Exhibit 10.1.
STOCK SALE AND PURCHASE AGREEMENT
THIS
AGREEMENT is made this 14th day of March
2007, by and among David
Keaveney ("Seller"),
an individual,
MOTORSPORTS EMPORIUM, INC. ("Company"), a
Nevada corporation, and Kenneth Yeung, ("Purchaser"), an
individual.
WHEREAS, the Seller
desires to sell to the Purchaser 200,000 shares of the
Series C Preferred
Stock of the Company,
with a par value of $0.001 per share,
representing all the
issued and outstanding
Series C Preferred Stock of the
Company ("Stock" or "Company Stock").
WHEREAS, the
Purchaser desires to purchase the Stock as hereinafter
provided; and
WHEREAS, the
Purchaser desires to reduce a substantial amount of the
Company's indebtedness
in order to improve
the Company's balance sheet and
financial position
in order to
benefit the Company's shareholders and the
Purchaser desires to assist the Company in reducing its
indebtedness;
NOW,
THEREFORE, in
consideration of the foregoing and the following mutual
covenants and agreements, the parties hereto agree as follows:
PURCHASE OF STOCK. At the signing of this Agreement ("Closing"), upon the
basis of the
covenants, warranties
and representations of the Purchaser set
forth in this Agreement, the Seller will sell, transfer,
assign, and deliver
to
the Purchaser 200,000
shares of Company Stock, represented by Certificate
No.
C-001, by causing the Company to reissue such 200,000 shares of
Company Stock in
a new Certificate
No. C-002, clear of all liens, pledges, rights of third
parties and any
other encumbrances, except as otherwise may be permitted
hereunder.
COMPENSATION; PAY-OFF OF
INDEBTEDNESS. Purchaser agrees to the following:
PAYMENT OF $10,000.00 IN CASH TO SELLER; AND
PAYMENT OF ALL ITEMS
LISTED IN THE COLUMN NAMED "NET BALANCE PAID IN CASH"
ON SCHEDULE A ATTACHED HEREIN AND THE ACCOMPANYING FOOTNOTES.
RESTRICTIVE LEGEND. All shares of the Stock to be delivered
hereunder shall
bear a restrictive legend in substantially the following form:
"THE
SHARES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES
ACT OF 1933, AS AMENDED ("SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SHARES NOR ANY INTEREST THEREIN
MAY BE OFFERED,
SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS A
REGISTRATION STATEMENT
WITH RESPECT THERETO
IS EFFECTIVE UNDER THE
SECURITIES ACT AND ANY
APPLICABLE
STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION
UNDER THE
SECURITIES ACT."
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REPRESENTATIONS AND
WARRANTIES
OF THE SELLER. Where a representation
contained in this
Agreement is qualified by the phrase "to the best of Seller's
knowledge" (or words
of similar import),
such expression means that, after
having conducted a due diligence review, the Seller believes the
statement to be
true, accurate and
complete in all material respects. Knowledge shall not be
imputed nor shall it include any matters which such person should have
known or
should have been reasonably expected to have known.
The Seller
represents and
warrants to the Purchaser as follows:
POWER AND AUTHORITY.
The Seller has full
power and authority to
execute,
deliver and
perform and deliver this Agreement and all other agreements,
certificates or
documents to be delivered in connection herewith, including,
without
limitation, the
other agreements, certificates and documents
contemplated hereby (collectively the "Other Agreements").
BINDING EFFECT. Upon
execution and delivery by the Seller, this Agreement
shall be and constitute the valid, binding and legal obligations of
the Seller,
enforceable against
the Seller in accordance with the terms hereof and thereof,
except as the
enforceability hereof
or thereof may be subject to the effect of
(i) any applicable bankruptcy, insolvency, reorganization,
moratorium or similar
laws relating to or
affecting creditors'
rights generally, and (ii) general
principles of equity (regardless of whether such enforceability is
considered in
a proceeding in equity or at law).
EFFECT. Neither the
execution and delivery of this Agreement nor full
performance by the
Seller of its
obligations
hereunder or thereunder will
violate or breach, or otherwise constitute or give rise to a
default under, the
terms or provisions of
the Articles of
Incorporation or
Bylaws of the Company
or, of any contract, commitment or other obligation of the Company
or the Seller
or necessary for the operation of the Company following the Closing
or any other
contract, commitment or other obligation to which the Seller or the
Company is a
party, or create or
result in the creation
of any encumbrance on any of the
property of the
Company other than what is disclosed in Schedule A and the
accompanying
footnotes. The
Company is not in
violation of its Articles of
Incorporation, as
amended, its Bylaws,
as amended, or of any indebtedness,
mortgage, contract,
lease, or other
agreement or commitment other than what is
disclosed in Schedule A and the accompanying footnotes.
NO
CONSENTS. No consent,
approval or
authorization
of, or
registration,
declaration or filing with any third party, including, but not limited to, any
governmental
department, agency,
commission or other
instrumentality,
will,
except such consents,
if any, delivered or obtained on or prior to the Closing,
be obtained
or made by the
Seller prior to the Closing to authorize the
execution, delivery and performance by the Seller of this Agreement
or the Other
Agreements which are listed on Schedule A and the accompanying
footnotes
STOCK OWNERSHIP OF THE SHARES TO BE SOLD BY THE SELLER.
The Seller, who is
the only legal
and beneficial owner of the Stock, has good, absolute and
marketable title to 200,000 shares of the Company Stock which
constitute 100% of
the issued
and outstanding shares of the Company Stock. The shares of the
Company Stock to be sold by the Seller hereunder constitute all of
the shares of
the Company
Stock of the
Company owned by the Seller. The Seller has the
complete and unrestricted right, power and authority to cause the
sale, transfer
and assignment of the Company Stock pursuant to this Agreement.
The delivery of
the Company
Stock to the
Purchaser as herein contemplated will vest in the
Purchaser good, absolute and marketable title to the shares of the
Company Stock
as described
herein, free and clear of all liens,
claims, encumbrances and
restrictions of every
kind, except those
restrictions
imposed by
applicable
securities laws.
No one affiliated with the Seller or any of its officers,
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directors or principal
stockholders owns any shares of the Company Stock, other
than the Company Stock owned by the Seller.
ORGANIZATION AND
STANDING OF THE COMPANY. The Company is a duly
organized
and validly existing
Nevada corporation in good standing,
with all requisite
corporate power and
authority to carry on its business as presently conducted.
Purchaser agrees that
Seller has provided a
copy of Certificate
of Existence
with Status in Good Standing as of January 31, 2007 prior to the
signing of this
Agreement. Currently,
the Company is registered to do business in Nevada and in
no other jurisdiction.
SUBSIDIARIES. The
Company has the following subsidiaries; Scottsdale
Diecast, Inc., and Quadriga MotorSports, Inc. The Company also has
the following
divisions; Pit Stop
Studios and Drivers
Digs. The Purchaser
has received full
disclosure to include
a copy of the
Company's filed
Definitive
Schedule 14C
Information statement
stipulating
its plans to issue a
stock dividend of
the
Company's subsidiary,
Scottsdale Diecast, Inc., to shareholders of the Company.
A turn of events has caused the Company to sell its web site
WWW.SCALECARS.COM
and divest its interest in the die cast model car business.
Quadriga MotorSports
is currently marketing
a line of car care
products, but
generates very little
revenue for the
Company. Both PitStop Studios and Drivers Digs generate
insignificant revenue
and represent less than 1% of annual gross revenue to the
Company. Since the
Company has deemed it
imprudent to carry out
the proposed
stock dividend of Scottsdale Diecast, Inc., the Company will notify
Nasdaq that
it will not follow through on such dividend.
CAPITALIZATION AND
OTHER OUTSTANDING
SHARES. The Company is authorized by
its Articles of Incorporation to issue 500,000,000 shares of the Common Stock,
$.001 par value per share and 200,000 shares of Series C Preferred
Stock. As of
the date of this
Agreement,
the Company has duly and validly issued and
outstanding, fully paid and non-assessable, 4,368,678 shares of the
Common Stock
and 200,000 shares of the Series C Preferred Stock. The Company intends to
file
a Form S-8 registration statement covering 1,000,000
shares of its common stock
for issuance under the Company's 2007 Employee and Consultant Stock Incentive
Plan ("New form S-8"). With the exception of what is disclosed in
Schedule A and
the accompanying
footnotes or pursuant to the New Form S-8, there are no
outstanding options,
contracts,
commitments,
warrants,
preemptive
rights,
agreements or any rights of any character affecting or relating in any
manner,
including without limitation, with respect to the voting, sale,
transfer, rights
of first refusal, rights of first offer, proxy or registration or
calls, demands
or commitments of any kind, to the issuance of any common or
preferred stock of
the Company or other
securities or
entitling anyone to acquire the common
or
preferred stock or other securities of the Company, whether
directly or upon the
exercise or conversion of other securities with the exception of
96 preferred A
share that are
convertible into
19,200 shares of the
Company's common
stock.
Additionally, Tracey
Baron has a promissory
note for a total of $5,500 that is
due on April 23, 2006.
The Company can
convert the debt into $10,000 of common
stock of the Company.
Also, with the exception of what is disclosed in Schedule
A and the accompanying footnotes or pursuant to the New Form S-8,
there are, and
at the Closing there
will be, no
outstanding
contractual
obligations of the
Seller or the Company to repurchase, redeem or otherwise acquire any shares of
their respective
capital stock or to
provide funds to, or make any investment
(in the form of a loan, capital contribution or otherwise) in, any
other entity
or person. Upon Closing, the investors who have delivered the three
Subscription
Agreements described in the Footnotes section of Schedule will have
the right to
rescind their
subscriptions
and receive a full refund of their collective
$75,000 in subscription funds. The subscription agreements are signed by the
investors but not by the Company. There are no anti-dilution or
price adjustment
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provisions contained in any security issued by the Company with the
exception of
what is disclosed in Schedule A and the accompanying footnotes.
TAXES. All federal,
state, local or
foreign return,
report,
information
return or other document (including any related or supporting
information) filed
or required
to be filed
with any governmental body in connection with the
determination,
assessment or collection of any Taxes (as defined below) or the
administration of any laws, regulations or administrative
requirements
relating
to any returns that are or were required to be filed by the
Company, pursuant to
the laws or
administrative
requirements of each
governmental body with taxing
power over it or its
assets have been duly
filed as of the
Closing with the
exception of the
Company's 2006
Federal and State
returns that will be
filed
upon the completion of the Company's 2006 audited financials.
"Taxes" means all
taxes, charges, fees, imposts, levies or other assessments,
including,
without
limitation, all net
income, gross
receipts, capital,
sales, use, ad
valorem,
value added, transfer,
franchise, profits,
inventory, capital
stock, license,
withholding,
payroll, employment,
social security, unemployment, excise,
severance, stamp, occupation, property but not estimated taxes,
customs duties,
fees, assessments and charges of any kind whatsoever, together with
any interest
and any penalties,
fines, additions to tax or additional amounts imposed by any
governmental body and
shall include
any transferee liability in respect of
Taxes. As of the Closing there is no audit, action, suit, claim, proceeding or
any investigation or inquiry, whether formal or informal, public or
private, now
pending or threatened
against or with
respect to the Company in respect of any
Tax that the Company has been made aware. As of the Closing there exists no
tax
assessment, proposed
or otherwise, against the Company or any lien
for Taxes
against any assets or property of the Company. All Taxes that the Company is
or
was required to withhold or collect have been duly withheld or collected as of
Closing and, to the extent required, have been paid to the proper
governmental
body. The Company is not a party to, bound by or subject to any
obligation under
any tax sharing, tax indemnity, tax allocation or similar
agreement. The Seller
is unaware of any claim, audit, action, suit, proceeding or investigation
with
respect to Taxes due or claimed to be due from the Company or of any Tax Return
filed or required to be filed by the Company pending or threatened against or
with respect to the Seller or the Company as of the Closing
with the exception
of the Company's
2006 Federal and State taxes that will be filled upon
completion of the Company's 2006 audited financials.
LITIGATION. Except as
set forth in Schedule
A, there is no action,
suit,
hearing, inquiry,
review, proceeding or investigation by or before any court or
governmental body pending, or threatened against or involving
the Company, its
affiliates or the
Seller or with respect to the activities of any employee or
agent of the Company.
Except as set forth in Schedule A, neither the Seller nor
the Company
has received any notice of any event or
occurrence
which could
result in any such
action, suit, hearing, inquiry, review, proceeding or
investigation.
RECORDS. As of March 14, 2007, the books of account and minute
books of the
Company are
complete and correct to the best of Seller's and Company's
knowledge, and reflect
all those transactions involving the Company's business,
which properly should have been set forth in such books.
INTERNAL ACCOUNTING
CONTROLS. The Company maintains a system of
internal
accounting controls
sufficient,
in the judgment of the Company's board of
directors, to provide reasonable assurance that (i) transactions
are executed in
accordance with
management's
general
or specific authorizations, (ii)
transactions are
recorded as
necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset
accountability,
(iii) access to assets is permitted only in
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accordance with
management's
general or specific
authorization
and (iv) the
recorded
accountability for
assets is compared
with the existing assets at
reasonable intervals
and appropriate action is taken with respect to any
differences. To the
best of the Seller's
knowledge,
the books of account,
corporate records and
minute books of the
Company are complete
and correct in
all material respects from September 30, 2004 to present.
STOCK ISSUANCES.
AS OF SEPTEMBER 30,
2004. Since September
30, 2004, all
issuances by the
Company of its stock have been legally and validly effected.
All of the offerings were conducted in strict accordance and in full
compliance
with the requirements
of the Securities Act of 1933, as amended, and the
Securities Exchange
Act of 1934, as amended, as applicable, and in full
compliance with and according to the requirements of state law and the
Articles
of Incorporation and By-laws of the company.
ANTI-TAKEOVER PLAN;
STATE TAKEOVER STATUTES. Other than what is set forth
and disclosed in Schedule A and the accompanying footnotes,
neither the
Company
nor any of its subsidiaries has in effect any plan, scheme, device or
arrangement,
commonly or
colloquially
known
as a "poison pill" or
"anti-takeover" plan
or similar plan, scheme, device or arrangement.
No other
state takeover statute
or similar statute or regulation applies or purports to
apply to this agreement or the transactions contemplated
hereby.
THE
SELLER'S
REPRESENTATIONS AND WARRANTIES TRUE AND COMPLETE. To the best
of the Seller's knowledge, in all material respects as of the Closing.
representations and
warranties
of the Seller in this Agreement are true,
accurate and complete,
NO
KNOWLEDGE OF THE
PURCHASER'S DEFAULT.
Except for what is set
forth in
Schedule A and the accompanying footnotes, the Seller has no knowledge that
any
of the Purchaser's representations and warranties contained in this
Agreement or
the Other Agreements are untrue, inaccurate or incomplete or that
the Purchaser
is in default
under any term or provision of this Agreement or the Other
Agreements.
NO
UNTRUE STATEMENTS.
No representation or
warranty by the Seller in this
Agreement or in any
writing furnished or to be furnished pursuant hereto,
contains or will contain any untrue statement of a material fact, or
omits, or
will omit to state any material fact required to make the
statements
herein or
therein contained not misleading.
RELIANCE. The
foregoing
representations and
warranties
are made by the
Seller with the knowledge and expectation that the Purchaser is
placing complete
reliance thereon.
ISSUANCES OF
SECURITIES.
Other than what the
Company is contractually
obligated to perform
under the disclosure(s) set forth in Schedule A and
the
accompanying footnotes
and in the New form
S-8, the Company will not issue any
shares of its
capital stock, issue or create any warrants, obligations,
subscriptions, options, convertible securities, or other
commitments under which
any additional
shares of its
capital stock of any class might be
directly or
indirectly authorized,
issued, or transferred from treasury, or agree to do any
of the acts listed above
REPRESENTATIONS AND
WARRANTIES OF THE
PURCHASER. Where a
representation
contained in this
Agreement is qualified by the phrase "to the best of the
Purchaser's knowledge" (or words of similar import), such
expression means that,
after having
conducted a due
diligence review, the Purchaser believes the
statement to be true, accurate, and complete in all material
respects. Knowledge
shall not be imputed nor shall it include any matters which such person should
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have known or should have been reasonably expected to have known. The
Purchaser
hereby represents and warrants to the Seller as follows:
POWER AND AUTHORITY. The Purchaser has full power and authority to
execute,
deliver and perform this Agreement and the Other Agreements.
BINDING EFFECT.
Only upon payment in
full and satisfaction
of all items
listed in the column
named "Net
Balance Paid In Cash" on Schedule A and the
footnotes attached
herein, the execution and delivery by the
Purchaser, this
Agreement shall be and
constitute the valid,
binding and legal
obligations of
the Purchaser
enforceable against
the Purchaser in
accordance with the
terms
hereof or thereof,
except as the
enforceability
hereof and thereof may be
subject to
the effect of (i) any applicable bankruptcy, insolvency,
reorganization,
moratorium or similar laws relating to or affecting creditors'
rights generally, and
(ii) general
principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law).
NO
CONSENTS. No consent,
approval or
authorization
of, or
registration,
declaration or filing with any third party, including, but not limited to, any
governmental
department, agency,
commission or other
instrumentality,
will,
except such consents,
if any, delivered or obtained on or prior to the Closing,
be obtained or made by
the Purchaser
prior to the
Closing to
authorize the
execution, delivery
and performance
by the Purchaser of
this Agreement or the
Other Agreements.
THE
PURCHASER'S
REPRESENTATIONS
AND WARRANTIES TRUE AND COMPLETE. All
representations and
warranties
of the Purchaser in this Agreement are true,
accurate and complete in all material respects as of the
Closing.
NO
KNOWLEDGE OF THE SELLER'S DEFAULT. Except what is set forth in
Schedule
A and the accompanying footnotes the Purchaser has no further
knowledge that any
of the Seller's
representations and warranties contained in this Agreement
are
untrue, inaccurate or incomplete in any respect or that the Seller
is in default
under any term or provision of this Agreement..
NO
UNTRUE STATEMENTS.
No representation or warranty by the Purchaser
in
this Agreement or in any writing furnished or to be furnished
pursuant hereto,
contains or will contain any untrue statement of a material fact, or
omits, or
will omit to state any material fact required to make the
statements
herein or
therein contained not misleading.
RECEIPT AND
REVIEW OF DUE DILIGENCE MATERIALS. The Purchaser hereby
acknowledges,
represents and
warrants that the Purchaser has received and
reviewed all Form 8-Ks, Form 10-QSBs, Form 10-KSBs, Form S-8s and
Schedule 14Cs
filed by the Company during the past three (3) years, as well as all Forms 3, 4
and 5 and Schedule 13Ds filed by the Company's officers,
directors,
affiliates
and major shareholders
during the past three
(3) years. The Purchaser has been
given unfettered
access to the management, assets, liabilities, books of
account, stock
transfer records of the Company and has
received
satisfactory
answers to any and all
questions the
Purchaser has asked or inquired about
during the course of conducting the Purchaser's due diligence with respect to
this transaction.
RELIANCE. The
foregoing
representations and
warranties
are made by the
Purchaser with the knowledge and expectation that the Seller is
placing complete
reliance thereon.
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CONDITIONS PRECEDENT
TO OBLIGATIONS OF THE PURCHASER. All obligations of
the Purchaser under this Agreement are subject to the fulfillment, prior to or
at the Closing, of the following conditions:
REPRESENTATIONS AND WARRANTIES TRUE AT THE CLOSING. The
representations and
warranties of the Purchaser herein shall be deemed to have been
made again as of
the Closing, and then
be true and correct,
subject to any changes contemplated
by this Agreement. The
Purchaser shall have performed all of the obligations to
be performed by it hereunder on or prior to the Closing.
DELIVERIES AT THE CLOSING. The Purchaser shall have delivered to
the Seller
at the Closing all checks backed by good funds required for full satisfaction
and payment of all items listed in the column named "Net Balance Paid In
Cash"
on Schedule A and the accompanying footnotes .
CONDITIONS PRECEDENT
TO OBLIGATIONS OF THE SELLER. All obligations of the
Seller under this Agreement are subject to the fulfillment, prior to or at the
Closing, of the following conditions:
CORPORATE RECORDS,
ETC. The Seller has
provided Purchaser
with copies of
all contracts
and agreements as set forth in Schedule A and the footnotes
attached, a copy of
the Articles of
Incorporation, Bylaws,
minute books, and
other corporate
governance
that have been in the
Seller's possession since
September 30, 2004,
and such documents
will be turned over to Purchaser at the
Closing.
REPRESENTATIONS AND
WARRANTIES TRUE AT CLOSING. The representations and
warranties of the
Seller herein shall be
deemed to have been made again at the
Closing, and then be
true and correct,
subject to any changes
contemplated by
this Agreement.
The Seller shall have
performed all of the
obligations to be
performed by it hereunder on or prior to the Closing.
PAYMENT OF THE PURCHASE PRICE. At or before Closing, the Purchaser shall
deliver checks backed by good funds to fully pay and satisfy all
items listed in
the column named "Net
Balance Paid In Cash" on Schedule A and the accompanying
footnotes attached
thereto. Funds shall
be valid and in good delivery no later
than two business days from Closing at which time Certificate No. C- 002 shall
be delivered to Purchaser or Purchaser's representative.
EVIDENCE OF SATISFACTION. Purchaser shall deliver good deliverable
funds at
Closing, to satisfy
the payment in full of all items listed on the spreadsheet
in the column named "Net Balance Paid In Cash" on Schedule A and the
accompanying
footnotes. Also,
Purchaser shall pay cash or issue shares of
registered common
shares to Seller commencing on or before July 31, 2007
continuing for six (6)
months in six equal
payments of $7,250 as
set forth on
Schedule A and the footnotes attached hereto.
THE
NATURE AND SURVIVAL OF REPRESENTATIONS, COVENANTS AND WARRANTIES.
All
statements and facts
contained in any
memorandum,
certificate,
instrument or
other document
delivered by or on behalf of the parties hereto for information
or reliance
pursuant to this Agreement, shall be deemed representations,
covenants and
warranties
by the parties hereto under this Agreement. All
representations,
covenants and
warranties
of the parties
shall survive the
Closing and all
inspections,
examinations or audits
on behalf of the parties,
shall expire one year following the Closing.
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INDEMNIFICATION.
Indemnification by Seller. The Seller agrees to indemnify and hold
harmless
the Purchaser
and its affiliates against and in respect to all damages (as
hereinafter defined)
up to the amount of the Purchase Price. Damages, as used
herein shall include any claim, salary, wage, action, tax, demand, loss,
cost,
expense, liability
(joint or several),
penalty, and other
damage, including,
without limitation,
counsel fees and other costs and expenses reasonably
incurred in
investigating or
attempting to avoid
same or in opposition to the
imposition thereof, or
in enforcing this indemnity, resulting to the Purchaser
from any intentional inaccurate representation or omission made by
or on behalf
of the Seller in or pursuant to this Agreement, breach of any of the
warranties
made by or on behalf of the Seller in or purs