company for any act done or omitted to be done in good faith in the
performance of any of the provisions of this agreement. Manager shall not be
liable to Company for any failure to perform or for any loss caused by strikes,
riots, fires, tornadoes, floods or any other cause including requirements of
governmental agencies, whether of like character or not, beyond the control of
Manager and which the exercise of reasonable diligence could not avoid.
Article IX
Notices
9.1 All notices, reports and correspondence permitted or required to be
given to any party hereunder, except as otherwise specifically provided herein,
shall be given in writing by U.S. mail or by telegram, postage or charges
prepaid, addressed to such party at the address listed above. Any party may
change his or its address by appropriate written notice to the other party
hereto.
Article X
State and Federal Laws, Rules and Regulations
10.1 All of the terms and provisions of this agreement are hereby
expressly made subject to all federal and state laws and to all valid rules and
regulations and orders of any duly constituted authority, having jurisdiction in
the premises. Manager shall prepare and the Company shall file all such
applications, notices, reports and other information concerning the operations
of the Company as may be required under the Exchange Act or other applicable
law. All costs and expenses incurred by Manager in preparing periodic and other
reports for the benefit of the Company shall be paid by the Manager at its sole
cost, risk and expense. Nothing herein contained, however, shall obligate the
Manager to prepare any applications, notices, reports and other information
concerning the operations of the Company from and after the closing date of a
business combination transaction of the type contemplated by the Plan.
Article XI
Force Majeure
11.1 If any party is rendered unable, wholly or in part, by force majeure,
to carry out its obligations under this Agreement, other than the obligation to
make money payments, that party shall the other party prompt written notice of
the force majeure, with reasonably full particulars concerning it; thereupon,
the obligation of the party giving the notice, so far as they are affected by
the force majeure, shall be suspended during, but no longer than, the
continuance of the force majeure. The affected party shall use all reasonable
diligence to remove the force majeure as quickly as possible. The term "force
majeure" as here employed shall mean an Act of God, strike, lockout or other
industrial disturbance, act of the public enemy, war, blockade, public riot,
lightning, fire, storm, flood, explosion, governmental restraint, unavailability
of equipment, and any other cause, whether of the kind specifically enumerated
above or otherwise, which is not reasonably within the control of the party
claiming suspension.
Article XII
Term
12.1 Subject to other provisions hereof, this agreement shall remain in
full force and effect until the earlier of (a) the closing date of a business
combination transaction of the type contemplated by the Plan, or (b) the
expiration of the 6 month period specified in Section 1.2 hereof, at which time
all powers and responsibilities of the Manager shall terminate.
Article XIII
Other Provisions
13.1 Notwithstanding anything to the contrary contained in this Agreement,
the following items pertaining to the management of the Company shall not be
considered as administrative overhead, and Manager shall be entitled to make a
direct charge to the Company or the Target Company for same:
a. Fees for legal services, costs and expenses incurred in connection with
preparation and filing of a Current Report on From 8-K to reflect the
consummation of a business combination transaction of the type
contemplated by the Plan.
b. Fees for third party professional and contract services of personnel
directly connected with or engaged in the consummation of a business
combination transaction of the type contemplated by the Plan, provided,
however, that all agreements with such professional service providers or
contract service personnel shall be subject, in all events, to the prior
approval of the Company's Board of Directors.
13.2 This agreement and of the terms and provisions hereof shall extend to
and be binding upon the parties hereto, their respective heirs, representatives,
successors and assigns, and shall be enforceable by the parties in any court of
competent jurisdiction.
Article XIV
Representations and Warranties
14.1 Organization and Qualification. The Company is a corporation, duly
organized, validly existing and in good standing under the laws of State of
Delaware and has all requisite power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted, and is
duly qualified and in good standing to do business in each jurisdiction in which
the nature of the business conducted by it or the ownership or leasing of its
properties makes such qualification necessary.
14.2 Articles of Incorporation and By-Laws. The Company has heretofore
furnished to Manager a complete and correct copy of the Articles of
Incorporation and the By-Laws, as amended or restated to the date hereof. The
Company is not in violation of any of the provisions of its Articles of
Incorporation or By-Laws.
14.3 Capitalization. The authorized capital stock of the Company consists
of 50,000,000 shares of common stock, $.001 par value and 5,000,000 shares of
preferred stock, $0.001 par value. As of the date hereof (before giving effect
to the transactions contemplated herein) (i) 12,648,244 shares of common stock
are issued and outstanding, all of which are duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights created by
statute, the Company's Articles of Incorporation or By-Laws or any agreement to
which the Company is a party or is bound and (ii) no shares of the Company's
Preferred are outstanding. There are no options, warrants, calls or other rights
(including registration rights), agreements, arrangements or commitments
presently outstanding obligating the Company to issue, deliver, sell or register
shares of its capital stock or debt securities, or obligating the Company to
grant, extend or enter into any such option, warrant, call or other such right,
agreement, arrangement or commitment. The shares of the Company Common issued to
Capston pursuant to this agreement will be duly authorized, validly issued,
fully paid and nonassessable and will not be subject to preemptive rights
created by statute, the Company's Articles of Incorporation or By-Laws or any
agreement to which the Company is a party or is bound.
14.4 Subsidiaries. The Company does not have any subsidiaries or own any
interest in any enterprise (whether or not such enterprise is a corporation).
The Company has either sold to third parties, or dissolved in accordance with
applicable law, all corporations, partnerships and other incorporated or
unincorporated enterprises in which it has previously had an interest,
regardless of whether such interest arose from stock ownership, management
control or otherwise.
14.5 Authority. Each of the Company and its Board of Directors has all
requisite corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated herein. The execution and delivery of this Agreement and the
consummation of the transactions contemplated herein have been duly authorized
by all necessary corporate action and no other corporate proceeding on the part
of the Company (including, without limitation, any approval by the shareholders
of the Company of this Agreement or the transactions contemplated herein) is
necessary to authorize this Agreement or to consummate the transactions
contemplated herein. This Agreement has been duly executed and delivered by the
Company and its Board of Directors and, assuming the due authorization,
execution and delivery hereof by Capston, constitutes the legal, valid and
binding obligation of the Company enforceable in accordance with its terms (i)
except as limited by bankruptcy, insolvency, reorganization, moratorium or other
similar law now or hereafter in effect relating to or affecting creditors'
rights generally, and without limitation, the effect of statutory or other laws
regarding fraudulent conveyances and preferential transfers and (ii) subject to
the limitations imposed by general rules of equity (regardless of whether such
enforceability is considered at law or in equity).
14.6 No Conflict; Required Filings and Consents. (a) The execution and
delivery of this Agreement by the Company does not, and the performance of this
Agreement by the Company will not (i) conflict with or violate the Company's
Certificate of Incorporation or By-Laws, as amended or restated, (ii) conflict
with or violate any Laws in effect as of the date of this Agreement applicable
to the Company or by which any of its properties is bound, or (iii) result in
any breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or require payment
under, or result in the creation of a lien or Encumbrance on, any of the
properties or assets of the Company pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company is a party or by which the Company
or any of its properties is bound or subject except for breaches, defaults,
events, rights of termination, amendment, acceleration or cancellation, payment
obligations or liens or Encumbrances that would not have a material adverse
effect on the business, properties, assets, condition (financial or otherwise)
operations or prospects of the Company, taken as a whole, or on the transactions
herein contemplated.
(b) The execution and delivery of this Agreement by the Company and the
performance of this Agreement by the Company does not require the Company to
obtain any consent, approval, authorization or permit of, or to make any filing
with or notification to, any Governmental Entities, except for applicable
requirements, if any, of (i) the Securities Exchange Act of 1934, as amended
(the "Exchange Act") or the securities laws of any other jurisdiction (the "Blue
Sky Laws") and the National Association of Securities Dealers, and (ii) where
the failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not, either individually or in the
aggregate, prevent the Company from performing its obligations under this
Agreement.
14.7 Permits; Compliance. The Company is in possession of all franchises,
grants, authorizations, licenses, permits, easements, variances, exemptions,
consents, certificates, approvals and orders necessary to own, lease and operate
its properties and to carry on its business as it is now being conducted
(collectively, the "the Company Permits"), and there is no action, proceeding or
investigation pending or, to the knowledge of the Company, threatened, regarding
suspension or cancellation of any of the Company Permits. The Company is not in
conflict with, or in default or violation of (a) any Law applicable to the
Company or by which any of its properties is bound or subject or (b) any of the
Company Permits. Neither the Company nor Newco has received from any
Governmental Entity any written notification with respect to possible conflicts,
defaults or violations of Laws.
14.8 Reports; Financial Statements. (a) with the exception of its
Quarterly Report on Form 10-QSB for the period ended September 30, 1999 and its
Annual Report on Form 10-KSB for the period ended December 31, 1999, Company has
filed (i) all forms, reports, statements and other documents required to be
filed with (A) the Securities and Exchange Commission ("SEC"), including,
without limitation (1) all Annual Reports on Form 10-KSB, (2) all Quarterly
Reports on Form 10-QSB, (3) all proxy statements relating to meetings of
stockholders (whether annual or special), (4) all Reports on Form 8-K, (5) all
other reports or registration statements and (6) all amendments and supplements
to all such reports and registration statements (collectively, the "the Company
SEC Reports") and (B) any applicable Blue Sky Laws and (ii) all forms, reports,
statements and other documents required to be filed with any other applicable
federal or state regulatory authorities (all such forms, reports, statements and
other documents being referred to herein, collectively, as the "the Company
Reports"). The Company Reports were prepared in all material respects in
accordance with the requirements of applicable Law (including, with respect to
the Company SEC Reports, the Securities Act and Exchange Act, as the case may
be, and the rules and regulations of the SEC thereunder applicable to such
Company SEC Reports) and (y) did not at the time they were filed contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) Each of the financial statements (including, in each case, any related
notes thereto) contained in the Company SEC Reports filed prior to or on the
date of this Agreement (i) have been prepared in accordance with, and complied
as to form with, the published rules and regulations of the SEC and generally
accepted accounting principles applied on a consistent basis throughout the
periods involved (except as otherwise noted therein) and (ii) fairly present the
financial position of the Company as of the respective dates thereof and the
results of its operations and cash flows for the periods indicated.
(c) To the best of the Company's knowledge after due inquiry, the
Company's auditors have issued no management letters in connection with the
Company's financial statements.
14.9 Absence of Certain Changes or Events. Except to the extent disclosed
in the Company SEC Reports filed prior to or on the date of this Agreement,
there has not been any significant change by the Company in its accounting
methods, principles or practices.
14.10 No Undisclosed Liabilities. There are no liabilities of the Company,
whether accrued, contingent, absolute, determined, determinable or otherwise,
and there is no existing condition, situation or set of circumstances which
could reasonably be expected to result in such a liability, other than (a)
liabilities fully reflected or reserved against on the balance sheet contained
in the Company's 1998 Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1998 or in the unaudited consolidated balance sheet contained in
the Quarterly Report on Form 10-QSB for the fiscal quarter ended June 30, 1999;
(b) liabilities under the Company's prior agreement with Brandmakers, Inc. and
fees and expenses related thereto, (c) liabilities under this Agreement and fees
and expenses related thereto; and (d) liabilities which, individually or in the
aggregate would not have a the Company Material Adverse Effect.
14.11 Absence of Litigation. There is no claim, action, suit, litigation,
proceeding, arbitration or, to the knowledge of the Company, investigation of
any kind, at law or in equity (including actions or proceedings seeking
injunctive relief), pending or, to the knowledge of the Company, threatened
against the Company or any properties or rights of the Company and the Company
is not subject to any continuing order of, consent decree, settlement agreement
or other similar written agreement with, or, to the knowledge of the Company,
continuing investigation by, any Governmental Entity, or any judgment, order,
writ, injunction, decree or award of any Governmental Entity or arbitrator,
including, without limitation, cease and desist or other orders.
14.12. Taxes. the Company has timely filed all returns or reports required
to be filed with any taxing authority with respect to Taxes for any period
ending on or before the date of this Agreement, taking into account any
extension of time to file granted to or obtained on behalf of the Company, all
Taxes shown to be payable on such returns or reports that are due prior to the
date of this Agreement have been paid and, as of the date hereof, no deficiency
for any material amount of tax has been asserted or assessed by a taxing
authority against the Company and all liability for Taxes of the Company that
are or will become due or payable with respect to periods covered by the
financial statements referred to herein have been paid or adequately reserved
for on such financial statements.
14.13 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated in this Agreement based upon arrangements made by or
on behalf of the Company.
14.14. Environmental Laws and Regulations. (a) the Company is in material
compliance with all applicable Environmental Laws, which compliance includes,
but is not limited to, the possession by the Company of all material permits and
other governmental authorizations required under applicable Environmental Laws,
and compliance with the terms and conditions thereof and compliance with
notification, reporting and registration provisions under applicable
Environmental Laws; the Company has not received notice of, or, to the knowledge
of the Company, is the subject of any Environmental Claim; and to the knowledge
of the Company, there are no circumstances that are reasonably likely to prevent
or interfere with such material compliance in the future, or to require material
expenditures to maintain such material compliance in the future.
(b) There are no Environmental Claims that are pending or, to the
knowledge of the Company, threatened against the Company or, to the knowledge of
the Company, against any person or entity whose liability for any Environmental
Claim the Company has or may have retained or assumed either contractually or by
operation of law.
(c) To the knowledge of the Company, there are no circumstances that could
form the basis for an Environmental Claim against the Company, or against any
person or entity whose liability for any Environmental Claim the Company has or
may have retained or assumed either contractually or by operation of law.
14.15. Contract Rights. Except for this Agreement and the prior agreement
with Brandmakers, the Company is not a party to or bound by any contract or
agreement, whether written or oral, including, without limitation, any contract
or agreement for employment, consulting or similar services, for capital
expenditures or the acquisition or construction of fixed assets, which
constitutes any note, bond, indenture or other evidence of indebtedness or
guaranty or security for indebtedness of others, for the sale of any asset, or
the grant of any right or option to purchase such asset, which constitutes a
lease, which purports to limit the freedom of the Company to compete in any line
of business or in any geographic area or to borrow money or incur indebtedness.
14.16. Employee Benefit Plans. (a) the Company does not have any
------------------------
employees.
(b) the Company does not have any continuing obligations under any
employee benefit plan of the Company existing prior to the date of this
agreement (including, without limitation, any "employee benefit plan," as
defined in Section 3(3) of the ERISA), or any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, insurance or other plan, arrangement or understanding.
(c) the Company is not a party to any collective bargaining agreement.
(d) the Company has no obligation for retiree health, medical or life
insurance benefits under any plan or arrangement.
14.17. Public Offering. The initial public offering of the Company was a
bona fide offering to the "public" as such term is used and defined in
connection with offerings of securities subject to the Securities Act in
material compliance with the Securities Act and the rules and regulations
promulgated thereunder. All shares issued in such offering were issued in
compliance with applicable Blue Sky Laws.
IN WITNESS WHEREOF, this Agreement has been executed by the parties on the
date first set forth above
.Smart Games Interactive, Inc. Tobem Investments, Ltd.
By: /s/ By: /s/
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Sole Director Authorized Representative
Capston Network Company
By: /s/
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President