-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HzW7oDekGJmwXbxwYDPuV989YC150wVADS9QFZbyC2H9Uc5jw303NSOkCXWjZgeg p1UcNmrL9N2vFSt07m0MJQ== 0000822935-02-000014.txt : 20020709 0000822935-02-000014.hdr.sgml : 20020709 20020709164740 ACCESSION NUMBER: 0000822935-02-000014 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020709 ITEM INFORMATION: Changes in control of registrant FILED AS OF DATE: 20020709 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CECS CORP CENTRAL INDEX KEY: 0000822935 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-VIDEO TAPE RENTAL [7841] IRS NUMBER: 521529536 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-17001 FILM NUMBER: 02698986 BUSINESS ADDRESS: STREET 1: 121 VINE STREET STREET 2: #1903 CITY: SEATTLE STATE: WA ZIP: 98121 BUSINESS PHONE: 2064436948 MAIL ADDRESS: STREET 1: 111 QUEEN ANNE AVENUE SUITE 501 CITY: SEATTLE STATE: WA ZIP: 89109 FORMER COMPANY: FORMER CONFORMED NAME: DATAVEND INC DATE OF NAME CHANGE: 19900401 FORMER COMPANY: FORMER CONFORMED NAME: CHOICES ENTERTAINMENT CORP DATE OF NAME CHANGE: 19920703 8-K 1 form8k_11348.txt COC ================================================================================ SECURITIES AND EXCHANGE COMMISSION FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): June 24, 2002 --------------- CECS CORP. ------------------------------------------------------ (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 0-17001 52-1529536 - -------------------------------------------------------------------------------- (STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.) 1925 Century Park East, 5th Floor, Los Angeles, California 90067 - -------------------------------------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 364-4404 --------------------------- 391 Cosgrove Avenue NW, Bainbridge Island, Washington 98110 ------------------------------------------------------------- (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT) ================================================================================ ITEM 1. CHANGES IN CONTROL OF REGISTRANT. On May 2, 2002, Registrant entered into a Common Stock Purchase Agreement (the "Agreement") by and among the Registrant and Dydx Consulting, LLC and MBA & Associates (collectively, the "Purchasers"). The Agreement provides for the sale to the Purchasers of 5,000,000 shares of CECS CORP. at $.001 per share and was deemed to have closed as of June 24, 2002. The Purchasers nominated two members to fill the vacancies on the Registrant's Board of Directors, Menachem Beychok and Valerie A. Broadbent, who were appointed to the Board of Directors as of June 24, 2002. Neither Mr. Beychok nor Ms. Broadbent is the beneficial owner of any securities of the Registrant. In May 2002, Registrant also entered into private sales to two existing shareholders of 5,000,000 shares each of Registrant's common stock at $.001 per share. In July 2002, Tracy M. Shier resigned as President, Secretary and Treasurer, and Valerie A. Broadbent was elected to fill those positions. Mr. Shier remains a director of the Registrant. The basis for the determination that a change of control has occurred is the election of two new directors by Registrant and the resignation of Mr. Shier as the sole officer of the Company. ITEM 7. FINANCIAL STATEMENTS, PRO-FORMA FINANCIAL INFORMATION AND EXHIBITS. (A) FINANCIAL STATEMENTS OF BUSINESS TO BE ACQUIRED. Not applicable. (B) PRO-FORMA FINANCIAL INFORMATION. Not required. (C) EXHIBITS. 1. Form of Common Stock Purchase Agreement dated May 2, 2002. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CECS CORP. By: /s/ Valerie A. Broadbent ------------------------------- Valerie A. Broadbent, President Dated: July 9, 2002. 2 EX-16 3 exh-1_11348.txt STOCK SALE CONTRACT EXHIBIT 1 --------- ================================================================================ COMMON STOCK PURCHASE AGREEMENT BY AND AMONG CECS CORP. (THE "ISSUER") AND ----------------------------------------- (THE "PURCHASERS") ----------------------- DATED AS OF MAY 2, 2002 ----------------------- ================================================================================ TABLE OF CONTENTS Page ---- Article I Certain Definitions.............................. 1 Article II Purchase of Common Stock......................... 3 Article III Representations and Warranties................... 4 Article IV Other Agreements of the Parties.................. 8 Article V Conditions Precedent to Closing.................. 10 Article VI Termination...................................... 12 Article VII Legal Fees....................................... 13 Article VIII Miscellaneous.................................... 14 Schedule 1 List of Purchasers Schedule 2.1(c) Term Sheet Schedule 3.1(a) Subsidiaries Schedule 3.1(c) Capitalization Schedule 3.1(f) Required Consents and Approvals Schedule 3.1(g) Litigation i COMMON STOCK PURCHASE AGREEMENT, dated as of May 2, 2002 (this "Agreement"), by and between CECS CORP., a Delaware corporation (the "Company"), and the purchasers listed on Schedule 1 attached hereto (each individually, the "Purchaser" and collectively, the "Purchasers"). WHEREAS, the Company desires to issue and sell to the Purchaser and the Purchaser desire to acquire certain of the Company's Common Stock, par value $.01, (the "Common Stock"). IN CONSIDERATION of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows: ARTICLE I CERTAIN DEFINITIONS ------------------- Section 1.1. Certain Definitions. As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated: "Affiliate" means, with respect to any Person, any Person that, directly or indirectly, controls, is controlled by or is under common control with such Person. For the purposes of this definition, "control" (including, with correlative meanings, the terms "controlled by" and "under common control with") shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities by contract or otherwise. "Business Day" means any day except Saturday, Sunday and any day which is a legal holiday or a day on which banking institutions in the state of New York are authorized or required by law or other government actions to close, between the hours of 9:30 a.m. and 6:00 p.m. New York Time. "Closing" shall have the meaning set forth in Section 2.1(b). "Closing Date" shall mean the date of Closing, as set forth in Section 2.1(b). "Code" means the Internal Revenue Code of 1986, as amended, and the rules and regulations thereunder as in effect on the date hereof. "Commission" means the Securities and Exchange Commission. "Common Stock" means the Company's common stock, par value $.01 Page 1 "Disclosure Documents" means the disclosure package, including but not limited to the Company's audited financial statements dated December 31, 2000 delivered to the Purchaser in connection with the offering by the Company of the Shares and the Schedules to this Agreement furnished by or on behalf of the Company pursuant to Section 3.1. "Escrow Agent" [RESERVED]. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "CECS" means CECS CORP., with its headquarters address at 391 Cosgrove Avenue NW, Bainbridge Island, Washington 98110; Phone: 206-842-6948. "Lien" means, with respect to any asset, any mortgage, lien, pledge, encumbrance, charge or security interest of any kind in or on such asset or the revenues or income thereon or therefrom. "Material" shall mean having a financial consequence in excess of $50,000. "Material Adverse Effect" shall have the meaning set forth in Section 3.1(a). "NASD" means the National Association of Securities Dealers, Inc. "Per Share Consideration" shall have the meaning set forth in Section 2.1(a). "Person" means an individual or a corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or political subdivision thereof) or other entity of any kind. "Purchase Price" shall have the meaning set forth in Section 2.1(a). "Required Approvals" shall have the meaning set forth in Section 3.1(f). "Securities Act" means the Securities Act of 1933, as amended. "Subsidiaries" shall have the meaning set forth in Section 3.1(a). Page 2 ARTICLE II PURCHASE OF COMMON STOCK ------------------------ Section 2.1. Purchase of Common Stock; Closing (a) Subject to the terms and conditions herein set forth, the Company shall issue and sell to the Purchasers, and the Purchasers shall purchase from the Company on the Closing Date the number of shares of Common Stock listed opposite the Purchaser's name on Schedule 1 (the "Shares") at a price of $.001 per share hereinafter referred to as the "Purchase Price." (b) The closing of the purchase and sale of the Shares (the "Closing") shall take place at the offices of DYDX Group of Funds, LLC 2121 Avenue of the Stars, Suite 1650, Los Angeles CA, immediately following the execution hereof, or at such other time and/or place as the Purchaser and the Company may agree, provided, however, in no case shall the Closing take place later than the fifth day after the last of the conditions listed in Article V is satisfied or waived by the appropriate party. The date of the Closing is hereinafter referred to as the "Closing Date". (c) At the Closing, (i) the Company shall deliver to the Purchaser (A) one or more stock certificates representing the shares of Common Stock purchased hereunder, registered in the name of the Purchaser, (B) all documents, instruments and writings required to have been delivered at or prior to Closing by the Company pursuant to this Agreement, and (ii) the Purchaser shall deliver to the Company (A) the Purchase Price as determined pursuant to this Article I in United States dollars in immediately available funds by wire transfer to an account designated in writing by the Company prior to the Closing and (B) all documents, instruments and writings required to have been delivered at or prior to Closing by the Purchaser pursuant to this Agreement. [THIS SPACE INTENTIONALLY LEFT BLANK] Page 3 ARTICLE III REPRESENTATIONS AND WARRANTIES ------------------------------ 3.1. Representations and Warranties of the Company. The Company hereby represents and warrants to the Purchaser as follows: (a) Organization and Qualification. The Company is a corporation, duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company has no subsidiaries other than as set forth in Schedule 3.1(a) (collectively, the "Subsidiaries"). Each of the Subsidiaries is a corporation, duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, with the full corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted. Each of the Company and the Subsidiaries is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not reasonably be expected to have, individually or in the aggregate, a material adverse effect on (a) the results of operations, assets, prospects, or financial condition of the Company and the Subsidiaries, or (b) the Purchaser's rights under this Agreement and the Shares (a "Material Adverse Effect"). (b) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated hereby and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company. This Agreement has been duly executed and delivered by the Company and constitutes the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application. (c) Capitalization. The authorized, issued and outstanding capital stock of the Company and each of the Subsidiaries is set forth in Schedule 3.1(c). No shares of Common Stock are entitled to preemptive or similar rights. Except as specifically disclosed in the Disclosure Documents, there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or, except as a result of the purchase and sale of the Common Stock hereunder, securities, rights or obligations convertible into or exchangeable for, or giving any person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings, or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock, or Page 4 securities or rights convertible or exchangeable into shares of Common Stock. Neither the Company nor any Subsidiary is in violation of any of the provisions of its respective certificate of incorporation, bylaws or other charter documents. (d) Issuance of Common Stock. The Shares have been duly and validly authorized for issuance, offer and sale pursuant to this Agreement and, when issued and delivered as provided hereunder against payment in accordance with the terms hereof. The Company has an adequate reserve of shares of Common Stock to enable it to perform its obligations under this Agreement. When issued in accordance with the terms hereof, the Shares will be duly authorized, validly issued, fully paid and nonassessable. (e) No Conflicts. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any provision of its certificate of incorporation or bylaws or (ii) subject to obtaining the consents referred to in Section 3.1(f), conflict with, or constitute a default (or an event which 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, any agreement, indenture or instrument to which the Company is a party, or (iii) to the knowledge of the Company result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including Federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected, except in the case of each of clauses (ii) and (iii), such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect. The business of the Company is not being conducted in violation of any law, ordinance or regulation of any governmental authority. (f) Consents and Approvals. Except as specifically set forth in Schedule 3.1(f), neither the Company nor any Subsidiary is required to obtain any consent, waiver, authorization or order of, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of this Agreement, other than the making of the applicable blue-sky filings under state securities laws, and other than, in all cases, where the failure to obtain such consent, waiver, authorization or order, or to give or make such notice or filing, would not materially impair or delay the ability of the Company to effect the Closing and deliver to the Purchaser the Shares free and clear of all Liens (collectively, the "Required Approvals"). (g) Litigation; Proceedings. Except as specifically disclosed in Schedule 3.1(g), there is no action, suit, notice of violation, proceeding or investigation pending or, to the best knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries or any of their respective properties before or by any court, governmental or administrative agency or regulatory authority (Federal, State, county, local or foreign) which (i) relates to or challenges the legality, validity or enforceability of this Agreement (ii) could, individually or in the aggregate, have Page 5 a Material Adverse Effect or (iii) could, individually or in the aggregate, materially impair the ability of the Company to perform fully on a timely basis its obligations under this Agreement. (h) No Default or Violation. Neither the Company nor any Subsidiary (i) is in default under or in violation of any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound, except such conflicts or defaults as do not have a Material Adverse Effect, (ii) is in violation of any order of any court, arbitrator or governmental body, except for such violations as do not have a Material Adverse Effect, or (iii) is in violation of any statute, rule or regulation of any governmental authority which could (individually or in the aggregate) (x) adversely affect the legality, validity or enforceability of this Agreement, (y) have a Material Adverse Effect or (z) adversely impair the Company's ability or obligation to perform fully on a timely basis its obligations under this Agreement. (i) Certain Fees. No fees or commission will be payable by the Company to any investment banker or bank with respect to the consummation of the transactions contemplated hereby. (j) Disclosure Documents. The Disclosure Documents do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. (k) Non-Registered Offering. Neither the Company nor any Person acting on its behalf has taken or will take any action (including, without limitation, any offering of any securities of the Company under circumstances which would require the integration of such offering with the offering of the Common Stock under the Securities Act) which might subject the offering, issuance or sale of the Shares to the registration requirements of Section 5 of the Securities Act. Section 3.2. Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants to the Company as follows: (a) Organization; Authority. The Purchaser is a corporation duly and validly existing and in good standing under the laws of the jurisdiction of its incorporation. The Purchaser has the requisite power and authority to enter into and to consummate the transactions contemplated hereby and otherwise to carry out its obligations hereunder and thereunder. The purchase of the Common Stock by the Purchaser hereunder has been duly authorized by all necessary action on the part of the Purchaser. Each of this Agreement has been duly executed and delivered by the Purchaser or on its behalf and constitutes the valid and legally binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights generally and to general principles of equity. (b) Investment Intent. The Purchaser is acquiring the Shares for its own account for investment purposes only and not with a view to or for distributing or reselling such Common Page 6 Stock or Shares or any part thereof or interest therein, without prejudice, however, to the Purchaser's right, subject to the provisions of this Agreement, at all times to sell or otherwise dispose of all or any part of such Shares in compliance with applicable State securities laws and under an exemption from registration under the Securities Act. (c) Experience of Purchaser. The Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Common Stock, or has so evaluated the merits and risks of such investment. (d) Ability of Purchaser to Bear Risk of Investment. The Purchaser is able to bear the economic risk of an investment in the Common Stock and, at the present time, is able to afford a complete loss of such investment. (e) Prohibited Transactions. The Common Stock to be purchased by the Purchaser is not being acquired, directly or indirectly, with the assets of any "employee benefit plan", within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended. (f) Access to Information. The Purchaser acknowledges receipt of the Disclosure Documents and further acknowledges that it has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Common Stock and the merits and risks of investing in the Shares; (ii) access to information about the Company and the Company's financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment in the Common Stock; and (iii) the opportunity to obtain such additional information which the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the Common Stock and to verify the accuracy and completeness of the information contained in the Disclosure Documents. (g) Reliance. The Purchaser understands and acknowledges that (i) the Common Stock is being offered and sold, and the Shares are being offered, to it without registration under the Securities Act in a private placement that is exempt from the registration provisions of the Securities Act and (ii) the availability of such exemption, depends in part on, and that the Company will rely upon the accuracy and truthfulness of, the foregoing representations and the Purchaser hereby consents to such reliance. The Company acknowledges and agrees that the Purchaser makes no representation or warranty with respect to the transactions contemplated hereby other than those specifically set forth in Article III herein. Page 7 ARTICLE IV OTHER AGREEMENTS OF THE PARTIES ------------------------------- Section 4.1. Manner of Offering. The Common Stock is being issued pursuant to Section 4 (2) of the Securities Act of 1933. The Shares will carry a restrictive legend. The Company will use its best efforts to insure that no actions are taken that would jeopardize the availability of the exemption from registration for the Common Stock and the Shares. Section 4.2. Furnishing of Information. As long as the Purchaser owns Shares, the Company will promptly furnish to it all annual and quarterly reports required by Section 13(a) or 15(d) of the Exchange Act. Section 4.3. Notice of Certain Events. The Company shall (i) advise the Purchaser promptly after obtaining knowledge thereof, and, if requested by the Purchaser, confirm such advice in writing, of (A) the issuance by any state securities commission of any stop order suspending the qualification or exemption from qualification of the Common Stock for offering or sale in any jurisdiction, or the initiation of any proceeding for such purpose by any state securities commission or other regulatory authority, or (B) any event that makes any statement of a material fact made in the Disclosure Documents untrue or that requires the making of any additions to or changes in the Disclosure Documents in order to make the statements therein, in the light of the circumstances under which they are made, not misleading, (ii) use its best efforts to prevent the issuance of any stop order or order suspending the qualification or exemption from qualification of the Common Stock under any state securities or Blue Sky laws, and (iii) if at any time any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Common Stock under any such laws, use its best efforts to obtain the withdrawal or lifting of such order at the earliest possible time. Section 4.4. Copies and Use of Disclosure Documents. The Company shall furnish the Purchaser, without charge, as many copies of the Disclosure Documents, and any amendments or supplements thereto, as the Purchaser may reasonably request. The Company consents to the use of the Disclosure Documents, and any amendments and supplements thereto, by the Purchaser in connection with resale of the Shares other than pursuant to an effective registration statement. Section 4.5. Modification to Disclosure Documents. If any event shall occur as a result of which, in the reasonable judgment of the Company or the Purchaser, it becomes necessary or advisable to amend or supplement the Disclosure Documents in order to make the statements therein, in the light of the circumstances at the time the Disclosure Documents were delivered to the Purchaser, not misleading, or if it is necessary to amend or supplement the Disclosure Documents to comply with applicable law, the Company shall promptly prepare an appropriate amendment or supplement to the Disclosure Documents (in form and substance reasonably satisfactory to both the Purchaser and Company) so that (i) as so amended or supplemented the Disclosure Documents will not include an untrue statement of material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time it is delivered to Purchaser, not misleading and (ii) the Disclosure Documents will comply with applicable law. Page 8 Section 4.6. Blue Sky Laws. The Company shall cooperate with the Purchaser in connection with the qualification of the Shares under the securities or Blue Sky laws of such jurisdictions as the Purchaser may request and to continue such qualification at all times through the fifth anniversary of the Closing Date; provided, however, that neither the Company nor its Subsidiaries shall be required in connection therewith to qualify as a foreign corporation where they are not now so qualified. Section 4.7. Integration. The Company shall not and shall use its best efforts to ensure that no Affiliate shall sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Common Stock in a manner that would require the registration under the Securities Act of the sale of the Shares to the Purchaser. Section 4.8. Furnishing of Rule 144A Materials. The Company shall, for so long as the Purchaser holds any of the Shares and during any period in which it is not subject to Section 13 or 15(d) of the Exchange Act, make available to any registered holder of Shares in connection with any sale thereof and any prospective purchaser of such Shares from such Person, the following information in accordance with Rule 144A(d)(4) under the Securities Act: a brief statement of the nature of the business of the Company and the products and services it offers and the Company's most recent audited balance sheet and profit and loss and retained earnings statements, and similar audited financial statements for such part of the two preceding fiscal years as the Company has been in operation. Section 4.9. Solicitation Materials. The Company shall not (i) distribute any offering materials in connection with the offering and sale of the Shares other than the Disclosure Documents and any amendments and supplements thereto prepared in compliance herewith or (ii) solicit any offer to buy or sell the Common Stock by means of any form of general solicitation or advertising. Section 4.10. Subsequent Financial Statements. The Company shall furnish to the Purchaser, promptly after they are filed with the Commission, a copy of all financial statements for any period subsequent to the period covered by the financial statements included in the Disclosure Documents. Section 4.11. Prohibition on Certain Actions. From the date hereof through the Closing Date, the Company shall not and shall cause the Subsidiaries not to, without the consent of the Purchaser, (i) amend its Certificate of Incorporation, bylaws or other charter documents so as to adversely affect any rights of the Purchaser; (ii) split, combine or reclassify its outstanding capital stock; (iii) declare, authorize, set aside or pay any dividend or other distribution with respect to the Common Stock; (iv) redeem, repurchase or offer to repurchase or otherwise acquire shares of its Common Stock; or (v) enter into any agreement with respect to any of the foregoing. Page 9 Section 4.12. Listing of Shares. The Company shall use its best efforts to maintain the quote for its common stock on the NASD OTC Electronic Bulletin Board (or listing on a national securities exchange or market on which the Common Stock is listed) and shall provide to the Purchaser evidence of such listing. Section 4.13. [RESERVED] Section 4.14. Registration of Underlying Shares. So long as any Shares remain restricted and unregistered, the Company agrees not to file a registration statement with the Commission, without first having registered the Shares for resale with the SEC and for resale in such states of the United States as the Holders thereof shall reasonably request. If the Company shall propose to file with the SEC any registration statement, the Company agrees to give written notification of such to the Holders of the Shares at least two weeks prior to such filing or taking of the proposed action. If any Shares are still held by Purchaser at the end of such notice period, the Company agrees to file a registration statement on Form S-1 or SB-2, or such other form of registration statement in which the Shares may be included, and to include in such registration statement the Shares held by Purchaser so as to permit the public resale thereof. All costs and expenses of registration shall be borne by the Company. Section 4.15. Escrow. [RESERVED] ARTICLE V CONDITIONS PRECEDENT TO CLOSING ------------------------------- Section 5.1. Conditions Precedent to Obligations of the Purchaser. The obligation of the Purchaser to purchase the Shares is subject to the satisfaction or waiver by the Purchaser, at or prior to the Closing, of each of the following conditions: (a) Legal Opinion. The Purchaser shall have received the legal opinion, addressed to it and dated the Closing Date of the Counsel for the Company. Such legal opinion shall address the Company's authority to enter into this Agreement and the availability of an exemption from Section 5 of the Securities Act for the offer and sale of the Common Stock; (b) Accuracy of the Company's Representations and Warranties. The representations and warranties of the Company contained herein shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except that representations and warranties that are made as of a specific date need be true in all material respects only as of such date); Page 10 (c) Performance by the Company. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing; (d) No Material Adverse Effect. Since the date of the financial statements included in the Company's Disclosure Documents, no event that had a Material Adverse Effect shall have occurred this is not disclosed in the Disclosure Documents; (e) No Prohibitions. The purchase of and payment for the Shares hereunder (i) shall not be prohibited or enjoined (temporarily or permanently) by any applicable law or governmental regulation and (ii) shall not subject the Purchaser to any penalty, or in its reasonable judgment, other onerous condition under or pursuant to any applicable law or governmental regulation that would materially reduce the benefits to the Purchaser of the purchase of the Shares (provided, however, that such regulation, law or onerous condition was not in effect in such form at the date of this Agreement); (f) Company Certificates. The Purchaser shall have received a certificate, dated the Closing Date, signed by the Secretary or an Assistant Secretary of the Company and certifying (i) that attached thereto is a true, correct and complete copy of (A) the Company's Certificate of Incorporation, as amended to the date thereof, (B) the Company's By-Laws, as amended to the date thereof, (C) resolutions duly adopted by the Board of Directors of the Company authorizing the execution and delivery of this Agreement, the issuance and sale of the Common Stock, and (D) a certificate of good standing from the Secretary of State of Nevada and (ii) the incumbency of officers executing this Agreement; (g) No Suspensions of Trading in Common Stock. Trading in the Common Stock shall not have been suspended by the Commission or the NASD or other exchange or market on which the Common Stock is listed or quoted (except for any suspension of trading of limited duration solely to permit dissemination of material information regarding the Company); (h) Required Approvals. All Required Approvals shall have been obtained; (i) Delivery of Certificates. The Company shall have delivered to the Escrow Agent the certificate(s) representing the Shares , registered in the name of the Purchaser, each in form satisfactory to the Purchaser; and Section 5.2. Conditions Precedent to Obligations of the Company. The obligation of the Company to issue and sell the Shares hereunder is subject to the satisfaction or waiver by the Company, at or to the Closing, of each of the following conditions: (a) Accuracy of the Purchaser's Representations and Warranties. The representations and warranties of the Purchaser shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except that representations and warranties that are made as of a specific date need be true in all material respects only as of such date); Page 11 (b) Performance by the Purchaser. The Purchaser shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by it at or prior to the Closing; and (c) No Prohibitions. The sale of the Common Stock hereunder (i) shall not be prohibited or enjoined (temporarily or permanently) by any applicable law or governmental regulation and (ii) shall not subject the Company to any penalty, or in its reasonable judgment, any other onerous condition under or pursuant to any applicable law or governmental regulation that would materially reduce the benefits to the Company of the sale of Common Stock to the Purchaser (provided, however, that such regulation, law or onerous condition was not in effect in such form at the date of this Agreement). ARTICLE VI TERMINATION ----------- Section 6.1. Termination by Mutual Consent. This Agreement may be terminated at any time prior to Closing by the mutual consent of the Company and the Purchaser. Section 6.2. Termination by the Company or the Purchaser. This Agreement may be terminated prior to Closing by either the Company or the Purchaser, by giving written notice of such termination to the other party, if: (a) the Closing shall not have occurred by June 15, 2002; provided that the terminating party is not then in material breach of its obligations under this Agreement in any manner that shall have caused the failure referred to in this paragraph (a); (b) there shall be in effect any statute, rule, law or regulation that prohibits the consummation of the Closing or if the consummation of the Closing would violate any non-appealable final judgment, order, decree, ruling or injunction of any court of or governmental authority having competent jurisdiction; or (c) there shall have been an amendment to the Securities Act or an interpretive release promulgated or issued thereunder, which, in the reasonable judgment of the terminating party, would materially adversely affect the transactions contemplated hereby. Section 6.3. Termination by the Company. This Agreement may be terminated prior to Closing by the Company, by giving written notice of such termination to the Purchaser, if the Purchaser has materially breached any representation, warranty, covenant or agreement contained in this Agreement and such breach is not cured within five business days following receipt by the Purchaser of notice of such breach. Page 12 Section 6.4. Termination by the Purchaser. This Agreement may be terminated prior to Closing by the Purchaser, by giving written notice of such termination to the Company, if: (a) the Company has breached any representation, warranty, covenant or agreement contained in this Agreement and such breach is not cured within five business days following receipt by the Company of notice of such breach; (b) there has occurred an event since the date of the financial statements included in the Company's disclosure documents which could reasonably be expected to have a Material Adverse Effect and which is not disclosed in the Disclosure Documents; or (c) trading in the Common Stock has been suspended by the Commission or the NASD or other exchange or market on which the Common Stock is listed or quoted (except for any suspension of trading of limited duration solely to permit dissemination of material information regarding the Company). ARTICLE VII LEGAL FEES ---------- In the event any Party commences a legal action to enforce its rights under this Agreement, the non-prevailing party shall pay all reasonable costs and expenses (including reasonable attorney's fees) incurred in enforcing such rights. [THIS SPACE INTENTIONALLY LEFT BLANK] Page 13 ARTICLE VIII MISCELLANEOUS ------------- Section 8.1. Fees and Expenses. Except as set forth above, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay the fees of the Escrow Agent and all stamp and other taxes and duties levied in connection with the issuance of the Common Stock pursuant hereto. The Purchaser shall be responsible for its own tax liability that may arise as a result of the investment hereunder or the transactions contemplated by this Agreement. Whether or not the transactions contemplated by this Agreement are consummated or this Agreement is terminated, the Company shall pay (i) all costs, expenses, fees and all taxes incident to and in connection with: (A) the preparation, printing and distribution of the Disclosure Documents and all amendments and supplements thereto (including, without limitation, financial statements and exhibits), and all preliminary and final Blue Sky memoranda and all other agreements, memoranda, correspondence and other documents prepared and delivered in connection herewith (B) the issuance and delivery of the Shares, (C) the qualification of the Shares for offer and sale under the securities or Blue Sky laws of the several states (including, without limitation, the fees and disbursements of the Purchasers' counsel relating to such registration or qualification), (D) furnishing such copies of the Disclosure Documents and all amendments and supplements thereto, as may reasonably be requested for use in connection, with resale of the Shares, and (E) the preparation of certificates for the Shares (including, without limitation, printing and engraving thereof), (ii) all fees and expenses of the counsel and accountants of the Company and (iii) all expenses and listing fees on Securities Exchanges, if any. Section 8.2. Entire Agreement; Amendments. This Agreement, together with the Exhibits, Annexes and Schedules hereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters. Section 8.3. Notices. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been made upon facsimile (with transmission confirmation report) at the number designated below (if delivered on a Business Day during normal business hours where such notice is to be received), or the first Business Day following such delivery (if delivered other than on a Business Day during normal business hours where such notice is to be received) whichever shall first occur. The addresses for such communications shall be: If to the Company: Tracy M. Shier CECS CORP. 391 Cosgrove Avenue NW Bainbridge Island, WA 98110 Tel: 206-842-6948 Page 14 If to the Purchasers: See Schedule 1 - Schedule of Purchasers (attached hereto) With copies to: Aaron Grunfeld, Esq. Resch Polster Alpert & Berger 10290 Santa Monica Boulevard 4th Floor Los Angeles, CA 90025 Tel: 310-788-7577 or such other address as may be designated in writing hereafter, in the same manner, by such person. Section 8.4. Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by both the Company and the Purchaser, or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. Section 8.5. Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. Section 8.6. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. Neither the Company nor the Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the other. The assignment by a party of this Agreement or any rights hereunder shall not affect the obligations of such party under this Agreement. Section 8.7. No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person. Section 8.8. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Washington without regard to the principles of conflicts of law thereof. Any action to enforce the terms of this Agreement or any of its exhibits shall be exclusively brought in the state and/or federal courts in the King County of the state of Washington. Section 8.9. Survival. The representations and warranties of the Company and the Purchaser contained in Article III and the agreements and covenants of the parties contained in Article IV and this Article VIII shall survive the Closing (or any earlier termination of this Agreement). Page 15 Section 8.10. Counterpart Signatures. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. Section 8.11. Publicity. The Company and the Purchaser shall consult with each other in issuing any press releases or otherwise making public statements with respect to the transactions contemplated hereby and neither party shall issue any such press release or otherwise make any such public statement without the prior written consent of the other, which consent shall not be unreasonably withheld or delayed. Section 8.12. Severability. In case any one or more of the provisions of this Agreement shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affecting or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision which shall be a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement. Section 8.13. Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Purchaser will be entitled to specific performance of the obligations of the Company under this Agreement and the Company will be entitled to specific performance of the obligations of the Purchaser hereunder. Each of the Company and the Purchaser agrees that monetary damages would not be adequate compensation for any loss incurred by reason of any breach of its obligations described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate. [SIGNATURE PAGE FOLLOWS] [THIS SPACE INTENTIONALLY LEFT BLANK] Page 16 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first indicated above. Company: CECS CORP. By: _____________________________ Tracy M. Shier Title: President Purchasers: _________________________________ By: _____________________________ Title: __________________________ _________________________________ By: _____________________________ Title: _________________________ [THIS SPACE INTENTIONALLY LEFT BLANK] Page 17 SCHEDULE 1 PURCHASER FULL AMOUNT OF NUMBER OF SHARES NAME & ADDRESS PURCHASE PRICE PURCHASED - -------------- -------------- --------- ________________________________________________________________________________ Page 18 -----END PRIVACY-ENHANCED MESSAGE-----