-----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, Bhr4W7g2BbiPvZMqrhK1vdQJPn9MIK83PvGsUpO1kZEJjp0a663UG+MyEHpDfw1o 7jSp7xK7naqKyNN0gld78A== 0001144204-05-031716.txt : 20051014 0001144204-05-031716.hdr.sgml : 20051014 20051014160119 ACCESSION NUMBER: 0001144204-05-031716 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20051007 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Changes in Control of Registrant ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20051014 DATE AS OF CHANGE: 20051014 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIRILIUM HOLDINGS INC CENTRAL INDEX KEY: 0000847777 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 521507455 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-18184 FILM NUMBER: 051139008 BUSINESS ADDRESS: STREET 1: 625 NORTH FLAGLER DRIVE STREET 2: NONE CITY: WEST PALM BEACH STATE: FL ZIP: 33401 BUSINESS PHONE: 561-491-0935 MAIL ADDRESS: STREET 1: 625 NORTH FLAGLER DRIVE STREET 2: NONE CITY: WEST PALM BEACH STATE: FL ZIP: 33401 FORMER COMPANY: FORMER CONFORMED NAME: SK TECHNOLOGIES CORP DATE OF NAME CHANGE: 19920703 8-K 1 v027150_8k.txt U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: October 7, 2005 Cirilium Holdings Inc. (Exact name of issuer as specified in its charter) Delaware 000-18184 52-1507455 (State or Other Jurisdiction of (Commission File (IRS Employer Incorporation or Organization) Number) Identification No.) 625 N. Flagler Drive, Suite 509, West Palm Beach, FL 33401 (Address and Zip Code of Principal Executive Offices) (561) 491-0935 (Registrant's Telephone Number) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01 Entry into a Material Definitive Agreement Item 5.01 Changes in Control of Registrant. On October 7, 2005, we entered into a share exchange agreement with Media Magic, Inc. to acquire all of the outstanding shares of Orangebox Entertainment, Inc., a wholly owned subsidiary of Media Magic which is engaged in business as a production and post-production services company in Burbank, California. Pursuant to the terms of the agreement, we will issue 158,191,589 restricted, unregistered shares of our common stock to Media Magic in exchange for all of the issued and outstanding shares of Orangebox held by Media Magic. Upon closing of the exchange transaction in accordance with the agreement, Orangebox will become our wholly owned subsidiary and Media Magic, which will then own approximately 80% of our outstanding capital stock, will become our controlling shareholder. We have also entered into a registration rights agreement with Media Magic with regard to the 158,191,589 shares of our common stock that it will be receiving upon completion of the share exchange. Pursuant to that registration rights agreement, in the event that Media Magic decides to distribute those shares to its shareholders, Media Magic will have the right, exercisable within one year of the closing date of the exchange, to demand that we register the shares under the Securities Act, for distribution by Media Magic to its shareholders and for resale by them. Item 9.01 Financial Statements and Exhibits The following financial statements, pro forma financial information and exhibits have been filed as part of this Report: (a) Financial Statements -- none (b) Pro forma financial information -- none (c) Exhibits Number Description ------ ----------- 4.5 Registration Rights Agreement between Cirilium Holdings, Inc. and Media Magic, Inc. dated October 7, 2005. 10.35 Share Acquisition and Exchange Agreement between Cirilium Holdings, Inc., Media Magic, Inc. and Orangebox Entertainment, Inc. dated October 7, 2005. 2 Signature In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Cirilium Holdings, Inc. Dated: October 14, 2005 By: /s/ Matthew J. Cohen -------------------------------------------- Matthew J. Cohen, Chief Executive Officer 3 Exhibit Index 4.5 Registration Rights Agreement between Cirilium Holdings, Inc. and Media Magic, Inc. dated October 7, 2005. 10.35 Share Acquisition and Exchange Agreement between Cirilium Holdings, Inc., Media Magic, Inc. and Orangebox Entertainment, Inc. dated October 7, 2005. 4 EX-4.5 2 v027150_ex4-5.txt Exhibit 4.5 REGISTRATION RIGHTS AGREEMENT dated as of OCTOBER 7, 2005 between CIRILIUM HOLDINGS, INC. and MEDIA MAGIC, INC. 1. Definitions and Usage....................................................1 1.1 Definitions........................................................1 1.2 Usage..............................................................2 2. Demand Registration......................................................3 3. Registration Procedures..................................................4 4. Expenses of Registration.................................................6 5. Indemnification; Contribution............................................6 6. Covenants of the Company.................................................9 7. Amendment, Modification and Waivers; Further Assurances.................10 8. Assignment; Benefit.....................................................10 9. Miscellaneous...........................................................11 9.1 Governing Law.....................................................11 9.2 Notices...........................................................11 9.3 Entire Agreement; Integration.....................................11 9.4 Injunctive Relief.................................................12 9.5 Section Headings..................................................12 9.6 Counterparts......................................................12 9.7 Severability......................................................12 9.8 Filing............................................................12 9.9 Termination.......................................................12 9.10 Attorneys' Fees...................................................12 9.11 No Third Party Beneficiaries......................................12 REGISTRATION RIGHTS AGREEMENT Registration Rights Agreement (this "Agreement") dated as of October 7, 2005 between Cirilium Holdings, Inc., a Delaware corporation (the "Company") and Media Magic, Inc., a Florida corporation ("Media Magic"). RECITALS WHEREAS, pursuant to that certain Share Acquisition and Exchange Agreement of even date herewith, by and among the Company, Media Magic and Orangebox Entertainment, Inc. ("Share Exchange Agreement"), Media Magic acquired 158,191,589 shares of Common Stock (the "Media Magic Shares") from the Company and agreed to provide certain rights to Media Magic to cause the Media Magic Shares to be registered pursuant to the Securities Act; and WHEREAS, the parties hereto hereby desire to set forth Media Magic's rights and the Company's obligations to cause the registration of the Media Magic Shares pursuant to the Securities Act; NOW, THEREFORE, in consideration of the consummation of the transactions contemplated in and by the Share Exchange Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Definitions and Usage. As used in this Agreement: 1.1 Definitions. "Board" shall mean the Board of Directors of the Company. "Commission" shall mean the Securities and Exchange Commission. "Common Stock" shall mean (i) the common stock, $.0001 par value per share, of the Company, and (ii) shares of capital stock of the Company issued by the Company in respect of or in exchange for shares of such common stock in connection with any stock dividend or distribution, stock split-up, recapitalization, recombination or exchange by the Company generally of shares of such common stock. "Continuously Effective", with respect to a specified registration statement, shall mean that it shall not cease to be effective and available for Transfers of Media Magic Shares thereunder for longer than either (i) any ten (10) consecutive business days, or (ii) an aggregate of fifteen (15) business days during the period specified in the relevant provision of this Agreement. "Demand Registration" shall have the meaning set forth in Section 2.1(i). "Exchange Act" shall mean the Securities Exchange Act of 1934. 1 "Media Magic Shareholders" shall mean the shareholders of Media Magic to whom the Media Magic Shares shall be distributed pursuant to a Demand Registration. "Media Magic Shares" shall have the meaning set forth in the Preamble. "Person" shall mean any individual, corporation, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization or government or other agency or political subdivision thereof. "Register", "registered", and "registration" shall refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act, and the declaration or ordering by the Commission of effectiveness of such registration statement or document. "Registration Expenses" shall have the meaning set forth in Section 6.1. "Securities Act" shall mean the Securities Act of 1933. "Share Exchange Agreement" shall have the meaning set forth in the Recitals. "Transfer" shall mean and include the act of selling, giving, transferring, creating a trust (voting or otherwise), assigning or otherwise disposing of (other than pledging, hypothecating or otherwise transferring as security) (and correlative words shall have correlative meanings); provided however, that any transfer or other disposition upon foreclosure or other exercise of remedies of a secured creditor after an event of default under or with respect to a pledge, hypothecation or other transfer as security shall not constitute a "Transfer". "Violation" shall have the meaning set forth in Section 7.1. 1.2 Usage. (i) References to a Person are also references to its assigns and successors in interest (by means of merger, consolidation or sale of all or substantially all the assets of such Person or otherwise, as the case may be). (ii) References to a document are to it as amended, waived and otherwise modified from time to time and references to a statute or other governmental rule are to it as amended and otherwise modified from time to time (and references to any provision thereof shall include references to any successor provision). (iii) References to Sections or to Schedules or Exhibits are to sections hereof or schedules or exhibits hereto, unless the context otherwise requires. (iv) The definitions set forth herein are equally applicable both to the singular and plural forms and the feminine, masculine and neuter forms of the terms defined. (v) The term "including" and correlative terms shall be deemed to be followed by "without limitation" whether or not followed by such words or words of like import. 2 (vi) The term "hereof" and similar terms refer to this Agreement as a whole. (vii) The "date of" any notice or request given pursuant to this Agreement shall be determined in accordance with Section 13. 2. Demand Registration. 2.1 At any time during the one year period commencing on the date of this Agreement, if Media Magic shall advise the Company in writing that Media Magic intends to distribute all of the Media Magic Shares to its shareholders, and in such writing Media Magic requests the Company to register all of the Media Magic Shares for distribution to Media Magic's shareholders and for resale by those shareholders to the public, the Company shall cause to be filed with the Commission a registration statement meeting the requirements of the Securities Act (a "Demand Registration"). Any request made pursuant to this Section 2.1 shall be addressed to the attention of the Secretary of the Company and shall specify the intended methods of disposition of the Media Magic Shares, and that the request is for a Demand Registration pursuant to this Section 2.1. 2.2 The Company shall be entitled to postpone for up to 60 days the filing of any Demand Registration statement otherwise required to be prepared and filed pursuant to this Section 2.1, if the Board determines, in its good faith reasonable judgment (with the concurrence of the managing underwriter, if any), that such registration and the Transfer of Media Magic Shares contemplated thereby would materially interfere with, or require premature disclosure of, any financing, acquisition or reorganization involving the Company or any of its wholly owned subsidiaries and the Company promptly gives Media Magic notice of such determination. 2.3 Following receipt of a request for a Demand Registration, the Company shall: (a) File a registration statement on the appropriate form with the Commission as promptly as practicable, and shall use the Company's best efforts to have the registration declared effective under the Securities Act as soon as reasonably practicable, in each instance giving due regard to the need to prepare current financial statements, conduct due diligence and complete other actions that are reasonably necessary to effect a registered public offering. (b) Use the Company's best efforts to keep the relevant registration statement Continuously Effective for up to two years or until such earlier date as of which all the Media Magic Shares under the Demand Registration statement shall have been disposed of in the manner described in the Registration Statement. Notwithstanding the foregoing, if for any reason the effectiveness of a registration pursuant to this Section 2 is suspended or, in the case of a Demand Registration, postponed as permitted by Section 2.2, the foregoing period shall be extended by the aggregate number of days of such suspension or postponement. 2.4 The Company shall be obligated to effect not more than one Demand Registration. For purposes of the preceding sentence, registration shall not be deemed to have been effected (a) unless a registration statement with respect thereto has become effective, or (b) if after such registration statement has become effective, such registration or the related offer, sale or distribution of Media Magic Shares thereunder is interfered with by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court for any reason not attributable to Media Magic and/or the Media Magic Shareholders and such interference is not thereafter eliminated. If the Company shall have complied with its obligations under this Agreement, a right to demand a registration pursuant to this Section 2 shall be deemed to have been satisfied upon the earlier of (x) the date as of which all of the Media Magic Shares included therein shall have been Transferred by the Media Magic Shareholders pursuant to the Registration Statement, and (y) the date as of which such Demand Registration shall have been Continuously Effective for a period of two years. 3 2.5 A registration pursuant to this Section 2 shall be on such appropriate registration form of the Commission as shall (a) be selected by the Company and be reasonably acceptable to the Media Magic, and (b) permit the disposition of the Media Magic Shares in accordance with the intended method or methods of disposition specified in the request pursuant to Section 2.1. 3. Registration Procedures. Whenever required under Section 2 to effect the registration of any Media Magic Shares, the Company shall, as expeditiously as practicable: 3.1 Prepare and file with the Commission a registration statement with respect to such Media Magic Shares and use the Company's best efforts to cause such registration statement to become effective; provided, however, that before filing a registration statement or prospectus or any amendments or supplements thereto, including documents incorporated by reference after the initial filing of the registration statement and prior to effectiveness thereof, the Company shall furnish to Media Magic's designated counsel copies of all such documents in the form substantially as proposed to be filed with the Commission at least four (4) business days prior to filing for review and comment by such counsel. 3.2 Prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act and rules thereunder with respect to the disposition of all securities covered by such registration statement. Subject to the Securities Act and the rules thereunder, the Company shall amend the registration statement or supplement the prospectus so that it will remain current and in compliance with the requirements of the Securities Act for two years after its effective date, and if during such period any event or development occurs as a result of which the registration statement or prospectus contains a misstatement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading, the Company shall promptly notify Media Magic, amend the registration statement or supplement the prospectus so that each will thereafter comply with the Securities Act and furnish to Media Magic and the Media Magic Shareholders such amended or supplemented prospectus, which Media Magic and the Media Magic Shareholders shall thereafter use in the Transfer of Media Magic Shares covered by such registration statement. Pending such amendment or supplement Media Magic shall cause each Media Magic Shareholder to cease making offers or Transfers of Media Magic Shares pursuant to the prior prospectus. In the event that any Media Magic Shares included in a registration statement subject to, or required by, this Agreement remain unsold at the end of the period during which the Company is obligated to use its best efforts to maintain the effectiveness of such registration statement, the Company may file a post-effective amendment to the registration statement for the purpose of removing such Securities from registered status. 4 3.3 Furnish to each Media Magic Shareholder, without charge, such numbers of copies of the registration statement, any pre-effective or post-effective amendment thereto, the prospectus, including each preliminary prospectus and any amendments or supplements thereto, in each case in conformity with the requirements of the Securities Act and the rules thereunder. 3.4 Use the Company's best efforts (a) to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such states or jurisdictions as shall be reasonably requested by Media Magic, and (b) to obtain the withdrawal of any order suspending the effectiveness of a registration statement, or the lifting of any suspension of the qualification (or exemption from qualification) of the offer and transfer of any of the Media Magic Shares in any jurisdiction, at the earliest possible moment; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions. 3.5 Promptly notify Media Magic and each Media Magic Shareholder (to the extent reasonably possible) of any stop order issued or threatened to be issued by the Commission in connection therewith (and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered). 3.6 Make available for inspection by Media Magic, all financial and other information as shall be reasonably requested by them, and provide Media Magic and its designated counsel the opportunity to discuss the business affairs of the Company with its principal executives and independent registered public accountants who have audited the financial statements included in such registration statement, in each case all as necessary to enable them to exercise their due diligence responsibility under the Securities Act; provided, however, that information that the Company determines, in good faith, to be confidential and which the Company advises such Person in writing is confidential shall not be disclosed unless such Person signs a confidentiality agreement reasonably satisfactory to the Company. 3.7 Use the Company's best efforts to obtain a so-called "comfort letter" from its independent registered public accountants, and legal opinions of counsel to the Company addressed to Media magic and the Media Magic Shareholders, in customary form and covering such matters of the type customarily covered by such letters, and in a form that shall be reasonably satisfactory to Media Magic. The Company shall furnish to Media Magic or any Media Magic Shareholder a signed counterpart of any such comfort letter or legal opinion. Delivery of any such opinion or comfort letter shall be subject to the recipient furnishing such written representations or acknowledgements as are customarily provided by selling shareholders who receive such comfort letters or opinions. 3.8 Provide and cause to be maintained a transfer agent and registrar for all Media Magic Shares covered by such registration statement from and after a date not later than the effective date of such registration statement. 3.9 Use all reasonable efforts to cause the Media Magic Shares covered by such registration statement (a) if the Common Stock is then listed on a securities exchange or included for quotation in a recognized trading market, to continue to be so listed or included for a reasonable period of time after the offering, and (b) to be registered with or approved by such other United States or state governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the Media Magic Shareholders to consummate the disposition of such Media Magic Shares. 5 3.10 If necessary, to use the Company's reasonable efforts to provide a CUSIP number for the Media Magic Shares prior to the effective date of the first registration statement including Media Magic Shares. 3.11 Take such other actions as are reasonably required in order to expedite or facilitate the disposition of Media Magic Shares included in each such registration. 3.12 Media Magic's Obligations. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Agreement with respect to the Media Magic Shares of any Media Magic Shareholder that Media Magic shall furnish to the Company such information regarding the Media Magic Shareholders, and the intended method of disposition of the Media Magic Shares as shall be required to effect the registration of such Media Magic Shareholders' Media Magic Shares, and to cooperate with the Company in preparing such registration. 4. Expenses of Registration. Expenses in connection with registrations pursuant to this Agreement shall be allocated and paid as follows: 4.1 The Company shall bear and pay all expenses incurred in connection with the Demand Registration of Media Magic Shares, including all registration, filing and National Association of Securities Dealers, Inc. fees, all fees and expenses of complying with securities or blue sky laws, all word processing, duplicating and printing expenses, messenger and delivery expenses, the reasonable fees and disbursements of counsel for the Company, and of the Company's independent registered public accountants, including the expenses of "cold comfort" letters required by or incident to such performance and compliance (the "Registration Expenses"), but excluding underwriting discounts and commissions relating to Media Magic Shares (which shall be paid by the Media Magic Shareholders); provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2 if the registration is subsequently withdrawn at the request of Media Magic (in which case Media Magic shall bear such expense). 4.2 Any failure of the Company to pay any Registration Expenses as required by this Section 4 shall not relieve the Company of its obligations under this Agreement. 5. Indemnification; Contribution. If any Media Magic Shares are included in a registration statement under this Agreement: 5.1 To the extent permitted by applicable law, the Company shall indemnify and hold harmless Media Magic and each Media Magic Shareholder, against any and all losses, claims, damages, liabilities and expenses (joint or several), including attorneys' fees and disbursements and expenses of investigation, incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation, or to which any of the foregoing Persons may become subject under the Securities Act, the Exchange Act or other federal or state laws, insofar as such losses, claims, damages, liabilities and expenses arise out of or are based upon any of the following statements, omissions or violations (collectively a "Violation"): 6 (i) Any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein, or any amendments or supplements thereto; (ii) The omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or (iii) Any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any applicable state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any applicable state securities law; provided, however, that the indemnification required by this Section 5.1 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or expense if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or expense to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished to the Company by the indemnified party expressly for use in connection with such registration. The Company shall also indemnify underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, their officers, directors, agents and employees and each person who controls such persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) to the same extent as provided above with respect to the indemnification of the Media Magic Shareholders. 5.2 To the extent permitted by applicable law, Media Magic and each Media Magic Shareholder shall indemnify and hold harmless the Company, each of its directors, each of its officers who shall have signed the registration statement, each Person, if any, who controls the Company within the meaning of the Securities Act, against any and all losses, claims, damages, liabilities and expenses (joint and several), including attorneys' fees and disbursements and expenses of investigation, incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation, or to which any of the foregoing Persons may otherwise become subject under the Securities Act, the Exchange Act or other federal or state laws, insofar as such losses, claims, damages, liabilities and expenses arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Selling Holder expressly for use in the registration statement; provided, however, that (x) the indemnification required by this Section 5.2 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or expense if settlement is effected without the consent of Media Magic or the relevant Media Magic Shareholder, which consent shall not be unreasonably withheld, and (y) in no event shall the amount of any indemnity under this Section 5.2 exceed the gross proceeds from the applicable offering received by such Selling Holder. 7 5.3 Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action, suit, proceeding, investigation or threat thereof made in writing for which such indemnified party may make a claim under this Section 5, such indemnified party shall deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the fees and disbursements and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. Any fees and expenses incurred by the indemnified party (including any fees and expenses incurred in connection with investigating or preparing to defend such action or proceeding) shall be paid to the indemnified party, as incurred, within thirty (30) days of written notice thereof to the indemnifying party. Any such indemnified party shall have the right to employ separate counsel in any such action, claim or proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be the expenses of such indemnified party unless (i) the indemnifying party has agreed to pay such fees and expenses, (ii) the indemnifying party shall have failed to promptly assume the defense of such action, claim or proceeding or (iii) the named parties to any such action, claim or proceeding (including any impleaded parties) include both such indemnified party and the indemnifying party, and such indemnified party shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or in addition to those available to the indemnifying party and that the assertion of such defenses would create a conflict of interest such that counsel employed by the indemnifying party could not faithfully represent the indemnified party (in which case, if such indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such action, claim or proceeding on behalf of such indemnified party, it being understood, however, that the indemnifying party shall not, in connection with any one such action, claim or proceeding or separate but substantially similar or related actions, claims or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for all such indemnified parties, unless in the reasonable judgment of such indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such action, claim or proceeding, in which event the indemnifying party shall be obligated to pay the fees and expenses of such additional counsel or counsels). No indemnifying party shall be liable to an indemnified party for any settlement of any action, proceeding or claim without the written consent of the indemnifying party, which consent shall not be unreasonably withheld. 5.4 If the indemnification required by this Section 5 from the indemnifying party is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to in this Section 5: (a) The indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any Violation has been committed by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such Violation. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 5.1 and Section 5.2, any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. 8 (b) The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5.4 were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in Section 5.4(a). No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. 5.5 If indemnification is available under this Section 5, the indemnifying parties shall indemnify each indemnified party to the full extent provided in this Section 5 without regard to the relative fault of such indemnifying party or indemnified party or any other equitable consideration referred to in Section 5.4. 5.6 The obligations of the Company, Media Magic and the Media Magic Shareholders under this Section 5 shall survive the completion of any offering of Media Magic Shares pursuant to a registration statement under this Agreement or otherwise. 6. Covenants of the Company. The Company hereby agrees and covenants as follows: 6.1 The Company shall file as and when applicable, on a timely basis, all reports required to be filed by it under the Exchange Act, including the annual report on Form 10-KSB for the fiscal year ended April 30, 2005 and the quarterly report on Form 10-QSB for the quarter ended July 31, 2005, which shall be filed within 60 days of the date hereof. If the Company is not required to file reports pursuant to the Exchange Act, upon the request of any Media Magic Shareholder, the Company shall make publicly available the information specified in subparagraph (c)(2) of Rule 144 of the Securities Act, and take such further action as may be reasonably required from time to time and as may be within the reasonable control of the Company, to enable Media Magic and any Media Magic Shareholder to Transfer Media Magic Shares without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 or, if applicable, Regulation S, under the Securities Act or any similar rule or regulation hereafter adopted by the Commission. (a) The Company shall not, and shall not permit its majority owned subsidiaries to, effect any public sale or distribution of any shares of Common Stock or any securities convertible into or exchangeable or exercisable for shares of Common Stock, during the five business days prior to, and during the 90-day period beginning on, the commencement of a public distribution of the Media Magic Shares pursuant to any registration statement prepared pursuant to this Agreement. 9 (b) Any agreement entered into after the date of this Agreement pursuant to which the Company or any of its majority owned subsidiaries issues or agrees to issue any privately placed securities similar to any issue of the Media Magic Shares (other than shares of Common Stock pursuant to a stock incentive, stock option, stock bonus, stock purchase or other employee benefit plan of the Company approved by its Board of Directors shall contain a provision whereby holders of such securities agree not to effect any public sale or distribution of any such securities during the periods described in Section 6.1(a), in each case including a sale pursuant to Rule 144 under the Securities Act. 6.2 The Company shall not, directly or indirectly, (a) enter into any merger, consolidation or reorganization in which the Company shall not be the surviving corporation or (b) Transfer or agree to Transfer all or substantially all the Company's assets, unless prior to such merger, consolidation, reorganization or asset Transfer, the surviving corporation or the Transferee, respectively, shall have agreed in writing to assume the obligations of the Company under this Agreement, and for that purpose references hereunder to "Media Magic Shares" shall be deemed to include the securities which the Media Magic Shareholders would be entitled to receive in exchange for Media Magic Shares pursuant to any such merger, consolidation or reorganization. 6.3 The Company shall not grant to any Person (other than a Media Magic Shareholder) any registration rights with respect to securities of the Company, or enter into any agreement, that would entitle the holder thereof to have securities owned by it included in a Demand Registration. 7. Amendment, Modification and Waivers; Further Assurances. (a) This Agreement may be amended with the consent of the Company and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company shall have obtained the written consent of Media Magic to such amendment, action or omission to act. (b) No waiver of any terms or conditions of this Agreement shall operate as a waiver of any other breach of such terms and conditions or any other term or condition, nor shall any failure to enforce any provision hereof operate as a waiver of such provision or of any other provision hereof. No written waiver hereunder, unless it by its own terms explicitly provides to the contrary, shall be construed to effect a continuing waiver of the provisions being waived and no such waiver in any instance shall constitute a waiver in any other instance or for any other purpose or impair the right of the party against whom such waiver is claimed in all other instances or for all other purposes to require full compliance with such provision. (c) Each of the parties hereto shall execute all such further instruments and documents and take all such further action as any other party hereto may reasonably require in order to effectuate the terms and purposes of this Agreement. 8. Assignment; Benefit. This Agreement and all of the provisions hereof shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, assigns, executors, administrators or successors; provided, however, that neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned or delegated by the Company without the prior written consent of Media Magic. 10 9. Miscellaneous. 9.1 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF. 9.2 Notices. All notices and requests given pursuant to this Agreement shall be in writing and shall be made by hand-delivery, first-class mail (registered or certified, return receipt requested) or overnight air courier guaranteeing next business day delivery, to the respective addresses of the Company and Media Magic set forth below, or to such other address as such party may designate by notice given in accordance with this Section 9.2. Except as otherwise provided in this Agreement, the date of each such notice and request shall be deemed to be, and the date on which each such notice and request shall be deemed given shall be: at the time delivered, if personally delivered or mailed; or the next business day after timely delivery to the courier, if sent by overnight air courier guaranteeing next business day delivery. All notices to be delivered hereunder shall be addressed, as follows: (a) It to the Company: Cirilium Holdings, Inc. 625 N. Flagler Drive Suite 509 West Palm Beach, FL 33401 Attention: President (b) If to Media Magic or a Media Magic Shareholder: Media Magic, Inc. 625 N. Flagler Drive Suite 605 West Palm Beach, FL 33401 Attention: CEO with a copy to Steven Dreyer, Esq. Arent Fox PLLC 1675 Broadway New York, New York 10019 9.3 Entire Agreement; Integration. This Agreement supersedes all prior agreements between or among any of the parties hereto with respect to the subject matter contained herein and therein, and such agreements embody the entire understanding among the parties relating to such subject matter. 11 9.4 Injunctive Relief. Each of the parties hereto acknowledges that in the event of a breach by any of them of any material provision of this Agreement, the aggrieved party may be without an adequate remedy at law. Each of the parties therefore agrees that in the event of such a breach hereof the aggrieved party may elect to institute and prosecute proceedings in any court of competent jurisdiction to enforce specific performance or to enjoin the continuing breach hereof. By seeking or obtaining any such relief, the aggrieved party shall not be precluded from seeking or obtaining any other relief to which it may be entitled. 9.5 Section Headings. Section headings are for convenience of reference only and shall not affect the meaning of any provision of this Agreement. 9.6 Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received a counterpart, or facsimile of a counterpart, of the Agreement signed by the other party or parties hereto. Delivery of an executed copy of this Agreement by facsimile transmission shall have the same effect as delivery of an originally executed copy of this Agreement, whether an originally executed copy shall be delivered subsequent thereto. 9.7 Severability. If any provision of this Agreement shall be invalid or unenforceable, such invalidity or unenforceability shall not affect the validity and enforceability of the remaining provisions of this Agreement, unless the result thereof would be unreasonable, in which case the parties hereto shall negotiate in good faith as to appropriate amendments hereto. 9.8 Filing. A copy of this Agreement and of all amendments thereto shall be filed at the principal executive office of the Company with the corporate recorder of the Company. 9.9 Termination. This Agreement may be terminated at any time by a written instrument signed by the parties hereto. Unless sooner terminated in accordance with the preceding sentence, this Agreement (other than Section 5 hereof) shall terminate on the second anniversary of the date first above written. 9.10 Attorneys' Fees. In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the successful party shall be entitled to recover reasonable attorneys' fees (including any fees incurred in any appeal) in addition to its costs and expenses and any other available remedy. 9.11 No Third Party Beneficiaries. Nothing herein expressed or implied is intended to confer upon any person, other than the parties hereto or their respective permitted assigns, successors, heirs and legal representatives, any rights, remedies, obligations or liabilities under or by reason of this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 12 IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the date first written above. CIRILIUM HOLDINGS, INC. By: ----------------------------------------------- Matthew J. Cohen, Chief Executive Officer MEDIA MAGIC, INC. By: ----------------------------------------------- Robert W. Pearce, Chief Executive Officer 13 EX-10.35 3 v027150_ex10-35.txt Exhibit 10.35 SHARE ACQUISITION AND EXCHANGE AGREEMENT dated October 7, 2005 between and among Media Magic, Inc., Orangebox Entertainment, Inc. and Cirilium Holdings, Inc. TABLE OF CONTENTS Page 1. DEFINITIONS AND INTERPRETATION...........................................1 2. ACQUISITION OF OB BY CHI; CLOSING........................................6 2.1 Exchange of the OB Shares for the Shares........................6 2.2 Closing.........................................................6 2.3 MMI's Closing Obligations.......................................6 2.4 CHI's Closing Obligations.......................................6 3. REPRESENTATIONS AND WARRANTIES OF OB.....................................7 3.1 Power and Authority.............................................7 3.2 Consents and Approvals..........................................7 3.3 Authorized and Issued Capital Stock.............................7 3.4 Other Subsidiaries..............................................8 3.5 Undisclosed Liabilities.........................................8 3.6 Intellectual Property...........................................8 3.7 Personal Property...............................................8 3.8 Real Property...................................................9 3.9 Litigation and Complaints.......................................9 3.10 Employees; Benefits.............................................9 3.11 Tax Matters....................................................10 4. REPRESENTATIONS AND WARRANTIES OF MMI...................................11 4.1 Power and Authority............................................11 4.2 Consents and Approvals.........................................11 4.3 Tax Matters....................................................12 4.4 Investment Representations.....................................12 5. REPRESENTATIONS AND WARRANTIES OF CHI...................................13 5.1 Power and Authority of CHI.....................................13 5.2 Consents and Approvals.........................................14 5.3 Authorized and Issued Capital Stock............................14 5.4 Other Subsidiaries.............................................14 5.5 Undisclosed Liabilities........................................14 5.6 Real Property and Other Assets.................................15 -i- TABLE OF CONTENTS (continued) Page 5.7 Litigation and Complaints......................................15 5.8 Employees; Benefits............................................15 5.9 Tax Matters....................................................16 5.10 Exchange Act Reports...........................................17 6. CLOSING CONDITIONS......................................................17 6.1 Conditions to the Obligations of MMI to Close..................17 6.2 Conditions to CHI's Obligation to Close........................17 7. NOTICES.................................................................18 8. MISCELLANEOUS...........................................................19 8.1 Entire Agreement...............................................19 8.2 Waiver.........................................................19 8.3 Amendment......................................................19 8.4 Construction...................................................19 8.5 Assignment.....................................................19 8.6 Costs and Expenses.............................................19 8.7 Non-Impairment of Rights.......................................19 8.8 Counterparts...................................................19 8.9 Governing Law..................................................20 Schedules 3.5 OB Balance Sheet 3.6 Intellectual Property Rights 3.8 Real Property 3.10 Employee Benefits 3.11 OB Tax Matters 5.4 CHI Subsidiaries 5.5 CHI Liabilities 5.9 CHI Tax Matters -ii- Share Acquisition and Exchange Agreement dated October 7, 2005 between and among Media Magic, Inc. ("MMI"), a corporation organized under the laws of the state of Florida, having an office for the transaction of business at 625 N. Flagler Drive, Suite 605, West Palm Beach, FL 33401; its subsidiary, Orangebox Entertainment, Inc. ("OB"), a corporation organized under the laws of the state of Florida, having an office for the transaction of business at 2921 West Olive Avenue, Burbank, CA 91505, and Cirilium Holdings, Inc. ("CHI"), a corporation organized under the laws of the state of Delaware, having an office for the transaction of business at 625 N. Flagler Drive, Suite 509, West Palm Beach, FL 33401. WHEREAS, MMI owns all of the issued and outstanding OB Shares, free and clear of all Liens other than the Lien held by Stillwater; and WHEREAS, CHI and MMI, pursuant to the terms, and subject to the conditions set forth in this Agreement, desire to undertake a tax-free acquisition of OB by CHI in a reorganization transaction under Code ss.368(a)(1)(B), pursuant to which MMI will receive shares of CHI Common Stock in exchange for the OB Shares, NOW, THEREFORE, in consideration of the foregoing, and the mutual terms, covenants and conditions hereinbelow set forth, the parties agree, as follows: 1. DEFINITIONS AND INTERPRETATION 1.1 In this Agreement: "Affiliate" means, when referring to a Person, the Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the first-mentioned person; "Adverse Consequences" means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and fees, including court costs and attorneys' fees and expenses; "Affiliated Group" means any affiliated group within the meaning of Code ss.1504(a) or any similar group defined under a similar provision of state, local, or foreign law; "Balance Sheet Date" means September 30, 2005; "Benefit Plan" and "Benefit Plans" have the meanings attributed to such terms in Section 3.11.3; "CHI Common Stock" means the common stock, $.0001 par value per share, of CHI; "CHI Reports" hase the meaning attributed to such term in Section 5.10.1; "Claim" has the meaning attributed to such term in Section 8.10.1; 1 "Claim Notice" has the meaning attributed to such term in Section 5.3; "Closing" means closing of the exchange of the OB Shares for the Shares in accordance with the terms, and subject to the conditions of this Agreement; "Closing Date" means October 3, 2005, or such other date as the Parties shall mutually agree upon in writing; "Code" means the Internal Revenue Code of 1986, as amended; "Commission" means the United States Securities and Exchange Commission; "Controlling Party" has the meaning attributed to such term in Section 5.4.1; "Exchange Act" means the United States Securities Exchange Act of 1934, as amended; "Expenses" means any and all reasonable out-of-pocket expenses incurred in connection with investigating, defending or asserting any Claim, action, suit or proceeding (including court filing fees, court costs, arbitration fees or costs, witness fees and reasonable fees and disbursements of legal counsel, investigators, expert witnesses, accountants and other professionals); "Governmental Entity" has the meaning attributed to such term in Section 3.2; "Income Tax" means any federal, state, local, or foreign income tax, including any interest, penalty, or addition thereto, whether disputed or not; "Income Tax Return" means any return, declaration, report, claim for refund, or information return or statement relating to any Income Tax, including any schedule or attachment thereto, and including any amendment thereof; "Intellectual Property Right" means all (i) patents, patent applications, patent disclosures and inventions, (ii) trademarks, service marks, trade dress, trade names, URL's, logos and corporate names and registrations and applications for registration thereof, together with all of the goodwill associated therewith, (iii) copyrights (registered or unregistered) and copyrightable works and registrations and applications for registration thereof, (iv) mask works and registrations and applications for registration thereof, (v) computer software, data, data bases and documentation thereof, (vi) trade secrets and other confidential information (including ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how, manufacturing and production processes and techniques, research and development information, drawings, specifications, designs, plans, proposals, technical data, copyrightable works, financial and marketing plans and customer and supplier lists and information), (vii) other intellectual property rights and (viii) copies and tangible embodiments thereof (in whatever form or medium); "Liability" or "Liabilities" mean any and all debts, liabilities, commitments and obligations, whether fixed, contingent or absolute, matured or unmatured, liquidated or unliquidated, accrued or not accrued, known or unknown, whenever or however arising (including whether arising out of any contract or tort based on negligence or strict liability) and whether or not the same would be required by GAAP to be reflected in financial statements or disclosed in the notes thereto; 2 "Lien" means any right which (a) shall entitle any Person to terminate, amend, accelerate or cancel any agreement, option, license or other instrument to which MMI or OB is a party by reason of the occurrence of (i) a violation, breach or default thereunder by MMI or OB, as the case may be; or (ii) an event which with or without notice or lapse of time or both would become a default thereunder; or (b) if exercised by the holder thereof, will (i) entitle such Person to accelerate the performance of any obligations or the payment of any sums owed by MMI or OB, as the case may be, under any agreement, option, license or other instrument, or (ii) result in any loss of any benefit under, or the creation of any pledges, claims, equities, options, liens, charges, call rights, rights of first refusal, "tag" or "drag" along rights, encumbrances and security interests of any kind or nature whatsoever on any of the property or assets of MMI or OB; "Material Adverse Effect" means any effect or change that would be materially adverse to the business, assets, condition (financial or otherwise), operating results, operations, or business prospects of CHI, MMI or OB, as the case may be, taken as a whole, or on the ability of any Party to consummate timely the transactions contemplated hereby; "MMI-Stillwater Pledge Agreement and Guaranty"has the meaning attributed thereto in Section 4.1 of this Agreement; "OB Balance Sheet" means the unaudited balance sheet of OB as at the Balance Shhet Date; "OB Shares" has the meaning attributed thereto in Section 3.3 of this Agreement; "Parties" means collectively, CHI and MMI; "Party" means CHI or MMI, individually; "Person" means a natural person, company, corporation, partnership, association, trust or any unincorporated organization; "Registration Rights Agreement" shall mean that certain Registration Rights Agreement, dated the Closing Date, by and between MMI and CHI, providing for the registration of the Shares under the Securities Act for distribution by MMI to its shareholders and for resale by such shareholders, as the same may be amended from time to time; "Rule 144" means Rule 144 promulgated by the Commission under the Securities Act; "Securities Act" means the United States Securities Act of 1933, as amended; "Shares" has the meaning attributed thereto in Section 2.1 of this Agreement; 3 "Stillwater" means The Stillwater Asset-Backed Fund LP; "Stillwater Loan" means the Credit Agreement and collateral agreements between OB, as borrower, and Stillwater, as Lender dated August 5, 2005; "Subsidiary" means, with respect to any Person, any corporation, limited liability company, partnership, association, or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof or (ii) if a limited liability company, partnership, association, or other business entity (other than a corporation), a majority of partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof and for this purpose, a Person or Persons own a majority ownership interest in such a business entity (other than a corporation) if such Person or Persons shall be allocated a majority of such business entity's gains or losses or shall be or control any managing director or general partner of such business entity (other than a corporation). The term "Subsidiary" shall include all Subsidiaries of such Subsidiary; "Tax" or "Taxes" means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code ss.59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not; "Taxation Authority" means any federal, state, local or foreign governmental agency, department or other entity which is authorized by applicable law to assess and collect Taxes; "Tax Return" means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof; and "Treas. Reg." means the regulations promulgated by the United States Department of the Treasury under the Code, as amended. 1.2 Interpretation. 1.2.1 As used in this Agreement, unless the context clearly indicates otherwise: (a) words used in the singular include the plural and words in the plural include the singular; 4 (b) reference to any Person includes such person's successors and assigns, but only if such successors and assigns are permitted by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity; (c) reference to any gender includes the other gender; (d) whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation" or "but not limited to" or words of similar import; (e) reference to any Section means such Section of this Agreement, and references in any Section or definition to any clause means such clause of such Section or definition; (f) the words "herein," "hereunder," "hereof," "hereto" and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision hereof; (g) reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement; (h) reference to any law (including statutes and ordinances) means such law (including all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability, and reference to any particular provision of any law shall be interpreted to include any revision of or successor to that provision regardless of how numbered or classified; (i) relative to the determination of any period of time, "from" means "from and including," "to" means "to but excluding" and "through" means "through and including"; and (j) the titles and headings of Sections contained in this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement. 1.2.2 This Agreement was negotiated by the parties with the benefit of legal representation, and no rule of construction or interpretation otherwise requiring this Agreement to be construed or interpreted against any party shall apply to any construction or interpretation hereof. This Agreement shall be interpreted and construed to the maximum extent possible so as to uphold the enforceability of each of the terms and provisions hereof, it being understood and acknowledged that this Agreement was entered into by the parties after substantial negotiations and with full awareness by the parties of the terms and provisions hereof and the consequences thereof. 5 1.2.3 Where a statement in this Agreement is qualified by the expression "to the best of MMI's knowledge," "to the best of OB's knowledge," "so far as MMI is aware" or "so far as OB is aware" or any similar expression shall be deemed to include MMI's or OB's actual knowledge and what MMI or OB should have known after due and careful inquiry of the President, the members of the Board of Directors and any relevant person(s) involved in the management of the business of MMI or OB. Except for statements qualified by MMI or OB after due and careful inquiry, in the manner set forth in the first sentence of this subsection, MMI and OB shall be liable, respectively, for any erroneous or untrue statement, warranty or representation that MMI or OB, as the case may be, may make in this Agreement, irrespective of whether the error contained therein or the untruth thereof shall have resulted from negligence or intent on the part of MMI or OB. 2. ACQUISITION OF OB BY CHI; CLOSING 2.1 Exchange of the OB Shares for the Shares. MMI shall exchange, transfer and assign all of the OB Shares to CHI, and CHI shall issue and deliver an aggregate of 158,191,589 shares of restricted, unregistered CHI Common Stock (the "Shares") to MMI pursuant to the terms, and subject to the conditions of, this Agreement. 2.2 Closing. Closing shall take place at the offices of MMI. All actions taken at the Closing shall be deemed to have been taken simultaneously at the time the last of any such actions is taken or completed. The Closing shall occur at 9:00 AM Eastern Standard Time on the Closing Date, or at such other place and time, and on such other date, as the Parties may agree in writing. 2.3 MMI's Closing Obligations. At the Closing, MMI shall deliver to CHI: 2.3.1 all stock certificates evidencing the ownership of the OB Shares, each of which shall have attached thereto blank stock powers dated the Closing Date and signed by an authorized representative of MMI; and 2.3.2 one or more agreements and/or other instruments executed by Stillwater canceling, or modifying in a manner satisfactory to CHI, the MMI-Stillwater Pledge Agreement and Guaranty. 2.4 CHI's Closing Obligations. At the Closing, CHI shall deliver to MMI: 2.4.1 the written resignations of all of the officers and directors of CHI, effective as of the Closing Date; 2.4.2 stock certificates evidencing the ownership of the Shares by MMI; 2.4.3 a Registration Rights Agreement executed by CHI; and 2.4.4 one or more agreements and/or other instruments executed by CHI pursuant to which CHI shall guaranty OB's payment and performance obligations under the Stillwater Loan, and pledge the OB Shares to Stillwater as collateral security for its obligations under such guaranty. 6 3. REPRESENTATIONS AND WARRANTIES OF OB OB hereby warrants and represents to CHI, as of the date of this Agreement and with the same force and effect on the Closing Date as if then made, as follows: 3.1 Power and Authority. OB is a corporation duly organized, validly existing, and in good standing under the laws of the State of Florida, and has the corporate power and authority to carry on its business as now conducted and to own, lease and operate its properties and assets. OB is duly qualified or licensed to transact business as a foreign corporation in good standing in the states of the United States and foreign jurisdictions where the character of its assets or the nature or conduct of its business requires it to be so qualified or licensed. OB has all requisite corporate power and authority to execute and deliver this Agreement and each instrument to be executed and delivered by OB in connection with the Closing, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and each instrument required hereby to be executed and delivered by OB prior to or at the Closing, the performance of its obligations hereunder and thereunder and the consummation by OB of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of OB, and no other corporate proceedings on the part of OB are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed by OB, and, assuming this Agreement has been duly executed by MMI and CHI, this Agreement constitutes a valid and binding agreement of OB, enforceable against OB 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 and to general equity principles. 3.2 Consents and Approvals. The execution and performance of this Agreement do not, and the consummation of the transactions contemplated hereby and compliance with the provisions of this Agreement will not (a) conflict with or violate the Articles of Incorporation or Bylaws of OB, (b) conflict with or violate any statute, ordinance, rule, regulation, judgment, order, writ, injunction, decree or law applicable to OB, or by which either OB or its properties or assets may be bound or affected, or (c) result in a violation or breach of or constitute a default (or an event which with or without notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in any loss of any benefit under, any contract, agreement or arrangement to which OB is a party, or the creation of Liens on any of the property or assets of OB. No consent, approval, order or authorization of, or registration, declaration or filing with, any federal, state or local government or any court, administrative or regulatory agency or commission or other governmental authority or agency, domestic or foreign (a "Governmental Entity"), is required by OB in connection with the execution of this Agreement by MMI or the consummation by it of the transactions contemplated hereby, except for such other consents, approvals, orders, authorizations, registrations, declarations or filings, the failure of which to obtain would not individually or in the aggregate have a Material Adverse Effect. 3.3 Authorized and Issued Capital Stock. OB is authorized, pursuant to its Articles of Incorporation, to issue 25,000,000 shares, par value $.001. As of the date hereof 100 shares of OB's common stock are issued and outstanding (the "OB Shares"). 7 3.4 Other Subsidiaries. OB owns no subsidiaries, and on the Closing Date, OB shall not own, or be a party to any agreement to own, any securities of any other corporation, or any other entity or business association of whatever kind. 3.5 Undisclosed Liabilities As of the Closing Date, OB has no debts, liabilities or obligations of any nature (whether accrued, absolute, contingent, direct, indirect, unliquidated or otherwise and whether due or to become due) arising out of transactions entered into on or prior to the Closing Date, or any transaction, series of transactions, action or inaction occurring on or prior to the Closing Date, or any state of facts or condition existing on or prior to the Closing Date (regardless of when such liability or obligation is asserted) except such debts, liabilities or obligations that have been disclosed to CHI in this Agreement or in the OB Balance Sheet annexed hereto as Schedule 3.5. 3.6 Intellectual Property. 3.6.1 The activities of OB (or of any licensee under any license granted by OB) do not infringe or are not likely to infringe on any Intellectual Property Rights of any third party and no claim has been made, has been threatened, or is likely to be made or threatened, against OB or any such licensee in respect of such infringement. 3.6.2 Details of all registered Intellectual Property Rights (including applications to register the same) and all commercially significant unregistered Intellectual Property Rights owned or used by OB are set out in Schedule 3.6. 3.6.3 Except for Intellectual Property Rights granted pursuant to shrinkwrap and similar licenses, OB does not, as of the date hereof, use in its business any Intellectual Property Rights, other than the Intellectual Property Rights identified on Schedule 3.6, and is under no obligation to pay license fees or royalties for any Intellectual Property Rights other than those identified on said Schedule. 3.7 Personal Property. OB has good and marketable title to, or in the case of leased or licensed personal property, it has valid leasehold or license interests in, all Personal Property, except for properties and assets sold since the Balance Sheet Date in the ordinary course of business consistent with past practices. None of such Personal Property is subject to any Liens, other than: 3.7.1 Liens securing the Stillwater Loan; 3.7.2 Liens for ad valorem Taxes which shall have accrued prior to the Closing Date, but which shall not be due and payable until after the Closing Date (and for which adequate accruals or reserves have been established on the Closing Balance Sheet); 3.7.3 Liens that do not materially detract from the value of the Personal Property as now used, or materially interfere with any present or intended use of the Personal Property; or 8 3.7.4 Liens reflected on the OB Balance Sheet. 3.7.5 Each item of Personal Property has no material defects, is in good operating condition and repair (ordinary wear and tear excepted), and is generally adequate for the uses to which it is being put. 3.8 Real Property. 3.8.1 None of the Real Property is owned by OB. All of the Real Property is leased by OB as lessee or sublessee. Schedule 3.8 sets forth all leases and subleases of the Real Property leased by OB (the "Leases"), true and correct copies of which have been previously provided to CHI. 3.8.2 The Leases are valid, binding and enforceable in accordance with their respective terms, and there does not exist under any such Lease any default by OB or, to OB's knowledge, by any other Person, or any event that, with notice or lapse of time or both, would constitute a default by OB or, to OB's knowledge, by any other Person. OB has delivered to CHI complete and accurate copies of all Leases, including all amendments and agreements related thereto. All rent and other charges currently due and payable under the Leases have been paid. 3.9 Litigation and Complaints. 3.9.1 OB is not engaged in any litigation or arbitration proceedings, and there are no such proceedings pending or threatened against or by OB. To the best of OB's knowledge, there are no matters or circumstances which are likely to give rise to any litigation or arbitration proceedings by or against OB. 3.9.2 OB is not subject to any investigation, inquiry or enforcement proceedings or processes by any Governmental Entity, and to the best of OB's knowledge, there are no matters or circumstances which are likely to give rise to any such investigation, inquiry, proceedings or process. 3.10 Employees; Benefits. 3.10.1 OB has 11 employees. There are no outstanding offers (whether accepted or not) of employment made to any Person by OB. 3.10.2 OB is a not party to or bound by any collective bargaining, shop or similar agreements. 3.10.3 OB does not have any "employee benefit plans" including, but not limited to, bonus, pension, profit sharing, deferred compensation, incentive compensation, excess benefit, stock, stock option, severance, termination pay, change in control or other employee benefit plans, programs or arrangements, whether written or unwritten, qualified or unqualified, funded or unfunded, currently maintained, or contributed to, or required to be maintained or contributed to, by OB (each of which is referred to as a "Benefit Plan" and all of which are collectively referred to as the "Benefit Plans"), other than the employment contracts, medical, dental, vision, disability, life insurance and vacation benefits, and options to purchase an aggregate of 1,750,000 share of MMI common stock issued to certain OB employees as identified in Schedule 3.10 hereof. 9 3.11 Tax Matters. 3.11.1 OB has filed, all federal Income Tax Returns and all other material Tax Returns that it was required to file since the date of its organization. 3.11.2 To the best of OB's knowledge, OB has paid all Taxes that it was required to pay since the date of its organization, except for those identified in Schedule 3.11 hereof. 3.11.3 OB is not currently the beneficiary of any extension of time within which to file any Tax Return. 3.11.4 To the best of OB's knowledge, there are no Liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of OB. 3.11.5 There is no material dispute or claim concerning any Tax liability of OB either (i) claimed or raised by any Taxation Authority in writing or (ii) as to which OB has knowledge, except for those reflected on the OB Balance Sheet or identified in Schedule 3.11 hereof. 3.11.6 OB: (a) has not filed a consent under Code ss.341(f) concerning collapsible corporations; (b) is not a party to any agreement, contract, arrangement, or plan that has resulted or would result, separately or in the aggregate, in the payment of any "excess parachute payment" within the meaning of Code ss.280G (or any corresponding provision of state, local, or foreign Tax law); (c) will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to the Closing Date; (ii) "closing agreement" as described in Code ss.7121 (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date; (iii) intercompany transactions or any excess loss account described in Treasury Regulations under Code ss.1502 (or any corresponding or similar provision of state, local or foreign income Tax law); (iv) installment sale or open transaction disposition made on or prior to the Closing Date; or (v) prepaid amount received on or prior to the Closing Date; or (d) has not been a United States real property holding corporation within the meaning of Code ss.897(c)(2) during the applicable period specified in Code ss.897(c)(1)(A)(ii). 10 3.11.7 OB is not a party to or bound by any Tax allocation or sharing agreement. OB has not been a member of an Affiliated Group filing a consolidated federal income Tax Return (other than a group the common parent of which was MMI). OB does not have any Liability for the Taxes of any Person (other than any of MMI and any other Subsidiary of MMI) under Treas. Reg. ss.1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise. 4. REPRESENTATIONS AND WARRANTIES OF MMI MMI hereby warrants and represents to CHI, as of the date of this Agreement and with the same force and effect on the Closing Date as if then made, as follows: 4.1 Power and Authority. MMI is a corporation duly organized, validly existing, and in good standing under the laws of the State of Florida, and has the corporate power and authority to carry on its business as now conducted and to own, lease and operate its properties and assets. MMI is duly qualified or licensed to transact business as a foreign corporation in good standing in the states of the United States and foreign jurisdictions where the character of its assets or the nature or conduct of its business requires it to be so qualified or licensed. MMI has all requisite corporate power and authority to execute and deliver this Agreement and each instrument to be executed and delivered by MMI in connection with the Closing, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and each instrument required hereby to be executed and delivered by MMI prior to or at the Closing, the performance of its obligations hereunder and thereunder and the consummation by MMI of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of MMI, and, except for the requirement to obtain the consent of MMI's shareholders to the consummation of the transfer of the OB Shares to CHI pursuant to, and in accordance with, the provisions of this Agreement, no other corporate proceedings on the part of MMI are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed by MMI, and, assuming this Agreement has been duly executed by OB and CHI, this Agreement constitutes a valid and binding agreement of MMI, enforceable against MMI 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 and to general equity principles. MMI has good and marketable title to the OB Shares free and clear of all Liens except as otherwise disclosed in this Agreement, and has full power and authority to exchange, transfer and deliver to CHI the OB Shares. Except for a pledge agreement and guaranty dated August 5, 2005 between MMI and Stillwater (the "MMI-Stillwater Pledge Agreement and Guaranty"), MMI is not a party to any voting agreement or other shareholder agreement with respect to the OB Shares or ownership of OB. 4.2 Consents and Approvals. The execution and performance of this Agreement do not, and the consummation of the transactions contemplated hereby and compliance with the provisions of this Agreement will not (a) conflict with or violate the Articles of Incorporation or Bylaws of MMI, (b) conflict with or violate any statute, ordinance, rule, regulation, judgment, order, writ, injunction, decree or law applicable to MMI, or by which either MMI or its properties or assets may be bound or affected, or (c) result in a violation or breach of or constitute a default (or an event which with or without notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in any loss of any benefit under, any contract, agreement or arrangement to which MMI is a party, or the creation of Liens on any of the property or assets of MMI. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity, is required by MMI in connection with the execution of this Agreement by MMI or the consummation by it of the transactions contemplated hereby, except for such other consents, approvals, orders, authorizations, registrations, declarations or filings, the failure of which to obtain would not individually or in the aggregate have a Material Adverse Effect. 11 4.3 Tax Matters. 4.3.1 MMI is not a party to or bound by any Tax allocation or sharing agreement. MMI has not been a member of an Affiliated Group filing a consolidated federal income Tax Return (other than a group of which MMI is the common parent). MMI does not have any Liability for the Taxes of any Person (other than any of its Subsidiaries, including, but not limited to, OB) under Treas. Reg. ss.1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise. 4.3.2 MMI agrees to indemnify CHI from and against its any Adverse Consequences CHI may suffer resulting from, arising out of, relating to, in the nature of, or caused by any Liability of MMI and/or any of its Subsidiaries (including the Liability of OB) for Taxes arising with respect to business operations conducted by OB on or prior to the Closing Date) for Taxes under Treas. Reg. ss.1.1502-6 (or any similar provision of state, local or foreign law). 4.3.3 MMI shall include the income of OB (including any deferred items triggered into income by Treas. Reg. ss.1.1502-13 and any excess loss account taken into income under Treas. Reg. ss.1.1502-19) on MMI's consolidated federal Income Tax Returns for all periods through the end of the Closing Date and pay any federal Income Taxes attributable to such income. OB shall furnish Tax information to MMI for inclusion in MMI's federal consolidated Income Tax Return for the period which includes the Closing Date in accordance with OB's past custom and practice. The income of OB shall be apportioned to the period up to and including the Closing Date and the period after the Closing Date by closing the books of OB as of the end of the Closing Date. 4.4 Investment Representations. 4.4.1 MMI is acquiring the Shares to be delivered hereunder for its own account with the present intention of holding such securities for purposes of investment, and that it has no intention of distributing such Shares to the shareholders of MMI or selling, transferring or otherwise disposing of such securities in a public distribution, in any of such instances, in violation of the federal securities laws of the United States of America. 12 4.4.2 MMI understands that (a) the Shares that it shall acquire hereunder are "Restricted Securities," as defined in Rule 144; (b) such securities have not been registered under the Securities Act, and are being issued in reliance on exemptions for private offerings contained in Section 4(2) of the Securities Act; (c) the Shares may not be distributed, re-offered or resold except through a valid and effective registration statement or pursuant to a valid exemption from the registration requirements under the Securities Act; and (d) until such time as the Shares become eligible for sale by it, either pursuant to the registration of such Shares under the Securities Act, or pursuant to a valid exemption from such registration, the certificates evidencing MMI's ownership of the Shares shall contain the following legend: "The shares of common stock evidenced by this certificate have not been registered under the Securities Act of 1933, as amended (the "Act"). Such shares may not be sold, transferred, pledged, hypothecated or otherwise disposed of unless they have been so registered or the issuer of such shares shall have received an opinion of counsel satisfactory to it to the effect that registration thereof for purposes of transfer is not required under the Act or the securities laws of any state." 4.4.3 MMI is fully aware of the restrictions on sale, transferability and assignment of the Shares, and that it must bear the economic risk of retaining ownership of such securities for an indefinite period of time. MMI is aware that (a) the Shares will not be registered under the Securities Act; and (b) because the issuance of the Shares has not been registered under the Securities Act, an investment in the Shares cannot be readily liquidated if MMI desires to do so, but rather may be required to be held indefinitely. 4.4.4 In the event that MMI decides to distribute any of the Shares to its shareholders, it shall not do so unless and until a registration statement has been duly filed by CHI under the Securities Act, and such registration statement has been declared effective by the Commission. 5. REPRESENTATIONS AND WARRANTIES OF CHI CHI hereby warrants and represents to MMI, as of the date of this Agreement and with the same force and effect on the Closing Date as if then made, as follows: 5.1 Power and Authority of CHI. CHI is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, and has the corporate power and authority to carry on its business as now conducted and to own, lease and operate its properties and assets. CHI is duly qualified or licensed to transact business as a foreign corporation in good standing in the states of the United States and foreign jurisdictions where the character of its assets or the nature or conduct of its business requires it to be so qualified or licensed. CHI has all requisite corporate power and authority to execute and deliver this Agreement and each instrument to be executed and delivered by CHI in connection with the Closing, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and each instrument required hereby to be executed and delivered by CHI prior to or at the Closing, the performance of its obligations hereunder and thereunder and the consummation by CHI of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of CHI, and no other corporate proceedings on the part of CHI are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed by CHI, and, assuming this Agreement is duly executed by MMI and OB, this Agreement constitutes a valid and binding agreement of CHI, enforceable against CHI 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 and to general equity principles. 13 5.2 Consents and Approvals. The execution and performance of this Agreement do not, and the consummation of the transactions contemplated hereby and compliance with the provisions of this Agreement will not (a) conflict with or violate the Certificate of Incorporation or Bylaws of CHI, (b) conflict with or violate any statute, ordinance, rule, regulation, judgment, order, writ, injunction, decree or law applicable to CHI, or by which CHI or its properties or assets may be bound or affected, or (c) result in a violation or breach of or constitute a default (or an event which with or without notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in any loss of any benefit under, any contract, agreement or arrangement to which CHI is a party, or the creation of Liens on any of the property or assets of CHI, other than the outstanding warrants and options previously disclosed in the CHI Reports. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required by CHI in connection with the execution of this Agreement by CHI or the consummation by it of the transactions contemplated hereby, except for consents, approvals, orders, authorizations, registrations, declarations or filings, the failure of which to obtain would not individually or in the aggregate have a Material Adverse Effect. 5.3 Authorized and Issued Capital Stock. On the Closing Date: 5.3.1 CHI shall be authorized, pursuant to its Certificate of Incorporation, to issue 225,000,000 shares, 200,000,000 of which shall be common stock, $.0001 par value per share, and 25,000,000 of which shall be preferred stock, $.0001 par value per share, issuable in one or more series; and 5.3.2 38,982,482 shares of CHI's common stock shall be issued and outstanding. 5.3.3 CHI shall not have any outstanding options or warrants other than those previously disclosed in the CHI Reports or otherwise identified in Schedule 5.3.3. 5.4 Other Subsidiaries. CHI does not own, and has not agreed to acquire, any securities of any other corporation, or any other entity or business association of whatever kind other than those disclosed in Schedule 5.4 hereof. 5.5 Undisclosed Liabilities As of the Closing Date, except for those Liabilities identified either in the CHI Reports or on Schedule 5.5, CHI shall not have any debts, liabilities or obligations of any nature (whether accrued, absolute, contingent, direct, indirect, unliquidated or otherwise and whether due or to become due) arising out of transactions entered into on or prior to the Closing Date, or any transaction, series of transactions, action or inaction occurring on or prior to the Closing Date, or any state of facts or condition existing on or prior to the Closing Date (regardless of when such liability or obligation is asserted) except such debts, liabilities or obligations that have been disclosed to MMI in this Agreement or in the consolidated financial statements CHI heretofore delivered to MMI or which taken in the aggregate would not have a Material Adverse Effect on CHI. 14 5.6 Real Property and Other Assets. CHI does not own or lease any real property, and does not own, lease or license the use of any other assets other than those previously disclosed in the CHI Reports. 5.7 Litigation and Complaints. 5.7.1 CHI is not engaged in any litigation or arbitration proceedings, and there are no such proceedings pending or threatened against or by CHI. To the best of CHI's knowledge, there are no matters or circumstances which are likely to give rise to any litigation or arbitration proceedings by or against CHI. 5.7.2 CHI is not subject to any investigation, inquiry or enforcement proceedings or processes by any Governmental Entity, and to the best of CHI's knowledge, there are no matters or circumstances which are likely to give rise to any such investigation, inquiry, proceedings or process. 5.8 Employees; Benefits. 5.8.1 CHI has no employees. There are no outstanding offers (whether accepted or not) of employment made to any Person by CHI. 5.8.2 CHI is a not party to or bound by any collective bargaining, shop or similar agreements. 5.8.3 Except for CHI's 2004 Stock Incentive Plan, CHI does not have any "employee benefit plans" including, but not limited to, employment contracts, bonus, pension, profit sharing, deferred compensation, incentive compensation, excess benefit, stock, stock option, severance, termination pay, change in control or other employee benefit plans, programs or arrangements, including those providing medical, dental, vision, disability, life insurance and vacation benefits, whether written or unwritten, qualified or unqualified, funded or unfunded, currently maintained, or contributed to, or required to be maintained or contributed to, by CHI (each of which is referred to as a "Benefit Plan" and all of which are collectively referred to as the "Benefit Plans"). 15 5.9 Tax Matters. 5.9.1 CHI has filed, all federal Income Tax Returns and all other material Tax Returns that it was required to file since the date of its organization. 5.9.2 To the best of CHI's knowledge, CHI has paid all Taxes that it was required to pay since the date of its organization, except for those identified in Schedule 5.9 hereof. 5.9.3 CHI is not currently the beneficiary of any extension of time within which to file any Tax Return. 5.9.4 To the best of CHI's knowledge, there are no Liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of CHI. 5.9.5 There is no material dispute or claim concerning any Tax liability of CHI either (i) claimed or raised by any Taxation Authority in writing or (ii) as to which CHI has knowledge. CHI: (a) has not filed a consent under Code ss.341(f) concerning collapsible corporations; (b) is not a party to any agreement, contract, arrangement, or plan that has resulted or would result, separately or in the aggregate, in the payment of any "excess parachute payment" within the meaning of Code ss.280G (or any corresponding provision of state, local, or foreign Tax law); (c) will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to the Closing Date; (ii) "closing agreement" as described in Code ss.7121 (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date; (iii) intercompany transactions or any excess loss account described in Treasury Regulations under Code ss.1502 (or any corresponding or similar provision of state, local or foreign income Tax law); (iv) installment sale or open transaction disposition made on or prior to the Closing Date; or (v) prepaid amount received on or prior to the Closing Date; or (d) has not been a United States real property holding corporation within the meaning of Code ss.897(c)(2) during the applicable period specified in Code ss.897(c)(1)(A)(ii). 5.9.6 CHI is not a party to or bound by any Tax allocation or sharing agreement. CHI has not been a member of an Affiliated Group filing a consolidated federal income Tax Return (other than a group of which CHI is the common parent). CHI does not have any Liability for the Taxes of any Person (other than any of its Subsidiaries) under Treas. Reg. ss.1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise. 16 5.9.7 CHI agrees to indemnify MMI from and against its any Adverse Consequences MMI may suffer resulting from, arising out of, relating to, in the nature of, or caused by any Liability of CHI and/or any of its Subsidiaries for Taxes arising with respect to business operations conducted by CHI or any of its Subsidiaries on or prior to the Closing Date) for Taxes under Treas. Reg. ss.1.1502-6 (or any similar provision of state, local or foreign law). 5.10 Exchange Act Reports. 5.10.1 CHI has filed with the Commission all forms, reports, schedules, statements and other documents required to be filed by it pursuant to Section 13 or 15 of the Exchange Act through August 1, 2005 (as such documents have been amended since the time of their filing, collectively, the "CHI Reports"), other than its annual report on Form 10-KSB for the fiscal year ended April 30, 2005 and its quarterly report on Form 10-QSB for the quarter ended July 31, 2005. As of their respective dates or, if amended, as of the date of the last such amendment, the CHI Reports, including, without limitation, any financial statements or schedules included therein, to the best of CHI's knowledge, complied in all material respects with the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the Commission promulgated thereunder applicable to such CHI Reports, and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. No Subsidiary of CHI is required to file any forms, reports or other documents with the Commission pursuant to Sections 13 or 15 of the Exchange Act. 5.10.2 CHI keeps books, records and accounts which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of CHI and its Subsidiaries. 6. CLOSING CONDITIONS 6.1 Conditions to the Obligations of MMI to Close. The obligation of MMI to consummate the transactions contemplated hereby at the Closing is subject to the fulfillment to the satisfaction of MMI, or the waiver by MMI, at or prior to the Closing of each of the following conditions: 6.1.1 Each of the representations and warranties of CHI contained in Article 5 shall be true, correct and complete on and as of the Closing Date as though then made. 6.1.2 CHI shall execute and deliver to Stillwater one or more agreements and/or instruments, in form satisfactory to Stillwater and its counsel, a guaranty of payment and performance of the Stillwater Loan and a pledge of the OB Shares to Stillwater as collateral security of the performance by CHI of its obligations under such guaranty. 6.1.3 CHI shall execute and deliver the Regsitration Rights Agreement to MMI. 6.2 Conditions to CHI's Obligation to Close. The obligation of CHI to consummate the transactions contemplated hereby at the Closing is subject to the fulfillment to the satisfaction of CHI, or the waiver by CHI, at or prior to the Closing, of each of the following conditions: 17 6.2.1 On or before the Closing Date, the shareholders of MMI shall have authorized MMI to consummate the transactions contemplated herein and hereby. 6.2.2 On or before the Closing Date, the MMI-Stillwater Pledge Agreement and Guaranty shall be canceled or modified in a manner satisfactory to CHI, and the OB Shares shall be delivered to CHI free and clear of all Liens. 6.2.3 Each of the representations and warranties of OB contained in Article 3, and each of the representations and warranties of MMI contained in Article 4 shall be true, correct and complete on and as of the Closing Date as though then made. 7. NOTICES 7.1 All notices and other communications hereunder shall be in writing and shall be deemed given if sent by e-mail transmission (if receipt is electronically confirmed), or by a prepaid overnight courier service (if receipt is confirmed in writing) addressed to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): 7.1.1 In the case of MMI or OB: Media Magic, Inc. 625 N. Flagler Drive Suite 605 West Palm Beach, FL 33401 Attention: CEO with a copy to Steven Dreyer, Esq. Arent Fox PLLC 1675 Broadway New York, New York 10019 E-Mail: dreyer.steven@arentfox.com 7.1.2 In the case of CHI: Cirilium Holdings, Inc. 625 N. Flagler Drive Suite 509 West Palm Beach, FL 33401 Attention: President 18 8. MISCELLANEOUS 8.1 Entire Agreement. This Agreement contains the entire agreement of the parties hereto with respect to the subject matter contained herein. All prior negotiations and agreements between the parties hereto with respect to the transactions provided for herein are superseded by this Agreement. 8.2 Waiver. No waiver of any of the provisions of this Agreement shall be effective against any party to this Agreement unless reduced in writing and duly signed by such party. The waiver by any party of any right hereunder or of any breach of any of the terms hereof or defaults hereunder shall not be deemed a waiver of any other rights or any subsequent breach or default, whether of the same or of a similar nature, and shall not in any way affect the terms hereof except to the extent of such waiver. 8.3 Amendment. This Agreement can not be amended or modified unless made in writing and duly signed by or on behalf of MMI, OB and CHI. 8.4 Construction. Wherever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law and in such a way as to, as closely as possible, achieve the intended economic effect of such provision and this Agreement as a whole, but if any provision contained herein is, for any reason, held to be invalid, illegal or unenforceable in any respect, such provision shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such provision or any other provisions hereof, unless such a construction would be unreasonable. 8.5 Assignment. This Agreement may not be transferred, assigned, pledged or hypothecated by any party hereto. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assignees. 8.6 Costs and Expenses. Each party shall pay its own and its advisers' fees and expenses (including financial and legal advisors) incurred in connection with the negotiation, execution and closing of this Agreement and the transactions contemplated herein. 8.7 Non-Impairment of Rights. No failure or delay on the part of any party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. 8.8 Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received a counterpart, or facsimile of a counterpart, of the Agreement signed by the other party or parties hereto. Delivery of an executed copy of this Agreement by facsimile transmission shall have the same effect as delivery of an originally executed copy of this Agreement, whether an originally executed copy shall be delivered subsequent thereto. 19 8.9 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of Florida excluding the conflicts of laws provisions thereof. The parties agree that the exclusive jurisdiction and venue of any action with respect to this Agreement shall be in the courts of Palm Beach County, Florida, and each of the parties hereby submits to the exclusive jurisdiction and venue of such courts for the purpose of such action. IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written. Cirilium Holdings, Inc. By: ------------------------------------- Matthew J. Cohen, CEO Media Magic, Inc. By: ------------------------------------- Robert W. Pearce, CEO Orangebox Entertainment, Inc. By: ------------------------------------- Sandra Varela, President 20 Schedule 3.5 OB Balance Sheet Orangebox Entertainment, Inc. Sep 30, 05 ------------ ASSETS (Unauditied) Current Assets Checking/Savings City National Bank -446.59 Petty Cash 15,950.00 Regent ***8406 -37,305.06 Regent Escrow Acct 16,670.00 ------------ Total Checking/Savings -5,131.65 Accounts Receivable Accounts Receivable 13,100.00 ------------ Total Accounts Receivable 13,100.00 Other Current Assets Departure 148,182.25 Employee Advances 1,000.00 Prepaid Expenses 16,937.00 ------------ Total Other Current Assets 166,119.25 ------------ Total Current Assets 174,087.60 Fixed Assets Equipment 484,327.46 Equipment Lease 86,146.25 Furniture 9,902.06 Leasehold Improvements 76,873.99 ------------ Total Fixed Assets 657,249.76 Other Assets Prepaid Loan Fees 47,409.00 ------------ Total Other Assets 47,409.00 ------------ TOTAL ASSETS 878,746.36 ============ LIABILITIES & EQUITY Liabilities Current Liabilities Accounts Payable Accounts Payable 282,614.91 ------------ Total Accounts Payable 282,614.91 Other Current Liabilities Due to DigiKidz, Inc. 35,540.17 Due to Media Magic 180,188.41 Due to Royal Palm 33,307.29 ------------ Total Other Current Liabilities 249,035.87 ------------ Total Current Liabilities 531,650.78 Long Term Liabilities Long Term Note 500,000.00 ------------ Total Long Term Liabilities 500,000.00 ------------ Total Liabilities 1,031,650.78 Shareholders' Equity Add'l Cap. Cont. (Wire Transfer 1,028,666.83 Opening Bal Equity 169,000.00 Retained Earnings -733,478.58 Net Income -617,092.67 ------------ Total Shareholders' Equity -152,904.42 ------------ TOTAL LIABILITIES & SHAREHOLDERS' EQUITY 878,746.36 ============ Schedule 3.6 Intellectual Property Rights None. Schedule 3.8 Real Poperty Landlord: John D. Howard Family Limited Partnership - ------------------------------------------------------------------------------ Square Term Expiration Option Notice Renewal Feet Date Date Term - ------------------------------------------------------------------------------ 9,678 5 years 10/31/2010 yes 4/30/2010 1-3 years - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------ Base Sales Total Annual Total Monthly Rent Taxes Expenditure Expenditure - ------------------------------------------------------------------------ $203,244.00 $13,245.96 $226,464.00 $18,872.00 - ------------------------------------------------------------------------ Landlord: The Cannery - ---------------------------------------------------------------------------- Square Term Expiration Option Notice Renewal Feet Date Date Term - ---------------------------------------------------------------------------- 2,200 month to N/A N/A N/A N/A month - ---------------------------------------------------------------------------- - ------------------------------------------------------------------------ Base Sales Total Annual Total Monthly Rent Taxes Expenditure Expenditure - ------------------------------------------------------------------------ $84,000.00 $6,930.00 $90,930.00 $7,577.50 - ------------------------------------------------------------------------ Schedule 3.10 Employee Benefits Incentive Stock Options:
- -------------------------------------------------------------------------------------------------------------------- Number of Name Shares Exercise Price Term Relationship Details - -------------------------------------------------------------------------------------------------------------------- Sandra Varela 300,000 $0.50 3 years Employee Granted in Exec. E'ment Agmnt - -------------------------------------------------------------------------------------------------------------------- Roderic Stokes 100,000 $0.50 3 years Employee Granted in Exec. E'ment Agmnt - -------------------------------------------------------------------------------------------------------------------- George Mihalopoulos 100,000 $0.50 3 years Employee Granted in Exec. E'ment Agmnt - -------------------------------------------------------------------------------------------------------------------- Dan Snow 100,000 $0.50 3 years Employee Granted in Exec. E'ment Agmnt - -------------------------------------------------------------------------------------------------------------------- Chris Eakins 100,000 $0.50 3 years Employee Granted in Exec. E'ment Agmnt - -------------------------------------------------------------------------------------------------------------------- Engineer 50,000 TBD 3 years Employee TBD - --------------------------------------------------------------------------------------------------------------------
Total 750,000 ======= Performance-based Stock Options:
- -------------------------------------------------------------------------------------------------------------------- Number Exercise Name of Shares Price Term Relationship Details - -------------------------------------------------------------------------------------------------------------------- Sandra Varela 300,000 $0.50 3 years Employee Granted in Exec. E'ment Agmnt - -------------------------------------------------------------------------------------------------------------------- Roderic Stokes 100,000 $0.50 3 years Employee Granted in Exec. E'ment Agmnt - -------------------------------------------------------------------------------------------------------------------- George Mihalopoulos 200,000 $0.50 3 years Employee Granted in Exec. E'ment Agmnt - -------------------------------------------------------------------------------------------------------------------- Dan Snow 200,000 $0.50 3 years Employee Granted in Exec. E'ment Agmnt - -------------------------------------------------------------------------------------------------------------------- Chris Eakins 200,000 $0.50 3 years Employee Granted in Exec. E'ment Agmnt - -------------------------------------------------------------------------------------------------------------------- Engineer TBD TBD 3 years Employee TBD - --------------------------------------------------------------------------------------------------------------------
Total 1,000,000 ========= Copies of the employment agreements between OB and the following employees are annexed to this Schedule: Sandra Varela Christopher Eakins George Mihalopoulos Daniel Snow Schedule 3.10 - continued Insurance Benefits: 1. Name of Carrier - CaliforniaChoice 2. Policy Number - 22197 3. Term - month-to-month 4. Current Monthly Premium - $3,552.37 5. Current Number of Participants - 10 6. Benefits Offered - Medical - Orangebox pays 100% of the lowest cost HMO Plan 10 Dental - FDH Access 100 includede at no charge to Orangebox; Voluntary 3000 Plan available at extra cost to participant Life - $10,000 coverage per participant Vision - Voluntary plan COBRA Status - Cal COBRA 7. Open Enrollment Date - 5/1/2006 8. Minimum Hours Eligibility - 30+ 9. New Hire Waiting Period - 90 days Schedule 3.11 OB Tax Matters 3.11.2 - Unpaid Taxes Orangebox Entertainment, Inc. Tax Withholdings - ------------------------------------------------------------------------------- Total Withholdings 06-15-05 through 08-15-05 $37,459.63 Total Withholdings 09-01-05 through 10-01-05 $24,501.04 =============================================================================== TOTAL TO BE PAID $61,960.67 ========== 3.11.5 - Tax Liability Claimed or Raised by any Taxation Authority Orangebox Entertainment, Inc. received a Notice of Non-Compliance from the City of Los Angeles Office of Finance Tax and Permit Division dated September 21, 2005, indicating that there was a deficiency in tax registration certificate for Orangebox Entertainment, Inc. A copy of said Notice has been previously provided to Cirilium Holdings, Inc. Schedule 5.3.3 Outstanding Warrants and Options New Warrants Issued June 1, 2005 Exercise Price: $0.30 Expiration Date: March 31, 2009 New warrants issued after Name Old Warrants repricing - -------------------------------------------------------------------------------- Alpenschlossl KG des Herbert Steger 235,733 1,178,665 - -------------------------------------------------------------------------------- Capital Bank - Grawe Gruppe AG 703,500 3,517,500 - -------------------------------------------------------------------------------- Class Financial 125,000 625,000 - -------------------------------------------------------------------------------- Reinhard Diethardt 50,000 250,000 - -------------------------------------------------------------------------------- Franz Peter Gruber 166,667 833,335 - -------------------------------------------------------------------------------- Helfried Heidinger 40,000 200,000 - -------------------------------------------------------------------------------- Erich Jeindl 67,500 337,500 - -------------------------------------------------------------------------------- Erich Kniepeiss 25,000 125,000 - -------------------------------------------------------------------------------- Gerold Pankl 50,000 250,000 - -------------------------------------------------------------------------------- Restinga Capital Ltd. 488,800 2,444,000 - -------------------------------------------------------------------------------- Thomas Riess 35,000 175,000 - -------------------------------------------------------------------------------- Friedrich Schubert 200,000 1,000,000 - -------------------------------------------------------------------------------- Siegfried Steger 97,600 488,000 - -------------------------------------------------------------------------------- Robert Szvetecz 50,000 250,000 - -------------------------------------------------------------------------------- Total: 2,334,800 11,674,000 ========= ========== Employee Stock Options Exercised but not Issued - 485,833 Employee Stock Options Vested but not Exercised - 444,167 Other Shares to be Issued - 1,350,000 Schedule 5.4 CHI Subsidiaries Cirilium Holdings II, Inc. - Delaware corporation and wholly-owned subsidiary of Cirilium Holdings, Inc. Cirilium, Inc. - a Florida corporation and wholly-owned subsidiary of Cirilium Holdings II, Inc. Stitel Systems, Inc. - an Arizona corporation and wholly-owned subsidiary of Cirilium Holdings II, Inc. Schedule 5.5 CHI Liabilities Cirilium Holdings, Inc. Accounts Payable ---------------------------------------- Current as of September 30, 2005 Account Amount Owed ------- ----------- 1 West Asset Mgmt - Qwest - Phone Local $249.74 2 AT&T - Phone LD & Internet $361.63 3 Staples - Office Supplies $490.15 4 FedEx - Shipping $8,996.45 5 DHL - Shipping $108.40 6 SRP - Utilities $219.88 7 CMS - SW Support $1,500.00 8 Premiere - Phone Conferencing $31.80 9 Prepaid Press - Advertising $4,750.00 10 RReef - Calwest - Rent $15,328.68 11 SOS Exterminating - Maintenance $45.00 12 Chastang Ferrell - Legal $146.25 13 Digium - Hardware $1,495.00 14 American Express - Credit Card $3,269.31 15 Contact - Website hosting $25.00 16 Virgo & Taurus Publishing $9,500.00 17 Sales Commissions $25,125.00 18 JMG Properties $22,032.00 ------------------- TOTAL $93,674.29 ========== Schedule 5.9 CHI Tax Matters 5.9.2 - Unpaid Taxes 1. 2003 Delaware Franchise Tax 2. 2004 Delaware Franchise Tax -----END PRIVACY-ENHANCED MESSAGE-----