EXHIBIT 10.6
C-3D DIGITAL
PURCHASE AGREEMENT
This Purchase Agreement (the "Agreement") dated
this 4th day of February, 2000 between CHEQUEMATE INTERNATIONAL, INC., a Utah
corporation ("Buyer" or "Chequemate") doing business as C-3D Digital, with its
principal offices located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇ ("Buyer"), and i-O Display Systems, LLC, a California limited
liability company, with its principal offices located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("Seller");
WITNESSETH:
WHEREAS, Buyer desires to purchase from Seller and Seller desires to sell to
Buyer, on the terms and subject to the conditions of this Agreement, certain
goods;
NOW THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties agree as
follows:
ARTICLE 1. SALE OF GOODS
Subject to the terms and conditions set forth in this Agreement, Seller agrees
to sell to Buyer, and Buyer agrees to purchase from Seller, Five Hundred
Thousand Dollars ($500,000.00) (less any balance presently owed to Seller by
Buyer) worth of Seller's goods, in particular, 3D video viewing, 3D internet
viewing and/or 3D gaming systems or other 3D products. The unit price shall be
the lowest distributor price offered by the Seller for the Seller's goods for a
given configuration and purchase volume. Exhibit "A" is the Seller's price list
effective February 1st, 2000.
ARTICLE 2. PURCHASE PRICE
2.1 PAYMENT OF PURCHASE PRICE: In consideration for the transfer and assignment
by Seller of the Assets, and in consideration of the representations,
warranties and covenants of the Seller set forth herein, Buyer on the
conditions set forth herein states that:
(a) Buyer shall pay to Seller the sum of Five Hundred Thousand Dollars
($500,000.00).
(b) Payment will be made in full on or before February 18, 2000. Payment
will be in cash or, at Buyer's option, in the form of Chequemate
International, Inc. restricted common stock, or both. Any such shares
of stock shall be valued at the average of the end of day closing price
for free-trading common stock in Chequemate International, Inc., over
the previous five (5) days of trading. The number of shares to be
issued shall be sufficient in value to equal the balance due on the
date of payment.
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ARTICLE 3. DOCUMENTATION
DELIVERIES: In the event that stock in Buyer is used as all or a portion of the
purchase price, Buyer shall deliver to Seller the following instruments and
documents against delivery of the goods:
(a) Stock Certificates issued in the name of Seller, for the balance due,
of Buyers common stock. (See Section 2.1); and
(b) The certificate of the President or Secretary of the Buyer confirming
that proper minutes and resolutions of the Buyer's Board of Directors
have been secured approving the purchase of the goods.
(c) Purchase may be made in whole or in part in the form of cash or
certified funds.
(d) Seller shall have demand registration rights on any and all stock
accepted hereunder toward the purchase price.
ARTICLE 4. SALES TAXES
Buyer shall pay all sales, use and transfer taxes arising out of the transfer of
the Assets.
ARTICLE 5. DELIVERY
All goods purchased hereunder are F.O.B. Seller's warehouse, Menlo Park,
California.
Buyer may take delivery of the goods in whole or in part, from time to time,
during the one hundred twenty (120) days following the payment of the purchase
price hereunder. Buyer shall give Seller reasonable notice of the number of
consumer kits of which it anticipates taking delivery.
ARTICLE 6. OTHER TERMS
All provisions of the Strategic Procurement Agreement entered into by the
parties on or about September 16, 1999, shall apply to this transaction to the
extent that this agreement does not expressly contradict them.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES AND BUYER.
Buyer represents and warrants to the Seller as follows:
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7.1 ORGANIZATION AND QUALIFICATION. Chequemate is a corporation duly organized,
validly existing and in good standing under the laws of the State of Utah.
Chequemate has all requisite power and authority to own or operate its
properties and conduct its business as it is now being conducted.
7.2 CAPITALIZATION; SUBSIDIARIES. The authorized capital stock of Chequemate
consists of 500,000,000 shares of Common Stock. As of October 25, 1999,
23,866,834 shares of Chequemate's Common Stock were issued and outstanding.
As of February 2, 2000, there was a 1 to 4 reverse split, resulting in
fewer than 6 million shares being outstanding. All issued and outstanding
shares of capital stock of Chequemate are validly issued, fully paid,
non-assessable and free of preemptive rights.
7.3 AUTHORITY RELATIVE TO THIS AGREEMENT. Chequemate has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of
Chequemate, and no other corporate proceedings on the part of Chequemate
are necessary to authorize this Agreement or to consummate the transactions
so contemplated. This Agreement has been duly and validly executed and
delivered by Chequemate and, assuming this Agreement constitutes a valid
and binding obligation of the Seller, this Agreement constitutes a valid
and binding agreement of Chequemate, enforceable against Chequemate in
accordance with its terms.
7.4 SEC REPORTS. Since January 1, 1998, to the best of its knowledge Chequemate
has filed all required forms, reports and documents ("Chequemate SEC
Reports") with the Securities and Exchange Commission (the "SEC") required
to be filed by it pursuant to the federal securities laws and the SEC rules
and regulations thereunder, all of which have complied in all material
respects with all applicable requirements of the Securities Act of 1933
(the "Securities Act") and the Securities Exchange Act of 1934 (the
"Exchange Act"), and the rules and interpretive releases promulgated
thereunder. None of such Chequemate SEC Reports, including without
limitation any financial statements, notes, or schedules included therein,
at the time filed, contained any untrue statement of a material fact, or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
Each of the consolidated balance sheets in or incorporated by reference
into the Chequemate SEC Reports fairly presents or will fairly present the
financial position of the entity or entities to which it relates as of its
date, and each of the related consolidated statements of operations and
retained earnings and cash flows or equivalent statements in the Chequemate
SEC Reports (including any related notes and schedules) fairly presents or
will fairly present the results of operations, retained earnings and cash
flows, as the case may be, of the entity or entities to which it relates
for the period set forth therein (subject in the case of unaudited interim
statements, to normal yearend audit adjustments) in each case in accordance
with generally-accepted accounting principles applicable to
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the particular entity consistently applied throughout the periods involved,
except as may be noted therein; and independent certified public
accountants for Chequemate have rendered or will render an unqualified
opinion with respect to each audited financial statement included in the
Chequemate SEC Reports. The consolidated financial statements included in
the Chequemate SEC Reports are hereinafter sometimes collectively referred
to as the "Chequemate Financial Statements."
7.5 CONSENTS AND APPROVALS: NO VIOLATION. Neither the execution and delivery of
this Agreement by Chequemate nor the consummation of the transactions
contemplated hereby nor compliance by Chequemate with any of the provisions
hereof will conflict with or result in any breach of any provision of the
Articles of Incorporation or by-laws of Chequemate or any Subsidiary,
require any consent, approval, authorization or permit of, or filing with
or notification to, any Governmental Authority, except pursuant to the
Securities Act and the Exchange Act, such filings and approvals as may be
required under the "blue sky", takeover or securities laws of various
states, or result in a default (with or without due notice or lapse of time
or both) (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, contract, license, agreement or other instrument
or obligation to which Chequemate is a party or by which Chequemate, any of
its Subsidiaries or any of their respective assets may be bound, result in
the creation or imposition of any lien, charge or other encumbrance on the
assets of Chequemate or violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Chequemate or any of its
respective assets.
7.6 LITIGATION, ETC. Except as disclosed in the Chequemate SEC Reports or in
Exhibit "B" attached hereto, there is no action, claim, or proceeding
pending or, to the knowledge of Chequemate, threatened, to which Chequemate
is or would be a party before any court or Governmental Authority acting in
an adjudicative capacity or any arbitrator or arbitration tribunal with
respect to which there is a reasonable likelihood of a determination
having, or which, insofar as reasonably can be foreseen in the future would
have, a material adverse effect on Chequemate and since December 31, 1997,
there have been no claims made or actions or proceedings brought against
any officer or director of Chequemate arising out of or pertaining to any
action or omission within the scope of his employment or position with
Chequemate, which claim, action or proceeding would involve a material
adverse effect on Chequemate taken as a whole. All material litigation and
other material administrative, judicial or quasi-judicial proceedings to
which Chequemate is a party or to which it has been threatened to be made a
party, are described in the Chequemate SEC Reports, or Exhibit "B" attached
hereto.
7.7 COMPLIANCE WITH LAW AND PERMITS. Chequemate has owned and operated its
properties and assets in substantial compliance with the provisions and
requirements of all laws, orders, regulations, rules and ordinances issued
or promulgated by all Governmental Authorities having jurisdiction with
respect thereto. All necessary governmental certificates, consents,
permits, licenses or other authorizations with regard to the ownership or
operation by Chequemate of their respective properties and assets have been
obtained and no violation exists in respect of such licenses, permits or
authorizations. None of the
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documents and materials filed with or furnished to any Governmental
Authority with respect to the properties, assets or businesses of
Chequemate contains any untrue statement of a material fact or fails to
state a material fact necessary to make the statements therein not
misleading.
7.8 CHEQUEMATE COMMON STOCK. The shares to be issued by Chequemate pursuant to
this Agreement have been duly authorized and, when issued in accordance
with the terms of the this Agreement, will be validly authorized and issued
and fully paid and nonassessable, and no shareholder of Chequemate will
have any preemptive rights or dissenter's right with respect thereto.
ARTICLE 8. SECURITIES ASPECTS OF AGREEMENT
8.1 All parties to this Agreement mutually understand, agree and covenant that
any referenced sale or other disposition of any security under this
Agreement shall be controlled and governed by this section. Specifically
should there arise any conflict of application or interpretation under this
section and any other provision or section of this Agreement, this section
shall be given primary definition and control. The term "securities" for
the purposes of this Agreement shall mean and include all shares of
Chequemate, and any warrants to acquire those shares as well as any other
instrument or obligation customary or commonly described as a security.
Each of the following terms and conditions of the issuance and distribution
of the securities shall be fully applicable unless otherwise specifically
waived or treated in the following paragraphs.
8.2 Each security issued pursuant to the terms of this Agreement shall be a
"restricted" security unless otherwise specifically referenced as being
issued pursuant to a registration or offering.
8.3 Seller understands and agrees that a restricted security, for the purposes
of this Agreement, is one which is issued without meeting registration
requirements under both federal and state law within the United States.
Each party to this Agreement further agrees and acknowledges that the
nature of a restricted security is that it is not freely tradable. That is,
the holder of such security cannot immediately market or further distribute
such security in the open market, or through private transactions without
the express written consent of the issuer, primarily Chequemate under the
terms of this Agreement.
8.4 Seller fully acknowledges and understands that the resale of a restricted
security will normally require substantial holding periods unless
subsequently subject to an intervening registration under applicable
federal and state securities laws. Seller acquiring restricted stock under
this Agreement further acknowledges and agrees that the principal, though
not exclusive, means by which restricted securities are resold under United
States law and conforming state laws and regulations is Securities and
Exchange Commission ("SEC") Rule 144, which essentially requires a holding
period of one year before the stock can be resold or any interest therein
further sold or assigned. In general terms, Rule 144 would require that
there be current public information about the Company before the provisions
of the Rule could be relied upon for subsequent resale, that the
aforementioned holding period had been
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met, that the sales occurred through independent arms-length and
unsolicited brokerage transactions, that certain volume limitations on the
number of shares sold in each three month period be observed, and that a
report of sales will be filed with the SEC. Seller understands that the
foregoing constitutes only a general description of Rule 144 and that such
person is or has the means to become familiar with all of the specific
provisions and terms of Rule 144 through his independent legal advisors.
Seller further acknowledges and agrees that while Rule 144 is not
exclusive, that it is anticipated and intended that it would be the primary
means by which securities acquired under this Agreement could be resold
absent the specific registration provisions of this Agreement.
8.5 Seller further acknowledges and agrees that, except as specifically
provided by the terms of this Agreement, none of the corporate parties will
have any obligation to register securities issued, and have no present
intention to register such securities other than is specifically provided
for by this Agreement. Each person under this Agreement acquiring
securities further understands and agrees that individual registration of
securities, absent registration by the issuer, is usually not practical and
should not be relied upon as a means for resale or other distributions of
securities acquired under this Agreement.
8.6 Any entity acquiring securities pursuant to this Agreement with the intent
to divide such securities among its principal shareholders or members as
part of the acquisition process, will be responsible for obtaining the
knowledgeable consent and agreement of such actual shareholder to the terms
of this Agreement, specifically referencing this paragraph.
8.7 Seller fully understands and agrees that should such person be deemed to be
in a "control" position as to Chequemate incident to the completion of this
Agreement, that such person must comply with the volume limitations of Rule
144 to complete sales of his or her securities acquired, except for
securities which have been otherwise registered pursuant to this Agreement.
A control person has been defined by the SEC, and by most state securities
regulatory agencies, as a person who has the capacity to exercise control
over the issuing company. While no precise mathematical formulation of a
control person is applicable to all situations, the following are generally
presumed to be control people:
(i) a person holding 10% or more of the shares of the issuing company;
(ii) any principal officer or any director of the issuing company.
8.8 Seller represents that it is acquiring the Shares for its own account, for
investment and not with a view to the distribution or resale thereof. The
Seller further represents that its financial and other circumstances are
such that it has adequate means of providing for its current and
anticipated future needs without having to sell or otherwise dispose of the
Shares, and that the Seller is able to bear the economic risks of this
investment and consequently is able to hold the Shares for an indefinite
period of time and to sustain the loss of its entire investment in the
Shares, in the event such a loss should occur.
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8.9 Seller acknowledges and represents that, due to its knowledge and
experience in financial and business matters, its investment experience
generally and its experience with investments similar to the Shares in
particular, Seller, either alone or together with its advisors, if any, is
able to understand and merits of, and the risks involved in, its proposed
investment in the Shares. Seller, either alone or together with its
advisors, if any, has the capacity to protect its own interests in
connection with this transaction.
8.10 Seller acknowledges that Chequemate has furnished or made available to
Seller all financial and other data relating to Chequemate, required by
Seller to enable it to make an informed decision concerning its approval of
this transaction and its resulting acquisition of the Shares. In
particular, Seller acknowledges that it has received and reviewed the
financial statements of Chequemate for the past two years and complete
copies of all of the Chequemate SEC Reports for such period. Seller
acknowledges that it has been informed that Chequemate has not previously
conducted business except as disclosed in the Chequemate SEC Reports.
Seller represents and acknowledges that it and its principals have been
engaged in the business of providing cable television services and
pay-per-view services in the hotel/lodging industry, which is intended area
of business for which the goods are being acquired by the Buyer. In this
regard, Seller has been acquainted with the Chief Executive Officer of
Chequemate. Seller further represents and acknowledges that it has had full
opportunity to obtain additional information from Chequemate to verify the
accuracy of the information supplied by it and to evaluate the merits of
its investment decision, including, without limitation, full opportunity to
ask questions of and receive satisfactory answers and other information
from Chequemate, its officers, directors and other persons acting on its
behalf, and all such questions have been answered, and such other
information supplied, to Seller's full satisfaction. Seller is aware of,
and has thoroughly evaluated, to its own satisfaction, the high degree of
risk associated with investing in Chequemate, including but not limited to,
the specific risks associated with Chequemate's business and the risks
associated with the ownership of common stock.
8.11 Seller hereby represents and warrants to Chequemate that Seller is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation
D. Seller further represents and warrants that it is a limited liability
company, and that each of the equity owners of Seller is an "accredited
investor" by reason of the fact that each of the equity owners meets one or
both of the following criteria:
(i) The owner is a natural person whose individual net worth, or
joint net worth with owner's spouse, at the time of this
agreement, exceeds $1,000,000; or
(ii) The owner is a natural person who had an individual income in
excess of $200,000 in each of the two most recent years, or
joint income with owner's spouse in excess of $300,000 in each
of those years, and has a reasonable expectation of reaching
the same income level in the current year.
ARTICLE 9. FURTHER ASSURANCES
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The parties agree to execute such additional or modified agreements as are
reasonably necessary to give full effect to the intentions of the parties as
shown in this Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it
as of the day and year first above written.
BUYER
CHEQUEMATE INTERNATIONAL, INC.
a Utah corporation
By J. ▇▇▇▇▇▇▇ ▇▇▇▇, CEO
SELLER
i-O Display Systems, LLC
a California limited liability company
By ▇▇▇▇ ▇▇▇▇▇▇▇▇, President
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