AGREEMENT FOR THE ISSUANCE, SALE AND PURCHASE
OF COMMON STOCK
OF ERLY INDUSTRIES, INC.
This Agreement for Issuance, Sale and Purchase of Common Stock of Erly
Industries, Inc, dated as of the 12th day of September, 2000 (the "Agreement")
is made by and between Xxxxxx Consulting Group, Inc., a Nevada corporation
("Purchaser") and Erly Industries, Inc., a California corporation (the
"Company"), and provides as follows,
1. Agreement for the Issuance, Sale and Purchase of Shares. Subject to the terms
and conditions of this Agreement, the Purchaser hereby agrees to purchase from
the Company on September 12th, 2000 (the "Closing Date"), at a price of One
Hundred Twenty Thousand and No/100 ($120,000.00) Dollars (The "Purchase Price",
being $0.012989948 per share), 9,237,912 shares (the "Shares") of the common
stock, par value $0.01 per share, of the Company (the "Common Stock").
2. Escrow. 'The parties hereto acknowledge and agree that Shares will be issued
by the Company from its authorized but unissued shares of Common Stock, The
Purchaser shall deliver, at the Closing (as defined below), the Purchase Price,
by wire transfer in immediately available funds. It is contemplated that both
the Shares and the Purchase Price shall be held by an escrow agent in a suitable
trust account until such time as all terms and conditions of this Agreement, and
all obligations of the parties hereto, have, been fulfilled and satisfied.
Unless otherwise specifically agreed upon by the parties hereto and memorialized
in a separate written agreement, any and all costs associated with this
engagement of said escrow agent and/or the establishment and utilization of send
trust account shall be borne by the Purchaser.
3. Representations and Warranties of the Company. The Company hereby represents
and warrants to the Purchaser as follows:
a. Corporate Existence and Power. The Company is a corporation duly
organized and validly existing under the laws of the State of California with
full corporate power and authority to enter into this Agreement and to perform
its obligations hereunder and thereunder.
b. Due Authorization. The Company has full power and authority to execute,
deliver and perform this Agreement and to carry out the contemplated transaction
contemplated hereby and thereby have been duly and validly authorized by all be
necessary corporate action of the Company and constitute the valid and binding
obligations of the Company enforceable against the Company in accordance with
its terms.
c. Conflict With Instruments, Governmental Consents and Approvals.
(i) The execution and delivery of this Agreement and the consummation
of the transaction contemplated hereby will not (A) violate or result
in any breach of any of the terms or conditions of, or constitute a
default under, the Articles of Incorporation or By-Laws of the Company
or (B) result in -any violation of any order, writ, injunction or
decree. of any court, administrative agency or governmental body.
(ii) The execution, delivery and performance of this Agreement by the
Company do not and will not (A) require any consent, approval,
authorization or other order of, action by, filing with or
notification to any federal, state, local or foreign government,
governmental, regulatory or administrative authority, agency or
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commission of any court, tribunal or judicial or arbitrary body,
except for such filings as may be necessary with the Securities and
Exchange Commission (the "SEC") to report the execution by the Company
of this Agreement, or (B) violate or conflict with, or permit the
cancellation of or constitute a default under any agreement to which
the Company is a party.
d. Capitalization of the Company. The authorized capital stock of the
Company consists of 15,000,000 shares of Common Stock and 6,000 shares of
preferred stock, par value $100 per share (the "Preferred Stock"), As of the
date hereof, 5,762,088 shares of Common Stock are issued and outstanding, all of
which are validly issued, fully paid and non-assessable. None of the outstanding
shares of Common Stock was issued in violation any preemptive rights. No shares
of Preferred Stock are issued or outstanding.
e. Bankruptcy Completed. On August 9, 1999 , the U.S. Bankruptcy Court in
and for the Southern District of Texas, Corpus Christi Division, rendered in
Order Confirming Debtors' and ERLY Creditors' Committee Joint Plan of
Reorganization as Modified, wherein the Company was discharged of all debts that
were dischargeable pursuant to 11 U.S.C, ss. 1141 and pursuant to the terms of
the Debtors and ERLY Creditors' Committee Joint Plan of Reorganization as
Modified.
f. Subsidiaries. The Company is the direct or indirect owner of 100% of the
outstanding capital stock of the following subsidiaries (the "Subsidiaries"):
Chemonics Industries, Inc., Chemonics International, Inc., Erly Juice, Inc.,
Beverage Source, Inc., Watch-Edge International, Inc. ("Watch-Edge").
g. Majority Ownership of Common Stock. Upon its purchase of the Shares as
Contemplated hereby, the Purchaser shall own a majority of the total number of
Shares of Common Stock of the Company that are issued and outstanding
immediately upon consummation of the transaction contemplated by this Agreement.
h. Preparation and Filing of Annual Report on Form 10-K and Eligibility for
Quotation on the OTCBB. Because of the Bankruptcy Proceedings (as defined in
Section 4d(i)), the Company has to date neither prepared nor filed with the SEC
Annual Reports on Form 10-K for each of the fiscal years ended March 31, 1998,
and 1999, and the Shares of the Companies Common Stock - are not presently
eligible for quotation on the OTC Bulletin Board" (the "OTCBB"). The Purchaser
shall: (i) prepare and file any and all quarterly and annual SEC reports
necessary to bring the Company current; and: (ii) engage the services of a
Market Maker in order that the Shares of the Company's Common Stock may become
eligible for quotation on the OCTBB.
i. Corporate Records. It is understood and acknowledged that numerous
Corporate Documents will be transferred to the ERLY and WEI Creditors' Limited
Partnership, as the successor in interest and assignee of ERLY Industries, Inc.
and assignee of its creditors, c/o Xx. Xxxxx Van Meter, Manager, ERLY and WEI
Creditors' Limited Partnership, Navigant Consulting, 0000 Xxxxx Xxxxxxx, Xxxxx
000, Xxxxxxx, Xxxxx, 00000-0000, and Xx. Xxxxxx Xxxx Xxxxxxx, Attorney at Law,
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, on
or about Scptember 7, 2000, which date is prior to the time of the Closing.
Pursuant to an agreement reached between the Company and the ERLY and WEI
Creditors' Limited Partnership, as evidenced by those certain correspondence
dated August 29, 2000, and September 6, 2000, the Company shall have access to
any ERLY-related documents previously on-site in Baton Rouge, Louisiana, on an
on-going basis following the transfer of said documents to the ERLY and WEI
Creditors' Limited Partnership in Houston, Texas.
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Said agreement between the Company and the ERLY and WEI Creditors' Limitedd
Partnership shall remain in effect following the transaction contemplated
herein, thus allowing the Purchaser the same access to said Corporate Documents
to the extent that said Corporate Documents exist, including specifically, but
not limited to:
(i) Certificates/Articles of Incorporation
(a) Amendments
(b) Unusual provisions re quorums, voting, approvals, etc.
(ii) Minutes
(a) Shareholders
(b) Board of Directors
(c) Committees of Board of Directors
(iii) Capital Structure
(a) Authorized shares
(b) Issued shares
(c) List and copies of options/warrants, convertible/exchangeable
securities, preemptive rights, etc. with respect to the Company
or any subsidiary.
(d) Stock transfer records, including list of transactions during
last three years for holders of over 5% of any class of
securities. (e) List and copies of agreements by and among
shareholders and/or the Company related to its stock, stock
purchase or repurchase agreements, voting trust agreements, or
agreements related to the sale, purchase, transfer, registration,
redemption or voting or issuing of any stock or other equity
interest.
(f) List and copies of acquisition or purchase, reorganization,
consolidation, amalgamation, sale or merger agreements (whether
relating to assets or stock) previously entered into or currently
in effect.
(iv) Management
(a) Members of Board of Directors
(b) Members of committees of Board of Directors
(c) Remuneration of Directors
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(d) Officers and other persons holding senior management positions;
description of responsibilities and brief biography for each,
(e) Remuneration of officers and other persons holding senior
management positions.
(f) Affiliations among officers, directors, shareholders, creditors,
suppliers, and other business counterparties.
(g) Signatories of the Company; proxies granted.
4. Representation and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Company as follows:
a. Corporate Existence, Etc. The Purchase is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada and
is duly authorized, qualified and licensed under all applicable laws,
regulations, ordinances and orders of public authorities to carry on its
business.
b. Due Authorization, The Purchaser has full power and authority to
execute, deliver and perform this Agreement and to carry out the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and-agreements related hereto, and the transaction contemplated hereby have duly
and validly authorized by all necessary corporate actions of the Purchaser. This
Agreement has been duly and validly executed and delivered by the Purchaser, and
constitutes the valid and binding obligation of the Purchaser enforceable
against the Purchaser, in accordance with its terms.
c. Conflict With Other Instruments, Governmental Consents and Approvals.
(i) The execution and delivery of this Agreement and the consummation
of the transaction contemplated hereby will not (A) violate or result
in any breach of any of the terms or conditions of, or constitute a
default under, the Articles of Incorporation or By-Laws of the
Purchaser or (B) result in any order, writ, injunction or decree of
any court, administrative agency or governmental body.
(ii) The execution, delivery and performance of this Agreement by the
Purchaser do not and will not (A) require any consent, approval,
authorization or other order of, action by, filing with or
notification to any federal, state, local or foreign government,
governmental, regulatory or administrative authority, agency or
commission of any court, tribunal or judicial or arbitral body, or (B)
violate or conflict with, or permit the cancellation of or constitute
a default under any agreement to which the Purchaser is a party.
d. Securities Laws Representations.
(i) The Purchaser has received and carefully read are audited
consolidated balance sheet of the Company as of August 20, 1999, which
reflects that the Company has no assets. The Purchaser recognizes that
the Company and Watch-Edge have previously filed a voluntary petition
of reorganization under Chapter 11 of the U. S. Bankruptcy Code, (the
"Bankruptcy Proceedings") in the U.S. Bankruptcy Court for the
Southern District of Texas, Corpus Christi Division (the "Bankruptcy
Court").
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The Bankruptcy Court, on August 9, 1999, confirmed the Company's Joint
Plan of Reorganization, will became effective on August 20, 1999.
Pursuant to the Confirmation Order issued by the Bankruptcy Court, all
property of the, Company and its subsidiaries became vested in the
ERLY and WEI Creditors' Limited Partnership for the benefit of the
Company's creditors and, as a result, The Company retained no assets,
other than the capital stock in the Subsidiaries. The Purchaser also
understands and acknowledges that an investment in the Company
involves significant risk including the risk that the Purchaser will
lose its entire investment.
(ii) The Purchaser is acquiring the Shares with the understanding that
the Company is a "shell" with sufficient assets to cover outstanding
liabilities, and no operations.
(iii) The parties hereto acknowledge and agree that while the
Company's shares of Common Stock have been previously registered With
the SEC pursuant to Section 12(g) of tho Securities Exchange Act of
1934, as amended, the Company has not filed certain reports with the
SEC because of the Bankruptcy Proceedings, and as a result, its shares
of Common Stock were delisted from the Nasdaq ,Stock Market, and are
not presently eligible for quotation on the OTCBB.
(iv) The Purchaser has been furnished materials relating to the
Company, its business and financial condition and any other matter
which it has requested and its representatives have been afforded the
opportunity to ask questions and receive answers concerning the terms
and conditions of the issuance and sale of the shares hereby and to
obtain any additional information which the Company possesses or can
acquire without unreasonable effort or expense.
(v) The Company has answered all inquiries that the Purchaser's
representatives have made of it concerning the Company, its business,
and financial condition, or any other matter relating to the operation
of the Company and the issuance and sale of the Shares.
(vi) The Purchaser is an "accredited investor" within the means of
Rule 501(a) of Regulation D under the Securities Act of 1933, as
amended (the "Securities Act"), The Purchaser has such knowledge and
experience in financial and business matters to enable it to utilize
the information made available to it in connection with the issuance
of the Shares, to evaluate the merits and risks of the prospective
investment, and to make an informed investment decision with respect
thereto.
(vii) The Purchaser (A) has adequate means of providing for its
current needs and possible contingencies, (B) has no need for
liquidity in this investment, (C) is able to bear the economic risks
of its investment in the Shares, and (D) at the present time, can
afford a complete loss of such investment.
(viii) The Purchaser is purchasing the Shares for its own account, for
investment, and not for distribution, assignment or resale to others,
and no other person has any direct or indirect beneficial interest in
such Shares.
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(ix) The undersigned understands that (A) there is and will be no
market for the Common Stock of the Company, (B) the sale of the Shares
has not been and will not be registered under the Securities Act in
reliance of the exemption for non-public offerings provided by Section
4(2) of the Securities Act and Regulation D promulgated thereunder and
must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is
available; (C) the Company is under no obligation to register the
Shares on behalf of the Purchaser or to assist it in complying with
any exemption. from registration, and (D) the Shares may not be sold
pursuant to Rule 144 promulgated by the SEC pursuant to the Securities
Act unless all of the conditions of such Rule are met.
(x) The Purchaser understands that no Federal or State agency has
passed upon the Shares, or made any finding or determination as to the
fairness of the investment or any recommendation or endorsement of the
Shares, The Purchaser will not transfer the Shares without registering
or qualifying the same under applicable state securities laws unless
such transfer is exempt under such laws.
(xi) All information which the Purchaser has provided to the Company
concerning itself, its financial position, and its knowledge of
financial and business matters, including all information contained
herein, is true and complete as of the date hereof, and if there
should by any adverse change in such information prior to the closing
of the sale of the Shares, the Purchaser will immediately provide the
Company with accurate and complete information concerning any such
change.
5. Indemnification. The Purchaser agrees to indemnify and hold harmless the
Company, its officers, directors, employees, shareholders, attorneys and
affiliates and any person acting on behalf of the Company, from and against any
and all damage, loss, liability, cost, and expense (including attorneys' fees)
which any of them may incur by reason of the failure by the Purchaser to fulfill
any of the terms or conditions of this Agreement, or by reason of any breach of
the representations and warranties made by the Purchaser herein. All
representations, warranties an covenants contained in this Agreement, and the
indemnification contained in this paragraph 5, shall survive tile closing of the
sale of the Shares.
6. Compliance with Section 4(2). The Purchaser acknowledges and agrees that the
following restrictions and limitations are applicable to its purchase of the
Shares which are being sold to it in reliance on the exemption from registration
contained in Section 4(2) of the Securities Act:
a. The Shares may not be sold, pledged, hypothecated or otherwise
transferred unless they are registered under the Securities Act and applicable
state securities laws or are exempt therefrom.
b. A legend to the following effect will be placed on any certificates
representing the Shares:
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"THE SECURITIES EVIDENCED BY THE CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR APPLICABLE STATE
LAW AND NO INTEREST THEREIN MAY BE SOLD,. DISTRIBUTED, ASSIGNED, OFFERED,
PLEDGED OR OTHERWISE TRANSFERRED UNLESS (1) THERE IS AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER THE SECURITIES ACT AND APPLICABLE' STATE
SECURITIES LAWS OR (2) THIS CORPORATION RECEIVES AN OPINION OF COUNSEL (WHICH
MAY BE COUNSEL TO THE COMPANY) SATISFACTORY TO THE COMPANY TO THE EFFECT THAT
SUCH REGISTRATION IS NOT REQUIRED."
c. Stop transfer instructions to the transfer agent, if any, of the Shares
have been or will be placed with respect to the Shares so as to restrict resale,
pledge, hypothecation or other transfer thereof, subject to the provisions
hereof, including the provisions of the legend referred to in subparagraph above
for as long as shares are delisted.
7. Other Agreements.
a. Directors' and Officers' Indemnification. The Purchaser agrees that the
provisions of the Articles of Incorporation and By-Laws of the Company with
respect to indemnification will not be amended, repealed or otherwise modified
for a period of six years from the Closing Date in any manner that would
adversely affect the rights there under of individuals who immediately prior to
the Closing were directors, officers, employees or agents of the Company or any
of its subsidiaries, unless such modification is required by law.
b. Election of Directors. The Company covenants and agrees, in accordance
with its Articles of Incorporation and By-Laws, to cause the members of its
Board of Directors, effective immediately prior to the Closing, to (i) increase
the authorized number of directors from five (5) to six (6), and (ii) fill the
vacancy caused by the increase in the authorized number of directors by electing
the Purchaser's designee, Xxxxxxx X. Xxxxxx (the "Purchaser Director'), as a new
director of the Company. Immediately upon the effectiveness of the Closing (ii)
the Company agrees that the members of the Board of Directors of the Company,
other than the Purchaser Director, and all officers of the Company shall resign,
effective immediately at such time and. (iii) the Purchaser agrees to cause the
Purchaser Director, on behalf of the Company, to accept such resignations, In
accordance with Article III, Section 4 of the Company's By-Laws, The Purchaser
Director, as the Company's sole remaining director, shall be entitled to elect
new directors to fill the vacancies caused by such resignations.
c. Release of Claims, The Purchaser covenants and agrees to cause the
Purchaser Director, concurrently with the Closing aiid immediately following the
resignation of the directors as set forth in Section 7b, to release on behalf of
the Company any and all claims, demands, causes of action and the like that the
Company may have against any of the directors and officers of the Company who
have resigned pursuant to Section 7b. Such release of claims to be in writing
and in form and substance satisfactory to such former officers and directors.
d. Use of Purchase Price and Cash on Hand. Upon receipt by the Company of
the Purchase Price, the liabilities will be zero (-0-). The Company agrees to,
and the Purchaser covenants and agrees to cause the Company to, utilize both the
Purchase Price and any Cash on hand for the payment of any liabilities of the
Company in existence at the time of the Closing, and for such other purposes in
the sole discretion and as directed by the five (5) directors and officers of
the Company who resign concurrently with the Closing.
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8. Conditions of Obligations of the Purchaser to Close. The obligations of the
Purchaser to consummate the transaction contemplated hereby shall be subject to
the fulfillment of each of the following conditions; (i) the approval by the
Purchaser's shareholders of this Agreement and the transactions contemplated
hereby; (ii) the representations and warranties of the Company contained in this
Agreement shall have been true and correct as of the date they were deemed to
have been made and shall be true and correct as of the Closing Date with the
same force and effect as if made as of the Closing Date (iii) the covenants and
agreements in this Agreement to be complied with by the Company on, before, or
concurrent with the Closing shall have been complied with and the Purchaser
shall have received a certificate from the Company to that effect (iv) no action
shall have been commenced or threatened by or before any governmental authority
against the Purchaser or the Company seeking to restrain or adversely alter the
transaction contemplated hereby or which is likely to render it impossible or
unlawful to consummate the transaction contemplated by the Agreement. (v) the
Purchaser shall have received certified extracts of resolutions duly adopted by
the Board of Directors and all officers of the Company; and (vi) the present
members of the Company's Board of Directors and all officers of the Company and
all officers and directors of the Subsidiaries, if any, shall have submitted
their resignations, and such resignations have become effective as contemplated
by Section 7b
9. Conditions of Obligations of the Company to Close. The obligations of the
Company to consummate the transaction contemplated hereby shall be subject to
the fulfillment of each of the following conditions: (i) the approval by the
Company's Board of Directors of this Agreement and the transactions contemplated
hereby; (ii) the representations and warranties of the Purchaser contained in
this Agreement shall have been true and correct as of the date they were deemed
to have been made as of the Closing Date; (iii) the covenants and agreements in
the Agreement to be complied with by the Purchaser or, before, or concurrent
with the Closing, shall have complied with the Company shall have received a
certificate from the Company to that effect; (iv) no action shall have commenced
or be threatened by or before any governmental authority against the Company or
the Purchaser seeking to restrain or adversely alter the transaction
contemplated hereby or which is likely to render it impossible or unlawful to
consummate the transaction contemplated by this Agreement (v) the company shall
have received certified extracts of resolutions duly adopted by the Board of
Directors of the Purchaser; and (vi) the present members of the Company's Board
of Directors and all officers of the Company and all officers and directors of
the Subsidiaries, if any, shall have submitted their resignations, and such
resignations have become effective as contemplated by Section 7b.
10. Closing. The closing of the transactions contemplated by this Agreement (the
"Closing"), shall occur on the Closing Date, or such earlier or later date as
the parties may agree, by facsimile and wire transfer, or otherwise as the
parties may agree,
11. Publicity. The Purchasers shall not make or cause to be made any press
release or Public announcement in respect of this Agreement or the transaction
contemplated hereby or otherwise communicate with any news media without prior
notification to, and approval by, the Company.
12. Entire Agreement; Modification. This Agreement constitutes the entire
agreement among the parties hereto with respect to the- subject matter hereof,
and neither this Agreement nor any provisions hereof shall be waived, changed,
discharged, or eliminated except by an instrument in writing signed by both
parties.
13. Notices. Any notice, demand, or other communication which any party hereto
in may be required, or may elect, to give to anyone interested hereunder shall
be sufficiently given if (a) deposited, postage prepaid, in the United States
mail, registered or certified mail, addressed to, in the case of the Company,
0000 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000, Xxxxx Xxxxx, Xxxxxxxxx 00000, Attention,
00
Xxxxxxx X. Xxxxxx, and in the case of the Purchaser, 268 West 000 Xxxxx, Xxxxx
000, Xxxx Xxxx Xxxx, Xxxx, 00000, Attention, Xxxxxxx X. Xxxxxx, or (b) delivered
personally at such addresses.
14. Binding Effect. Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, successors, legal representatives and assigns.
15. Counterparts. This Agreement may be executed in one or more counterparts,
all of which when taken together shall constitute one and the same instruments
16. Severability. If any term or other provision of this Agreement is declared
by a court of competent jurisdiction to be invalid, all other terms and
provisions of this Agreement shall, nevertheless, remain in full force and
effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party.
17. Assignability, This Agreement may not be assigned by the Purchaser without
the prior written consent of the Company.
18. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Louisiana.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
date set forth herein above.
PURCHASER: THE COMPANY:
XXXXXX CONSULTING GROUP, INC. ERLY INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxx
---------------------- --------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxx
Title: President Title: Chairman of the Board,
President and CEO
Federal Taxpayer Identification Federal Taxpayer Identification
Number and Address of Principle Number and Address of Principle
Place of Business of the Purchaser: Place of Business of the Company:
Federal Taxpayer I.D. Number: Federal Taxpayer I.D. Number:
00-0000000 00-0000000
Address: Address:
000 Xxxx 000 Xxxxx Xxxxx 000 0000 Xxxxxx Xxxxx Xxxxxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000 Xxxxx Xxxxx, Xxxxxxxxx 00000
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