WNLV 8-K
Winvest Group Ltd (WNLV)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of Earliest Event Reported):
(Exact name of registrant as specified in its charter)
| (State
or other jurisdiction of incorporation) |
(Commission
File Number) |
(IRS
Employer Identification No.) |
(Address of principal executive offices (zip code))
(Registrant’s telephone number, including area code)
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 240.13d-4(c)) |
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common stock
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
JUMPSTART OUR BUSINESS STARTUPS ACT
The Company qualifies as an “emerging growth company” as defined in Section 101 of the Jumpstart our Business Startups Act (the “JOBS Act”) as we do not have more than $1,070,000,000 in annual gross revenue and did not have such amount as of March 31, 2018 our last fiscal year. We are electing to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act.
We may lose our status as an emerging growth company on the last day of our fiscal year during which (i) our annual gross revenue exceeds $2,000,000,000 or (ii) we issue more than $2,000,000,000 in non-convertible debt in a three-year period. We will lose our status as an emerging growth company if at any time we are deemed to be a large accelerated filer. We will lose our status as an emerging growth company on the last day of our fiscal year following the fifth anniversary of the date of the first sale of common equity securities pursuant to an effective registration statement.
As an emerging growth company, we are exempt from Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”) and Section 14A(a) and (b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such sections are provided below:
Section 404(b) of the Sarbanes-Oxley Act requires a public company’s auditor to attest to, and report on, management’s assessment of its internal controls.
Sections 14A(a) and (b) of the Exchange Act, implemented by Section 951 of the Dodd-Frank Act, require companies to hold shareholder advisory votes on executive compensation and golden parachute compensation.
As long as we qualify as an emerging growth company, we will not be required to comply with the requirements of Section 404(b) of the Sarbanes-Oxley Act and Section 14A(a) and (b) of the Exchange Act.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Current Report on Form 8-K or Form 8-K and other reports filed by us from time to time with the Securities and Exchange Commission (collectively the “Filings”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, our management as well as estimates and assumptions made by our management. When used in the filings the words “anticipate”, “believe”, “estimate”, “expect”, “future”, “intend”, “plan” or the negative of these terms and similar expressions as they relate to us or our management identify forward looking statements. Such statements reflect the current view of our management with respect to future events and are subject to risks, uncertainties, assumptions and other factors (including the risks contained in the section of this report entitled “Risk Factors”) as they relate to our industry, our operations and results of operations, and any businesses that we may acquire. Should one or more of the events described in these risk factors materialize, or should our underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the U.S. federal securities laws, we do not intend to update any of the forward-looking statements to conform them to actual results. The following discussion should be read in conjunction with our pro forma financial statements and the related notes that will be filed herein.
1
Item 1.01 Entry into Material Definitive Agreement
On May 16, 2022, Winvest Group Ltd. (“WNLV,” or the “Company”) entered into a share exchange agreement (the “Share Exchange Agreement”) with The Catalyst Group Entertainment, LLC (“TCG”), a California limited liability company, Joseph Lanius (“Lanius”), Nicholas Burnett (“Burnett”), and Khiow Hui Lim (“Khiow,” “Burnett” and together with Lanius, the “TCG Shareholders”), the sole officers, directors, and shareholders of TCG, IQI Media Inc. (“IQI”), a California corporation, solely 100% women-owned company, Khiow, Lanius, Charlene Logan Kelly (“Kelly”), Burnett, Connie Tsai (“Tsai”), and Amy Morton (“Morton”), as the officers, directors and shareholders of IQI (the “IQI Shareholders”). Under the Share Exchange Agreement, One Hundred Percent (100%) of the ownership interest of TCG and IQI was exchanged for 900,000 shares of common stock of the Company at the Closing issued to the TCG Shareholders and the IQI Shareholders. The transaction has been accounted for as a recapitalization of the Company, whereby WNLV is the accounting acquirer.
Immediately after completion of such share exchange, the Company will have a total of 17,411,217 issued and outstanding shares, with authorized share capital for common share of 4,500,000,000.
Consequently, the Company has ceased to fall under the definition of shell company as define in Rule 12b-2 under the Exchange Act of 1934, as amended (the “Exchange Act”) and TCG and IQI are now wholly owned subsidiaries.
Item 2.01 Completion of Acquisition or Disposition of Assets
As described in Item 1.01 above, on May 16, 2022, we acquired all the issued and outstanding shares of TCG and IQI pursuant to the Share Exchange Agreement and TCG and IQI became our wholly-owned subsidiaries. The acquisition was accounted for as a recapitalization effected by a share exchange, wherein TCG and IQI are considered the acquirer for accounting and financial reporting purposes.
As a result of the acquisition of all of the issued and outstanding membership interest of TCG and all the issued and outstanding shares of IQI, we have now assumed TCG’s and IQI’s business operations as our own.
2
FORM 10 DISCLOSURE
As mentioned in Item 1.01, on May 16, 2022, the Company effectively acquired TCG and IQI in a Reverse Merger business combination transaction and of which the Company was a shell company prior to such acquisition is now entering into a business combination, other than a business combination with a shell company, as those terms are defined in Rule 12b-2 under the Exchange Act, according to Item 2.01(f) of Form 8-K, the registrant is required to disclose the information that would be required if the registrant were filing a general form for registration of securities under the Exchange Act on Form 10.
We hereby provide below information that would be included in a Form 10 registration statement.
Description of Businesses
Corporate History
Winvest Group Limited (the “Company”), changed its name from Zyrox Mining International, Inc. on December 17, 2021. The Company (formerly Diversified Energy & Fuel, Inc. until August 15, 2012) was incorporated in the State of Nevada on June 3, 2009. The Company began formal operations on June 3, 2009, with the principle purpose of developing, marketing, and selling software products through the Internet, and to provide web based services for individuals and small business. During 2010, this business was discontinued and management focused on developing a biodegradable plastic opportunity.
The Company began trading as Riverdale Capital, Ltd. under the symbol “RICP” on June 3, 2009. Effective April 30, 2012 the Company changed its name to Diversified Energy & Fuel International, Inc and changed its name to Zyrox Mining International, Inc. on August 15, 2012.
On November 8, 2010, the Company entered into an agreement to acquire 100% of the Membership Interests of WSVPA Bio Products Incorporated, a Nevada LLC in consideration for 102,238,200 shares of common stock. After completion of their due diligence, WSPVA formally closed on the transaction on May 12, 2012. The Company subsequently received 500,000,000 Class “A” membership units and 1,000,000 Class “B” membership units representing 100% of the membership interest of WSPVA (dissolvingplastic.com) in return for 102,238,200 common shares of the Company and WSPVA is now a wholly-owned subsidiary of the Company.
On August 17, 2010, the then Chief Executive Officer resigned and appointed Carl H. Kruse as sole Director and Chief Executive Officer. Carl H. Kruse became the majority shareholder at that time by virtue of a Stock Purchase Agreement with the majority shareholder, resulting in a change of control of the Issuer.
The Company finalized the acquisition of a biodegradable plastic manufacturer, WSPVA, Bio Products International, LLC, a Nevada LLC, on March 12, 2012 for 102,238,200 common shares, of which 98,984,744 had been issued in the prior fiscal year and recorded as Issuance of Common Shares for Donated Services, because of the uncertainty of completing the transaction. The Company now owns 100% of the equity interests in this wholly owned subsidiary. With the transaction now complete the market value of the shares on March 12, 2012 has been recorded as the purchase price for WSPVA.
We are a development stage company and have not yet opened for business or generated any revenues. Our limited start-up operations have consisted of the formation of our business plan and identification of our target market. We will require the funds from this offering in order to fully implement our business plan as discussed in the “Plan of Operation” section During the period from November 2012 through April 2020, the Company was dormant.
The Company’s accounting year-end is.
David Lazar, the principal of Custodian Ventures, LLC conducted due diligence on the Company and determined that the Company would be a potential Custodianship candidate, based upon previous management appearing to have abandoned the Company approximately eleven years ago. Mr. Lazar then chose to buy shares of the Company on the open market, and start a Custodianship proceeding.
On December 27, 2019 Custodian Ventures, LLC was appointed as the custodian of the Company by the Eighth Judicial Court of Nevada pursuant to Case No. A-19-805642-B.
3
On March 5, 2021, as a result of a private transaction, 300,000,000 shares of Series A Preferred Stock, $0.001 par value per share (the “Shares”) of the Company, were transferred from Custodian Ventures, LLC (the “Seller”) to Wan Nyuk Ming, Ng Chian Yin, and Jeffrey Wong Kah Mun, respectively, based on their ownership of Winvest Group Limited (collectively, the “Purchaser”). As a result, the Purchaser became an approximately 90% holder of the voting rights of the issued and outstanding share capital of the Company on a fully diluted basis of the Company, and became the controlling shareholders. The consideration paid for the Shares was $700,000. The source of the cash consideration for the Shares was the personal funds of the Purchaser. In connection with the transaction, David Lazar released the Company from all debts owed to him and/or the Seller.
Other than as described below, there are no arrangements or understandings among both the former and new control persons and their associates with respect to the election of directors of the Company or other matters. The information set forth in Item 5.02 of this Form 8-K is incorporated by reference into this Item 5.01.
On April 14, 2021, the existing director and officer resigned immediately. Accordingly, David Lazar, serving as a director and an officer, ceased to be the Company’s Chief Executive Officer, Chief Financial Officer, President, Treasurer, Secretary and a Director.
On April 14, 2021, Mr. Wan Nyuk Ming consented to act as the new Chairman and a member of the Board of Directors of the Company; Mr. Ng Chian Yin consented to act as Managing Director (MD) and a member of the Board of Directors of the Company; Mr. Jeffrey Wong Kah Mun consented to act as the new Chief Executive Officer (CEO) and a member of the Board of Directors of the Company.
Finally, also on April 14, 2021, Ms. Tham Yee Wen was appointed as Secretary and Chief Operating Officer (COO) of the Company; Ms. Boo Shi Huey was appointed as Treasurer of the Company.
On December 29, 2021, FINRA declared the latest name change and a 1 for 250 reverse stock split went effective. Also on December 29, 2021, the Company was informed by FINRA that the Company’s ticker symbol would be changed to WNLV in twenty business days.
On May 16, 2022, Winvest Group Ltd. (“WNLV,” or the “Company”) entered into a share exchange agreement (the “Share Exchange Agreement”) with The Catalyst Group Entertainment, LLC (“TCG”), a Delaware corporation, Joseph Lanius (“Lanius”), Nicholas Burnett (“Burnett”), and Khiow Hui Lim (“Khiow,” “Burnett,” and together with Lanius, the “TCG Shareholders”), the sole officers, directors, and shareholders of TCG, IQI MEDIA INC. (“IQI”), a California corporation, Khiow, Lanius, Charlene Logan Kelly (“Kelly”), Burnett, Connie Tsai (“Tsai”), and Amy Morton (“Morton”), as the officers, directors and shareholders of IQI (the “IQI Shareholders”). Under the Share Exchange Agreement, One Hundred Percent (100%) of the ownership interest of TCG and IQI was exchanged for 900,000 shares of common stock of the Company at the Closing issued to the TCG Shareholders and the IQI Shareholders. The transaction has been accounted for as a recapitalization of the Company, whereby WNLV is the accounting acquirer.
Business Overview
Winvest Group Ltd. (“WNLV” or the “Company”) is a US holding company incorporated in Nevada, which operates through the Company’s wholly-owned subsidiaries TCG and IQI.
TCG
The Catalyst Group Entertainment is a media debt financing company focusing on opportunities comprised of global emerging film, television and media projects. We curate a diverse portfolio of projects that we believe will create profitable and steady returns for investors with an equal focus on capital protection by providing collateralized loans to an asset class that is traditionally not correlated to normal market conditions.
The Catalyst Group Entertainment (hereafter called “TCG”) is a media finance and production company for the media and entertainment sector headed by Joseph S. Lanius, Nick D. Burnett and Khiow H. Lim with over 25 years’ experience in the film industry, encompassing film finance, production and distribution. The TCG team has relationships with movie studios, streaming platforms, agencies, production companies and leading financial institutions.
4
TCG has a broad range of film finance products and support services to offer established and emerging film production companies, catalyzing both domestic and international filmmakers and producers in the global film markets.
With our experience, networks, relationships and resources, TCG utilizes risk mitigation techniques that could enhance investor protection by financing collateralized debt and gap/mezzanine positions for film, television and other media projects, whilst also occasionally securing net profit participations to enable investors to benefit from potential extraordinary returns generated from TCG financed projects.
The founding team possesses a full breadth of hands-on experience including deal origination, financial structuring, business and legal affairs consulting and film and television production expertise. Within the new emerging digital entertainment market, TCG will not only provide media financing tools but also plans to partner with a distribution aggregator with experienced technology developers and data analysts to facilitate a streaming distribution platform for content creators backed by metrics.
Our founding members believe that current and anticipated market trends are ideal for the launch of a debt facility with industry veterans that have a strong background in financing and production and media technology. Our team has an excellent industry network of associates that have worked with major film studios, globally known talent and packaging agencies, and management companies. We also possess a strong network of close relationships with distributors, as well as recognized Sale Agents and banks. These are complemented by an extensive network of family offices, asset managers, hedge funds and a pool of private investors.
The Catalyst Group Entertainment is preparing to commence operations with a soft launch in May 2022.
Independent Film Financing Overview
EQUITY
Equity investment is the last to recoup in the waterfall of revenues for a media project. The equity investors negotiate with producers for a share of net profits, which could be up to 50% depending on the size of the investment for the project. This type of investment is the highest risk & highest potential reward. The production team and overall package of the media project are important factors to help mitigate the risk and optimize the reward.
GAP:
The “gap” position in the waterfall is a form of mezzanine debt financing where the producer wishes to complete their film finance plan by procuring a loan that is secured against the projected estimates of a media project that are provided by the sales and distribution experts within the marketplace for a particular project. This is a type of loan that TCG will provide in the marketplace and generate interest rates of 10-17.5% annually.
PRE-SALES:
Prior to the media project being released, distribution agreements with major studios or film distributors negotiated by producers and sales agents for the media project are made that provide a minimum guarantee or license fee with a negotiated payment structure and backend. The typical payment structure is 10-20% upon signature and 80-90% upon delivery of the finished film to the distributor. TCG will provide pre-sale loans for projects at interest rates between 5-12.5% annually.
SOFT MONEY:
So-called “soft money” can take on a variety of different forms including tax credits, tax rebates and tax allowances, government-backed grants or subsidies, negotiated service discounts and sales of certain rights in the film. The most common form of soft money is in tax incentives, tax rebates, or tax credits that are paid by the government body where the media project is produced. This is generally considered to be highly secured financing and any loans for this type of collateral typically generate interest returns of approximately 8-10% annually.
5
Deals
When making GAP LOANS:
| ● | it is very important that the producer has a solid production track record and key crew to support to ensure that the producer can deliver the film that it is proposing on time and on budget. |
| ● | TCG’s executive producer team will vary from project to project; overseeing and monitoring each project. |
Client Focus
Pre-sale distribution. Securing minimum guarantees and license fees.
In collaboration with a reputable sales agency, skilled producers can sell distribution rights piecemeal to various domestic and foreign territories before the project starts production, which is known as a “pre-sale” within the industry. These are sales made to reputable and verified distributors with proven records of timely payment. The amount of the minimum guarantee/license fee is based on the strength of the script and attached (or “packaged”) elements such as director and actors. TCG will always discount the pre-sale collateral when determining its loan size to provide a safety buffer.
Tax Incentive Financing and GAP/Mezzanine Contributions
TAX INCENTIVES:
Many countries and states provide tax incentives from government entities. In the United States, many state governments (e.g. Georgia, Louisiana, New York, etc.) have tax incentive programs for media projects that are a reliable form of collateral for financiers. The tax incentive is dependent upon the amount of qualified spend in the production location. Interest rates for tax incentive financing vary from 8-12% with repayment typically being made from the applicable government entity within 12-18 months depending on the program. The tax incentive loan will not be provided until an industry approved third party has analyzed the budget and submitted an estimated audit. Also, the producer must provide necessary evidence that the production is approved to qualify for the tax incentive. The amount of the tax incentive loan will be no more than 90% of the estimated tax incentive return provided by the auditor.
GAP/MEZZANINE FINANCING:
Gap financing is a type of mezzanine financing that is secured by unsold territories for a media project. This type of financing is recouped after the pre-sale loan is satisfied. It is a riskier form of financing than pre-sale loans but also has a higher form of return averaging from 12-17.5% annually depending on the evaluation of the overall risk profile of the project. The estimated time of recoupment is normally 12-18 months. TCG will consider the performance of pre-sales and overall value of the package to determine the appropriate amount of gap financing. With certain projects, any gap financing will require a net profit share that can potentially generate exponential returns if a picture is a box office success.
Competitive Advantages
TCG has experienced finance and production executives, a rigorous and strategic green-light process, U.S. and international distribution relationships, and access to premium investment opportunities.
INVESTMENT CONTROLS AND PROTECTIONS
With extensive access to the top commercial film projects from the studios/production companies and independent producers, predominantly due to TCG’s and its principals’ track record, reputation and standing within the industry, deals will be sourced from trusted professionals working in the entertainment industry.
The Managers have created a due diligence process to facilitate the initial assessment of each media project submission and will involve key partners to help with the evaluation process. If gap coverage is being considered a ‘reader’s coverage’ review of the script may also be sourced.
6
TCG has several risk mitigation advantages including (i) use of tried and tested transaction structures, (ii) knowledge of the various co-production treaties and their benefits, and (iii) thorough collateral evaluation and due diligence techniques. For any loan to be issued, there must be a credible finance plan with evidence that 100% of the budget will be in place upon loan issuance to complete and deliver the project in accordance with the production schedule. TCG also negotiates priority recoupment positions appropriate to the level of risk undertaken. All productions will have (i) general liability and errors and omission insurance policies, (ii) reputable third-party collection agents, and (iii) robust legal documentation to secure the necessary collateral and rights.
GAP funding will be no more than 50% of a budget and the applicable sales agent’s historical hit rate of actual sales vs take estimates will be scrutinized. Additionally, no less than 25% of the sales fees due to the sales agent will be deferred until TCG’s loans are repaid. This is intended to align interests and ensure the sales agent needs to perform for them to earn their full fees. Counter party creditworthiness will be assessed by appropriate due diligence. TCG will always liaise with its network and other financiers in assessing and validating its due diligence of counter-parties.
SALES AGENT RELATIONSHIPS
TCG has relationships with sales agents including Hanway Films, The Solution Entertainment Group, XYZ Films, the Exchange, Mister Smith, Highland Film Group, and AGC Studios.
IQI
IQI MEDIA INC. is a full-service content creation, film and advertising production company located in the City of Pasadena, California. Our producers’ team keen on managing all aspects of a multi-languages project throughout its life cycle from conception and strategy to design, development and delivery. IQI Media, a solely 100% women-owned company, founded by Khiow Hui Lim in August 2010, a native Malaysia born producer graduated from Wichita State University. She has been producing from small to large scale video, film productions for more than 20+ years.
In 2012, IQI reached out to Brand USA offered to donate a nearly 700 hours road trip footage to support President Obama “Travel Promotion Act” campaign, ended up IQI was offered a contracted post editorial job from Miles Partnership. Miles Partnership is the official destination marketing management agency under the “Travel Promotion Act” that created the Brand USA — the country’s first national marketing arm was signed into law in 2010. IQI’s mission is to support Brand USA and Miles Partnership to increase incremental international visitation, spend, and market share to fuel the nation’s economy and enhance the image of the USA worldwide.
IQI production has served prestigious S&P 500 brand clients, overseeing interactive development from pre- to post-production, including concept and design.
In 2014, IQI decided to embrace it production creativity into feature length film and animation production. During these years, IQI and producer Charlene Kelly closed a deal to begin story development with the Academy Awards director Brenda Chapman. And the next year to complete a sci-fiction feature film titled “Alien Code” currently distributed across North America and Europe starring an Emmy award cast Richard Schiff, Mary McCormack
In 2018, IQI officially incorporated in state of California, as a joint venture with The Catalyst Group Entertainment to roll out theatrical and original streaming content. Focus on “ConTech” incubators who can utilize visual creation, script data development with analytical metrics and emerging technologies for better content delivery experience.
OUR VISION
IQI vision is to be the best-in-content visual delivery and metric analysis in content creativity and reiteration production lab — helping content creators in the largest share of the global streaming market and significantly contributing to job creation, gross domestic product (GDP), export cultural and freedom contents throughout the world.
7
OUR MISSION
Our mission is to increase content creator incremental ads spend revenues via streaming platforms, and market share to fuel nationwide jobs creation and enhance the story of the USA worldwide, not only in short form video but also in a large-scale format like theatrical release movies.
Market Overview
During the global lockdown at the end of March 2020, Deloitte media, entertainment and technology did a possible scenarios on how a world reshaped by pandemic-driven trends; and one where streaming video and subscription services have revolutionized the traditional U.S. media and entertainment industry. According to Deloitte media, entertainment and technology, 82% of U.S. consumers subscribe to at least one paid streaming video service; the average subscriber has four paid video streaming services. Each consumer might subscribe to Apple+, Disney+, Netflix and Amazon Prime. Representing media and entertainment behaviors in five different countries, Deloitte’s 16th annual “Digital Media Trends” survey shows global audiences are increasingly frustrated managing the costs and content of streaming video on-demand services, New York, March 29, 2022. According to a 2021 survey report from the Deloitte Center for Technology, Media & Telecommunications, many cancelled cables and subscribe to HBO Max, Hulu, Netflix and Amazon Prime or even spend over $80 a month subscription on Youtube Premium TV (Doug Shapiro, “One clear casualty of the streaming wars: profit,” TheStartup, Medium, October 28, 2020).
According to Deloitte Insights, 55% of respondents now watch a free ad-supported video service. Streaming music subscribers pay for an average of two paid music services, and those who subscribe to gaming services pay for an average of three.
Subscribers cite an increase in price as the biggest reason they would cancel a paid video, music, or gaming service.
Before the pandemic, the Studios typically released new movies to theaters with an exclusive window: A film would not be shown on any other channel during the theatrical release. On average, studios share 45% of box office revenue with the theater operator. Most movies make about 75% of total US box office revenue in the first 17 days (including the first three weekends), yet they can stay in theaters for another 60 to 75 days to capture the remaining 25%. The longer a movie runs in theaters, the more the revenue share shifts in favor of the venues (Chris Arkenberg, David Cutbill, Jeff Loucks, Kevin Westcott, Digital Media Trends “The Future Of Movies,” The Deloitte Center for Technology, Media & Telecommunications, 10 December 2020).
Key Findings
Traditionally, the windowing system has ensured that revenue generated by each platform is protected by rights to show movies during a particular time frame. Theatrical releases not only drive box office revenues; typically determine how revenue from subsequent windows are negotiated. Here’s an example, the license fee for TV windows is determined by the success of the theatrical release: the higher the box office revenue, the higher the license fee paid to studios. If more movies skip theaters or shorten theatrical windows in favor of digital platforms, fewer movies would likely be able to generate required box office results or reach minimums for TV deals. Likewise, production budget and cost will eventually reach to the lowest.
Changes to the theatrical window—such as releasing a movie on Streaming OR PVoD instead of in a theater—could create a domino effect of change across other windows and put more pressure on the success of streaming efforts to compensate. This shifting landscape puts studios in a difficult position. They may be able to reach more people through streaming services, particularly during the pandemic, but doing so could undermine theaters and the large revenues they generate.
As on-demand streaming services have expanded, they have put more pressure on the traditional post-theater windows, such as premium and basic pay TV.
IQI producers team believes that by Q2 of 2022, at least 150 million paid subscriptions to streaming video-on-demand (SVOD) services will be cancelled worldwide, with churn rates of up to 30% per market.
As leading streaming providers expand globally while national media companies spin up their own domestic streaming services, the amplified competition is creating abundant consumer choice—and this whip effect is accelerating as a result. That’s the bad news.
However, we believe the good news is that, overall, more subscriptions will be added than cancelled, the average number of subscriptions per person will rise, and, in markets with the highest churn, many of those cancelling may resubscribe to a service that they had previously left. These are all signs of a competitive and maturing SVOD market. As SVOD matures, growth across global regions that may have different cost sensitivities will likely require different business model innovation and pathways to profitability in media and entertainment.
Physical movie theaters do exist and will continuing shining in a different business model by market.
8
Current Filmmaking
The IQI production team is a true believer in post-covid “Filmmaking+” and “Cinema+” landscape. If the motherland is full of viruses, we are should have died by now. Apparently, our motherland can heal itself without a doubt.
When a movie or television show shoots on location, it brings jobs, revenue, and related infrastructure development, providing an immediate boost to the local economy. Our industry pays out $44 billion per year to more than 320,000 businesses in cities and small towns across the country—and the industry itself is comprised of more than 93,000 businesses, 87 percent of which employ fewer than 10 people. As much as $250,000 can be injected into local economies per day when a film shoots on location. In some cases, popular films and television shows can also boost tourism. Travel agencies even bundle with an extraordinary locations to serve tourists for better travel experience. In conclusion, FILM INDUCED TOURISM does influence younger travelers to a world destination (Shbhangi Goel, “Blockbuster movies create booms for tourism — and headaches for locals,” August 26, 2021. Source: https://www.cnbc.com/2021/08/26/movie-tourism-films-that-attract-visitors-cause-problems-for-locals.html.
Business Model
IQI , through its sole officer, has been in media and entertainment industry for more than 11 years. It wasn’t an easy journey for IQI the past 10 years to use of Strategic Foresight Methods for Content Creation and Portfolio Management in visual and storytelling. IQI has created a unique 3 Edges business model to drive revenues to the core business – ConTech Studio. Our blueprint layouts as below:
Content Management & Data Analytics
Be a strategic partner and work with 3 -4 global and domestic Content Creators to manage contents such as: Weekly Short Children Animation, Educational Programs. These content creators require Content Management via YouTube – Google Analytic – Google Ad Sense.
As this revenue stream allows IQI sustains an active cash flow from a 60/40, 70/30 or 80/20 split ad revenues with Content Creator. (**Currently we are in negotiating with one content creator in New York and 2 content creators from Taiwan, China to set up and manage YouTube channels. This will generate a monthly management fees as well as a quarterly ads revenues stream.
Original Intellectual Property Development
Be an Original Content Creator (OCC) and Production Company in Hollywood.
IQI will actively engage with studios and talent agencies to develop and match funding to produce quality Live Action, Holiday movies and CGI feature animation film that provide global audience with enjoyable entertainment on theatrical big screen and carry audience favorites stories along in a smart technology on worldwide streaming platforms.
Aggregator
Be an early in aggregator ecosystem, act as “One-Stop Gatekeeper Entertainment Smart Platform” for content creator and filmmaker in streaming platforms.
IQI will utilize its’ content management team to work with industry distributor Synergetic Films to develop an aggregator platform to facilitate crowded OTT market.
9
Objectives
1. Leverage content partner IP to Drive Revenue
To begin a longer content monetizing term planning for two to four IPs and improve existing content performance, in order to manage a better content channel and the same time to sustain weekly original content for Character Arts’ “Spookley the Square Pumpkin” currently distributed on Disney Junior and Disney +. IQI will work Character Arts as a strategic partner to revamp “Spookley the Square Pumpkin” outside of Disney Channel and data driven to Spookley Education Website, Youtube Channel and Social Platforms. Our tactics will create engaging children’s programs via KPIs metrics measurement, such as:
| ■ | Impact on sentiment about the Square Pumpkin |
| ■ | Increase Social engagements and engagement rate with bi-weekly episode. |
| ■ | Impressions/CPM to drive ads revenue |
| ■ | In addition, localization “Spookley the Square Pumpkin”. and distributed via official YouTube channel, targeting designated audience. |
Focus on:
| a. | Reorganize – “Spookley the Square Pumpkins” Playlists |
| b. | Strategize monetization plans |
| c. | Create partner programs to benefit existing followers. |
| d. | Re-create a quick and fast turn around live action “Read Aloud” series to engage with exiting followers. Mainly distribute to YouTube and Spotify. |
| e. | Successfully launching weekly new episode |
| f. | Improving existing Follower Health |
International revenue via localization – to begin the first language with “Spanish” Caption. EU, North America and South America have the biggest community with Spanish speakers.
Monthly Performance Improvements
| a. | Promoting, engaging and creative episodes strategy needs an owner; |
| b. | Opportunity-driven account planning. |
Smart Prioritization of Jobs
| a. | Prioritize episodes based on expected ROI. |
Increase in productivity
| b. | Possible add one monthly special edition in trends to engage with new and existing followers. |
10
2. Develop and Complete Micro Budget IP Content Production Between 2022 – 2023
Produce new IP to facilitate market needs and at the same time to increase IQI market cap value via Original Content.
Develop and Complete An Animation IP Content Production Between 2022 – 2024. With its’ characters and famous pop music from the 70’s in this animation, IQI intends to produce and complete an animation IP for the creative and NFT market via IQI original content.
3. Decrease Turnaround Time from Pre-production to Post Editorial → reduce time to wrap a production by 30%
The shorter turnaround time should cost at least 30% less in production budget which should lead to a faster distribution.
RISK MITIGATION
Animation production is a very labor-intensive business process that can be segmented in different stages some of which are highly suitable to outsourcing to lower-cost locations. Hence, in terms of financially successful of a film will receive a high revenue in box office truly depends on distribution success. In addition, it is no way to prove for financially successful if without a great distribution & marketing strategy.
IQI Animation division plans to implement several proven strategies to mitigate risk to investors, first with a funds matching agreed amount from distribution studio such as Cartoon Network or Netflix Animation. In addition, IQI reduces risk from customizing brand sponsorship that incorporating the early marketing budget into the production budget, setting up a collection account with distributors, and casting 1 or 2 marketable actors with name recognition, ultimately a secure and completion bond will issue to protect the investors for film delivery. Lastly, a secure bond will tie to the film to secure and cover any possibilities that might happen during the process of filmmaking.
MARKETING
Regardless of the eventual distribution method, IQI Animation will be responsible for early efforts to market and build awareness for animation feature film to two specific groups: Distributors and End Users. Engaging the end user from the beginning is key to building and establishing a fan base to help bring awareness to the project. This approach gives the company more negotiating power in securing traditional distribution. IQI Animation has devised a comprehensive marketing strategy that utilizes a coordinated effort directed at creating a synergy between the distributor and audience, engaging both at the same time.
Animation feature will be marketed early on by social networking, blogs, and viral video. We will allow the fans to express themselves and get rewarded and recognized for their efforts. This will build a list of end users with markets they reside in. Using this information IQI Animation will be able to market directly to the end user and keep them engaged with distribution content.
IQI Animation for equivalent to the production budget will work with distribution studios to spend nearly a 50/50 P&A deal to gain public exposure worldwide. By understanding the importance of marketing and building a strategy for it from the outset, it is easier to manage, maintain and adapt to trends rather than waiting until the completion of postproduction.
SUCCESS FACTORS OF CGI ANIMATION PRODUCTIONS
The key success factors for producing high quality animation feature and to make profitable to our investors are to set up an appropriate infrastructure in terms of studio facilities, workspaces, computer hardware, software etc. which allows to utilize technical skills and competence with studios in the market. Far and foremost, hiring the well knows creative visual artists who can convey the right story.
11
As below, these are the success key factor that IQI Animation will conduct:
| ● | Objectively and critically conduct self-assessment |
| ● | Right level of corporate controls |
| ● | Right incentive and motivation mechanisms |
| ● | Robust production workflows |
| ● | Supportive corporate culture (respectful, collaborative, etc.) |
| ● | Sound economic model |
| ● | Strong intellectual property planning |
| ● | Strengths in licensing |
| ● | Ability to form contracts and leverage networks to get the right work done at the right global location and at the right price |
| ● | Effective marketing and public relations plan |
| ● | Extensive distribution networks |
IPS HEALTH GROWTH MEASUREMENT GOAL FOR LIVE-ACTION PRODUCTION
Currently YouTube has around 2 billion global users (Published by L. Ceci, “YouTube - Statistics & Facts” Apr 4, 2022, Source: https://www.statista.com/topics/2019/youtube/#dossierKeyfigures). For example, this is how IQI will measure, the unit of calculation is based on 1% of the minimum daily active number “click-through-rate”, which is $20,000,000 in impression. If we negotiate the revenue of the on-demand volume at the lowest class at $0.01 globally (not setting any territory), if the content receive 1 million viewers in a month, IQI content will receive at least $300K in revenue stream.
In terms of Content Creator, revenue comes from a share of advertising money. Creators are paid 68% of advertising revenue (Werner Geyser, How Much do YouTubers Make? – A YouTuber’s Pocket Guide [Calculator], January 4th, 2022 Source: https://influencermarketinghub.com/how-much-do-youtubers-make/). Actual figures vary significantly, depending on factors such as engagement rate, but as a rough average channel owners can earn between $3 and $5 for every 1000 video views.
The revenue stream might overwhelm our investors if IQI produces a unique content. We foresee by 2025, YouTube contents will becoming a “special interest” or “niche” long and short form content that audiences will subscribe to watch daily on their devices.
IQI has a long-term relationship with a group of Google Analytics, Google Ads Sense and YouTube Analytic software integration engineers to implement necessary metrics measurement on each of IQI Original Content or clients’ original content.
4. Hire union and non-union of 250+ crews, create new production + on-site jobs
We are looking to add 6 to 8 Management Roles in full-time supporting day-to-day basis jobs.
12
STRATEGIC FRAMEWORK
| BUSINESS GOAL | REACH THE TOP 100 Production Companies in the new recovery Hollywood | ||
| MARKETING OBJECTIVES | 1. | Developing Original Content | |
| 2. | Incubating Younger Generation | ||
| 3. | Engaging Cinema and Online Streaming Relationship and, | ||
| 4. | Partnering with Unions in Content Technology Education | ||
| CREATIVE PLATFORMS | THEATRICAL, YOUTUBE & STREAMING PLATFORMS | ||
| COMMUNICATION TASKS | ● | RETURN OF PRODUCTION | |
| ● | WELCOME BACK THE ENTERTAINMENT INDUSTRY | ||
| ● | ENTICE AUDIENCE WITH METRICS MEASUREMENT IN PLOT & CONVERT PLOT INTO AN INTERESTING VISUAL + STORY | ||
| CHANNELS & METHODS | ● | INFLUENCERS OWNED PLATFORMS/BRANDED CONTENT SOCIAL
| |
| ● | TELEVISION/ONLINE VIDEO/PUBLIC RELATIONS/OUT OF HOME/SPONSORED CONTENT | ||
| ● | IN-FLIGHTS ENTERTAINMNET/HOSPITALITY ENTERTAINMENT/ELECTRICE CHARGER STATION ENTERTAINMENT | ||
PLAN OF OPERATIONS
Continue reaching out to new Content Creators that require Content Management via YouTube – Google Analytic – Google Ad Sense. This revenue stream allows IQI to sustain an active cash flow from a 60/40, 70/30 or 80/20 split ad revenues with Content Creator. (**Currently we are in closing a content partnership with content creator Character Arts in New York, Ouction.io NFT content platform from Hong Kong and 1 animation content creator from China to set up its’ original contents YouTube channels. With these content management jobs, IQI will generate a monthly management fee as well as a quarterly ads revenues stream.) Continuing serving Miles Partnership/Brand USA on “United Stories” Campaign launches in 2022.
Set up operation workspace studio for production meeting and facilitate 7 -8 full time operation employees on day-to-day production to sprint planning content creatives, usage and content management. Contracting with an IT to support studio intranet, hardware and software implementation. Set up distribution key opinions leader (a.k.a KOL) partners programs. Complete monthly and quarterly IQI reviews and weekly content health reviews. Hold daily production updates meetings on feature film pre-production development.
Reach out to a few market developers to initiate first conversation on the blueprint of “MaiContent” aggregator pipeline product. Begin MaiContent self-distribution platform UI and UX design. Develop platform database. Hold weekly and monthly product development updates and progress.
Employees
WNLV, TCG and IQI currently have an aggregate of 14 employees, one of whom is the sole officer and director of WNLV. We anticipate hiring additional employees in the next twelve months. We anticipate hiring necessary personnel based on an as needed basis only on a per contract basis to be compensated directly from revenues.
13
Intellectual Property
WNLV does not currently own any existing Intellectual Property.
TCG does not own any IP. TCG is a media film producing company and has been involved in a few film titles. The fact notwithstanding that TCG does not own any Intellectual Properties and prepare for future media financing solutions to major independent studios.
IQI is developing original titles and optioning the following film titles: The Journey to the West, The New World (Animation), I Will Follow Him, Daughter’s Death, Christmas Café. And a licensing deal with the Character Arts “Spookley the Square Pumpkins” and Feature Animation “The New World”, featuring a world festival series of famous Brian Wilson, IQI does not own existing licensing, it belongs to the Brian Wilson and the Universal Music Group. IQI will own 50% IP equity of the “The New World” musical upon completion. Once all the above mentioned titles production are completed, IQI will solely own all the above mentioned film titles and animation series.
Reports to Security Holders
You may read and copy any materials the Company files with the Commission in the Commission’s Public Reference Section, Room 1580, 100 F Street N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Section by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, which can be found at http://www.sec.gov.
14
Risk Factors
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information contained in this report before deciding to invest in our common stock.
Risks Related to our Business
We have a limited operating history
We have had limited recent operating history. We will, in all likelihood, sustain operating expenses without corresponding revenues, at least for the foreseeable future. We can make no assurances that we will be able to effectuate our strategies or otherwise to generate sufficient revenue to continue operations.
During the year ended December 31, 2021, the IQI’s aggregate total revenue was $11,363, and had a net loss of $4,316.
During the year ended December 31, 2021, the TCG’s aggregate total revenue was $-0-, and had a net income of $-0-.
Our estimates of capital, personnel, equipment, and facilities required for our proposed operations are based on certain other existing businesses operating under projected business conditions and plans. We believe that our estimates are reasonable, but it is not possible to determine the accuracy of such estimates at this point. In formulating our business plan, we have relied on the judgment of our officers and directors and their experience in developing businesses. We can make no assurances that we will be able to obtain sufficient financing or implement successfully the business plan we have devised. Further, even with sufficient financing, there can be no assurance that we will be able to operate our business on a profitable basis. We can make no assurances that our projected business plan will be realized or that any of our assumptions will prove to be correct.
We are subject to a variety of possible risks that could adversely impact our revenues, results of operations or financial condition. Some of these risks relate to general economic and financial conditions, while others are more specific to us and the industry in which we operate. The following factors set out potential risks we have identified that could adversely affect us. The risks described below may not be the only risks we face. Additional risks that we do not yet know of, or that we currently think are immaterial, could also have a negative impact on our business operations or financial condition. See also Statement Regarding Forward-Looking Disclosure.
Since our auditor has issued a going concern opinion regarding the Company, there is an increased risk associated with an investment in the Company.
We have earned an aggregate of $-0- in revenue since January 1, 2020. We expect to continue to incur additional losses in the foreseeable future as a result of our film production activities. Our future is dependent upon our ability to obtain financing or upon future profitable operations. We reserve the right to seek additional funds through private placements of our Common Stock and/or through debt financing. Our ability to raise additional financing is unknown. We do not have any formal commitments or arrangements for the advancement or loan of funds. If we are unable to secure additional financing in the future on acceptable terms, or at all, we could be forced to reduce or discontinue film development, reduce or forego sales and marketing efforts, and forego attractive business opportunities in order to improve liquidity to enable the Company to continue its operations. There are also risks and uncertainties inherent to the film industry including the highly speculative nature of the industry, intense competition, the lack of industry experience of the stockholders of the Company. For these reasons, our auditors stated in their report that they have substantial doubt we will be able to continue as a going concern. As a result, there is an increased risk that you could lose the entire amount of your investment in the Company.
15
Since we were previously a shell company, and we have not generated any revenues, there is no assurance that our business plan will ever be successful. We may never attain profitability.
Until March 31, 2022, the Company had been a shell company with nominal operations and no assets other than cash. With the Company’s limited operating history, there is limited operating history upon which an evaluation of our business plan or performance and prospects can be made.
Given the limited operating history, management has little basis on which to forecast future market acceptance of our services. It is difficult to accurately forecast future revenues because the business of the Company is new. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable operations.
We may not be able to obtain additional funding to meet our requirements.
Our ability to maintain and expand our development and production of feature films to cover our general and administrative expenses depends upon our ability to obtain financing through equity financing, debt financing (including credit facilities) or the sale or syndication of some or all of our interests in certain projects or other assets. If our access to existing credit facilities is not available, and if other funding does not become available, there could be a material adverse effect on our business.
Our success depends on our personnel. Loss of key personnel may adversely affect our business.
Our success depends to a significant extent on the performance of our management personnel. In particular, we will depend on the services of such personnel as Joseph Lanius, Nicholas Burnett, and Khiow Hui Lim, the co-founders and executive producers of both TCG and IQI. The loss of the services of key persons could have a material adverse effect on the Company’s business, operating results and financial condition. We will also be dependent on the officers and directors of WNLV to raise the required capital to fund the projects of IQI and TCG. Failure to do so would hinder the Company’s ability to grow.
Budget overruns may adversely affect our business.
Actual motion picture costs may exceed their budget, sometimes significantly. Risks such as labor disputes, death or disability of star performers, rapid high technology changes relating to special effects or other aspects of production, shortages of necessary equipment, damage to film negatives, master tapes and recordings or adverse weather conditions may cause cost overruns and delay or frustrate completion of a production. If a film incurs substantial budget overruns, we may have to seek additional financing from outside sources to complete production of a motion picture. No assurance can be given as to the availability of such financing on terms acceptable to us. In addition, if a film incurs substantial budget overruns, there can be no assurance that such costs will be recouped, which could have a significant impact on our business, results of operations or financial condition.
Distributors’ failure to promote our programs may adversely affect our business.
Decisions regarding the timing of release and promotional support of our films are important in determining the success of feature film. As with most production companies, for our product distributed by others we do not control the manner in which our distributors distribute our television programs or feature films. Although our distributors have a financial interest in the success of any such feature films, any decision by our distributors not to distribute or promote one of feature films or to promote competitors’ feature films to a greater extent than it promotes ours could have a material adverse effect on our business, results of operations or financial condition.
16
We may not be able to compete with larger sales contract companies, the majority of whom have greater resources and experience than we do.
We are very small and unproven entity as compared to our competitors. As an independent production company, we will compete with major U.S. and international film studios. Most of the major U.S. studios are part of large diversified corporate groups with a variety of other operations, including television networks and cable channels, that can provide both the means of distributing their products and stable sources of earnings that may allow them better to offset fluctuations in the financial performance of their motion picture and television operations. In addition, the major studios have more resources with which to compete for ideas, storylines and scripts created by third parties as well as for actors, directors and other personnel required for production. This may have a material adverse effect on our business, results of operations and financial condition.
Our lack of diversification may make us vulnerable to oversupplies in the market.
Most of the major U.S. film studios are part of large diversified corporate groups with a variety of other operations, including television networks and cable channels, which can provide both means of distributing their products and stable sources of earnings that offset fluctuations in the financial performance of their motion picture and television operations. The number of films released by our competitors, particularly the major U.S. film studios, in any given period may create an oversupply of product in the market, and that may reduce our share of gross box-office admissions and make it more difficult for our films to succeed.
Our operating results depend on product costs, public tastes and promotion success.
We expect to generate our future revenue from the development and production of feature films, limited series, feature documentary and animation series. Our future revenues will depend upon the timing and the level of market acceptance of our feature films, as well as upon the cost to produce, distribute and promote these content development. The revenues derived from the production of a feature film depend primarily on the feature film’s acceptance by the public, which cannot be predicted and does not necessarily bear a direct correlation to the production costs incurred. Our Company currently has no revenue or material market following. The commercial success of a feature film also depends upon promotion and marketing and certain other factors. Accordingly, our revenues are, and will continue to be, extremely difficult to forecast.
Our business could be adversely impacted if we are unable to protect our intellectual property rights.
Our ability to compete depends, in part, upon successful protection of our intellectual property. We do not have the financial resources to protect our rights to the same extent as major studios. We will attempt to protect proprietary and intellectual property rights to our production through available copyright and trademark laws and licensing and distribution arrangements with reputable international companies in specific territories and media for limited durations. Despite these precautions, existing copyright and trademark laws afford only limited practical protection in certain countries. As a result, it may be possible for unauthorized third parties to copy and distribute our productions or certain portions or applications of our intended productions, which could have a material adverse effect on our business, results of operations and financial condition.
Litigation may also be necessary in the future to enforce our intellectual property rights, to protect our movie rights, or to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity. Any such litigation could result in substantial costs and the diversion of resources and could have a material adverse effect on our business, results of operations and financial condition. We cannot assure you that infringement or invalidity claims will not materially adversely affect our business, results of operations and financial condition. Regardless of the validity or the success of the assertion of these claims, we could incur significant costs and diversion of resources in enforcing our intellectual property rights or in defending against such claims, which could have a material adverse effect on our business, results of operations and financial condition.
17
If we fail to maintain effective internal controls over financial reporting, we may be subject to litigation and/or costly remediation and the price of our Common Stock may be adversely affected.
Failure to establish the required internal controls or procedures over financial reporting, or any failure of those controls or procedures once established, could adversely impact our public disclosures regarding our business, financial condition or results of operations. Upon review of the required internal control over financial reporting and disclosure controls and procedures, our management and/or our auditors may identify material weaknesses and/or significant deficiencies that need to be addressed. Any actual or perceived weaknesses or conditions that need to be addressed in our internal control over financial reporting, disclosure of management’s assessment of its internal control over financial reporting or disclosure of our public accounting firm’s attestation to or report on management’s assessment of our internal control over financial reporting could adversely impact the price of our Common Stock and may lead to claims against us.
Global economic conditions, such as COVID-19, may adversely affect our industry, business and results of operations.
Our overall performance depends, in part, on worldwide economic conditions which historically is cyclical in character. Key international economies continue to be impacted by a recession, characterized by falling demand for a variety of goods and services, restricted credit, going concern threats to financial institutions, major multinational companies and medium and small businesses, poor liquidity, declining asset values, reduced corporate profitability, extreme volatility in credit, equity and foreign exchange markets and bankruptcies. By way of example, the automotive aftermarket, specifically fuel saving add-ons such as light-truck tonneau covers, is typically not as affected by economic slow-down or recession as other industries or market segments. In markets where our sales occur and go into recession, these conditions affect the rate of spending and could adversely affect our customers’ ability or willingness to purchase our products, and delay prospective customers’ purchasing decisions, all of which could adversely affect our operating results. In addition, in a weakened economy, companies that have competing products may reduce prices which could also reduce our average selling prices and harm our operating results.
Movies, like many other non-essential spending, has been hampered by COVID-19.
Due to the impact of COVID-19 around the world, the Company’s revenue was less than expected as governments around the world entered a lockdown to prevent the spread of COVID-19. Increased current unemployment and loss of income could cause our customers to spend their money elsewhere, on more essential products.
Any further disruptions from an uptick in new infections related to COVID-19 may materially harm out business prospects.
Further upticks in infection, and the related enforcement of governmental restrictions would materially hinder our ability to grow, as it would make it could interrupt our supply chain, as well as the financial condition of our intended customer base.
The movie industry may take longer to recover from the COVID-19 pandemic.
Increased current unemployment and loss of income, as well as any further disruptions from an uptick in new infections related to COVID-19 may materially harm out business prospects. As COVID-19 confirmed cases increase, the Company will have difficulty acquiring getting customers to the theater.
18
Risks Related to our Common Stock
The OTC and share value
Our Common Stock trades over the counter, which may deprive stockholders of the full value of their shares. Our stock is quoted via the Over-The-Counter (“OTC”) Pink Sheets under the ticker symbol “WNLV”. Therefore, our Common Stock is expected to have fewer market makers, lower trading volumes, and larger spreads between bid and asked prices than securities listed on an exchange such as the New York Stock Exchange or the NASDAQ Stock Market. These factors may result in higher price volatility and less market liquidity for our Common Stock.
Low market price
A low market price would severely limit the potential market for our Common Stock. Our Common Stock is expected to trade at a price substantially below $5.00 per share, subjecting trading in the stock to certain Commission rules requiring additional disclosures by broker-dealers. These rules generally apply to any non-NASDAQ equity security that has a market price share of less than $5.00 per share, subject to certain exceptions (a “penny stock”). Such rules require the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and the risks associated therewith and impose various sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and institutional or wealthy investors. For these types of transactions, the broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to the sale. The broker-dealer also must disclose the commissions payable to the broker-dealer, current bid and offer quotations for the penny stock and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Such information must be provided to the customer orally or in writing before or with the written confirmation of trade sent to the customer. Monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. The additional burdens imposed upon broker-dealers by such requirements could discourage broker-dealers from effecting transactions in our Common Stock.
Lack of market and state blue sky laws
Investors may have difficulty in reselling their shares due to the lack of market or state Blue Sky laws. The holders of our shares of Common Stock and persons who desire to purchase them in any trading market that might develop in the future should be aware that there may be significant state law restrictions upon the ability of investors to resell our shares. Accordingly, even if we are successful in having the shares available for trading on the OTC, investors should consider any secondary market for our securities to be a limited one. We intend to seek coverage and publication of information regarding our Company in an accepted publication which permits a “manual exemption.” This manual exemption permits a security to be distributed in a particular state without being registered if the company issuing the security has a listing for that security in a securities manual recognized by the state. However, it is not enough for the security to be listed in a recognized manual. The listing entry must contain (1) the names of issuers, officers, and directors, (2) an issuer’s balance sheet, and (3) a profit and loss statement for either the fiscal year preceding the balance sheet or for the most recent fiscal year of operations. We may not be able to secure a listing containing all of this information. Furthermore, the manual exemption is a non-issuer exemption restricted to secondary trading transactions, making it unavailable for issuers selling newly issued securities. Most of the accepted manuals are those published in Standard and Poor’s, Moody’s Investor Service, Fitch’s Investment Service, and Best’s Insurance Reports, and many states expressly recognize these manuals. A smaller number of states declare that they “recognize securities manuals” but do not specify the recognized manuals. The following states do not have any provisions and therefore do not expressly recognize the manual exemption: Alabama, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont, and Wisconsin.
Accordingly, our shares of Common Stock should be considered totally illiquid, which inhibits investors’ ability to resell their shares.
19
Penny stock regulations
We will be subject to penny stock regulations and restrictions and you may have difficulty selling shares of our Common Stock. The Commission has adopted regulations which generally define so-called “penny stocks” to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. We anticipate that our Common Stock will become a “penny stock”, and we will become subject to Rule 15g-9 under the Exchange Act, or the “Penny Stock Rule”. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers. For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market.
For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule prepared by the Commission relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.
We do not anticipate that our Common Stock will qualify for exemption from the Penny Stock Rule. In any event, even if our Common Stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the Commission the authority to restrict any person from participating in a distribution of penny stock, if the Commission finds that such a restriction would be in the public interest.
Rule 144 Risks
Sales of our Common Stock under Rule 144 could reduce the price of our stock. There are 15,426,046 issued and outstanding shares of our Common Stock held by affiliates that Rule 144 of the Securities Act defines as restricted securities.
These shares will be subject to the resale restrictions of Rule 144, should we hereinafter cease being deemed a “shell company”. In general, persons holding restricted securities, including affiliates, must hold their shares for a period of at least nine months, may not sell more than 1.0% of the total issued and outstanding shares in any 90-day period, and must resell the shares in an unsolicited brokerage transaction at the market price. The availability for sale of substantial amounts of Common Stock under Rule 144 could reduce prevailing market prices for our securities.
No audit or compensation committee
Because we do not have an audit or compensation committee, stockholders will have to rely on our entire Board of Directors, none of which are independent, to perform these functions. We do not have an audit or compensation committee comprised of independent directors. Indeed, we do not have any audit or compensation committee. These functions are performed by our Board of Directors as a whole. No members of our Board of Directors are independent directors. Thus, there is a potential conflict in that Board members who are also part of management will participate in discussions concerning management compensation and audit issues that may affect management decisions.
Security laws exposure
We are subject to compliance with securities laws, which exposes us to potential liabilities, including potential rescission rights. We may offer to sell our shares of our Common Stock to investors pursuant to certain exemptions from the registration requirements of the Securities Act, as well as those of various state securities laws. The basis for relying on such exemptions is factual; that is, the applicability of such exemptions depends upon our conduct and that of those persons contacting prospective investors and making the offering. We may not seek any legal opinion to the effect that any such offering would be exempt from registration under any federal or state law. Instead, we may elect to relay upon the operative facts as the basis for such exemption, including information provided by investor themselves.
20
If any such offering did not qualify for such exemption, an investor would have the right to rescind its purchase of the securities if it so desired. It is possible that if an investor should seek rescission, such investor would succeed. A similar situation prevails under state law in those states where the securities may be offered without registration in reliance on the partial pre-emption from the registration or qualification provisions of such state statutes under the National Securities Markets Improvement Act of 1996. If investors were successful in seeking rescission, we would face severe financial demands that could adversely affect our business and operations. Additionally, if we did not in fact qualify for the exemptions upon which we have relied, we may become subject to significant fines and penalties imposed by the Commission and state securities agencies.
No cash dividends
Because we do not intend to pay any cash dividends on our Common Stock, our stockholders will not be able to receive a return on their shares unless they sell them. We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on shares of our Common Stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them. There is no assurance that stockholders will be able to sell shares of our Common Stock when desired.
Delayed adoption of accounting standards
We have delayed the adoption of certain accounting standards through an opt-in right for emerging growth companies. We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs Act, which allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.
We cannot assure you that a market will develop for our Common Stock or what the market price of our Common Stock will be.
There is a limited trading market for our Common Stock. There is no assurance that an active market for our Common Stock will develop as a result of our operation of the businesses of TCG and IQI even if we are successful. If a market does not develop or is not sustained, it may be difficult for you to sell your shares of Common Stock at an attractive price or at all. We cannot predict the prices at which our Common Stock will trade. It is possible that, in future quarters, our operating results may be below the expectations of securities analysts or investors. As a result of these and other factors, the price of our Common Stock may decline or may never become liquid.
Risks Related to Industry
Success depends on external factors in the film industry.
Operating in the film production industry involves a substantial degree of risk. Each motion picture is a unique piece of art that depends on unpredictable audience reaction to determine commercial success. There can be no assurance that our feature films will be favorably received.
Technological advances may reduce demand for films.
The entertainment industry in general, and the motion picture industry in particular, are continuing to undergo significant changes, primarily due to technological developments. Because of this rapid growth of technology, shifting consumer tastes and the popularity and availability of other forms of entertainment, it is impossible to predict the overall effect these factors will have on the potential revenue from and profitability of feature-length motion pictures.
21
A decline in the popularity of entertainment, film and leisure activities could adversely impact our business.
Because our operations are affected by general economic conditions and consumer tastes, our future success is unpredictable. The demand for entertainment, film and leisure activities tends to be highly sensitive to consumers’ disposable incomes, and thus a decline in general economic conditions could, in turn, have a material adverse effect on our business, operating results and financial condition and the price of our Common Stock.
Public tastes are unpredictable and subject to change and may be affected by changes in the country’s political and social climate. A change in public tastes could have a material adverse effect on our business, operating results and financial condition and the price of our Common Stock.
A decline in general economic conditions could adversely affect our business.
Our operations are affected by general economic conditions, which generally may affect consumers’ disposable income. The demand for entertainment and leisure activities tends to be highly sensitive to the level of consumers’ disposable income. A decline in general economic conditions could reduce the level of discretionary income that our fans and potential fans have to spend on our live and televised entertainment and consumer products, which could adversely affect our revenues.
22
Management’s discussion and analysis of financial condition and results of operation
The following discussion and analysis should be read in conjunction with our financial statements and related notes thereto.
Forward Looking Statements
The following information specifies certain forward-looking statements of the management of our Company. Forward-looking statements are statements that estimate the happening of future events and are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as may, shall, could, expect, estimate, anticipate, predict, probable, possible, should, continue, or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information statement have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.
The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. We cannot guaranty that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements. Such forward-looking statements include statements regarding our anticipated financial and operating results, our liquidity, goals, and plans.
All forward-looking statements in this Form 10 are based on information available to us as of the date of this report, and we assume no obligation to update any forward-looking statements.
Overview
Winvest Group Limited (the “Company”), changed its name from Zyrox Mining International, Inc. on December 17, 2021. The Company (formerly Diversified Energy & Fuel, Inc. until August 15, 2012) was incorporated in the State of Nevada on June 3, 2009. The Company began formal operations on June 3, 2009, with the principle purpose of developing, marketing, and selling software products through the Internet, and to provide web based services for individuals and small business. During 2010, this business was discontinued and management focused on developing a biodegradable plastic opportunity.
The Company began trading as Riverdale Capital, Ltd. under the symbol “RICP” on June 3, 2009. Effective April 30, 2012 the Company changed its name to Diversified Energy & Fuel International, Inc and changed its name to Zyrox Mining International, Inc. on August 15, 2012.
On November 8, 2010, the Company entered into an agreement to acquire 100% of the Membership Interests of WSVPA Bio Products Incorporated, a Nevada LLC in consideration for 102,238,200 shares of common stock. After completion of their due diligence, WSPVA formally closed on the transaction on May 12, 2012. The Company subsequently received 500,000,000 Class “A” membership units and 1,000,000 Class “B” membership units representing 100% of the membership interest of WSPVA (dissolvingplastic.com) in return for 102,238,200 common shares of the Company and WSPVA is now a wholly owned subsidiary of the Company.
On August 17, 2010, the then Chief Executive Officer resigned and appointed Carl H. Kruse as sole Director and Chief Executive Officer. Carl H. Kruse became the majority shareholder at that time by virtue of a Stock Purchase Agreement with the majority shareholder, resulting in a change of control of the Issuer.
The Company finalized the acquisition of a biodegradable plastic manufacturer, WSPVA, Bio Products International, LLC, a Nevada LLC, on March 12, 2012 for 102,238,200 common shares, of which 98,984,744 had been issued in the prior fiscal year and recorded as Issuance of Common Shares for Donated Services, because of the uncertainty of completing the transaction. The Company now owns 100% of the equity interests in this wholly owned subsidiary. With the transaction now complete the market value of the shares on March 12, 2012 has been recorded as the purchase price for WSPVA.
23
We are a development stage company and have not yet opened for business or generated any revenues. Our limited start-up operations have consisted of the formation of our business plan and identification of our target market. We will require the funds from this offering in order to fully implement our business plan as discussed in the “Plan of Operation” section During the period from November 2012 through April 2020, the Company was dormant.
The Company’s accounting year-end is December 31.
David Lazar, the principal of Custodian Ventures, LLC conducted due diligence on the Company and determined that the Company would be a potential Custodianship candidate, based upon previous management appearing to have abandoned the Company approximately eleven years ago. Mr. Lazar then chose to buy shares of the Company on the open market, and start a Custodianship proceeding.
On December 27, 2019 Custodian Ventures, LLC was appointed as the custodian of the Company by the Eighth Judicial Court of Nevada pursuant to Case No. A-19-805642-B.
On March 5, 2021, as a result of a private transaction, 300,000,000 shares of Series A Preferred Stock, $0.001 par value per share (the “Shares”) of the Company, were transferred from Custodian Ventures, LLC (the “Seller”) to Wan Nyuk Ming, Ng Chian Yin, and Jeffrey Wong Kah Mun, respectively, based on their ownership of Winvest Group Limited (collectively, the “Purchaser”). As a result, the Purchaser became an approximately 90% holder of the voting rights of the issued and outstanding share capital of the Company on a fully-diluted basis of the Company, and became the controlling shareholders. The consideration paid for the Shares was $700,000. The source of the cash consideration for the Shares was personal funds of the Purchaser. In connection with the transaction, David Lazar released the Company from all debts owed to him and/or the Seller.
Other than as described below, there are no arrangements or understandings among both the former and new control persons and their associates with respect to the election of directors of the Company or other matters. The information set forth in Item 5.02 of this Form 8-K is incorporated by reference into this Item 5.01.
On April 14, 2021, the existing director and officer resigned immediately. Accordingly, David Lazar, serving as a director and an officer, ceased to be the Company’s Chief Executive Officer, Chief Financial Officer, President, Treasurer, Secretary and a Director.
On April 14, 2021, Mr. Wan Nyuk Ming consented to act as the new Chairman and a member of the Board of Directors of the Company; Mr. Ng Chian Yin consented to act as Managing Director (MD) and a member of the Board of Directors of the Company; Mr. Jeffrey Wong Kah Mun consented to act as the new Chief Executive Officer (CEO) and a member of the Board of Directors of the Company.
Finally, also on April 14, 2021, Ms. Tham Yee Wen was appointed as Secretary and Chief Operating Officer (COO) of the Company; Ms. Boo Shi Huey was appointed as Treasurer of the Company.
On December 29, 2021, FINRA declared the latest name change and a 1 for 250 reverse stock split went effective. Also on December 29, 2021, the Company was informed by FINRA that the Company’s ticker symbol would be changed to WNLV in twenty business days.
On May 16, 2022, Winvest Group Ltd. (“WNLV,” or the “Company”) entered into a share exchange agreement (the “Share Exchange Agreement”) with The Catalyst Group Entertainment, LLC (“TCG”), a California limited liability company, Joseph Lanius (“Lanius”), Nicholas Burnett (“Burnett”) and Khiow Hui Lim (“Khiow,” “Burnett,” and together with Lanius, the “TCG Shareholders”), the sole officers, directors, and shareholders of TCG, IQI Media Inc. (“IQI”), a California corporation, Khiow, Lanius, Charlene Logan Kelly (“Kelly”), Burnett, Connie Tsai (“Tsai”), and Amy Morton (“Morton”), as the officers, directors and shareholders of IQI (the “IQI Shareholders”). Under the Share Exchange Agreement, One Hundred Percent (100%) of the ownership interest of TCG and IQI was exchanged for 900,000 shares of common stock of the Company at the Closing issued to the TCG Shareholders and the IQI Shareholders. The transaction has been accounted for as a recapitalization of the Company, whereby WNLV is the accounting acquirer.
24
TCG Business Overview
Winvest Group Ltd. (“WNLV” or the “Company”) is a US holding company incorporated in Nevada in October 2017, which operates through the Company’s wholly owned subsidiaries, IQI Media Inc. (“IQI”), and The Catalyst Group Entertainment (“TCG”).
TCG is a media finance and production company for the media and entertainment sector headed by Joseph S. Lanius, Nick D. Burnett and Khiow H. Lim with over 25 years’ experience in the film industry, encompassing film finance, production and distribution. The TCG team have relationships with major studios, streaming platforms, agencies, production companies and leading financial institutions.
TCG has a broad range of film financial products and support services to offer established and emerging film production companies, incubating both domestic and international filmmakers and producers in the global film markets.
With our expertise, networks, relationships and resources, TCG utilizes risk mitigation techniques that provide investor protection by financing collateralized debt and gap/mezzanine positions for film, television and other media projects, whilst also occasionally securing net profit participations to enable investors to benefit from potential extraordinary returns generated from TCG financed projects.
The founding team possesses a full breadth of hands-on experience including deal origination, financial structuring, business and legal affairs consulting and film and television production expertise. Within the new emerging digital entertainment market, TCG will not only provided media financing tools but also plan to partner with a distribution aggregator with experienced technology developers and data analysts to facilitate a streaming distribution platform for content creators backed by metrics.
Our founding members believe that current and anticipated market trends are ideal for the launch of a debt facility with industry veterans that have a strong background in financing and production and media technology.. Our team has an excellent industry network of associates that have worked with major film studios, globally known talent and packaging agencies, and management companies. We also possess a strong network of close relationships with distributors such as Netflix, Amazon, Sony, Universal, Lionsgate, as well as leading industry Sale Agents that include Hanway Films, Sierra Affinity/Eone, The Solution, The Exchange, Mr. Smith, Highland Film Group, XYZ and Capstone amongst others. Banking relationships include City National Bank, Comerica, Union Bank, JP Morgan, National Bank of Canada and Banc of California; these are complemented by an extensive network of family offices, asset managers, hedge funds and a pool of private investors.
The Catalyst Group Entertainment will commence operations with a soft launch in May 2022.
IQI Business Overview
IQI is a full-service content creation, film and advertising production company located in the City of Pasadena, California. Our producers’ team keen on managing all aspects of a multi-languages project throughout its life cycle from conception and strategy to design, development and delivery. IQI Media founded by Khiow Hui Lim in August 2010, a native Malaysia born producer graduated from Wichita State University. She has been producing from small to large scale video, film productions for more than 20+ years.
In 2012, IQI reached out to Brand USA offered to donate a nearly 700 hours road trip footage to support President Obama “Travel Promotion Act” campaign, ended up IQI was offered a contracted post editorial job from Miles Partnership. Miles Partnership is the official destination marketing management agency under the “Travel Promotion Act” that created the Brand USA — the country’s first national marketing arm was signed into law in 2010. IQI’s mission is to support Brand USA and Miles Partnership to increase incremental international visitation, spend, and market share to fuel the nation’s economy and enhance the image of the USA worldwide.
IQI production has served prestigious S&P 500 brand clients, overseeing interactive development from pre- to post-production, including concept and design.
25
In 2014, IQI decided to embrace it production creativity into feature length film and animation production. During these years, IQI and producer Charlene Kelly closed a deal to begin story development with the Academy Awards director Brenda Chapman. And the next year to complete a sci-fiction feature film titled “Alien Code” currently distributed across North America and Europe starring an Emmy award cast Richard Schiff, Mary McCormack
In 2018, IQI has officially incorporated in state of California, a joint venture with The Catalyst Group Entertainment to roll out theatrical and original streaming content. Focus on “ConTech” incubators who can utilize visual creation, script data development with analytical metrics and emerging technologies for better content delivery experience.
COVID-19
On March 11, 2020, the World Health Organization (“WHO”) declared the Covid-19 outbreak to be a global pandemic. In addition to the devastating effects on human life, the pandemic is having a negative ripple effect on the global economy, leading to disruptions and volatility in the global financial markets. Most US states and many countries have issued policies intended to stop or slow the further spread of the disease.
Covid-19 and the U.S’s response to the pandemic are significantly affecting the economy. There are no comparable events that provide guidance as to the effect the Covid-19 pandemic may have, and, as a result, the ultimate effect of the pandemic is highly uncertain and subject to change. We do not yet know the full extent of the effects on the economy, the markets we serve, our business, or our operations.
Liquidity and Capital Resources
On December 31, 2021, we had an aggregate of $-0- in current assets compared to $-0- at May 31, 2021. Current liabilities on December 31, 2021, totalled $114,522 compared to $32,298 at May 31, 2021. The change is due to payments made to service providers for legal, accounting and compliance expenses to maintain public company status.
We will have to meet all the financial disclosure and reporting requirements associated with being a publicly reporting company. Our management will have to spend additional time on policies and procedures to make sure our Company is compliant with various regulatory requirements, especially that of Section 404 of the Sarbanes-Oxley Act. This additional corporate governance time required of management could limit the amount of time management has to implement our business plan and may impede the speed of our operations.
Results of Operations
We did not generate any revenues or cost of sales for the years ended December 31, 2021 and May 31, 2021, respectively. For the year ended December 31, 2021, our operating expenses were $82,224 compared to $2,534,182 for the year ended May 31, 2021. The May 31, 2021 year includes a non-cash charge of $2,469,659 for stock-based compensation. As a result of the foregoing, we have an aggregate net loss of $82,224 for the year ended December 31, 2021, and $2,534,182 for the year ended May 31, 2021. The change is due to limited start-up operations.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.
Critical Accounting Policies and Estimates
The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of the Company’s financial condition and results of operations and which require the Company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified the critical accounting policies and judgments addressed below. We also have other key accounting policies that are significant to understanding our results.
26
Basis of Presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and are expressed in Canadian dollars.
Management’s Representation of Interim Financial Statements
The accompanying unaudited financial statements have been prepared by the Company without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Company uses the same accounting policies in preparing quarterly and annual financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These financial statements include all of the adjustments, which in the opinion of management are necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year. These financial statements should be read in conjunction with the audited financial statements and notes thereto on December 31, 2020.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to revenue recognition, valuation of accounts receivable and inventories, income taxes, and contingencies. The Company bases its estimates on historical experience, known or expected trends, and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.
Revenue Recognition
The Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The guidance provided in Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”) requires entities to use a five-step model to recognize revenue by allocating the consideration from contracts to performance obligations on a relative standalone selling price basis. Revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. The standard also requires new disclosures regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. ASC 606 also includes Subtopic 340-40, Other Assets and Deferred Costs – Contracts with Customers, which requires the deferral of incremental costs of obtaining a contract with a customer.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market funds, the fair value of which approximates cost. The Company maintains its cash balances with a high-credit-quality financial institution. The Company has not experienced any losses in such accounts, and management believes the Company is not exposed to any significant credit risk on its cash and cash equivalents. As of December 31, 2021, the balance of cash was $-0-.
27
Accounts Receivable
Accounts receivable are customer obligations due under normal trade terms which are recorded at net realizable value. The Company establishes an allowance for doubtful accounts based on management’s assessment of the collectability of trade receivables. A considerable amount of judgment is required in assessing the amount of the allowance. The Company makes judgments about the creditworthiness of each customer based on ongoing credit evaluations and monitors current economic trends that might impact the level of credit losses in the future. If the financial condition of the customers were to deteriorate, resulting in their inability to make payments, a specific allowance will be required.
Recovery of bad debt amounts previously written off is recorded as a reduction of bad debt expense in the period the payment is collected. If the Company’s actual collection experience changes, revisions to its allowance may be required. After all, attempts to collect a receivable have failed, the receivable is written off against the allowance.
As of December 31, 2021, the balance of accounts receivable was $-0-.
Income Taxes
The Company accounts for income taxes under FASB ASC 740, Accounting for Income Taxes (“ASC 740”). Under ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. ASC 740-10-05, Accounting for Uncertainty in Income Taxes prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.
The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company assesses the validity of its conclusions regarding uncertain tax positions on a quarterly basis to determine if facts or circumstances have arisen that might cause it to change its judgment regarding the likelihood of a tax position’s sustainability under audit.
Foreign Currency Translation
The functional and reporting currency of the Company is the US dollar.
Basic and Diluted Net Income (Loss) Per Share
The Company computes net income (loss) per share in accordance with FASB ASC 260, Earnings per Share which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common stockholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.
Recent Accounting Pronouncements
There are no recent accounting pronouncements that impact the Company’s operations.
Employees
We currently have 5 employees, 5 of which are officers and directors of WNLV. We anticipate hiring additional employees in the next twelve months. We anticipate hiring necessary personnel based on an as needed basis only on a per contract basis to be compensated directly from revenues.
28
Off-Balance Sheet Arrangements
During the years ended December 31, 2021 and December 31, 2020 we did not engage in any off-balance sheet arrangements as defined in item 303(a)(4) of the Commission’s Regulation S-K.
Properties
Our mailing address is 50 West Liberty Street Suite 880, Reno NV 89501. WNLV’s wholly-owned subsidiary’s, TCG’s, address is 8383 Wilshire Blvd, Suite 255, Beverly Hills, CA 90211. WNLV’s wholly-owned subsidiary’s, IQI’s, monthly month-to-month leased office address is 1055 East Colorado Boulevard, Suite 500, Pasadena, California 91106, United States.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information with respect to the beneficial ownership of our voting securities following the completion of the Reverse Merger, and the increase of the described in Items 1.01 of this report by (i) any person or group owning more than 5% of any class of voting securities, (ii) each director, (iii) our chief executive officer and (iv) all executive officers and directors of WNLV as a group as of March 31, 2022.
| Name | Number of Shares
of | Percentage | ||||||
| Jeffrey Wong Kah Mun (1) 50 West Liberty Street, Suite 880, Reno, Nevada 89501 | 14,432,265 | 87.41 | % | |||||
| Wan Nyuk Ming (1) 50 West Liberty Street, Suite 880, Reno, Nevada 89501 | 0 | 0 | % | |||||
| Ng Chian Yin (1) 50 West Liberty Street, Suite 880, Reno, Nevada 89501 | 0 | 0 | % | |||||
| Tham Yee Wen 50 West Liberty Street, Suite 880, Reno, Nevada 89501 | 0 | 0 | % | |||||
| Boo Shi Huey 50 West Liberty Street, Suite 880, Reno, Nevada 89501 | 0 | 0 | % | |||||
All executives officers, directors, and beneficial ownership thereof as a group 5 people)
There are no other officer or director 5 % shareholders.
Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, each of the stockholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned. Except as set forth above, applicable percentages are based upon 17,411,217 shares of common stock to be outstanding upon the completion of the increase in authorized shares of common stock of WNLV to 4,500,000,000.
29
Directors and Executive Officers, Promoters and Control Persons
On April 14, 2021, Mr. Wan Nyuk Ming was appointed Chairman of the Board of Directors, Mr. Ng Chian Yin was appointed MD of the Board of Directors, Mr. Jeffrey Wong Kah Mun was appointed Chief Executive Officer and a Director, Ms. Tham Yee Wen, was appointed Secretary cum COO, Ms. Boo Shi Huey was appointed Treasurer of the Company. Mr. Joseph Lanius is a founder and an executive producer of TCG and an executive producer of IQI. Mr. Nicholas Burnett is a co-founder and executive producer of TCG and an executive producer of IQI. Ms. Khiow Hui Lim is a co-founder and executive producer of TCG and IQI. Ms. Charlene Logan Kelly is an executive producer of IQI. Ms. Amy Morton is a producer at IQI.
| Name | Age | Position(s) | ||
| Wan Nyuk Ming | 53 | Chairman of the Board of Directors | ||
| Ng Chian Yin | 32 | MD of the Board of Directors | ||
| Jeffrey Wong Kah Mun | 43 | Chief Executive Officer and Director | ||
| Tham Yee Wen | 32 | Secretary cum COO | ||
| Boo Shi Huey | 33 | Treasurer | ||
| Joseph Lanius | 45 | Founder and an executive producer of TCG and an executive producer of IQI | ||
| Nicholas Burnett | 40 | Co-founder and executive producer of TCG and an executive producer of IQI | ||
| Khiow Hui Lim | 48 | Co-founder and executive producer of TCG and IQI | ||
| Charlene Logan Kelly | 50 | Executive producer of IQI | ||
| Amy Morton | 48 | Producer at IQI |
Mr. Wan Nyuk Ming, age 53, Chairman of the Board of Directors, previously worked as the Managing Director of Mega7 Holding Sdn Bhd from 2017 to 2019, where he supervised the day-to-day operations of the company, managed delivery teams, and was directly responsible for business support functions as a head of the business. From 2012 to 2017, he was the Managing Director of Macademy International Sdn Bhd. With over 30 years of experience and hard work, he is a successful remarkable entrepreneur and a practical international market strategist.
Mr. Ng Chian Yin, age 32, MD of the Board of Directors, with ten years of experience in running a company’s core business, where he expanded his strategy skill with “New Thinking, New Creativity, and New Generation” to meet the new era of emerging financial technology in his career path. He has been the Marketing Director of his own company, Philocity Holdings Sdn Bhd since August 2019. He was the Senior Sales & Technology Manager at Milletique Technology Sdn Bhd from July 2018 to July 2019.
Mr. Jeffrey Wong Kah Mun, age 43, CEO of the Board of Directors, has over 18 years of exposure in the fields of health, beauty, wellness products, online and education. He previously worked as Chief Operating Officer at Linton University and three affiliated Institutes, Pertama Institute of Technology (ITP), Jati Institute, and International Institute of Science Mantin from 2017 to 2020, where he oversaw, developed, and expanded the built of Environment, Information Technology, Business & Accounting, and Applied & Visual Arts.
Ms. Tham Yee Wen, age 32, Secretary cum COO of the Company. She worked as Operations Director at KN Avenue Sdn Bhd from September 2018 to October 2020. She worked as the Personal Assistant to the Executive Director at Mega7 Holdings Sdn Bhd from September 2017 to August 2018. She also worked as a Sales Executive for meetings and events at the Berjaya Times Square Hotel, Kuala Lumpur from October 2015 to August 2017. She is responsible to oversee, develop and implement a proactive maintenance program for the company.
Ms. Boo Shi Huey, age 33, Treasurer of the Company. She worked at Philocity Holdings Sdn Bhd, as a Sr. Account Executive from February 2020 to the present. She worked as an Account Executive to Syarikat Elektrik Siang Sdn Bhd from October to December 2019. She previously worked as a Finance Executive cum Admin at Mega7 Holding Sdn Bhd from January 2019 to July 2019. She has extensive account experience, and is able to work at different perspectives and adjust workflow as change arises.
30
Mr. Joseph Lanius, age 45, Founder and an executive producer of TCG and an executive producer of IQI, is an entertainment attorney who specializes in distribution, finance and production legal affairs. He also provides executive producing services to motion picture producers and production companies, offering consulting on financial structuring and investment, and direct distribution sources in the United States, China and the Middle East. Before entering private practice, Joseph served as Lead Counsel - Business & Legal Affairs for After Dark Films, where he was responsible for overseeing distribution and financial structuring for the After Dark Originals and After Dark Action slates as well as individual titles consisting of over 20 feature films. Prior to that, he was Director of Business & Legal Affairs for IM Global, where he focused on distribution for the various films IM Global represented including the PARANORMAL ACTIVITY and INSIDIOUS franchises as well as COMPANY MEN (Kevin Costner, Tommy Lee Jones), BULLET TO THE HEAD (Sylvester Stallone) and SAFE (Jason Statham). Since entering private practice, some of Joseph’s current and former clients include Sparkhouse Media, Benaroya Pictures, Mulberry Pictures, International Film Trust, QED International and Highland Film Group. A few of the pictures Joseph has helped bring to worldwide audiences include CELL (John Cusack, Samuel L. Jackson), 478 (Arnold Schwarzenegger) QUEEN OF THE DESERT (Nicole Kidman, James Franco, Robert Pattinson), FURY (Brad Pitt, David Ayers), DIRTY GRANDPA (Zac Efron, Robert DeNiro), TO THE BONE (Lilly Collins, Keanu Reeves), HOUR OF LEAD (Thomas Jane, Anne Heche), THE CARD COUNTER (Oscar Isaac, Tiffany Hadish, Tye Sheridan) and upcoming films CALL JANE (Elizabeth Banks, Sigourney Weaver, Kate Mara) and ASSASIN CLUB (Henry Golding, Noomi Rapace, Sam Neill). Joseph earned his B.A. from the University of North Texas and his J.D. from Southwestern Law School.
Mr. Nicholas Burnett, age 40, Co-founder and executive producer of TCG and an executive producer of IQI, is a media executive and transactional business lawyer focused on mergers and acquisitions, joint ventures, private placement equity and debt offerings, secured lending, and a variety of commercial matters including licensing and general corporate counselling. He also regularly consults on financing and production matters in the entertainment industry, providing guidance on the formation of film funds, financing and distribution plans for single motion pictures and slates, and the development, financing and production of television series. From 2012 to 2018, Nicholas served as in-house counsel and head of development for New York based television production companies Brick City TV and Blowback Productions, where he oversaw business, legal and production matters for television programming produced for Viacom Networks, Discovery Communications, Participant Media/Pivot, and CNN/Turner Networks. Prior to that, Nicholas was an associate with national law firms White & Case LLP and Arent Fox LLP, where he assisted in representing clients on mergers and acquisitions, joint ventures, business reorganizations and various structured financing and capital markets transactions. Nicholas earned his B.A. and J.D. from the University of Florida, where served as an editor of the Florida Law Review. His articles and presentations have been featured in several legal and financial publications including Thompson Reuters’ The M&A Lawyer, West Publishing Corporation’s Practical Law Company, and the New York Institute of Finance’s ExecSense series.
Ms. Khiow Hui Lim, age 48, Co-founder and executive producer of TCG and IQI, hail from Melaka, Malaysia, Khiow Hui began her career at the Media Resources Center in Wichita, Kansas, which was a subsidiary and syndication station of The Discovery Channel. Starting as a production assistant, she rose to become a segment producer and eventually a full-fledged producer for the station. In 1997, Khiow Hui was hired by Fox Television Network (FOX 24/UPN), now a division of iHeart MEDIA, to produce and direct public service announcements (PSAs) for the Midwest region. In 2011, Khiow Hui founded iQiMedia that helps advertising agencies, new media companies and S&P 500 to create intuitive experiences for a diverse range of new emerging media. She has worked with global renown advertising agencies, new media companies and managed brands like AIG, AT&T, Toyota, Caesars Entertainment Corporation, Tencent, Apple, Sony Entertainment, Ogilvy, Dentsu and more. At IQI, she has managed feature film production, commercial and interactive development, budgets of up to $40 million and overseen union production crews of more than 80 people. A native of Malaysia, Khiow Hui holds a BA in Electronic Arts from Wichita State University. Khiow Hui also one of the core production team players at Miles Partnership for the VisitTheUSA.com—the official tourism bureau for the United States—helping to deliver tailored content for the both domestic and international Asian market. In 2016, Khiow Hui produced her first feature film, Alien Code, a sci-fi thriller starring Mary McCormack, Azura Skye, Richard Schiff and Kyle Gallner. Now available on most streaming platforms. Other Hollywood credits include projects like Sony PlayStation 2’s Rise to Honor–Jet Li, the SAG Awards’ Hollywood Hits Broadway segment and post-production editorial work on Resident Evil 5 & 6 and the Oscar-winning film Crash.
31
Ms. Charlene Logan Kelly, age 50, Executive producer of IQI, received her Business Degree from Mount Alison University in Canada, where she then worked in finance briefly. Having been a painter and artist most of her life, she decided to turn her attention towards art and completed the Animation Program at Algonquin College where she began her career in Toronto then moved to Los Angeles. Most of her career has been working in Feature Animation and for several studios, which included Warner Brothers, Fox Animation, and Dreamworks, on films such as All Dogs Go to Heaven 2, Space Jam, The Quest for Camelot, Anastasia, Prince of Egypt, El Dorado and Spirit: Stallion of the Cimarron. She had a short period as a Stop Motion animator for a CBC kids show called Poko and has had the privilege of working in most departments of the animation pipeline. She then went on to become the Associate Producer at a boutique studio in Los Angeles, managing and producing the studio projects, such as Iron Giant Signature Edition, Once Upon a Time Adventure (Snow White ride at Disneyland in Shanghai) and the Minion Mayhem Ride (Illumination ride at Universal), in collaboration with studios such as Warner Brothers, Walt Disney, ReelFX and Universal/NBC. She recently was the Producer on an independent CG Animated Feature Film, Next Gen, distributed by Netflix and Alibaba Pictures and is presently developing a couple of personal projects as well as the Feature Film spinoff of the popular TV Series, Mansour, created by Bidaya Media and backed by the Mubadala Investment Company.
Ms. Amy Morton, age 48, Producer at IQI, began her career at Cowboy Pictures, a small New York City film distributor, where she assisted with sales and marketing for indie, foreign language and documentary films. She then relocated to Los Angeles, where she worked as a copywriter and eventually became the Manager of Marketing Communications for an ad agency serving healthcare clients such as Pfizer. From there, she returned to the film industry as the Assistant Manager for Editorial Services at MGM Home Entertainment, where she developed movie taglines, synopses and more for films such as Hotel Rwanda. Since 2005, Amy has freelanced for digital agencies serving Fortune Global 500 companies and helped clients – from entertainment to technology – craft the right messaging for their marketing, branding and web content initiatives.
Term of Office
Our director holds his position until the next annual meeting of shareholders and until his successor is elected and qualified by our shareholders, or until earlier death, retirement, resignation or removal.
Family Relationships
There are no family relationships between the Company and any of our current and proposed directors or executive officers.
Legal Proceedings Involving Directors and Executive Officers
During the past ten years no current or incoming director, executive officer, promoter or control person of the Company has been involved in the following:
(1) A petition under the Federal bankruptcy laws or any state insolvency law which was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
(2) Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
(3) Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
32
i. Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
ii. Engaging in any type of business practice; or
iii. Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
(4) Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;
(5) Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
(6) Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
(7) Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
i. Any Federal or State securities or commodities law or regulation; Or
ii. Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease and desist order, or removal or prohibition order; Or
iii. Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; Or
(8) Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
33
Executive Compensation
The table below sets forth the positions and compensations for the officers and directors of WNLV, and for the officers and directors of TCG and IQI, for the years ended December 31, 2021 and 2020.
| Position | Name of Officers or Directors | Year | Salary before tax | Bonus | All other compensation | Total | |||||||
| Chairman of the Board of Directors | Wan Nyuk Ming | 2021 | n/a | n/a | n/a | n/a | |||||||
| 2020 | n/a | n/a | n/a | n/a | |||||||||
| MD of the Board of Directors | Ng Chian Yin | 2021 | n/a | n/a | n/a | n/a | |||||||
| 2020 | n/a | n/a | n/a | n/a | |||||||||
| Chief Executive Officer and Director | Jeffrey Wong Kah Mun | 2021 | n/a | n/a | n/a | n/a | |||||||
| 2020 | n/a | n/a | n/a | n/a | |||||||||
| Secretary cum COO | Tham Yee Wen | 2021 | n/a | n/a | n/a | n/a | |||||||
| 2020 | n/a | n/a | n/a | n/a | |||||||||
| Treasurer | Boo Shi Huey | 2021 | n/a | n/a | n/a | n/a | |||||||
| 2020 | n/a | n/a | n/a | n/a | |||||||||
| Founder and an executive producer of TCG and an executive producer of IQI | Joseph Lanius | 2021 | n/a | n/a | n/a | n/a | |||||||
| 2020 | n/a | n/a | n/a | n/a | |||||||||
| Co-founder and executive producer of TCG and an executive producer of IQI | Nicholas Burnett | 2021 | n/a | n/a | n/a | n/a | |||||||
| 2020 | n/a | n/a | n/a | n/a | |||||||||
| Co-founder and executive producer of TCG and IQI | Khiow Hui Lim | 2021 | n/a | n/a | n/a | n/a | |||||||
| 2020 | n/a | n/a | n/a | n/a | |||||||||
| Executive producer of IQI | Charlene Logan Kelly(1) | 2021 | n/a | n/a | n/a | n/a | |||||||
| 2020 | n/a | n/a | n/a | n/a | |||||||||
| Producer at IQI | Amy Morton(1) | 2021 | n/a | n/a | n/a | n/a | |||||||
| 2020 | n/a | n/a | n/a | n/a |
| (1) | Independent contractors. |
We do not have an audit or compensation committee comprised of independent directors as our Company qualifies for an exemption from these requirements. Indeed, we do not have any audit or compensation committee. These functions are performed by our Board of Directors as a whole.
All directors serve 1 yr. terms.
Transactions with related persons, promoters and certain control persons
Related Party Transactions
The Company’s financing subsequent to the change of control in March 31, 2021 has come from the Winvest Group Limited. As of May 31, 2021 the amount due to the Winvest Group was $32,298 which is being treated as an interest free demand loan.
34
Corporate Governance
Director Independence
None of our directors qualified as an “independent director” under the rules of NASDAQ, Marketplace Rule 4200(a).
Nominating Committee
We do not presently have a nominating committee. Our Board of Directors currently acts as our nominating committee.
Audit Committee
We do not presently have an audit committee. Our Board of Directors currently acts as our nominating committee.
Legal Proceeding
None.
35
Market Price of and dividends on the registrant’s common equity and related shareholder matters
Market Information
Winvest Group Limited is currently listed under OTC Pink tier of OTC markets, ticker symbol “WNLV.” The quotation of our common share does not assure a meaningful, consistent and liquid trading market currently exist. We cannot predict whether a more active market for our common share will develop in the future. In absence of an active trading market,
| (1) | Investor may have difficulty buying or selling or obtaining market quotation, |
| (2) | Market visibility of our common share may be limited which may have a depressive effect on the market price for our common share. |
Our common stock is currently quoted on the OTC market “Pink Sheets” under the symbol WNLV. For the periods indicated, the following table sets forth the high and low bid prices per share of common stock. The below prices represent inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions.
| Price Range | ||||||||
| Period | High | Low | ||||||
| Year ended December 31, 2020 | ||||||||
| Second Quarter | $ | 20.00 | 2.75 | |||||
| Third Quarter | $ | 24.975 | 2.50 | |||||
| Fourth Quarter | $ | 12.50 | 5.00 | |||||
| Year ended December 31, 2021 | ||||||||
| First Quarter | $ | 17.50 | 5.875 | |||||
| Second Quarter | $ | 20.00 | 2.50 | |||||
| Third Quarter | $ | 8.535 | 2.50 | |||||
| Fourth Quarter | $ | 27.25 | 2.50 | |||||
| Year ended December 31, 2022 | ||||||||
First Quarter | $ | 27.25 | 2.20 | |||||
The closing market price of our common stock on March 31, 2022 was $2.20.
As mentioned in Item 1.01, an additional 900,000 restricted common shares were issued to the shareholders of TCG and IQI upon reverse acquisition activity. All additional issued common shares of Winvest Group Limited restricted from disposal for the lesser of 2 years from issuance, or one-year from the date of filing hereof. No options or warrants to purchase, or securities convertible into, common equity of the registrant. None of above mentioned additional issuance of restricted common share are issued to qualified institutional buyer as defined under § 230.144A
Pacific Stock Transfer Co., 6725 Via Austi Parkway, Suite 300, Las Vegas, NV 89119, 702-361-3033, is the registrar and transfer agent of our common share.
Holders
As of March 31, 2022, we had approximately 197 shareholders of our common shares, including the shares held in street name by brokerage firm. The holders of common share are entitled to one vote for each share held for record on all matters submitted to a vote of shareholders. Holders of the common share have no pre-emptive rights and no right to convert their common share into any other securities. There are no redemption or sinking fund provisions applicable to the common share.
36
Dividends
We have not issued any dividends, and have no plans of paying cash dividends in the future.
Securities authorized for issuance under equity compensation plan
As of March 31, 2022, the Company has no securities authorized either previously approved or disapproved for issuance under equity compensation plan.
Penny Stock Regulations
Our shares of common stock are subject to the “penny stock” rules of the Securities Exchange Act of 1934 and various rules under this Act. In general terms, “penny stock” is defined as any equity security that has a market price less than $5.00 per share, subject to certain exceptions. The rules provide that any equity security is considered to be a penny stock unless that security is registered and traded on a national securities exchange meeting specified criteria set by the SEC, issued by a registered investment company, and excluded from the definition on the basis of price (at least $5.00 per share), or based on the issuer’s net tangible assets or revenues. In the last case, the issuer’s net tangible assets must exceed $3,000,000 if in continuous operation for at least three years or $5,000,000 if in operation for less than three years, or the issuer’s average revenues for each of the past three years must exceed $6,000,000.
Recent Sales of Unregistered Securities
On May 16, 2022, Winvest Group Ltd. (“WNLV,” or the “Company”) entered into a share exchange agreement (the “Share Exchange Agreement”) with The Catalyst Group Entertainment, LLC (“TCG”), a California limited liability company, Joseph Lanius (“Lanius”), Nicholas Burnett (“Burnett”), and Khiow Hui Lim (“Khiow,” “Burnett,” and together with Lanius, the “TCG Shareholders”), the sole officers, directors, and shareholders of TCG, IQI Media Inc. (“IQI”), a California corporation, Khiow, Lanius, Charlene Logan Kelly (“Kelly”), Burnett, Connie Tsai (“Tsai”), and Amy Morton (“Morton”), as the officers, directors and shareholders of IQI (the “IQI Shareholders”). Under the Share Exchange Agreement, One Hundred Percent (100%) of the ownership interest of TCG and IQI was exchanged for 900,000 shares of common stock of the Company at the Closing issued to the TCG Shareholders and the IQI Shareholders. The transaction has been accounted for as a recapitalization of the Company, whereby WNLV is the accounting acquirer.
37
Description of securities
The following is a summary description of our capital stock and certain provisions under the laws of the State of Nevada where the Company was incorporated. The following discussion is qualified in its entirety by reference to such exhibits.
General
We have authorized 4,500,000,000 shares of common stock with par value $0.001 per share. As at March 31, 2022, the Company has issued and outstanding 16,511,217 shares of common stock. We have authorized 300,000,000 shares of Series A Preferred Stock. As of March 31, 2022, the Company has issued and outstanding 227,838,680 shares of preferred stock.
Common Stock
The holders of our common stock are entitled to one vote for each share held of record on all matters to be voted on by stockholders. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voting for the election of directors can elect all of the directors then up for election. The holders of our common stock are entitled to receive dividends when, as and if declared by the Board of Directors out of funds legally available therefor. In the event of liquidation, dissolution or winding up of our company, the holders of common stock are entitled to share rateably in all assets remaining which are available for distribution to them after payment of liabilities and after provision has been made for each class of stock, if any, having preference over the common stock. Holders of shares of our common stock, as such, have no conversion, pre-emptive or other subscription rights, and there are no redemption provisions applicable to the common stock.
Preferred Stock
The holders of our Series A preferred stock are entitled to 50 votes for each share held of record on all matters to be voted on by stockholders. The Series A preferred stock also convert into common stock at a rate of 50 for one. The holders of our preferred stock are entitled to receive dividends when, as and if declared by the Board of Directors out of funds legally available therefore. In the event of liquidation, dissolution or winding up of our company, the holders of preferred stock are entitled to share rateably in all assets remaining which are available for distribution to them after payment of liabilities and after provision has been made for each class of stock, if any, having preference over the Series A preferred stock.
Indemnification of Directors and Officers
Section 78.138 of the NRS provides that a director or officer will not be individually liable unless it is proven that (i) the director’s or officer’s acts or omissions constituted a breach of his or her fiduciary duties, and (ii) such breach involved intentional misconduct, fraud or a knowing violation of the law.
Section 78.7502 of NRS permits a company to indemnify its directors and officers against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with a threatened, pending or completed action, suit or proceeding if the officer or director (i) is not liable pursuant to NRS 78.138 or (ii) acted in good faith and in a manner the officer or director reasonably believed to be in or not opposed to the best interests of the corporation and, if a criminal action or proceeding, had no reasonable cause to believe the conduct of the officer or director was unlawful.
Section 78.751 of NRS permits a Nevada company to indemnify its officers and directors against expenses incurred by them in defending a civil or criminal action, suit or proceeding as they are incurred and in advance of final disposition thereof, upon receipt of an undertaking by or on behalf of the officer or director to repay the amount if it is ultimately determined by a court of competent jurisdiction that such officer or director is not entitled to be indemnified by the company. Section 78.751 of NRS further permits the company to grant its directors and officers additional rights of indemnification under its articles of incorporation or bylaws or otherwise.
38
Section 78.752 of NRS provides that a Nevada company may purchase and maintain insurance or make other financial arrangements on behalf of any person who is or was a director, officer, employee or agent of the company, or is or was serving at the request of the company as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, for any liability asserted against him and liability and expenses incurred by him in his capacity as a director, officer, employee or agent, or arising out of his status as such, whether or not the company has the authority to indemnify him against such liability and expenses. Our Bylaws provide that we may indemnify and advance litigation expenses to our directors, officers, employees and agents to the extent permitted by law, our Articles of Incorporation or our Bylaws, and shall indemnify and advance litigation expenses to our directors, officers, employees and agents to the extent required by law, our Articles of Incorporation or Bylaws. Our obligations of indemnification, if any, shall be conditioned on receiving prompt notice of the claim and the opportunity to settle and defend the claim. We may, to the extent permitted by law, purchase and maintain insurance on behalf of an individual who is or was our director, officer, employee or agent.
Indemnification against Public Policy
Insofar as indemnification by us for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling the company pursuant to provisions of our Articles of Incorporation and Bylaws, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification by such director, officer or controlling person of us in the successful defence of any action, suit or proceeding is asserted by such director, officer or controlling person in connection with the securities being offered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The effect of indemnification may be to limit the rights of the Company and the shareholders (through shareholders’ derivative suits on behalf of the Company) to recover monetary damages and expenses against a director for breach of fiduciary duty.
Item 3.02 Unregistered Sales of Equity Securities.
Reference is made to the disclosure made under Item 1.01 which is incorporated herein by reference.
Item 5.01 Changes in Control of Registrant.
None.
Item 5.06 Change in Shell Company Status
Prior to the Share Exchange, we were a “shell company” (as such term is defined in Rule 12b-2 under the Exchange Act). As a result of the Share Exchange, we have ceased to be a shell company. The information contained in this Report constitutes the current “Form 10 information” necessary to satisfy the conditions contained in Rule 144(i)(2) under the Securities Act.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statement of Business Acquired
The audited financial statements of TCG as of December 31, 2021 and 2020 are appended to this report beginning on page 40. The audited financial statements of TCG as of December 31, 2021 and 2020 were audited by BF Borgers CPA PC.
The audited financial statements of IQI as of December 31, 2021 and 2020 are appended to this report beginning on page 45. The audited financial statements of IQI as of December 31, 2021 and 2020 were audited by BF Borgers CPA PC.
39
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of The Catalyst Entertainment Group
Opinion on the Financial Statements
We have audited the consolidated balance sheets of The Catalyst Entertainment Group as of December 31, 2021 and 2020, the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/S/ BF Borgers CPA PC
BF Borgers CPA PC
We have served as the Company’s auditor since 2022
Lakewood, CO
May 12, 2022
40
THE CATALYST ENTERTAINMENT GROUP
BALANCE SHEETS
| December 31, | December 31, | |||||||
| 2021 | 2020 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | 4,726 | 4,726 | |||||
| Total current assets | 4,726 | 4,726 | ||||||
| Total Assets | $ | 4,726 | 4,726 | |||||
| LIABILITIES AND MEMBERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | - | $ | - | ||||
| Due to related party | - | |||||||
| Total current liabilities | - | - | ||||||
| Total liabilities | - | - | ||||||
| Members’ Equity | 4,726 | 4,726 | ||||||
| Total Liabilities and Members’ Deficit | $ | 4,726 | $ | 4,726 | ||||
The accompanying notes are an integral part of these financial statements.
41
THE CATALYST ENTERTAINMENT GROUP
STATEMENTS OF OPERATIONS
| Year Ended | Year Ended | |||||||
| December 31, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Revenue | $ | - | $ | - | ||||
| Production cost | - | - | ||||||
| Gross profit | - | - | ||||||
| Operating expenses: | ||||||||
| Administrative expenses | - | 30,374 | ||||||
| Total operating expenses | - | 30,374 | ||||||
| Net loss | - | (30,374 | ) | |||||
| Members equity -beginning of year | $ | 4,726 | $ | 35,100 | ||||
| Distribution to members | - | - | ||||||
| Members deficit -end of year | $ | 4,726 | $ | 4,726 | ||||
The accompanying notes are an integral part of these financial statements.
42
THE CATALYST ENTERTAINMENT GROUP
STATEMENTS OF CASH FLOWS
| Year Ended | Year Ended | |||||||
| December 31, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Cash flows used in operating activities | ||||||||
| Net loss | $ | - | $ | (30,374 | ) | |||
| Changes in assets and liabilities | ||||||||
| Prepaid expenses | - | |||||||
| Accounts payable and accrued liabilities | - | |||||||
| Net cash used in operating activities | - | (30,374 | ) | |||||
| Cash flows provided used by financing activities | ||||||||
| Distributions to members | - | - | ||||||
| Proceeds from member contributions | - | 35,100 | ||||||
| Net cash provided used by financing activities | - | 35,100 | ||||||
| Net increase (decrease) in cash | - | 4,726 | ||||||
| Cash, beginning of period | 4,726 | - | ||||||
| Cash, end of period | $ | 4,726 | $ | 4,726 | ||||
The accompanying notes are an integral part of these financial statements.
43
THE CATALYST ENTERTAINMENT GROUP, LLC
NOTES TO FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 2021 AND 2020
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
The Catalyst Group Entertainment, LLC (the Company or “TCG”) was formed in Delaware on April 1, 2019. TCG is media debt financing company intending to focus on opportunities comprised of global emerging film, television and media projects. Except for limited activity the Company has been dormant since inception. The Company is preparing to commence operations with a soft launch in May 2022.
The Company’s year-end is December 31.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) “FASB Accounting Standard Codification™” (the “Codification”) which is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States.
Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve months following the date of these financial statements. As of December 31, 2021, the Company had $4,726 in cash and Members Equity of $4,726.
Because the Company does not expect that existing operational cash flow will be sufficient to fund presently anticipated operations, this raises substantial doubt about the Company’s ability to continue as a going concern. Therefore, the Company will need to raise additional funds and is currently exploring alternative sources of financing. The Company will be required to continue to do so until its operations become profitable. There can be no assurance that such additional financing will be available to the Company on acceptable terms or at all.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to income taxes and contingencies. The Company bases its estimates on historical experience, known or expected trends, and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.
Cash and cash equivalents
The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. On December 31, 2021, and December 31, 2020, the Company’s cash equivalents totaled $4,726 and $4,726 respectively.
44
Income taxes
The Company accounts for income taxes under FASB ASC 740, “Accounting for Income Taxes”. Under FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. FASB ASC 740-10-05, “Accounting for Uncertainty in Income Taxes” prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.
The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company assesses the validity of its conclusions regarding uncertain tax positions quarterly to determine if facts or circumstances have arisen that might cause it to change its judgment regarding the likelihood of a tax position’s sustainability under audit.
Net Loss per Share
Net loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260, “Earnings per Share.” Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding.
Recent Accounting Pronouncements
There are no recent accounting pronouncements that impact the Company’s operations.
NOTE 4 – EQUITY
The Company operates as a limited liability company. As of December 31, 2021 and December 31, 2020, the balance of the Members’ Deficit was $4,726 and $4,726.
NOTE 5 – COMMITMENTS AND CONTINGENCIES
The Company did not have any contractual commitments as of December 31, 2021, and December 31, 2020.
NOTE 6 – SUBSEQUENT EVENTS
In accordance with FASB ASC 855-10, Subsequent Events, the Company has analyzed its operations subsequent to December 31, 2021 to the date these condensed consolidated financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these condensed consolidated financial statements.
45
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of IQI Media, Inc.
Opinion on the Financial Statements
We have audited the consolidated balance sheets of IQI Media, Inc. as of December 31, 2021 and 2020, the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/S/ BF Borgers CPA PC
BF Borgers CPA PC
We have served as the Company’s auditor since 2022
Lakewood, CO
May 12, 2022
46
IQI MEDIA INC.
BALANCE SHEETS
| December 31, | December 31, | |||||||
| 2021 | 2020 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | 1,836 | $ | 79 | ||||
| Prepaid expenses | 2,637 | 2,637 | ||||||
| Total current assets | 4,473 | 2,716 | ||||||
| Total Assets | $ | 4,473 | $ | 2,716 | ||||
| LIABILITIES AND MEMBERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 12,065 | $ | 10,244 | ||||
| Due to related party | 51,550 | 26,500 | ||||||
| Total current liabilities | 63,615 | 36,744 | ||||||
| Total liabilities | 63,615 | 36,744 | ||||||
| Members’ Deficit | (59,142 | ) | (34,028 | ) | ||||
| Total Liabilities and Members’ Deficit | $ | 4,473.44 | $ | 2,716 | ||||
The accompanying notes are an integral part of these financial statements.
47
IQI MEDIA INC.
STATEMENTS OF OPERATIONS
| Year Ended | Year Ended | |||||||
| December 31, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Revenue | $ | 11,363 | $ | 6,659 | ||||
| Production cost | 309 | 315 | ||||||
| Gross profit | 11,054 | 6,344 | ||||||
| Operating expenses: | ||||||||
| Administrative expenses | 31,852 | 34,723 | ||||||
| Total operating expenses | 31,852 | 34,723 | ||||||
| Net loss | (20,798 | ) | (28,380 | ) | ||||
| Members deficit -beginning of year | (34,028 | ) | (1,269 | ) | ||||
| Distribution to members | (4,316 | ) | (4,380 | ) | ||||
| Members deficit -end of year | (59,142 | ) | (34,028 | ) | ||||
The accompanying notes are an integral part of these financial statements.
48
IQI MEDIA INC.
STATEMENTS OF CASH FLOWS
| Year Ended | Year Ended | |||||||
| December 31, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Cash flows used in operating activities | ||||||||
| Net loss | $ | (20,798 | ) | $ | (28,380 | ) | ||
| Changes in assets and liabilities | ||||||||
| Prepaid expenses | - | (2,637 | ) | |||||
| Accounts payable and accrued liabilities | 1,821 | (6,750 | ) | |||||
| Net cash used in operating activities | (18,976 | ) | (37,767 | ) | ||||
| Cash flows provided used by financing activities | ||||||||
| Distributions to members | (4,316 | ) | (4,380 | ) | ||||
| Proceeds from related party loans | 25,050 | 39,100 | ||||||
| Net cash provided used by financing activities | 20,734 | 34,720 | ||||||
| Net increase (decrease) in cash | 1,758 | (3,047 | ) | |||||
| Cash, beginning of period | 79 | 3,127 | ||||||
| Cash, end of period | $ | 1,836 | $ | 79 | ||||
The accompanying notes are an integral part of these financial statements.
49
IQI MEDIA INC.
NOTES TO FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 2021 AND 2020
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
IQI Media Inc.(“the Company”) is a women-owned, California Sub-S Corporation incorporated in February 2017. Previously the Company operated as a sole proprietorship from 2010-2016. The Company is a full-service content creation, film and advertising production company located in the City of Pasadena, California. The Company manages all aspects of a multi-languages project throughout its life cycle from conception and strategy to design, development and delivery.
The Company’s year-end is December 31.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) “FASB Accounting Standard Codification™” (the “Codification”) which is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States.
Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve months following the date of these financial statements. As of December 31, 2021, the Company had $1,836 in cash and an accumulated deficit of $59,142.
Because the Company does not expect that existing operational cash flow will be sufficient to fund presently anticipated operations, this raises substantial doubt about the Company’s ability to continue as a going concern. Therefore, the Company will need to raise additional funds and is currently exploring alternative sources of financing. Historically, the Company has been solely financed by its CEO. The Company will be required to continue to do so until its operations become profitable. There can be no assurance that such additional financing will be available to the Company on acceptable terms or at all.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to income taxes and contingencies. The Company bases its estimates on historical experience, known or expected trends, and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.
Revenue Recognition
Revenues are accounted for in accordance with the FASB’s Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606).
The Company derives revenue by providing content creation and advertising services to major corporations
50
The amount of revenue recognized reflects the consideration which the Company expects to be entitled to receive in exchange for the products and/or services. To achieve this principle, the Company applies the following five steps:
| 1. | Identify the contract with the customer; |
| 2. | Identify the performance obligations in the contract; |
| 3. | Determine the transaction price; |
| 4. | Allocate the transaction price to performance obligations in the contract, and |
| 5. | Recognize revenue when or as the Company satisfies a performance obligation. |
The Company recognizes revenue when the services have been completed.
Cash and cash equivalents
The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. On December 31, 2021, and December 31, 2020, the Company’s cash equivalents totaled $1,836 and $79 respectively.
Income taxes
The Company accounts for income taxes under FASB ASC 740, “Accounting for Income Taxes”. Under FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. FASB ASC 740-10-05, “Accounting for Uncertainty in Income Taxes” prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.
The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company assesses the validity of its conclusions regarding uncertain tax positions quarterly to determine if facts or circumstances have arisen that might cause it to change its judgment regarding the likelihood of a tax position’s sustainability under audit.
Net Loss per Share
Net loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260, “Earnings per Share.” Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding.
Recent Accounting Pronouncements
There are no recent accounting pronouncements that impact the Company’s operations.
NOTE 3 – RELATED PARTY LOANS
As of December 31, 2021 and December 31, 2020 the balance of related party loans was $51,550 and $26,500, respectively. These loan have been provided to the Company on an free demand basis, by the Company’s CEO.
51
NOTE 4 – EQUITY
The Company operates as a Sub-Chapter S corporation. As of December 31, 2021 and December 31, 2020, the balance of the Members’ Deficit was $59,142 and $34,028.
NOTE 5 – COMMITMENTS AND CONTINGENCIES
The Company did not have any contractual commitments as of December 31, 2021, and December 31, 2020.
NOTE 6 – SUBSEQUENT EVENTS
In accordance with FASB ASC 855-10, Subsequent Events, the Company has analyzed its operations subsequent to December 31, 2021 to the date these condensed consolidated financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these condensed consolidated financial statements.
52
Item 9.01 (b) Pro forma financial information. The pro forma financial information required by this Item 9.01(b) are appended to this report beginning on page 51. The unaudited pro forma financial information required by this Item 9.01(b) were reviewed by BF Borgers CPA PC.
Pro Forma Combined Financial Statements
The following pro forma balance sheet and proforma income statements have been derived from the financial statements of Winvest Group Ltd. at December 31, 2021, and adjusts such information to give the effect of the acquisition of TCG and IQI, as if the acquisition had occurred at January 1, 2021. The following pro forma EPS statement has been derived from the income statements of TCG and IQI and adjusts such information to give the effect that the acquisition by Winvest Group Ltd. at January 1, 2021 and December 31, 2021, respectively. The pro forma balance sheet and EPS statement is presented for informational purposes only and does not purport to be indicative of the financial condition that would have resulted if the acquisition had been consummated at December 31, 2021 or January 1, 2021.
WINVEST GROUP LTD, IQI MEDIA, INC AND THE CATALYST ENTERTAINMENT GROUP, LLC
UNAUDITED PROFORMA CONSOLIDATED BALANCE SHEETS
FOR THE YEAR ENDED DECEMBER 31, 2021
Winvest Group Ltd. December 31, 2021 |
IQI Media, Inc December 31, 2021 |
The
Catalyst Entertainment Group, LLC December 31, 2021 |
Preliminary Consolidated |
Acquisition Entries |
Final December 31, 2021 |
||||||||||||||||||||
| ASSETS | |||||||||||||||||||||||||
| Current assets | |||||||||||||||||||||||||
| Cash | $ | - | $ | 1,836 | $ | 4,726 | $ | 6,562 | $ | 6,562 | |||||||||||||||
| Prepaid expenses | 2,637 | 2,637 | 2,637 | ||||||||||||||||||||||
| Total current assets | 4,473 | 4,726 | 9,200 | 9,200 | |||||||||||||||||||||
| Goodwill | 27,658 | (a) | 27,658 | ||||||||||||||||||||||
| Intangible Assets | 27,658 | (a) | 27,658 | ||||||||||||||||||||||
| Total Assets | $ | - | $ | 4,473 | $ | 4,726 | $ | 9,200 | $ | 55,316 | $ | 64,516 | |||||||||||||
| LIABILITIES & STOCKHOLDERS’ DEFICIT | |||||||||||||||||||||||||
| Current liabilities | |||||||||||||||||||||||||
| Accounts payable liabilities | $ | 5,961 | $ | 12,065 | $ | 18,026 | $ | 18,026 | |||||||||||||||||
| Notes payable-related party | 108,561 | 51,550 | 160,111 | 160,111 | |||||||||||||||||||||
| Total current liabilities | 114,522 | 63,615 | 178,137 | 178,137 | |||||||||||||||||||||
| Total liabilities | 114,522 | 63,615 | 178,137 | 178,137 | |||||||||||||||||||||
| STOCKHOLDERS’ DEFICIT | |||||||||||||||||||||||||
| Members equity/deficit | (59,142 | ) | 4,726 | (54,416 | ) | 54,416 | (a) | - | |||||||||||||||||
| Preferred stock Series A, par value, $0.001 | 227,839 | 227,839 | 227,839 | ||||||||||||||||||||||
| Common stock, par value $0.001 | 16,514 | 16,514 | 900 | (a) | 17,414 | ||||||||||||||||||||
| Additional paid in capital | 101,134,769 | 101,134,769 | 101,134,769 | ||||||||||||||||||||||
| Accumulated Deficit | (101,493,644 | ) | (101,493,644 | ) | (101,493,644 | ) | |||||||||||||||||||
| Total Stockholders’ (Deficit) | (114,522 | ) | (59,142 | ) | 4,726 | (168,938 | ) | 55,316 | $ | (113,622 | ) | ||||||||||||||
| Total Liabilities and Stockholders’ Deficit | $ | - | $ | 4,473 | $ | 4,726 | $ | 9,200 | $ | 55,316 | $ | 64,516 | |||||||||||||
Notes
| (a) | To record the issuance of 450,000 Winvest shares each to IQI Media (“IQI”) and The Catalyst Group (“TCG”), and to eliminate the capital structure of IQI and TCG. The resulting goodwill was allocated 50% to goodwill and 50% to intangible assets |
53
WINVEST GROUP LTD, IQI MEDIA, INC AND THE CATALYST ENTERTAINMENT GROUP, LLC
UNAUDITED PROFORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2021
| Winvest Group Ltd. December 31, 2021 |
IQI Media, Inc December 31, 2021 |
Entertainment Group, LLC December 31, 2021 |
Preliminary Consolidated |
Acquisition Entries |
Final December 31, 2021 |
||||||||||||||||||||
| Revenue | $ | - | $ | 11,363 | $ | - | 11,363 | $ | 11,363 | ||||||||||||||||
| Cost of sales | - | 309 | - | ||||||||||||||||||||||
| Gross profit | - | 11,054 | 11,054 | 11,054 | |||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||
| Administrative expenses | 82,224 | 31,852 | - | 114,076 | 9,219 | (a) | 123,295 | ||||||||||||||||||
| Total operating expenses | 82,224 | 31,852 | - | 114,076 | 9,219 | 123,295 | |||||||||||||||||||
| Loss from operations | (82,224 | ) | (20,798 | ) | - | (103,022 | ) | (9,219 | ) | (112,241 | ) | ||||||||||||||
| Net loss | $ | (82,224 | ) | $ | (20,798 | ) | $ | - | (103,022 | ) | (9,219 | ) | $ | (112,241 | ) | ||||||||||
| Basic and diluted loss per common share | $ | (0.01 | ) | $ | (0.01 | ) | |||||||||||||||||||
| Weighted average number of shares outstanding | 14,432,264 | 900,000 | (b) | 15,332,264 | |||||||||||||||||||||
| (a) | to record amortization of intangible assets using an estimated three year life calculated as if the acquisition had occurred at the beginning of the period |
| (b) | to record the issuance of acquisition shares |
54
(d) Exhibit
55
SIGNATURES
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.
WINVEST GROUP LTD. | ||
| Date: May 16, 2022 | /s/ Jeffrey Wong Kah Mun | |
| By: | Jeffrey Wong Kah Mun, Chief Executive Officer | |
56
Exhibit 3.1
Exhibit 3.2
AMENDED AND RESTATED
BY-LAWS
OF
WINVEST GROUP LTD.
(hereinafter called the “Corporation”)
ARTICLE I
OFFICES
Section 1.1 Registered Office. The registered office of the corporation shall be established and maintained at the office of NEVADA AGENCY AND TRANSFER COMPANY, at 50 WEST LIBERTY STREET SUITE 880, Reno, NV, 89501, in the State of Nevada; NEVADA AGENCY AND TRANSFER COMPANY shall be the registered agent of the corporation in charge thereof. The registered office and registered agent may be changed from time to time by action of the board of directors of the Corporation (the “Board of Directors”) and the appropriate filing by the corporation in the office of the Secretary of State of the State of Nevada.
Section 1.02. Principal Office. The principal office for the transaction of the business of the Corporation shall be as determined by the Board of Directors. The Board of Directors is hereby granted full power and authority to change said principal office from one location to another.
Section 1.3 Other Offices. The Corporation may also have offices at such other places, both within and without the State of Nevada, as the Board of Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.1 Annual Meetings. The Annual Meeting of stockholders of the Corporation (“Stockholders”) for purposes of the Nevada Revised Statutes (“NRS”) 78.330 shall be held on such date and at such time as shall be designated from time to time by the Board of Directors. The election of directors and any other proper business may be transacted at the Annual Meeting of Stockholders.
Section 2.2 Special Meetings. A Special meeting of the stockholders (a “Special Meeting”) for any purpose or purposes may be called by the president of the Corporation, the Board of Directors or a committee of the Board of Directors that has been duly designated by the Board of Directors and whose powers and authority, as provided in a resolution of the Board of Directors or in these by-laws (“By-Laws”), include the power to call such meetings. Such request shall state the purpose or purposes of the proposed meeting. Unless otherwise prescribed by law, the articles of incorporation of the Corporation, as amended and restated from time to time (the “Articles of Incorporation”) or these By-Laws, a Special Meeting may not be called by any other person or persons. No business may be transacted at any Special Meeting other than such business as may be designated in the notice (or any supplement thereto) calling such meeting.
Section 2.3 Place of Meetings. The president, the Board of Directors, or a committee of the Board of Directors, as the case may be, may designate the time and place, either within or without the State of Nevada, for any Annual Meeting or for any Special Meeting of the Stockholders called by the president, the Board of Directors, or a committee of the Board of Directors. The Board of Directors may, in its sole discretion, determine that any meeting of the stockholders shall be held by means of electronic communications or other available technology in accordance with Section 2.17.
Section 2.4 Notice. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting, the means of electronic communication, if any, and, in the case of a Special Meeting, the purpose or purposes for which the meeting is called. Unless otherwise required by law, written notice of any meeting shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to notice of and to vote at such meeting, and shall be delivered in accordance with NRS 78.370.
Section 2.5 Adjournments. Any meeting of the stockholders may be adjourned from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than sixty (60) days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting in accordance with the requirements of Section 2.4 hereof shall be given to each stockholder of record (including the new record date) entitled to notice of and to vote at the meeting.
Section 2.6 Quorum. Unless otherwise required by applicable law or the Articles of Incorporation, the holders of one-third (1/3) of the Corporation’s capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, a quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, in the manner provided in Section 2.5 hereof, until a quorum shall be present or represented.
Section 2.7 Voting.
(a) Unless otherwise required by law, the Articles of Incorporation or these By-Laws, any question brought before any meeting of the stockholders, other than the election of directors, shall be decided by the vote of the holders of a majority of the votes cast on a matter at the meeting at which a quorum is present. Directors shall be elected by a plurality of the votes cast at the election. Broker non-votes and abstentions are considered for purposes of establishing a quorum but not considered as votes cast for or against a proposal or director nominee.
(b) Unless otherwise provided in the Articles of Incorporation, and subject to Section 2.11(a), each stockholder represented at a meeting of the stockholders shall be entitled to cast one (1) vote for each share of the capital stock entitled to vote thereat held by such stockholder. Such votes may be cast in person or by proxy as provided in Section 2.8. The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of the stockholders, in such officer’s discretion, may require that any votes cast at such meeting shall be cast by written ballot.
Section 2.8 Proxies. Each stockholder entitled to vote at a meeting of the stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder as proxy, but no such proxy shall be voted upon after six months from its date of creation, unless such proxy provides for a longer period, which may not exceed seven years from the date of its creation. Without limiting the manner in which a stockholder may authorize another person or persons to act for such stockholder as proxy, the following shall constitute a valid means by which a stockholder may grant such authority:
(i) A stockholder may execute a writing authorizing another person or persons to act for such stockholder as proxy. Execution may be accomplished by the stockholder or such stockholder’s authorized officer, director, employee or agent signing such writing or causing such person’s signature to be affixed to such writing by any reasonable means, including, but not limited to, by facsimile signature.
(ii) A stockholder may authorize another person or persons to act for such stockholder as proxy by transmitting or authorizing the transmission of an electronic record to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive the transmission, provided that any such electronic record must either set forth or be submitted with information from which it can be determined that the electronic record was authorized by the stockholder. If it is determined that such electronic record is valid, the inspectors or, if there are no inspectors, such other persons making that determination shall specify the information on which they relied.
| 2 |
Any copy, facsimile or other electronic telecommunication or other reliable reproduction of the writing or electronic record authorizing another person or persons to act as proxy for a stockholder may be substituted or used in lieu of the original writing or electronic record for any and all purposes for which the original writing or electronic record could be used; provided, however, that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or electronic record.
Section 2.9 Consent of Stockholders in Lieu of Meeting.
(a) Unless otherwise provided in the Articles of Incorporation, any action required or permitted to be taken at any Annual or Special Meeting of Stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation’s principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of the stockholders are recorded, to the attention of the Secretary of the Corporation. Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the earliest dated consent delivered in the manner required by this Section 2.9 to the Corporation, written consents signed by a sufficient number of holders to take action are delivered to the Corporation by delivery to the Corporation’s principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of the stockholders are recorded, to the attention of the Secretary of the Corporation. Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all purposes for which the original writing could be used, provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire original writing. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to the Corporation as provided above in this Section 2.9.
(b) In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be less than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary of the Corporation, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within ten (10) days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within ten (10) days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation’s principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of the stockholders are recorded, to the attention of the Secretary of the Corporation. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action.
| 3 |
(c) In the event of the delivery, in the manner provided by this Section 2.9, to the Corporation of the requisite written consent or consents to take corporate action and/or any related revocation or revocations, the Corporation shall engage independent inspectors of elections for the purpose of performing promptly a ministerial review of the validity of the consents and revocations. For the purpose of permitting the inspectors to perform such review, no action by written consent without a meeting shall be effective until such date as the independent inspectors certify to the Corporation that the consents delivered to the Corporation in accordance with this Section 2.9 represent at least a minimum number of votes that would be necessary to take the corporate action. Nothing contained in this Section 2.9(c) shall in any way be construed to suggest or imply that the board of directors or any stockholder shall not be entitled to contest the validity of any consent or revocation thereof, whether before or after such certification by the independent inspectors, or to take any other action (including, without limitation, the commencement, prosecution, or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation).
Section 2.10 List of Stockholders Entitled to Vote. The officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days but not more than sixty (60) days, before every meeting of the stockholders, a complete list of the stockholders of record entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder of record and the number of shares registered in the name of each stockholder of record. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting (i) either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held or (ii) during ordinary business hours, at the principal place of business of the Corporation. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Except as otherwise required by law, such list shall be the only evidence as to who are the stockholders entitled to vote at any meeting of the stockholders. In the event that more than one group of shares is entitled to vote as a separate voting group at the meeting, there shall be a separate listing of the stockholders of each group.
Section 2.11 Record Date.
(a) In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of the stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of the stockholders shall be at the close of business on the day before the day on which the first notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of the stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation’s principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of the stockholders are recorded, to the attention of the Secretary of the Corporation. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.
Section 2.12 Stock Ledger. The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 2.10 or the books of the Corporation, or to vote in person or by proxy at any meeting of the stockholders.
| 4 |
Section 2.13 Conduct of Meetings. Meetings of stockholders shall be presided over by the chairman of the Board of Directors (the “Chairman”), or, in the absence of the Chairman, by the vice chairman of the Board of Directors, if any, or if there be no vice chairman or in the absence of the vice chairman, by the chief executive officer, if any, or if there be no chief executive officer or in the absence of the chief executive officer, by the president, or, in the absence of the president, or, in the absence of any of the foregoing persons, by a chairman designated by the Board of Directors, or by a chairman chosen at the meeting by the stockholders entitled to cast a majority of the votes which all stockholders present in person or by proxy are entitled to cast. The individual acting as chairman of the meeting may delegate any or all of his or her authority and responsibilities as such to any director or officer of the Corporation present in person at the meeting. The secretary, or in the absence of the secretary an assistant secretary, shall act as secretary of the meeting, but in the absence of the secretary and any assistant secretary the chairman of the meeting may appoint any person to act as secretary of the meeting. The order of business at each such meeting shall be as determined by the chairman of the meeting. The chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts and things as are necessary or desirable for the proper conduct of the meeting, including, without limitation, (i) the establishment of procedures for the maintenance of order and safety, (ii) the establishment of an agenda or order of business for the meeting, (iii) limitation on participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies and such other persons as the chairman of the meeting shall permit, (iv) limitation on the time allotted for consideration of each agenda item and for questions or comments by meeting participants, (v) restrictions on entry to such meeting after the time prescribed for the commencement thereof, and (vi) the opening and closing of the voting polls. The Board of Directors, in its discretion, or the chairman of the meeting, in his or her discretion, may require that any votes cast at such meeting shall be cast by written ballot.
Section 2.14 Inspectors of Election. In advance of any meeting of the stockholders, the Board of Directors, by resolution, the Chairman or the president shall appoint one or more inspectors to act at the meeting and make a written report thereof. One or more other persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of the stockholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Unless otherwise required by applicable law, inspectors may be officers, employees or agents of the Corporation. Each inspector, before entering upon the discharge of the duties of inspector, shall take and sign an oath to faithfully execute the duties of inspector with strict impartiality and according to the best of such inspector’s ability. The inspector or inspectors may (i) ascertain the number of shares outstanding and the voting power of each; (ii) determine the number of shares represented at a meeting and the validity of proxies or ballots; (iii) count all votes and ballots; (iv) determine any challenges made to any determination made by the inspector(s); and (v) certify the determination of the number of shares represented at the meeting and the count of all votes and ballots.
Section 2.15 Nature of Business at Meetings of Stockholders. Only such business (other than nominations for election to the Board of Directors and the election of directors, which must comply with the provisions of Section 2.16) may be transacted at an Annual Meeting of Stockholders as is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the Annual Meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof), or (c) otherwise properly brought before the Annual Meeting by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.15 and on the record date for the determination of stockholders entitled to notice of and to vote at such Annual Meeting and (ii) who complies with the notice procedures set forth in this Section 2.15.
In addition to any other applicable requirements, for business to be properly brought before an Annual Meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.
To be timely, a stockholder’s notice to the Secretary must be delivered to or be mailed and received at the principal executive offices of the Corporation not less than ninety (90) days nor more than one-hundred and twenty (120) days prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders; provided, however, that in the event that the Annual Meeting is called for a date that is not within twenty-five (25) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the Annual Meeting was mailed or such public disclosure of the date of the Annual Meeting was made, whichever first occurs. In no event shall the adjournment or postponement of an Annual Meeting, or the public announcement of such an adjournment or postponement, commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
| 5 |
To be in proper written form, a stockholder’s notice to the Secretary must set forth the following information: (a) as to each matter such stockholder proposes to bring before the Annual Meeting, a brief description of the business desired to be brought before the Annual Meeting and the reasons for conducting such business at the Annual Meeting, and (b) as to the stockholder giving notice and the beneficial owner, if any, on whose behalf the proposal is being made, (i) the name and address of such person, (ii) (A) the class or series and number of all shares of stock of the Corporation which are owned beneficially or of record by such person and any affiliates or associates of such person, (B) the name of each nominee holder of shares of all stock of the Corporation owned beneficially but not of record by such person or any affiliates or associates of such person, and the number of such shares of stock of the Corporation held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to stock of the Corporation and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or associates of such person, with respect to stock of the Corporation; (iii) a description of all agreements, arrangements, or understandings (whether written or oral) between or among such person, or any affiliates or associates of such person, and any other person or persons (including their names) in connection with the proposal of such business and any material interest of such person or any affiliates or associates of such person, in such business, including any anticipated benefit therefrom to such person, or any affiliates or associates of such person, (iv) a representation that the stockholder giving notice intends to appear in person or by proxy at the Annual Meeting to bring such business before the meeting; and (v) any other information relating to such person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies by such person with respect to the proposed business to be brought by such person before the Annual Meeting pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder.
A stockholder providing notice of business proposed to be brought before an Annual Meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.15 shall be true and correct as of the record date for determining the stockholders entitled to receive notice of the Annual Meeting and such update and supplement shall be delivered to or be mailed and received by the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for determining the stockholders entitled to receive notice of the Annual Meeting.
No business shall be conducted at the Annual Meeting of Stockholders except business brought before the Annual Meeting in accordance with the procedures set forth in this Section 2.15; provided, however, that, once business has been properly brought before the Annual Meeting in accordance with such procedures, nothing in this Section 2.15 shall be deemed to preclude discussion by any stockholder of any such business. If the chairman of an Annual Meeting determines that business was not properly brought before the Annual Meeting in accordance with the foregoing procedures, the chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.
Nothing contained in this Section 2.15 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act (or any successor provision of law).
Section 2.16 Nomination of Directors. Only natural persons of at least 18 years of age who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except as may be otherwise provided in the Articles of Incorporation with respect to the right of holders of preferred stock, if any, of the Corporation to nominate and elect a specified number of directors in certain circumstances. Nominations of persons for election to the Board of Directors may be made at any Annual Meeting of Stockholders, or at any Special Meeting of Stockholders called for the purpose of electing directors, (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.16 and on the record date for the determination of stockholders entitled to notice of and to vote at such Annual Meeting or Special Meeting and (ii) who complies with the notice procedures set forth in this Section 2.16.
| 6 |
In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation. To be timely, a stockholder’s notice to the Secretary must be delivered to or be mailed and received at the principal executive offices of the Corporation (a) in the case of an Annual Meeting, not less than ninety (90) days nor more than one-hundred and twenty (120) days prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders; provided, however, that in the event that the Annual Meeting is called for a date that is not within twenty-five (25) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the Annual Meeting was mailed or such public disclosure of the date of the Annual Meeting was made, whichever first occurs; and (b) in the case of a Special Meeting of Stockholders called for the purpose of electing directors, not later than the close of business on the tenth (10th) day following the day on which notice of the date of the Special Meeting was mailed or public disclosure of the date of the Special Meeting was made, whichever first occurs. In no event shall the adjournment or postponement of an Annual Meeting or a Special Meeting called for the purpose of electing directors, or the public announcement of such an adjournment or postponement, commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
To be in proper written form, a stockholder’s notice to the Secretary must set forth the following information: (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of such person and that such person is a natural person of at least 18 years of age, (ii) the principal occupation or employment of such person, (iii) (A) the class or series and number of all shares of stock of the Corporation which are owned beneficially or of record by such person and any affiliates or associates of such person, (B) the name of each nominee holder of shares of all stock of the Corporation owned beneficially but not of record by such person or any affiliates or associates of such person, and the number of such shares of stock of the Corporation held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to stock of the Corporation and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or associates of such person, with respect to stock of the Corporation; and (iv) any other information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice, and the beneficial owner, if any, on whose behalf the nomination is being made, (i) the name and record address of the stockholder giving the notice and the name and principal place of business of such beneficial owner; (ii) (A) the class or series and number of all shares of stock of the Corporation which are owned beneficially or of record by such person and any affiliates or associates of such person, (B) the name of each nominee holder of shares of the Corporation owned beneficially but not of record by such person or any affiliates or associates of such person, and the number of shares of stock of the Corporation held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to stock of the Corporation and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or associates of such person, with respect to stock of the Corporation; (iii) a description of all agreements, arrangements, or understandings (whether written or oral) between such person, or any affiliates or associates of such person, and any proposed nominee or any other person or persons (including their names) pursuant to which the nomination(s) are being made by such person, and any material interest of such person, or any affiliates or associates of such person, in such nomination, including any anticipated benefit therefrom to such person, or any affiliates or associates of such person; (iv) a representation that the stockholder giving notice intends to appear in person or by proxy at the Annual Meeting or Special Meeting to nominate the persons named in its notice; and (v) any other information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with the solicitation of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.
| 7 |
A stockholder providing notice of any nomination proposed to be made at an Annual Meeting or Special Meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.16 shall be true and correct as of the record date for determining the stockholders entitled to receive notice of the Annual Meeting or Special Meeting, and such update and supplement shall be delivered to or be mailed and received by the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for determining the stockholders entitled to receive notice of such Annual Meeting or Special Meeting.
No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 2.16. If the chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.
Section 2.17 Meetings Through Electronic Communications. Stockholders may participate in a meeting of the stockholders by any means of electronic communications, videoconferencing, teleconferencing or other available technology permitted under the NRS (including, without limitation, a telephone conference or similar method of communication by which all individuals participating in the meeting can hear each other) and utilized by the Corporation. If any such means are utilized, the Corporation shall, to the extent required under the NRS, implement reasonable measures to (a) verify the identity of each person participating through such means as a stockholder and (b) provide the stockholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to communicate, and to read or hear the proceedings of the meeting in a substantially concurrent manner with such proceedings. Participation in a meeting pursuant to this Section 2.17 constitutes presence in person at the meeting.
ARTICLE III
DIRECTORS
Section 3.1 Number, Election and Term of Directors. The Board of Directors shall consist of not less than one nor more than nine members, the exact number of which shall be fixed from time to time by the Board of Directors. No decrease in the number of authorized directors constituting the Board of Directors of the Corporation shall shorten the term of any incumbent director. Except as provided in Section 3.2, directors shall be elected by a plurality of the votes cast at each Annual Meeting of Stockholders and each director so elected shall hold office until the next Annual Meeting of Stockholders, or until such director’s earlier death, resignation or removal. Despite the expiration of a director's term, the director shall continue to serve until his or her successor is elected and qualified. Directors must be natural persons of at least 18 years of age but need not be stockholders of the Corporation or residents of the State of Nevada.
Section 3.2 Vacancies. Unless otherwise required in the Articles of Incorporation, vacancies on the Board of Directors or any committee thereof arising through death, resignation, removal, an increase in the number of directors constituting the Board of Directors or such committee or otherwise may be filled only by a majority of the remaining directors then in office, though less than a quorum, or by a sole remaining director. The directors so chosen shall, in the case of the Board of Directors, hold office until the next annual election and until their successors are duly elected and qualified, or until their earlier death, resignation or removal and, in the case of any committee of the Board of Directors, shall hold office until their successors are duly appointed by the Board of Directors or until their earlier death, resignation or removal.
| 8 |
Section 3.3 Duties and Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these By-Laws required to be exercised or done by the stockholders.
Section 3.4 Meetings. The Board of Directors and any committee thereof may hold meetings, both regular and special, either within or without the State of Nevada. Regular meetings of the Board of Directors or any committee thereof may be held without notice at such time and at such place as may from time to time be determined by the Board of Directors or such committee, respectively. Special meetings of the Board of Directors may be called by the Chairman, if any, or the president. Special meetings of any committee of the Board of Directors may be called by the chairman of such committee, if any, the president, or any director serving on such committee. Notice thereof stating the place, date and hour of the meeting shall be given to each director (or, in the case of a committee, to each member of such committee) either by mail not less than seventy-two (72) hours before the date of the meeting, by telephone or electronic mail on twenty-four (24) hours’ notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances.
Section 3.5 Organization. At each meeting of the Board of Directors or any committee thereof, the Chairman of the Board of Directors or the chairman of such committee, as the case may be, or, in his or her absence or if there be none, a director chosen by a majority of the directors present, shall act as chairman. Except as provided below, the Secretary of the Corporation shall act as secretary at each meeting of the Board of Directors and of each committee thereof. In case the Secretary shall be absent from any meeting of the Board of Directors or of any committee thereof, an Assistant Secretary shall perform the duties of secretary at such meeting; and in the absence from any such meeting of the Secretary and all the Assistant Secretaries, the chairman of the meeting may appoint any person to act as secretary of the meeting. Notwithstanding the foregoing, the members of each committee of the Board of Directors may appoint any person to act as secretary of any meeting of such committee and the Secretary or any Assistant Secretary of the Corporation may, but need not if such committee so elects, serve in such capacity.
Section 3.6 Resignations and Removals of Directors. Any director of the Corporation may resign from the Board of Directors or any committee thereof at any time, by giving notice in writing to the Chairman of the Board of Directors, if any, the president or the secretary of the Corporation and, in the case of a committee, to the chairman of such committee, if any. Such resignation shall take effect at the time therein specified or, if no time is specified, immediately; and, unless otherwise specified in such notice, the acceptance of such resignation shall not be necessary to make it effective. Except as otherwise required by applicable law and subject to the rights, if any, of the holders of shares of preferred stock then outstanding, any director or the entire Board of Directors may be removed from office at any time, with or without cause, and only by the affirmative vote of the holders of at least two-thirds (2/3) of the combined voting power of the issued and outstanding capital stock of the Corporation entitled to vote in the election of directors, voting together as a single class. Any director serving on a committee of the Board of Directors may be removed from such committee at any time by the Board of Directors.
Section 3.7 Quorum and Voting.
(a) Except as otherwise required or permitted by the Articles of Incorporation, the NRS or the rules and regulations of any securities exchange or quotation system on which the Corporation’s securities are listed or quoted for trading, at all meetings of the Board of Directors or any committee thereof, a majority of the entire Board of Directors or a majority of the directors constituting such committee, as the case may be, shall constitute a quorum for the transaction of business and the act of a majority of the directors or committee members present at any meeting at which there is a quorum shall be the act of the Board of Directors or such committee, as applicable. If a quorum shall not be present at any meeting of the Board of Directors or any committee thereof, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting of the time and place of the adjourned meeting, until a quorum shall be present.
| 9 |
(b) Each director shall have one vote for any action required or permitted to be taken at any meeting of the Board or any committee thereof or without a meeting as provided herein. In accordance with NRS 78.330, all directors and classes of directors shall have the same voting rights.
Section 3.8 Actions of the Board by Written Consent. Unless otherwise provided in the Articles of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all the members of the Board of Directors or such committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or such committee.
Section 3.9 Meetings by Means of Conference Telephone. Unless otherwise provided in the Articles of Incorporation or these By-Laws, members of the Board of Directors, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 3.9 shall constitute presence in person at such meeting.
Section 3.10 Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. Each member of a committee must meet the requirements for membership, if any, imposed by applicable law and the rules and regulations of any securities exchange or quotation system on which the securities of the Corporation are listed or quoted for trading. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. Subject to the rules and regulations of any securities exchange or quotation system on which the securities of the Corporation are listed or quoted for trading, in the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another qualified member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. Any committee, to the extent permitted by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Each committee shall keep regular minutes and report to the Board of Directors when required. Notwithstanding anything to the contrary contained in this Article III, the resolution of the Board of Directors establishing any committee of the Board of Directors and/or the charter of any such committee may establish requirements or procedures relating to the governance and/or operation of such committee that are different from, or in addition to, those set forth in these By-Laws and, to the extent that there is any inconsistency between these By-Laws and any such resolution or charter, the terms of such resolution or charter shall be controlling; provided that it complies with the NRS.
Section 3.11 Compensation. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary for service as director, payable in cash or securities. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for service as committee members.
Section 3.12 Interested Directors. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are directors or officers or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because any such director’s or officer’s vote is counted for such purpose if: (i) the material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) the material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders holding a majority of the voting power (the votes of the common or interested directors may be counted); and (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board of Directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction as set forth herein.
| 10 |
ARTICLE IV
OFFICERS
Section 4.1 General. The officers of the Corporation shall consist of a chief executive officer, president, chief operating officer, chief financial officer and a secretary, each of whom shall be elected by the Board. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the Board. All officers must be natural persons and any natural person may hold two or more offices, except that in the event that the Corporation shall have more than one director, the offices of president and secretary shall be held by different persons.
Section 4.2 Election, Qualification and Term of Office. Each of the officers shall be elected by the Board. None of said officers need be a director. Except as hereinafter provided or subject to the express provisions of a contract authorized by the Board of Directors, each of said officers shall hold office from the date of his/her election until the next annual meeting of the Board and until his/her successor shall have been duly elected and qualified or until his or her removal or resignation.
Section 4.3 Voting Securities Owned by the Corporation. Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the president or any vice president or any other officer authorized to do so by the Board of Directors and any such officer may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons.
Section 4.4 Removal. The Board of Directors shall have the right to remove, with or without cause, any officer of the Corporation.
Section 4.5 Resignation. Any officer may resign at any time by giving notice to the Board, the president or the secretary. Any such resignation shall take effect at the date of receipt of such notice or at any later date specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
Section 4.6 Vacancies. The Board of Directors shall fill any office which becomes vacant with a successor who shall hold office for the unexpired term and until his/her successor shall have been duly elected and qualified or until his or her removal or resignation.
Section 4.7 Powers and Duties. The powers and duties of the respective corporate officers shall be determined by the Board.
Section 4.8 Salaries. The salaries of all executive officers of the Corporation shall be fixed by the Board of Directors or by such committee of the Board of Directors as may be designated from time to time by a resolution adopted by a majority of the Board of Directors.
Section 4.9 Other Officers. Such other officers as the Board of Directors may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors. The Board of Directors may delegate to any other officer of the Corporation the power to choose such other officers and to prescribe their respective duties and powers.
| 11 |
ARTICLE V
STOCK
Section 5.1 Shares of Stock. The shares of capital stock of the Corporation shall be represented by a certificate, unless and until the Board of Directors adopts a resolution permitting shares to be uncertificated. Notwithstanding the adoption of any such resolution providing for uncertificated shares, every holder of capital stock of the Corporation theretofore represented by certificates and, upon request, every holder of uncertificated shares, shall be entitled to have a certificate for shares of capital stock of the Corporation signed by, or in the name of the Corporation by, (a) the Chairman, the chief executive officer or the president, and (b) the chief financial officer or the secretary, certifying the number of shares owned by such stockholder in the Corporation.
Section 5.2 Signatures. Any or all of the signatures on a certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.
Section 5.3 Lost Certificates. Unless otherwise provided in the Articles of Incorporation or these By-laws, the Board of Directors may direct a new certificate or uncertificated shares be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issuance of a new certificate or uncertificated shares, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or such owner’s legal representative, to identify the same in such manner as the Board of Directors shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate or the issuance of such new certificate or uncertificated shares.
Section 5.4 Transfers. Stock of the Corporation shall be transferable in the manner prescribed by applicable law and in these By-Laws. Transfers of stock shall be made only on the books of the Corporation, and in the case of certificated shares of stock, only by the person named in the certificate or by such person’s attorney lawfully constituted in writing and upon the surrender of the certificate therefor, properly endorsed for transfer and payment of all necessary transfer taxes; or, in the case of uncertificated shares of stock, upon receipt of proper transfer instructions from the registered holder of the shares or by such person’s attorney lawfully constituted in writing, and upon payment of all necessary transfer taxes and compliance with appropriate procedures for transferring shares in uncertificated form; provided, however, that such surrender and endorsement, compliance or payment of taxes shall not be required in any case in which the officers of the Corporation shall determine to waive such requirement. With respect to certificated shares of stock, every certificate exchanged, returned or surrendered to the Corporation shall be marked “Cancelled,” with the date of cancellation, by the Secretary or Assistant Secretary of the Corporation or the transfer agent thereof. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred.
Section 5.5 Regulations. The Board of Directors may make such rules and regulations as it may deem expedient, not inconsistent with these By-Laws, concerning the issue, transfer and registration of certificates for shares or uncertificated shares of the stock of the Corporation.
Section 5.6 Dividend Record Date. Subject to compliance with NRS 78.288 and 78.300, and the Articles of Incorporation, in order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
| 12 |
Section 5.7 Record Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by law.
Section 5.8 Transfer and Registry Agents. The Corporation may from time to time maintain one or more transfer offices or agencies and registry offices or agencies at such place or places as may be determined from time to time by the Board of Directors.
Section 5.9 Consideration for Shares. The Board of Directors may authorize shares to be issued for consideration consisting of any tangible or intangible property or benefit to the Corporation including, without limitation, cash, services performed or other securities of the Corporation. When the Corporation receives the consideration for which the Board of Directors authorized the issuance of shares, such shares shall be fully paid and non-assessable (if non-assessable stock) and the stockholders shall not be liable to the Corporation or to its creditors in respect thereof.
ARTICLE VI
NOTICES
Section 6.1 Notices. Whenever written notice is required by the NRS, the Articles of Incorporation or these By-Laws, to be given to any director, member of a committee or stockholder, such notice may be given by mail in accordance with the NRS, and as permitted thereby, addressed to such director, member of a committee or stockholder, at such person’s address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Written notice may also be given personally or by electronic transmission (by fax, electronic mail, or posting on electronic network).
Section 6.2 Waivers of Notice. Whenever any notice is required by applicable law, the Articles of Incorporation or these By-Laws, to be given to any director, member of a committee or stockholder, a waiver thereof in writing, signed by the person or persons entitled to notice, or by transmission of an electronic record by that person, whether before or after the time stated therein, shall be deemed equivalent thereto.
Attendance of a person at a meeting, present in person or represented by proxy, shall constitute a waiver of notice of such meeting, except where the person attends the meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any Annual or Special Meeting of Stockholders or any regular or special meeting of the directors or members of a committee of directors need be specified in any written waiver of notice unless so required by law, the Articles of Incorporation or these By-Laws.
ARTICLE VII
GENERAL PROVISIONS
Section 7.1 Dividends. Dividends upon the capital stock of the Corporation, subject to the requirements of the NRS and the provisions of the Articles of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting of the Board of Directors (or any action by written consent in lieu thereof in accordance with Section 3.8 hereof), and may be paid in cash or in property other than shares. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for purchasing any of the shares of capital stock, warrants, rights, options, bonds, debentures, notes, scrip or other securities or evidences of indebtedness of the Corporation, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for any proper purpose, and the Board of Directors may modify or abolish any such reserve.
| 13 |
Section 7.2 Disbursements. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.
Section 7.3 Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.
Section 7.4 Corporate Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words “Corporate Seal, Nevada”. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Power to Indemnify in Actions, Suits or Proceedings other than Those by or in the Right of the Corporation. Subject to Section 8.3 and to the fullest extent permitted by the NRS, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that such person is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful.
Section 8.2 Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Corporation. Subject to Section 8.3 and to the fullest extent permitted by the NRS, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court in which such action or suit was brought deem proper.
Section 8.3 Authorization of Indemnification. Any indemnification under this Article VIII (unless ordered by a court) shall be made by the Corporation only as permitted by the NRS and authorized in the specific case upon a determination that indemnification of the present or former director or officer is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section 8.1 or Section 8.2, as the case may be. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (i) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (ii) by a committee of such directors designated by a majority vote of such directors, even though less than a quorum, or (iii) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion or (iv) by the stockholders. Such determination shall be made, with respect to former directors and officers, by any person or persons having the authority to act on the matter on behalf of the Corporation. To the extent, however, that a present or former director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith, without the necessity of authorization in the specific case.
| 14 |
Section 8.4 Good Faith Defined. For purposes of any determination under Section 8.3, a person shall be deemed to have acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe such person’s conduct was unlawful, if such person’s action is based on the records or books of account of the Corporation or another enterprise, or on information supplied to such person by the officers of the Corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise. The provisions of this Section 8.4 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Section 8.1 or Section 8.2, as the case may be.
Section 8.5 Indemnification by a Court. Notwithstanding any contrary determination in the specific case under Section 8.3, and notwithstanding the absence of any determination thereunder, any director or officer may apply to any court of competent jurisdiction in the State of Nevada for indemnification to the extent otherwise permissible under Section 8.1 or Section 8.2. The basis of such indemnification by a court shall be a determination by such court that indemnification of the director or officer is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section 8.1 or Section 8.2, as the case may be. Neither a contrary determination in the specific case under Section 8.3 nor the absence of any determination thereunder shall be a defense to such application or create a presumption that the director or officer seeking indemnification has not met any applicable standard of conduct. Notice of any application for indemnification pursuant to this Section 8.5 shall be given to the Corporation promptly upon the filing of such application. If successful, in whole or in part, the director or officer seeking indemnification shall also be entitled to be paid the expense of prosecuting such application.
Section 8.6 Expenses Payable in Advance. Expenses (including attorneys’ fees) incurred by a director or officer in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation as authorized in this Article VIII. Such expenses (including attorneys’ fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the Corporation deems appropriate.
Section 8.7 Nonexclusivity of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the Articles of Incorporation, these By-Laws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office, it being the policy of the Corporation that indemnification of the persons specified in Section 8.1 and Section 8.2 shall be made to the fullest extent permitted by law. The provisions of this Article VIII shall not be deemed to preclude the indemnification of any person who is not specified in Section 8.1 or Section 8.2 but whom the Corporation has the power or obligation to indemnify under the provisions of the NRS, or otherwise.
Section 8.8 Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power or the obligation to indemnify such person against such liability under the provisions of this Article VIII.
| 15 |
Section 8.9 Certain Definitions. For purposes of this Article VIII, references to “the Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors or officers, so that any person who is or was a director or officer of such constituent corporation, or is or was a director or officer of such constituent corporation serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article VIII with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued.
The term “another enterprise” as used in this Article VIII shall mean any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise of which such person is or was serving at the request of the Corporation as a director, officer, employee or agent. For purposes of this Article VIII, references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director or officer with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Article VIII.
Section 8.10 Survival of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person.
Section 8.11 Limitation on Indemnification. Notwithstanding anything contained in this Article VIII to the contrary, except for proceedings to enforce rights to indemnification (which shall be governed by Section 8.5), the Corporation shall not be obligated to indemnify any director or officer (or his or her heirs, executors or personal or legal representatives) or advance expenses in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors.
Section 8.12 Indemnification of Employees and Agents. The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this Article VIII to directors and officers of the Corporation.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Acquisition of Controlling Interest Statute Opt–Out. The provisions of NRS 78.378 to 78.3793, inclusive, shall not apply to the Corporation or to an acquisition of a “controlling interest” (as defined in NRS 78.3785).
Section 9.2 Forum for Adjudication of Disputes. To the fullest extent permitted by law, and unless the Corporation consents in writing to the selection of an alternative forum, the Eighth Judicial District Court of Clark County, Nevada, shall, to the fullest extent permitted by law, be the sole and exclusive forum for each of the following: (a) any derivative action or proceeding brought in the name or right of the Corporation or on its behalf, (b) any action asserting a claim for breach of any fiduciary duty owed by any director, officer, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders, (c) any action arising or asserting a claim arising pursuant to any provision of NRS Chapters 78 or 92A or any provision of the Articles of Incorporation or these By-laws or (d) any action asserting a claim governed by the internal affairs doctrine, including, without limitation, any action to interpret, apply, enforce or determine the validity of the Articles of Incorporation or these By-laws. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the corporation shall be deemed to have notice of and consented to the provisions of this Section 9.2. Actions arising under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, shall not be governed by this provision.
| 16 |
ARTICLE X
AMENDMENTS
Section 10.1 Amendments. These By-Laws may be altered, amended or repealed at any meeting of the Board of Directors, provided notice of the proposed change was given in the notice of the meeting not less than two days prior to the meeting. Notwithstanding the foregoing sentence, these By-laws may be amended or repealed in any respect, and new by-laws may be adopted, in each case by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the outstanding voting power of the Corporation, voting together as a single class.
Section 10.2 Entire Board of Directors. As used in this Article X and in these By-Laws generally, the term “entire Board of Directors” means the total number of directors which the Corporation would have if there were no vacancies.
* * *
| 17 |
CERTIFICATION
The undersigned, as the duly elected Secretary of Winvest Group Ltd., a Nevada corporation (the “Corporation”), does hereby certify that the Board of Directors of the Corporation adopted the foregoing Amended and Restated By-laws as of May 11, 2022.
| Winvest Group Ltd. | ||
| By: | Wan Nyuk Ming, CEO and Director | |
| /s/ Wan Nyuk Ming | ||
| 18 |
Exhibit 3.3
Exhibit 3.4
OPERATING AGREEMENT
OF
THE CATALYST GROUP ENTERTAINMENT LLC
APRIL 1, 2019
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
THE CATALYST GROUP ENTERTAINMENT LLC
This LIMITED LIABILITY COMPANY OPERATING AGREEMENT, dated as of April 1, 2019 (this “Agreement”), is adopted, executed and agreed to, for good and valuable consideration, by and among The Catalyst Group Entertainment LLC, a Delaware limited liability company (the “Company”), each of the Members (as defined below) listed on the signature pages hereto.
WHEREAS, the Company was formed under the Delaware Act pursuant to a certificate of formation filed with the Secretary of State of the State of Delaware on April 1, 2019 (the “Certificate”);
WHEREAS, this Agreement shall constitute a limited liability company agreement within the meaning of Section 18-101(7) of the Delaware Act.
NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used but not otherwise defined herein shall have the following meanings:
“Additional Equity Securities” has the meaning set forth in Section 3.3.
“Additional Member” means a Person admitted to the Company as a member pursuant to Section 8.1.
“Adjusted Capital Account” means with respect to any Capital Account as of the end of any Taxable Year (or other relevant period), the balance in such Capital Account after:
(a) reducing it for any items described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), and (6); and
(b) increasing it for any amount such Person is obligated to contribute or is treated as being obligated to contribute to the Company pursuant to Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (relating to partner liabilities to a partnership) or 1.704-2(g)(1) and 1.704-2(i) (relating to minimum gain).
This definition of Adjusted Capital Account is intended to comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
2
“Adjusted Capital Account Deficit” means, with respect to any Member, the deficit balance, if any, in such Member’s Adjusted Capital Account as of the end of the Taxable Year (or other relevant period).
“Affiliate” of any particular Person means (a) any other Person controlling, controlled by or under common control with such particular Person, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, by contract or otherwise, (b) if such Person is a partnership, any general partner thereof, (c) if such Person is a limited liability company, any member thereof and (d) if such Person is an entity, any manager, director, officer or employee of such Person.
“Agreement” has the meaning set forth in the introductory paragraph.
“Applicable Tax Rate” means the greater of (i) forty percent (40%) for each Fiscal Year or (ii) the highest effective combined federal, state and local Tax rate for a Fiscal Year that applies to a Member on its income for an individual that resides in Los Angeles, California. For the avoidance of doubt, the Applicable Tax Rate for a Fiscal Year shall be the same for each Member.
“Approved Sale” has the meaning set forth in Section 8.5(a).
“Board” has the meaning set forth in Section 5.1.
“Books and Records” has the meaning set forth in Section 9.1.
“Business Day” means any day that is not a Saturday, Sunday or a day on which banking institutions in Los Angeles, California are not required to be open.
“Capital Account” means the capital account maintained for a Member pursuant to Section 3.5.
“Capital Contributions” means, with respect to any Member, the amount of money and the Fair Market Value (as determined for purposes of determining Gross Asset Value) of any property (other than money) (net of liabilities secured by such property that the Company is considered to assume or take subject to under Code Section 752) that any Member contributes (or is deemed to contribute) to the Company pursuant to Section 3.2.
“Certificate” has the meaning set forth in the Recitals.
“Certificated Units” has the meaning set forth in Section 8.7.
“Chosen Courts” has the meaning set forth in Section 15.8(b).
“Co-Sale Notice” has the meaning set forth in Section 8.3(a).
3
“Co-Sale Pro Rata Amount” means, with respect to any Other Member, a fraction, expressed as a percentage, (a) the numerator of which is the total number of Units held by such Other Member that are the same class of Units as the Units that are the subject of the Co-Sale Notice, and (b) the denominator of which is the total number of the class of Units that are the subject of such Co-Sale Notice then outstanding.
“Co-Sale Transferee” has the meaning set forth in Section 8.3(a).
“Co-Sale Transferor” has the meaning set forth in Section 8.3(a).
“Code” means the United States Internal Revenue Code of 1986, as amended.
“Company” has the meaning set forth in the introductory paragraph.
“Company Asset Sale” has the meaning set forth in the definition of “Sale of the Company”.
“Company Minimum Gain” means “partnership minimum gain” as set forth and defined in Treasury Regulation Section 1.704-2(b)(2) and 1.704-2(d).
“Conversion Event” means any of the following: (a) a determination by the Board to effect a Public Offering (in which case the conversion to corporate form shall occur reasonably in advance of such Public Offering), (b) a written proposal by a bona fide third party to provide equity or debt financing that has been approved by the Board, but that has been made conditional by the proposing party upon a conversion of the Company to corporate form (in which case the conversion to corporate form shall be conditioned upon the consummation of such financing), (c) an affirmative vote or written consent from the majority to convert the Company to corporate form, or (d) any acquisition or divestiture that has been approved by the Board that requires a conversion to corporate form (in which case the conversion to corporate form shall be conditioned upon the consummation of such acquisition or divestiture).
“Covered Person” has the meaning set forth in Section 5.10(a).
“Delaware Act” means the Delaware Limited Liability Company Act, 6 Del. L. § 18-101, et seq., as it may be amended from time to time, and any successor to the Delaware Act.
“Depreciation” means, for each Taxable Year (or other relevant period), an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such Taxable Year (or other relevant period), except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such Taxable Year (or other relevant period), Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such Taxable Year (or other relevant period) bears to such beginning adjusted tax basis; provided, that if the adjusted basis for federal income tax purposes of an asset at the beginning of such Taxable Year (or other relevant period) is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Tax Matters Member, and permitted under the Code and Treasury Regulations.
4
“Distribution” means any distribution made by the Company to a Member in respect of such Member’s Units, whether in cash, property or securities of the Company and whether by liquidating distribution or otherwise; provided, that none of the following shall be a Distribution: (a) any redemption or repurchase by the Company of any securities of the Company (including Units), (b) any recapitalization, exchange or conversion of securities of the Company (including Units), (c) any subdivision (by Unit split or otherwise) or any combination (by reverse Unit split or otherwise) of any outstanding Units, (d) any fees or remuneration paid to any Member in such Member’s capacity as an employee, officer, consultant, advisor, manager, board member or other provider of services to the Company or any of its Subsidiaries or (e) any reimbursements of expenses or costs to or on behalf of the Board and/or any Member by or on behalf of the Company and/or any of its Subsidiaries.
“Dragging Member” has the meaning set forth in Section 8.5(a).
“Equity Securities” means all equity securities or other interests of the Company, including the Units and Additional Equity Securities, including any unit appreciation or similar rights, contractual or otherwise.
“Event of Withdrawal” means the death, retirement, resignation, expulsion, bankruptcy or dissolution of a Member or the occurrence of any other event that terminates the continued membership of a Member in the Company.
“Fair Market Value” with respect to all non-cash (or non-cash equivalent) assets shall mean the fair value for such assets as would be determined between a willing buyer and a willing seller in an arm’s-length transaction occurring on the date of valuation as determined by the Board in its good faith discretion, taking into account all relevant factors determinative of value; provided, that the Fair Market Value of any Units will be determined assuming, if applicable, the exercise or conversion of all “in-the-money” warrants, convertible securities, options or other rights to subscribe for or purchase any additional Units or securities convertible or exchangeable into Units; provided, further, that to the extent applicable, the Fair Market Value of any publicly-traded security on any particular date of valuation shall mean the arithmetic average of the closing prices of such security’s sales on the principal national securities exchange or automated quotation system on which the shares of such publicly-traded securities may at the time be listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange or automated quotation system, the average of the last reported bid and asked prices on such date of valuation in the over-the-counter market as furnished by the Financial Industry Regulatory Authority, Inc., in each such case averaged over a period of five (5) trading days consisting of the day immediately prior to the day as of which valuation is being determined and the four (4) consecutive Business Days subsequent to such day. The Board, at its option, may select an investment banking or valuation firm of national reputation to assist in its determination of Fair Market Value.
“Fiscal Year” has the meaning set forth in Section 9.2.
“Governmental Authority” means any United States or non-U.S. federal, foreign, state, municipal or local government, or political subdivision thereof, or any authority, agency or commission entitled to exercise any administrative, executive, judicial, legislative, regulatory or taxing authority or power, any court or tribunal (or any department, bureau or division thereof), or any arbitrator or arbitral body, and includes any contractor acting on behalf of any of the foregoing.
5
“Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:
(a) the initial Gross Asset Value of any asset contributed by a Member to the Company after the date hereof shall be the Fair Market Value of such asset at the time it is accepted by the Company, unreduced by any liability secured by such asset;
(b) the Gross Asset Values of all Company assets shall be adjusted after the date hereof to equal their respective Fair Market Values, unreduced by any liabilities secured by such assets, as of the following times: (i) the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution or the grant of other than a de minimis interest for services; (ii) the distribution by the Company to a Member of more than a de minimis amount of cash or other property as consideration for an interest in the Company, and (iii) the liquidation of the Company within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g), provided that an adjustment described in clauses (i) and (ii) of this paragraph shall be made only if the Tax Matters Member reasonably determines that such an adjustment is necessary or appropriate to reflect the relative economic interests of the Members of the Company;
(c) the Gross Asset Value of any Company asset distributed to any Member shall be adjusted to equal the Fair Market Value of such asset, unreduced by any liability secured by such asset, on the date of distribution as determined by the Board; and
(d) the Gross Asset Value of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b); but only to the extent that such adjustments are taken into account in determining Capital Accounts.
If the Gross Asset Value of an asset of the Company is different than its adjusted tax basis, the Gross Asset Value shall be adjusted appropriately by the Depreciation taken into account with respect to such asset for purposes of computing Profits and Losses.
“Group” means:
(a) in the case of any Member who is an individual, (i) such Member, the spouse, parent, sibling or lineal descendants of such Member, (ii) all trusts for the benefit of such Member or any of the foregoing, (iii) all Persons principally owned by and/or organized or operating for the benefit of any of the foregoing, and (iv) all Affiliates of such Member;
(b) in the case of any Member that is a partnership, (i) such Member, its limited, special and general partners, (ii) any Person to which such Member shall Transfer all or substantially all of its assets or with which it shall be merged, and (iii) all Affiliates and employees of and consultants to, such Member; and
(c) in the case of any Member which is a corporation or a limited liability company, (i) such Member, (ii) its stockholders or members as the case may be, (iii) any Person to which such Member shall Transfer all or substantially all of its assets, and (iv) all Affiliates of such Member.
6
“Indebtedness” means, with respect to the Company and its Subsidiaries, but without duplication, (a) all indebtedness of the Company and its Subsidiaries for borrowed money and all accrued interest thereon (other than accounts payable in the ordinary course of business), including, without limitation, arising from loans, advances, letters of credit, surety bonds and obligations related thereto, (b) all obligations of the Company and its Subsidiaries for the deferred purchase price of assets, property or services other than (i) operating or other leases of property (except as set forth in (d)), (ii) trade payables and (iii) other non-ordinary course third party payables, accrued expenses and liabilities to current and/or former employees incurred in the ordinary course of business, (c) all obligations of the Company and its Subsidiaries evidenced by notes, bonds, debentures, hedging and swap arrangements or contracts or other similar instruments other than trade payables, accrued expenses and liabilities to current and/or former employees incurred in the ordinary course of business, (d) all capital lease obligations of the Company and its Subsidiaries, (e) all accrued and unpaid interest on any Indebtedness referred to in clauses (a) through (d) above through the Closing Date and any prepayment penalties, premiums, consent or other fees, breakage costs on interest rate swaps and any other hedging obligations (including, without limitation, foreign exchange contracts) or other costs incurred in connection with the repayment or assumption of such Indebtedness and (f) all Indebtedness of others of the type referred to in clauses (a) through (e) above guaranteed directly or indirectly in any manner by the Company or its Subsidiaries.
“Indemnity Obligation” has the meaning set forth in Section 15.19(b)(i).
“Joinder Agreement” has the meaning set forth in Section 8.1.
“Losses” means the Company’s net losses as determined by the Company for purposes of maintaining the Members’ Capital Account pursuant to Section 3.5.
“Managers” means each of the individuals elected as a Manager pursuant to and in accordance with the terms of this Agreement.
“Member” means each Person admitted as a member and any Person admitted to the Company as an Additional Member; but only so long as such Person is shown on the Company’s Books and Records as the owner of one or more Units.
“Member Nominee” has the meaning set forth in Section 8.5(c).
“Member Nonrecourse Debt” has the meaning of “partner nonrecourse debt” as set forth in Treasury Regulation Section 1.704-2(b)(4).
“Member Nonrecourse Debt Minimum Gain” means an amount, with respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Treasury Regulation Section 1.704-2(i)(3).
“Member Nonrecourse Deductions” has the meaning of “partner nonrecourse deductions” set forth in Treasury Regulation Section 1.704-2(i)(1) and 1.704-2(i)(2).
7
“Net Taxable Income” means for any Member the amount of net taxable income allocated to a Member for any Fiscal Year (less the amount of taxable losses allocated to such Member for prior Fiscal Years that have not reduced the computation of Net Taxable Income for a prior Fiscal Year); provided, however, Net Taxable Income shall not include any item of income or gain allocated to a members to the extent such item is attributable to the rights to Distributions under Section 4.1(a) and such item is not allocated proportionately among all members in accordance with their right to receive Distributions under Section 4.1(a). Unless otherwise determined by the Board, Net Taxable Income shall be computed including all the allocations of taxable income, gain, loss, deduction or expense resulting from the application of Section 704(c), Section 734 and Section 743 of the Code and Treasury Regulations promulgated thereunder. Net Taxable Income for any Member shall be based on the amounts of taxable income, gain, loss, deduction, expenses, and credits shown on the IRS Form K-1 with respect to such Member for the Fiscal Year.
“New Securities” means all Equity Securities issued after the date hereof other than Equity Securities approved by the Board and issued to (i) employees and consultants of the Company, (ii) strategic partners or lenders and/or (iii) in connection with an acquisition of another entity.
“Nonrecourse Deductions” has the meaning set forth in Treasury Regulation Section 1.704-2(b)(1).
“Nonrecourse Liability” has the meaning set forth in Treasury Regulations Section 1.704-2(b)(3).
“Operations” means the business operations of the Company, excluding any Sale of the Company.
“Other Accredited Member” has the meaning set forth in Section 8.4(f).
“Other Members” has the meaning set forth in Section 8.3(a).
“Permitted Transfer” means any Transfer by any Member to (a) a member of such Member’s Group or (b) any Transferee approved in writing by the Board.
“Permitted Transferee” means any Person to whom a Permitted Transfer is made.
“Person” shall be construed as broadly as possible and shall include an individual or natural person, a partnership (including a limited liability partnership), a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a Governmental Authority.
“Profits” means the Company’s net income as determined by the Company for purposes of maintaining the Members’ Capital Accounts pursuant to Section 3.5.
“Public Offering” means an offering of Equity Securities (or any successor-in-interest of the foregoing), listed on a nationally recognized exchange, which is made pursuant to an effective registration statement under the Securities Act.
8
“Public Sale” means any sale of securities to the public pursuant to a Public Offering or to the public through a broker, dealer or market maker pursuant to the provisions of Rule 144 adopted under the Securities Act (or any similar provision then in force).
“Purchase Notice” has the meaning set forth in Section 8.4(b).
“Recapture Gain” has the meaning set forth in Section 4.5(c).
“Regulatory Allocations” has the meaning set forth in Section 4.3(i).
“Sale of the Company” means (a) the Transfer of all or substantially all of the Company’s assets to a Person or a group of Persons acting in concert (a “Company Asset Sale”), (b) the Transfer of all or substantially all of the outstanding Units (whether directly or indirectly through the sale of a Member) to a Person or a group of Persons acting in concert or (c) the merger or consolidation of the Company with or into another Person that is not (i) an Affiliate of the Company or (ii) a Member, in each case in clauses (b) and (c) above, under circumstances in which the holders of a majority in voting power of the outstanding Units, immediately prior to such transaction, own less than a majority in voting power of the outstanding Units, or the surviving or resulting Person immediately following such transaction; provided, however, that a conversion from a limited liability company to a corporation shall not be deemed to be a Sale of the Company so long as it does not result in the holders of a majority in voting power of the outstanding Units, immediately prior to such transaction, owning less than a majority in voting power of the resulting corporation immediately following such transaction.
“Securities” means any form of common or preferred equity of any Person, including the Equity Securities (including warrants, rights, put and call options and other options relating thereto or any combination thereof, and any notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of Indebtedness, choices in action, other property or interests commonly regarded as securities, interests in real property, whether improved or unimproved, and interests in personal property of all kinds, tangible or intangible (including cash and bank deposits).
“Securities Act” means the Securities Act of 1933, as amended, and applicable rules and regulations thereunder, and any successor to such statute, rules or regulations. Any reference herein to a specific section, rule or regulation of the Securities Act shall be deemed to include any corresponding provisions of future law.
“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or business entity of which (a) 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 (b) 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 any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity (other than a corporation) if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or control any managing director or general partner of such limited liability company, partnership, association or other business entity. For purposes hereof, references to a “Subsidiary” of any Person shall be given effect only at such times that such Person has one or more Subsidiaries, and, unless otherwise indicated, the term “Subsidiary” refers to a Subsidiary of the Company.
9
“Tag-Along Notice” has the meaning set forth in Section 8.3(d).
“Tax” or “Taxes” means any federal, state, county, local or foreign income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, registration, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profit, environmental, customs, duties, real property, personal property, capital stock, social security, unemployment, disability, payroll, license, employee or other withholding, or other tax, of any kind whatsoever, including any interest, penalties (civil or criminal) or additions to tax or additional amounts in respect of the foregoing.
“Tax Matters Member” means Joseph Lanius.
“Taxable Year” means the tax year of the Company determined under Section 10.1.
“TEFRA Election” has the meaning set forth in Section 10.3(b).
“Transfer” means any sale, transfer, assignment, pledge, mortgage, exchange, grant of a security interest or other direct or indirect disposition or encumbrance of an interest (legal or beneficial) whether with or without consideration, whether voluntarily or involuntarily or by operation of law or the acts thereof. The terms “Transferee,” “Transferred,” and other forms of the word “Transfer” shall have correlative meanings.
“Treasury Regulations” means the income tax regulations promulgated under the Code and effective as of the date hereof.
“Unit” means a unit of a Member or Transferee in the Company representing a fractional part of interests in Profits, Losses and Distributions of the Company held by all Members and Transferees; provided, that any class, series or group of Units issued shall have relative rights, powers and duties set forth in this Agreement.
“Unreturned Capital” shall mean, as of any determination date, a Member’s capital contributions reduced by the cumulative distributions to such Member pursuant to Section 4.1.
ARTICLE II
ORGANIZATIONAL MATTERS
2.1 Formation. This Agreement establishes the affairs of the Company and the conduct of its business in accordance with the provisions of the Delaware Act.
10
2.2 Certificate. The Certificate was filed with the Secretary of State of the State of Delaware. The Members hereby ratify and adopt the Certificate and agree to execute, file and record all certificates and documents, including amendments to the Certificate, and to do such other acts as may be appropriate to comply with all requirements for the continuation and operation of the Company, the ownership of property and the conduct of business under the laws of the State of Delaware and any other jurisdiction in which the Company may own property or conduct business. The officers of the Company shall take any and all other actions reasonably necessary to maintain the status of the Company under the laws of the State of Delaware.
2.3 Name. The name of the limited liability company governed hereby shall be “The Catalyst Group Entertainment LLC”. The Board may change the name of the Company at any time and from time to time. Notification of any such change shall be given to all Members. The Company’s business may be conducted under its name and/or any other name or names deemed advisable by the Board. The Company shall hold all of its property in the name of the Company and not in the name of any Manager, officer of the Company or Member.
2.4 Purpose. The purpose and business of the Company shall be to (i) engage in the development production, financing and/or distribution of entertainment properties including without limitation film, television, and interactive media, (ii) engage in any lawful act or activity which may be conducted by a limited liability company formed pursuant to the Delaware Act and (iii) engage in all activities necessary or incidental to the foregoing. Notwithstanding anything herein to the contrary, nothing set forth herein shall be construed as authorizing the Company to possess any purpose or power, or to do any act or thing, forbidden by law to a limited liability company organized under the laws of the State of Delaware. Subject to the Delaware Act, the provisions of this Agreement and the other agreements contemplated hereby, (a) the Company may, with the approval of the Board, enter into and perform under any and all documents, agreements and instruments, all without any further act, vote or approval of any Member, and (b) the Board may authorize any Person (including any Manager, Member or officer of the Company) to enter into and perform under any document, agreement or instrument on behalf of the Company.
2.5 Principal Office; Registered Office. The principal office of the Company shall be located at 8383 Wilshire Blvd, Suite 255, Beverly Hills, CA 90211, or at such other place as the Board may from time to time designate, and all business and activities of the Company shall be deemed to have occurred at its principal office. The Company may maintain offices at such other place or places as the Board deems advisable. Notification of any such change in the location of the principal office of the Company shall be given to all Members. The address of the registered office of the Company in the State of Delaware shall be the office of the initial registered agent named in the Certificate or such other office (which need not be a place of business of the Company) as the Board may designate from time to time in the manner provided by applicable law, and the registered agent for service of process on the Company in the State of Delaware at such registered office shall be the registered agent named in the Certificate or such Person or Persons as the Board may designate from time to time in the manner provided by applicable law.
2.6 Term. The term of the Company commenced upon the filing of the Certificate in accordance with the Delaware Act and shall continue in existence until termination and dissolution thereof in accordance with the provisions of Article XII.
11
ARTICLE III
UNITS; CAPITAL CONTRIBUTIONS; FEES
3.1 Units. Each Member’s interest in the Company shall be represented by the Units owned by such Member. No Units issued hereunder shall be Certificated Units unless otherwise determined by the Board. The Company may issue fractional Units. So long as any such Units are owned by or on behalf of the Company, such Units will not be considered outstanding for any purpose.
3.2 Schedule of Members; Additional Capital Contributions.
(a) The Company shall maintain at all times a schedule of members which shall reflect the number of Units owned by each Member. An initial schedule of members and Units as of the date hereof is attached hereto as Exhibit A.
(b) No Member shall be required to make any additional Capital Contributions to the Company, except as otherwise required by a subsequent agreement entered into between the Company and such Member.
3.3 Issuance of Additional Units. Subject to compliance with Section 8.4, the Board shall have the right to cause the Company to create and/or issue (i) additional Units or other interests in the Company, (ii) obligations, evidences of Indebtedness or other securities or interests convertible or exchangeable into Units or other Equity Securities in the Company and (iii) warrants, options or other rights to purchase or otherwise acquire Units or other interests in the Company (collectively, “Additional Equity Securities”). In such event, the Board shall have the power to amend this Agreement to reflect such additional issuances and dilution and to make any such other amendments as it deems necessary or desirable to reflect such additional issuances (including amending this Agreement to increase the number of Equity Securities of any class, group or series, to create and authorize a new class, group or series of Equity Securities and to add the terms of such new class, group or series including economic and governance rights which may be different from, senior to or more favorable than the other existing Equity Securities).
3.4 New Members. Subject to compliance with the terms and conditions herein (including Article VIII), any Person who acquires Equity Securities from the Company shall be admitted to the Company as a Member. After the date hereof each Person who acquires Units shall in exchange for such Units make a Capital Contribution to the Company.
3.5 Capital Accounts. A separate capital account (each a “Capital Account”) for each Member shall be established on the Books and Records of the Company in compliance with Section 704(b) of the Code and the Treasury Regulations. The initial Capital Accounts of each Member as of the date hereof are set forth on the Schedule of Members maintained by the Company pursuant to Section 3.2(a) above. This Section 3.5 and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulation Section 1.704-1(b), and shall be interpreted and applied in a manner consistent with such Treasury Regulation.
12
3.6 Negative Capital Accounts. No Member shall be required to pay to any other Member or the Company any deficit or negative balance which may exist from time to time in such Member’s Capital Account (including upon and after dissolution of the Company).
3.7 No Withdrawal. No Person shall be entitled to withdraw any part of such Person’s Capital Contributions or Capital Account or to receive any Distribution from the Company, except as expressly provided herein.
3.8 Loans From Members; Additional Loan. Loans by Members to the Company shall not be considered Capital Contributions unless otherwise agreed to by the Board. If any Member shall loan funds to the Company in excess of the amounts required hereunder to be contributed by such Member to the capital of the Company, the making of such loans shall not result in any increase in the amount of the Capital Account of such Member. The amount of any such loans shall be a debt of the Company to such Member and shall be payable or collectible in accordance with the terms and conditions upon which such loans are made.
ARTICLE IV
DISTRIBUTIONS AND ALLOCATIONS
4.1 Distributions.
(i) Distributions from Sale of the Company. All Distributions resulting from the Sale of the Company (as distinguished from Profits and Losses from Operations) or the dissolution of the Company shall be distributed to the Members as soon as practicable on a pro rata basis, in proportion to the number of Units held by each Member as compared to all of the issued and outstanding Units held by all Members (the “Percentage Interests”), subject to a pro rata priority return to Members who have made Capital Contributions to the Company.
(ii) Distributions of Profits. All Distributions of Profits of the Company shall be made as soon as practicable in accordance with the allocation of such Profits under the provisions of Section 4.2 below, subject to retention by the Company of reasonable reserves as determined by the Board; provided that Members who have made Capital Contributions to the Company shall receive a priority return of their Capital Contributions to the extent not previously distributed under this Section 4.1.
4.2 Allocations of Profits and Losses. Subject to, and after the application of, the allocation rules in Section 4.3, Profits and Losses, and if necessary, items thereof, for a Taxable Year (or other relevant period) shall be allocated among the Members for such Taxable Year (or other relevant period) on a pro rata basis to each Member in accordance with their Percentage Interest.
4.3 Special Allocations. Any allocation pursuant to Section 4.2 will, however, be subject to any adjustment required to comply with Treasury Regulation Sections 1.704-1 and 1.704-2, including the following adjustments and special allocations which shall be made in the following order of priority and prior to any allocation under Section 4.2:
13
(a) Minimum Gain Chargeback. Except as otherwise provided in Treasury Regulation Section 1.704-2(f), notwithstanding any other provision of this Article IV, if there is a net decrease in Company Minimum Gain during any Taxable Year (or other relevant period), each Member shall be specifically allocated items of Company income and gain for such Taxable Year (or other relevant period) (and, if necessary, subsequent Taxable Year (or other relevant period)) in an amount equal to such Member’s share of the net decrease in Company Minimum Gain, determined in accordance with Treasury Regulation Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member in accordance with Treasury Regulation Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 4.3(a) is intended to comply with the minimum gain chargeback requirements in Treasury Regulation Section 1.704-2(f) and shall be interpreted consistently therewith.
(b) Member Minimum Gain Chargeback. Except as otherwise provided in Treasury Regulation Section 1.704-2(i)(4), notwithstanding any other provision of this Article IV, if there is a net decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt during any Taxable Year (or other relevant period), each Member who has a share of the Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Treasury Regulation Section 1.704-2(i)(5), shall be specifically allocated items of Company income and gain for such Taxable Year (or other relevant period) (and, if necessary, subsequent Taxable Year (or other relevant period)) in an amount equal to such Member’s share of the net decrease in Member Nonrecourse Debt, determined in accordance with Treasury Regulation Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be allocated shall be determined in accordance with Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 4.3(b) is intended to comply with the minimum gain chargeback requirement in Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted consistently therewith.
(c) Qualified Income Offset. If any Member unexpectedly receives any adjustments, allocations or distributions described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) resulting in, or increasing, an Adjusted Capital Account Deficit for such Member, items of Company income and gain shall be specially allocated to each such Member in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, the Adjusted Capital Account Deficit of such Member as quickly as possible, provided that an allocation pursuant to this Section 4.3(c) shall be made only if and to the extent that such Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Article IV have been tentatively made as if this Section 4.3(c) were not in this Agreement.
(d) Gross Income Allocation. In addition, if any Member has an Adjusted Capital Account Deficit at the end of any Taxable Year (or other relevant period), each such Member shall be specially allocated items of Company income and gain in the amount of such excess as quickly as possible, provided that an allocation pursuant to this Section 4.3(d) shall be made only if and to the extent that such Member would have an Adjusted Capital Account Deficit in excess of such sum after all other allocations provided for in this Article IV have been tentatively made as if this Section 4.3(d) were not in this Agreement.
14
(e) Stop Loss. Notwithstanding the foregoing provisions of Section 4.2, the Losses (or items of expense or deduction or loss) allocated pursuant to Section 4.2 shall not exceed the maximum amount that can be so allocated without causing any Member to have an Adjusted Capital Account Deficit at the end of any Taxable Year (or other relevant period). In the event some but not all of the Members would have an Adjusted Capital Account Deficit as a consequence of an allocation of Losses pursuant to Section 4.2, the limitation set forth in this Section 4.3(e) shall be applied on a Member by Member basis so as to allocate the maximum permissible Losses to each Member under Treasury Regulation Section 1.704-1(b)(2)(ii)(d). All Losses (or items of expense or deduction or loss) in excess of the limitation set forth in this Section 4.3(e) shall be allocated to other Members in accordance with the positive balances in such Members’ Adjusted Capital Accounts so as to allocate the maximum permissible Losses to each Member under Treasury Regulation Section 1.704-1(b)(2)(ii)(d).
(f) Nonrecourse Deductions. Nonrecourse Deductions for any Taxable Year (or other relevant period) shall be specially allocated in a manner permitted under Treasury Regulation Section 1.704-2(e) and selected by the Board.
(g) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any Taxable Year (or other relevant period) shall be specially allocated to the Members in accordance with Treasury Regulation Section 1.704-2(i).
(h) Section 754 Adjustments. Items of income, gain, loss, and deductions shall be specifically allocated to the Members to comply with Treasury Regulation Section 1.704-1(b)(2)(iv)(m).
(i) Regulatory Allocations. The allocations set forth in Sections 4.3(a), 4.3(b), 4.3(c), 4.3(d), 4.3(e), 4.3(f), 4.3(g) and 4.3(h) (collectively, the “Regulatory Allocations”) are intended to comply with certain requirements of the Treasury Regulations. It is the intent of the parties to this Agreement that, to the extent possible, all Regulatory Allocations will be offset in the current Taxable Year or future Taxable Years either with other Regulatory Allocations or with special allocations of other items of Company income, gain, loss or deduction pursuant to this Section 4.3(i).
4.4 Other Allocation Rules.
(a) In the event Members are admitted to the Company pursuant to this Agreement on different dates, the Company items of income, gain, loss, deduction and credit allocated to the Members for each Taxable Year during which Members are so admitted shall be allocated among the Members in proportion to their respective interests during such Taxable Year using any reasonable convention permitted by Section 706 of the Code and selected by the Board.
(b) In the event a Member transfers its Units during a Taxable Year, the allocation of Company items of income, gain, loss, deduction and credit allocated to such Member and its transferee for such Taxable Year shall be made between such Member and its transferee in accordance with Section 706 of the Code using any reasonable convention permitted by Section 706 of the Code and selected by the Board.
15
(c) If, and to the extent that, any Member is deemed to recognize any item of income, gain, deduction, or loss as a result of any transaction between the Member and the Company pursuant to Sections 83, 482 or 7872 of the Code, or a similar provision now or hereafter in effect, the Company shall use reasonable efforts to allocate the corresponding item of Profit or Loss to the Member who recognizes such item in order to reflect the Member’s economic interest in the Company.
(d) For purposes of determining the allocations under this Article IV, all outstanding Units shall be treated as vested and as having the right to share in any distribution under Section 4.1.
4.5 Tax Allocations; Code Section 704(c).
(a) Except as otherwise provided in this Section 4.5, all items of Company income, gain, loss and deduction for income tax purposes shall be allocated among the Members in the same manner as they share correlative items of Profit and Loss for the relevant Taxable Year (or other period). Allocations pursuant to this Section 4.5 are solely for income Tax purposes and shall not affect or in any way be taken into account in computing any Member’s Capital Account.
(b) In accordance with Code Section 704(c) and the Treasury Regulations, items of income, gain, loss and deduction with respect to any property of the Company shall, solely for income Tax purposes, be allocated among the Members so as to take account of any variation between the adjusted tax basis of such property and its initial Gross Asset Value.
(c) If any portion of gain recognized from the disposition of assets by the Company represents the “recapture” of previously allocated deductions by virtue of the application of Code Section 1245 or 1250 (the “Recapture Gain”), such Recapture Gain shall be allocated, solely for income Tax purposes in accordance with Treasury Regulation Sections 1.1245-1(e)(2) and (3) and 1.1250-1(f).
(d) The liabilities of the Company shall be allocated to the Members in any manner permitted under Code Section 752 and Treasury Regulation promulgated thereunder and as selected by the Board.
(e) Tax credits and Tax credit recapture shall be allocated among the Members in accordance with any reasonable method selected by the Board that is permitted by applicable Tax laws.
(f) Unless otherwise provided in this Section 4.5, any elections or other decisions relating to allocations for income Tax purposes, including selecting any allocation method under Treasury Regulation Section 1.704-3, shall be made by the Board; provided, that the Board shall cause the Company to use the “traditional method” as defined in Treasury Regulation Section 1.704 for purposes of the application of Code Section 704(c) to the difference between the Gross Asset Value of any of the Company’s or Subsidiary’s assets and the adjusted tax basis.
16
4.6 Compliance with Tax Laws. The allocation rules set forth in Sections 4.2, 4.3, 4.4 and 4.5 are intended to comply with the Code and Treasury Regulations and to ensure that all allocations under this Article IV are respected for United States federal income tax purposes. If for any reason the Board determines that any provision of Sections 4.2, 4.3, 4.4 and 4.5 do not comply with the Code or Treasury Regulations or that the allocations under this Article IV may not be respected for United States federal income tax purposes, the Board shall take all reasonable actions, including amending this Article IV or adjusting a Member’s Capital Account or how Capital Accounts are maintained, to ensure compliance with the Code and Treasury Regulations and that the allocations provided for in this Article IV shall be respected for United States federal income tax purposes. Nothing in this Section 4.6 shall permit any changes to provisions that determine how amounts are to be distributed or otherwise paid to the Members under this Agreement.
ARTICLE V
MANAGEMENT
5.1 Management by the Board. In managing the business and affairs of the Company and exercising their powers, the Managers shall be members of and shall act as a Board of Managers (the “Board”). The Board may act (a) through meetings and written consents pursuant to Sections 5.6 and 5.7, (b) through committees pursuant to Section 5.5 and (b) through any Manager or other individuals to whom authority and duties have been delegated pursuant to Section 5.8. No individual Manager in his or her capacity as a Manager shall have the power alone to bind the Company other than pursuant to action duly adopted by the Board of Managers.
5.2 Authority of the Board. Subject to any approval of the Members, in each case specifically required by the terms of this Agreement, which approval(s) shall be in addition to Board approval, and further subject to the provisions of this Article V, the Board shall have the exclusive and complete charge of the management of the Company.
5.3 Number; Board Composition.
(a) The Board may set the number of Managers to serve thereon. The Board shall initially consist of three (3) Managers.
(b) The Board shall initially be comprised of Joseph Lanius, Khiow Hui Lim and Nicholas Burnett (or their designated personal services corporations).
(c) Each nomination to the Board of any new Manager (including a replacement Manager in the event of any vacancy in a seat of the Board as described in Section 5.3(e) below) shall be made by delivering to the Company a notice signed by each of the current Managers (or in the event of the death or incapacity of a Manager, each of the remaining current Managers) indicating the new Manager that is to be appointed. As promptly as practicable, but in any event within ten (10) days, after delivery of such notice, the Company shall take or cause to be taken such company action as may be reasonably required to cause the appointment of such new Manager proposed in such notice. Such company action may include calling a meeting or soliciting a written consent of the Board, or calling a meeting or soliciting a written consent of the Members.
(d) The Managers designated in Section 5.3 will be elected at any annual or special meeting of the Members (or by written consent in lieu of a meeting of the Members) and will serve until their successors are duly elected and qualified or until their earlier resignation or removal. No Member shall have the ability to remove a Manager to the extent that such Manager was not nominated by such Member or any Affiliate thereof.
17
(e) The Company shall notify each Member of the occurrence of any vacancy in any seat of the Board. Subject to the foregoing regarding the appointment of the Managers, in the event a vacancy is created on the Board by reason of the death, removal for any reason or resignation of any Manager, each of the Members hereby agrees that such vacancy shall be filled in accordance with the procedures set forth in this Sections 5.3, and (ii) no Member shall have the ability to fill any vacancy to the extent that the ability to appoint such Manager is specifically granted to other Members pursuant to this Section 5.3.
5.4 Voting Agreement.
(a) Each Member covenants and agrees to vote all voting Units held by such Member for the election to the Board of the individuals specified or designated in accordance with Section 5.3, and shall take all actions required on its behalf to give effect to the agreements set forth in this Article V.
(b) Pursuant to this Section 5.4, each undersigned Member hereby approves and votes all of his, her or its voting Units in favor of the election to the Board of each of the initial designees named pursuant to Section 5.3 above.
5.5 Board Meetings.
(a) Board Action. A majority of the total number of Managers fixed by, or in the manner provided in, this Agreement shall constitute a quorum for the transaction of business of the Board and the act of a majority of the Managers present at a meeting of the Board at which a quorum is present shall be the act of the Board.
(b) Regular Meetings. Regular meetings of the Board shall be held at least quarterly unless otherwise determined by the Board. Meetings of the Board may be held at such place or places as shall be determined from time to time by resolution of the Board. At all meetings of the Board, business shall be transacted in such order as shall from time to time be determined by resolution of the Managers. Attendance of a Manager at a meeting shall constitute a waiver of notice of such meeting, except where a Manager attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called or convened. Notice of such meeting shall be provided to each Manager at least three (3) Business Days prior to such meeting.
(c) Special Meetings. Special meetings of the Board may be called by any Manager, on at least seven (7) Business Days’ notice to each other Manager (or such shorter notice as to which the Managers may agree). Attendance of a Manager at a special meeting shall constitute a waiver of notice of such meeting, except where a Manager attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called or convened.
18
5.6 Action by Written Consent or Telephone Conference. Subject to the limitations set forth herein, any action permitted or required by the Delaware Act or this Agreement to be taken at a meeting of the Board may be taken without a meeting if a consent in writing, setting forth the action to be taken, is signed by a majority of the Members of the Board. Such consent shall have the same force and effect as a vote at a meeting and may be stated as such in anydocument or instrument filed with the Secretary of State of Delaware, and the execution of such consent shall constitute attendance or presence in person by such person executing such consent at a meeting of the Board. Subject to the requirements of the Delaware Act or this Agreement for notice of meetings, the Managers designated by the Board may participate in and hold a meeting of the Board by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in such meeting shall constitute attendance and presence in person by such person participating at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.
5.7 Delegation of Authority and Duties. The Board may, from time to time, delegate to one or more Persons (including any Manager or officer of the Company) such authority and duties as the Board may deem advisable. In addition, the Board may assign titles (including Chairman, Chief Executive Officer, President, Vice President, Secretary, Assistant Secretary, Controller, Treasurer and Assistant Treasurer) to any Manager or other individuals and delegate to such Managers or other individuals certain authority and duties. Any number of titles may be held by the same Manager or other individual. Any delegation pursuant to this Section 5.7 may be revoked at any time by the Board.
5.8 Limitation of Liability. Except as otherwise provided herein or in any agreement entered into by such Person and the Company, and to the maximum extent permitted by the Delaware Act, no present or former Manager or any of such Manager’s Affiliates shall be liable to the Company or to any other Member for any act or omission performed or omitted by such Person in its capacity as a Manager of the Company, a member of the Board or any committee thereof taken in good faith, to the maximum extent permitted by applicable law; provided, that except as otherwise provided herein, such limitation of liability shall not apply to the extent the act or omission was attributable to such Person’s or such Person’s Affiliates’ fraud, willful misconduct, gross negligence or willful or intentional breach of this Agreement or any other agreement between a Member or its Affiliates, on the one hand, and the Company or its Subsidiaries, on the other hand. The Board may exercise any of the powers granted to it by this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its Affiliates, employees, agents or representatives, and no Manager or any of such Manager’s Affiliates shall be responsible for any fraud, misconduct or negligence on the part of any such Affiliate, agent or representative appointed by the Board (so long as such Affiliate, agent or representative was selected in good faith). The Board shall be entitled to rely upon the advice of legal counsel, independent public accountants and other experts, including financial advisors, and any act of or failure to act by the Board in good faith reliance on such advice shall in no event subject the Board, any Manager or any of their Affiliates, employees, agents or representatives to liability to the Company or any Member.
19
5.9 Indemnification.
(a) Right to Indemnification. Except as otherwise required by law or by this Agreement, the Company shall indemnify and hold harmless each Person (each, a “Covered Person”) to the fullest extent permitted under the Delaware Act, as the same now exists or may hereafter be amended, substituted or replaced (but, in the case of any such amendment, substitution or replacement only to the extent that such amendment, substitution or replacement permits the Company to provide broader indemnification rights than the Company is providing immediately prior to such amendment), against any losses, liabilities, damages and expenses (including amounts paid for attorneys’ fees, judgments, settlements, fines, excise taxes or penalties in connection with any threatened, pending or completed action, suit or proceeding) incurred or suffered by such Person (or one or more of such Person’s Affiliates) by reason of the fact that such Person (i) is or was serving as a Manager or officer of the Company or any of its Subsidiaries (and any Person that is or was serving as an employee or agent of the Company or its Subsidiaries or is or was serving at the request of the Company or its Subsidiaries as a representative, officer, director, principal, member, employee or agent of another partnership, corporation, joint venture, limited liability company, trust or other enterprise), or (ii) is or was a Member, but only to the extent not prohibited by applicable law; provided, that (unless the Board otherwise consents) no such Person shall be indemnified for any losses, liabilities, damages or expenses suffered that are attributable to such Person’s fraud, willful misconduct, gross negligence, or willful or intentional breach of this Agreement or any other agreement between such Person or its Affiliates, on the one hand, and the Company or its Subsidiaries, on the other hand. The Company shall pay the expenses incurred by any such Covered Person indemnifiable hereunder, as such expenses are incurred, in connection with any proceeding in advance of the final disposition, so long as the Company receives an undertaking by such Covered Person to repay the full amount advanced if there is a final determination that such Covered Person failed the applicable standards set forth above or that such Covered Person is not entitled to indemnification as provided herein for other reasons.
(b) Non-Exclusive Right. The right to indemnification and the advancement of expenses conferred in this Section 5.9 shall not be exclusive of any other right which any Covered Person may have or hereafter acquire under any statute, agreement, by-law, vote of the Board or otherwise.
(c) Insurance. The Company may in its discretion, but shall have no obligation to, maintain insurance, at its or any of its Subsidiaries’ expense, to protect any Covered Person against any loss, liability, damage or expense described in Section 5.9(a) above whether or not the Company would have the power to indemnify such Covered Person against such loss, liability, damage or expense under the provisions of this Section 5.9.
(d) No Personal Liability. Notwithstanding anything contained herein to the contrary, any indemnity by the Company relating to the matters covered in this Section 5.9 shall be provided out of and to the extent of Company assets only, and no Member (unless such Member otherwise agrees in writing or is found in a final decision by a court of competent jurisdiction to have personal liability on account thereof) shall have personal liability on account thereof or shall be required to make additional Capital Contributions to help satisfy such indemnity of the Company.
20
(e) Severability. If this Section 5.9 or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify and hold harmless each Covered Person pursuant to this Section 5.9 to the fullest extent permitted by any applicable portion of this Section 5.9 that shall not have been invalidated and to the fullest extent permitted by applicable law.
5.10 Expenses. The Company shall reimburse each Manager for his or her reasonable out-of-pocket expenses incurred in pursuit of Company-related endeavors; provided however, each such Manager or Member shall provide the Company with requisite documents substantiating any such request for reimbursement.
ARTICLE VI
RIGHTS AND OBLIGATIONS OF MEMBERS
6.1 Members Right to Act.
(a) Authority of Members. Except for a Person who is a Member and also a Manager or officer of the Company, no Member shall be entitled to participate in or vote in matters involving the management or the business of the Company, all such authority being vested in the Board and the officers of the Company. The Members shall be entitled to exercise only those rights specifically granted to them in this Agreement or to vote on such matters as may be submitted to them by the Board in its discretion or as is otherwise required by this Agreement or applicable law.
(b) Member Action. For situations for which the approval of the Members is required by this Agreement or by applicable law action shall be by vote of a majority of Units entitled to vote and each such voting Unit shall be entitled to one (1) vote on matters requiring a vote of the Members. It is acknowledged and agreed that certain existing Members of the Company have non-voting Units as described in their Joinder Agreements.
(c) Meetings Generally. Meetings of the Members may be held at such place or places as shall be determined from time to time by resolution of the Board. At all meetings of the Members, business shall be transacted in such order as shall from time to time be determined by resolution of the Board. Attendance by a Member at a meeting shall constitute a waiver of notice of such meeting, except where a Member attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called or convened. Notice of such meeting shall be provided to each Member at least three (3) Business Days prior to such meeting.
(d) Annual Meeting. An annual meeting of the Members may be held on such date and at such time as may be designated by the Board from time to time for the transaction of such business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday, such meeting shall be held on the next succeeding Business Day.
21
6.2 Action by Written Consent or Telephone Conference. Subject to the limitations set forth herein, any action permitted or required by the Delaware Act or this Agreement to be taken at a meeting of the Members may be taken without a meeting if a consent in writing, setting forth the action to be taken, is signed by such of the Members (including Members necessary to establish a quorum for the purpose of conducting business) as shall be required to authorize, approve, ratify or otherwise consent to such action under the Delaware Act and this Agreement (which may be less than all of the Members, in which event a copy thereof shall be sent to each of the Members who did not sign the consent). Such consent shall have the same force and effect as a vote at a meeting and may be stated as such in any document or instrument filed with the Secretary of State of Delaware, and the execution of such consent shall constitute attendance or presence in person by such person executing such consent at a meeting of the Members. Subject to the requirements of the Delaware Act or this Agreement for notice of meetings, the Members may participate in and hold a meeting of the Members by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in such meeting shall constitute attendance and presence in person by such person participating at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.
6.3 Limitation of Liability. Except as otherwise provided by the Delaware Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Member shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being or acting as a Member of the Company; provided, that a Member shall be required to return to the Company any Distribution made to it in a clear and manifest accounting error or similar error. The immediately preceding sentence shall constitute a compromise to which all Members have consented within the meaning of the Delaware Act. Notwithstanding anything contained herein to the contrary, the failure of the Company to observe any formalities or requirements relating to the exercise of its powers or management of its business and affairs under this Agreement or the Delaware Act shall not be grounds for imposing personal liability on the Members for liabilities of the Company.
6.4 Lack of Authority. Unless delegated such power in accordance with Section 5.9 or as otherwise expressly provided in this Agreement, no Member has the authority or power to act for or on behalf of the Company in any manner, to do any act that would be (or could be construed as) binding on the Company or to make any expenditures on behalf of the Company, and the Members hereby consent to the exercise by the Board of the powers conferred upon them by law and this Agreement.
6.5 No Right of Partition. No current or former Member shall have the right to seek or obtain partition by court decree or operation of law of any Company property, or the right to own or use particular or individual assets of the Company.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES; COVENANTS
7.1 Investment Representations. By executing this Agreement (or, after the date hereof, any counterpart or Joinder Agreement) and in connection with the issuance of Equity Securities to such Member, each Member represents and warrants to the Company as follows:
(a) The Equity Securities being acquired by such Member pursuant to this Agreement or otherwise will be acquired for such Member’s own account and not with a view to, or intention of, distribution thereof in violation of the Securities Act or any applicable state securities laws, the Equity Securities were not offered to such Member by means of general solicitation or general advertising and the Equity Securities will not be disposed of in contravention of the Securities Act or any applicable state securities laws.
22
(b) Such Member is sophisticated in financial matters and is able to evaluate the risks and benefits of decisions respecting the investment in the Equity Securities and is an “accredited investor” as such term is defined under the Securities Act and the rules and regulations promulgated thereunder.
(c) Such Member is able to bear the risk of its investment in the Equity Securities for an indefinite period of time and is aware that transfer of the Equity Securities may not be possible because (i) such transfer is subject to contractual restrictions on transfer set forth in this Agreement, and (ii) the Equity Securities have not been registered under the Securities Act or any applicable state securities laws and, therefore, cannot be sold unless subsequently registered under the Securities Act and such applicable state securities laws or an exemption from such registration is available.
(d) Such Member has had an opportunity to ask questions and receive answers concerning the terms and conditions of the offering of the Equity Securities and has had access to such other information concerning the Company and its respective Subsidiaries and Affiliates and the Equity Securities as such Member may have requested and that in making its decision to invest in the Equity Securities being acquired such Member is not in any way relying on the fact that any other Person has decided to be a Member hereunder or to invest in the Equity Securities.
(e) Such Member has received and carefully read a copy of this Agreement. This Agreement and each of the other agreements contemplated hereby to be executed by such Member constitute the legal, valid and binding obligation of such Member, enforceable in accordance with their terms, and the execution, delivery and performance of this Agreement and such other agreements do not and will not conflict with, violate or cause a breach of any agreement, contract or instrument to which such Member is a party or any law, regulation, judgment, order or decree to which such Member is subject.
(f) To the extent applicable, the execution, delivery and performance of this Agreement have been duly authorized by such Member and do not require such Member to obtain any consent or approval that has not been obtained.
(g) Such Member has been given the opportunity to consult with independent legal counsel regarding his, her or its rights and obligations under this Agreement and has consulted with such independent legal counsel regarding the foregoing (or, after carefully reviewing this Agreement, has freely decided not to consult with independent legal counsel), fully understands the terms and conditions contained herein and therein and intends for such terms to be binding upon and enforceable against him, her or it.
(h) The determination of such Member to purchase the Equity Securities has been made by such Member independent of any other Member and independent of any statements or opinions as to the advisability of such purchase, which may have been made or given by any other Member or by any agent or employee of any other Member (including any Managers or officer of the Company).
23
ARTICLE VIII
TRANSFER OF INTERESTS
8.1 Additional Members. The Company shall require each Person that acquires Equity Securities after the date hereof (an “Additional Member”), as a condition to the effectiveness of such acquisition, to execute a joinder to this Agreement, substantially in the form attached hereto as Exhibit B (the “Joinder Agreement”), whereupon such Person shall be bound by, and entitled to the benefits of, the provisions of this Agreement. Certain existing Members of the Company are subject to Joinder Agreements that shall continue to apply with respect to this Agreement and shall supersede and govern any inconsistent terms set forth herein (the “Existing Joinders”).
8.2 Limitations on Transfers.
(a) No Transfer of any Applicable Securities by any Member shall become effective unless and until the Board has approved such Transfer and (i) the Transferee (unless already subject to this Agreement) executes and delivers to the Company a Joinder Agreement, agreeing to be treated in the same manner as the transferring Member and (ii) such Transfer is either (A) a Permitted Transfer or (B) otherwise made in compliance with this Article VIII. Upon such Transfer and such execution and delivery, the Transferee shall be bound by, and entitled to the benefits of, this Agreement with respect to the Transferred Applicable Securities in the same manner as the transferring Member. The provisions regarding Transfers of Applicable Securities contained in this Article VIII shall apply to all Applicable Securities now owned or hereafter acquired by a Member. Any Transfer of Applicable Securities by a Member not made in accordance with this Article VIII shall be void ab initio.
(b) Notwithstanding anything to the contrary contained herein, except as approved by the Board, no Member may Transfer any Applicable Securities to any Person (or to any Affiliate thereof), (i) who directly or indirectly competes with the Company or any of the Company’s Subsidiaries other than in connection with an Approved Sale or (ii) if the Transfer would terminate the partnership for purposes of Section 708 of the Code.
(c) Each Member shall, after complying with the provisions of this Agreement, but prior to any Transfer of Applicable Securities, give written notice to the Company of such proposed Transfer. Each such notice shall describe the manner and circumstances of the proposed Transfer. Upon request by the Company, each Member seeking to Transfer Applicable Securities shall deliver a written opinion, addressed to the Company, of counsel for such Member, stating that in the opinion of such counsel (which opinion and counsel shall be reasonably satisfactory to the Company) such proposed Transfer does not involve a transaction requiring registration or qualification of such Applicable Securities under the Securities Act or the securities laws of any State of the United States; provided, however, that no such opinion shall be required for a Transfer which is a Permitted Transfer or a Transfer effected pursuant to Sections 8.3, 8.4(f) or 8.5. Subject to compliance with the other provisions of this Agreement, if the Company does not request such an opinion within ten (10) Business Days of receipt of the notice, the Transferring Member shall be entitled to Transfer such Applicable Securities, on the terms set forth in the notice, within sixty (60) days of delivery of the notice.
24
(d) Each Member that is an entity that was formed for the sole purpose of directly or indirectly acquiring Applicable Securities or that has no substantial assets other than Applicable Securities or direct or indirect interests in Applicable Securities agrees that (i) certificates for shares reflecting Units or other instruments reflecting equity interests in such entity will note the restrictions contained in this Agreement on the restrictions on Transfer of Units or other equity interests were Applicable Securities, (ii) no Units or other equity interests may be Transferred or issued to any Person other than in accordance with the terms and provisions of this Agreement as if such Units were Applicable Securities and (iii) any transfer of Units or other equity interests shall be deemed to be a transfer of a pro rata number of Applicable Securities hereunder.
8.3 Co-Sale Rights.
(a) Subject to compliance with the other applicable provisions of this Agreement, if, at any time a majority in interest of the Units (for purposes of this Section 8.3, the “Co-Sale Transferor(s)”) proposes to Transfer any Units (other than pursuant to a Permitted Transfer) to any Person (the “Co-Sale Transferee”), then the Co-Sale Transferor, at least thirty (30) days prior to the closing of such Transfer, shall deliver a notice (the “Co-Sale Notice”) to the other Members holding the same class of Units as the Units that are the subject of the Co-Sale Notice (the “Other Members”) detailing the terms and conditions of the proposed Transfer and indicating that the Co-Sale Transferee has (i) been informed of the co-sale rights provided for in this Section 8.3 and (ii) agreed to purchase such Units in accordance with the terms hereof, provided, so long as a Member holds at least one of the classes of Units subject to any Co-Sale Notice, such member may participate in such Co-Sale Rights with respect to such class of Units.
(b) The Co-Sale Transferor shall not be permitted to Transfer any Units to the Co-Sale Transferee unless the Other Members are permitted to Transfer their respective Co-Sale Pro Rata Amount of the aggregate number of such Units to which the Co-Sale Notice relates, to the extent the Other Members have timely delivered a Tag-Along Notice in accordance with Section 8.3(d).
(c) The Co-Sale Transferor shall, in addition to complying with the provisions of this Section 8.3, comply with the other provisions of this Article VIII.
(d) Within thirty (30) days after delivery of the Co-Sale Notice, each Other Member may elect to participate in the proposed Transfer by delivering to such Co-Sale Transferor a notice (the “Tag-Along Notice”) specifying the number of Units (up to his, her or its Co-Sale Pro Rata Amount) with respect to which such Other Member shall exercise his, her or its rights under this Section 8.3. For purposes of this Section 8.3, each Other Member may aggregate his, her or its Co-Sale Pro Rata Amount among Other Members in his, her or its Group to the extent that such Other Members in his, hers or its Group do not elect to sell their respective Co-Sale Pro Rata Amounts.
(e) Any Units required to be included in a Tag-Along Notice shall be Transferred on at least the same terms and conditions as set forth in the Co-Sale Notice.
25
8.4 Preemptive Rights.
(a) The Company hereby grants to each of the Members (each, a “Preemptive Rightholder”) a right to purchase a portion of any New Securities which the Company may, from time to time, propose to issue and sell on the terms and conditions set forth in this Section 8.4. Such right shall permit each Preemptive Rightholder to purchase up to (and including) a portion of the New Securities proposed to be issued equal to such Preemptive Rightholder’s Percentage Interest (determined immediately prior to such issuance and sale of New Securities) (such Preemptive Rightholder’s “Proportionate Share”). The right granted under this Section 8.4(a) shall terminate if unexercised within twenty (20) days after receipt of the New Issue Notice described in Section 8.4(b).
(b) Except as otherwise provided herein, in the event that the Company proposes to issue New Securities, it shall give each Preemptive Rightholder written notice of its intention (the “New Issue Notice”), describing the number and type of New Securities it intends to issue, the purchase price therefor, and the other terms and conditions upon which the Company or any of its Subsidiaries, as applicable, proposes to issue the same. Each Preemptive Rightholder shall have twenty (20) days from the date that the New Issue Notice is received by it to determine whether to purchase all or any portion of its Proportionate Share of such New Securities for the purchase price and upon the terms and conditions specified in the New Issue Notice by giving written notice to the Company stating therein the quantity of New Securities to be purchased. A Preemptive Rightholder’s election to purchase New Securities shall be binding and irrevocable.
(c) Notwithstanding anything to the contrary contained herein, the rights of Preemptive Rightholders under this Section 8.4 shall be deemed satisfied with respect to any issuance of New Securities to:
(i) any Person that is not a Member or an Affiliate of a Member if within thirty (30) days following the sale of any New Securities by the Company or any of its Subsidiaries, as applicable, to any Person that is not a Member or an Affiliate of a Member, the Company or any of its Subsidiaries, as applicable, offers to sell, and if accepted, sells to each Preemptive Rightholder, on the same terms as such Person purchased such New Securities, the number of New Securities that would result in each such Preemptive Rightholder owning the same portion of the New Securities that such Preemptive Rightholder would have been entitled to purchase pursuant to Section 8.4(a); or
(ii) any Member or an Affiliate of a Member if (A) there is a risk that the failure to provide additional capital to the Company could reasonably be likely to result in material harm to the Company, (B) the Company promptly provides written notice to the Preemptive Rightholders of such issuance and (C) within thirty (30) days following the sale of any New Securities by the Company to such Member or Affiliate, such Member or Affiliate offers to sell on the same terms as such Member or Affiliate purchased such New Securities, up to the number of such New Securities that is in excess of such Member’s Proportionate Share immediately prior to the purchase of such New Securities to each Preemptive Rightholder who is not such Member or an Affiliate of such Member in an amount equal to such Preemptive Rightholder’s Proportionate Share of such excess.
26
(d) Upon the consummation of any issuance pursuant to this Section 8.4, each electing Preemptive Rightholder shall deliver payment in full by wire transfer of immediately available funds of the purchase price for the New Securities purchased by such Preemptive Rightholder. Simultaneously with the consummation of such issuance, all of the parties to such purchase and sale shall execute such additional documents as are otherwise necessary or appropriate.
8.5 Drag-Along Rights.
(a) Subject to Section 8.5(d), at any time that the majority (the “Dragging Member(s)”) approve a Sale of the Company to one or more Persons (an “Approved Sale”), each Member and the Company shall consent to and raise no objections against the Approved Sale, and if such Approved Sale is structured as (i) a merger or consolidation of the Company or a Company Asset Sale, each Member shall, and hereby does, waive any dissenter’s rights, appraisal rights or similar rights in connection with such merger, consolidation or sale, or (ii) a sale of Equity Securities, each Member shall, and hereby does, agree to sell their Equity Securities on the terms and conditions of the Approved Sale. Each Member (in its capacity as a Member and, if applicable, as a Manager or an officer) and the Company shall take all necessary and desirable actions in connection with the consummation of the Approved Sale, including the execution of such agreements and such instruments and other actions reasonably necessary to (A) provide the representations, warranties, indemnities (jointly and severally with respect to any escrow amounts and on a several basis thereafter), covenants, conditions, escrow agreements and other provisions and agreements relating to such Approved Sale and (B) effectuate the allocation and distribution of the aggregate consideration upon the Approved Sale as set forth below. The Members shall not be required to comply with, and shall have no rights under, Sections 8.1 through 8.4 in connection with any Approved Sale.
(b) The Company shall provide the Members with written notice of any Approved Sale at least ten (10) days prior to the consummation thereof setting forth in reasonable detail the terms (including price, time and form of payment) of any Approved Sale. Each Member shall receive the same portion of the aggregate consideration from such Approved Sale that such Member would have received if such aggregate consideration (in the case of a Company Asset Sale, after payment or provision for all liabilities) had been distributed by the Company pursuant to Section 12.6.
(c) Each Member and the Company hereby grants an irrevocable proxy and power of attorney to any Person designated by the Dragging Member (the “Member Nominee”) to take all reasonable actions and execute and deliver all documents deemed reasonably necessary and appropriate by such Person to effectuate the consummation of any Approved Sale. The proxies and powers granted by the Members hereunder are coupled with an interest and are given to secure the performance of the Members’ obligations hereunder. Such proxies and powers shall be irrevocable for the term of this Agreement and shall survive the death, incompetency, disability or bankruptcy of any Member or Permitted Transferee thereof. The Members hereby agree to indemnify, defend and hold the Member Nominee harmless (severally in accordance with their pro rata share of the consideration received in any such Approved Sale (and not jointly and severally)) against all liability, loss or damage, together with all reasonable costs and expenses (including reasonable legal fees and expenses), relating to or arising from its exercise of the proxy and power of attorney granted hereby absent gross negligence or fraud.
27
8.6 Right of First Refusal.
(a) If a member receives a bona fide written offer (“Member BFO”, which, if the Member BFO relates to the Sale of the Company, shall also be a “Company BFO”) to purchase Units (whether solicited or unsolicited) from any Person other than an Affiliate (a “Potential Purchaser”), including a letter of intent or similar document, and such Member desires to Transfer all or a portion of its Units to such Potential Purchaser, such Member (the “Selling Member”) shall first deliver written notice of its desire to do so (the “Sale Notice”) to the Company, and to each of the other members (the “Non-Selling Members”). The Notice must specify: (i) the Selling Member’s bona fide intention to Transfer the Units, (ii) the number of Units that the Selling Member proposes to Transfer (the “Offered Units”), (iii) the proposed consideration per Unit (expressed as a value in cash, the “Offered Price”) for which the Selling Member proposes to Transfer the Units, (iv) the identity of the Potential Purchaser, and (v) all other material terms and conditions of the proposed transaction (the “Offered Terms”). Each Sale Notice shall constitute an irrevocable and binding offer by the Selling Member to Transfer the Offered Units in accordance with the Sale Notice and this Section 8.6.
(b) The Company shall have the option to purchase all or a portion of the Offered Units for the Offered Price and on the Offered Terms, unless to the extent applicable. The Company must exercise such option, if it so desires, no later than 30 calendar days (“First Option Period”) after the Sale Notice has been delivered to the Company in accordance with Section 8.6(a). Any written notice delivered by the Company to the Selling Member exercising the option set forth under this Section 8.6(b) shall constitute an irrevocable commitment by the Company to purchase the number of Offered Units for which the Company has indicated its intention to purchase in such written notice in accordance with the Sale Notice and this Section 8.6(b). If the Company fails to provide such written notice to the Selling Member prior to the expiration of the First Option Period, then the Company shall forfeit its right to purchase any of the Offered Units.
(c) The Company shall, no later than the last calendar day of the First Option Period, deliver written notice to the Non-Selling Members specifying the number, if any, of Offered Units that it does not intend to purchase pursuant to Section 8.6(b) (“Non-Selling Notice”). If there are remaining Offered Units after the application of Section 8.6(b) then each Non-Selling Member shall have an option (the “Non-Selling Member Option”) to purchase on a pro rata basis all or a portion of the remaining Offered Units eligible for purchase by the Non-Selling Members for the Offered Price and on the Offered Terms. Each such Non-Selling Member must exercise the Non-Selling Member Option, if it so desires, no later than 30 calendar days after one of the following applicable times (the “Non-Selling Member Option Period”) from the earlier of the date of delivery of the Non-Selling Notice and (ii) the expiration of the First Option Period.
28
(d) Neither the Company nor the Non-Selling Members shall have any right to purchase any of the Offered Units hereunder unless all of the Offered Units are purchased pursuant to this Section 8.6. If the Company and/or the Non-Selling Members exercise their option or options to purchase all of the Offered Units, any Person that elects, pursuant to this Section 8.6, to purchase any Offered Units from the Selling Member shall, following delivery of written notice to the Selling Member for such election, cooperate with the Selling Member, and the Selling Member shall cooperate with such Person, and each of them shall use commercially reasonable efforts, to consummate the purchase and sale of the Offered Units that such Person has elected to purchase, as promptly as practicable, for the Offered Price and on the Offer Terms. If the Company and the Non-Selling Members do not exercise their option or options to purchase all of the Offered Units within the time periods described in this Section 8.6, then all options of the Company and the Non-Selling Members to purchase the Offered Units, whether exercised or not, shall terminate. Notwithstanding anything to the contrary herein, if the consideration to be provided pursuant to the Member BFO is other than for all cash, the right to purchase the Offered Units hereunder may be exercisable in cash at the Fair Market Value of the Equity Securities or other property which constitute the Member BFO.
(e) Upon the earlier of (i) the expiration of the Non-Selling Member Option Period in which period the Non-Selling Members do not deliver written notices indicating their intent, in the aggregate, to purchase all of the Offered Units, and (ii) delivery of written notices to the Selling Member from all the Non-Selling Members indicating their intent, in the aggregate, to purchase less than all of the Offered Units (the date of such earlier occurrence, the “ROFR Ending Date”), the Selling Member shall have the right, exercisable for a period of 60 calendar days from the ROFR Ending Date (the “Unrestricted Period”), and subject to the limitations set forth elsewhere in this Agreement, to Transfer all or a portion of the Offered Units to any Person for a price per Unit that is not less than the Offered Price and on material terms and conditions that are not more favorable than the Offered Terms.
8.7 Legend. In the event that certificates representing the Equity Securities are issued (the “Certificated Units”), such certificates will bear substantially the following legend:”THE UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE STATE SECURITIES LAWS (“STATE ACTS”) AND MAY NOT BE SOLD, ASSIGNED, PLEDGED OR TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR STATE ACTS OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE TRANSFER OF THE UNITS REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE LIMITED LIABILITY COMPANY OPERATING AGREEMENT, DATED AS OF APRIL 1, 2019, AS AMENDED AND MODIFIED FROM TIME TO TIME, GOVERNING THE CATALYST GROUP ENTERTAINMENT LLC AND BY AND AMONG CERTAIN INVESTORS. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.”
29
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
9.1 Records and Accounting. The Company shall keep, or cause to be kept, appropriate books and records with respect to the Company’s business, including all books and records necessary to provide any information, lists and copies of documents required to be provided pursuant to Section 9.3 or pursuant to applicable laws (the “Books and Records”). All matters concerning (i) the determination of the relative amount of allocations and distributions among the Members pursuant to Articles III and IV and (ii) accounting procedures and determinations, and other determinations not specifically and expressly provided for by the terms of this Agreement, shall be determined in good faith by the Board. Further, so long as no conflict exists, all members of the Board and/or their duly authorized representatives shall be provided full access, for inspection and all other valid purposes, to the Books and Records and other information of the Company that would be afforded to the member of the board of directors of any corporation incorporated under the laws of the State of Delaware.
9.2 Fiscal Year. The fiscal year (the “Fiscal Year”) of the Company shall constitute the twelve (12) month period ending on December 31 of each calendar year, or such other annual accounting period as may be established by the Board that is permitted under the Code and the Treasury Regulations.
9.3 Transmission of Communications. Each Person that owns or controls Units on behalf of, or for the benefit of, another Person or Persons shall be responsible for conveying any report, notice or other communication received from the Board to such other Person or Persons.
9.4 Reporting and Audit Rights. The Company will provide Members with reviewed or audited financial reports on an annual basis and interim financial reports on a quarterly basis.
ARTICLE X
TAX MATTERS
10.1 Tax Year. The Taxable Year of the Company shall be its Fiscal Year.
10.2 Filing of Tax Returns.
(a) The Company shall be responsible for timely filing all tax returns of the Company. Within a reasonable period of time after the end of each Taxable Year, the Company shall furnish to each Member its IRS Form K-1 for such Taxable Year and any similar forms required for state or local tax purposes; provided, that the Company shall provide to each Member a reasonable estimate of the net taxable income or loss that will be allocated to such Member for the prior Taxable Year and a reasonable estimate on how such income will be allocated among the various states in which the Company conducts (or is deemed to conduct) business on or before February 28 following such Taxable Year unless the Company has previously furnished a final IRS Form K-1.
(b) Any balance sheet prepared for any tax return of the Company shall, unless otherwise determined by the Board or required under applicable law, be prepared in accordance with the same methods of accounting used for purposes of determining Capital Accounts.
(c) Each Member shall provide any forms (including an IRS Form W-9 or applicable IRS Form W-8) reasonably requested by the Company to allow the Company to determine the amount, if any, that is required to be withheld with respect to such Member under applicable Tax laws.
30
10.3 Tax Elections.
(a) Except as otherwise provided by this Agreement, all elections and decisions required or permitted to be made by the Company under any applicable Tax law shall be made by the Board; provided, that upon the request of any Member, the Company shall file an election under Code Section 754.
(b) The Board shall determine whether to make election under Code Section 6231(a)(1)(B)(ii) to cause Code Section 6231(a)(1)(B)(i) not to apply (the “TEFRA Election”). If the TEFRA Election is made, then for any applicable Taxable Year, the Tax Matters Member is hereby designated as the “tax matters partner” for the Company within the meaning of Code Section 6231(a)(7); provided, however, that the Tax Matters Member shall (i) receive the consent of the Board prior to taking any material action in connection with its representation of the Company before the Internal Revenue Service or other Governmental Authority (including entering any agreement to extend any statute of limitations with respect to a material Tax, make a material Tax election, or settling a material Tax claim); (ii) keep the Board reasonably informed regarding any communication it has received from the Internal Revenue Service or other Governmental Authority relating to any material Tax matter of the Company and shall provide the Board with a copy of any written correspondence received; and (iii) promptly provide the Board with a detailed account of all states of any administrative or judicial proceedings relating to Company Tax matters and shall provide the Board with sufficient notice to enable to the Board to participate in such proceedings.
(c) Except in connection with a Conversion Event, no Member (including the Tax Matters Member), agent or employee of the Company is authorized to, or may, file Internal Revenue Service Form 8832 (or such alternative or successor form) to elect to have the Company be classified as a corporation for income tax purposes, in accordance with Treasury Regulation Section 301.7701-3.
(d) By executing this Agreement, the Members and the Company agree that the Board shall take such actions (including amending this Agreement) as may be required by any authority with respect to the taxation of “profits interests” to conform to the tax consequences under Revenue Procedure 93-27 and Revenue Procedure 2001-43; provided, that the Board cannot take any action pursuant to this Section 10.3(d) if it would result in any Member receiving an after-tax return that is less than such Member would have received had such amendments not been made and the profits interest been taxed in accordance with Revenue Procedure 93-27 and Revenue Procedure 2001-43.
ARTICLE XI
WITHDRAWAL AND RESIGNATION OF MEMBERS
11.1 Withdrawal and Resignation of Members. Except in connection with any Transfer in compliance with Article VIII, no Member shall have the power or right to withdraw or otherwise resign from the Company prior to the dissolution and winding up of the Company pursuant to Article XII without the prior written consent of the Board (which consent may be withheld by the Board in its discretion), except as otherwise expressly permitted by this Agreement. Upon a Transfer of all of a Member’s Units in a Transfer permitted by this Agreement, subject to Article XII, such Member shall cease to be a Member. Notwithstanding that payment on account of a withdrawal may be made after the effective time of such withdrawal, any completely withdrawing Member will not be considered a Member for any purpose after the effective time of such complete withdrawal, and, in the case of a partial withdrawal, such Member’s Capital Account (and corresponding voting and other rights) shall be proportionately reduced for all other purposes hereunder upon the effective time of such partial withdrawal.
31
ARTICLE XII
DISSOLUTION AND LIQUIDATION
12.1 Dissolution. The Company shall not be dissolved by the admission of Additional Members. The Company shall dissolve, and its affairs shall be wound up upon the first to occur of the following:
(a) at any time upon the written request of the Board; or
(b) the entry of a decree of judicial dissolution of the Company under the Delaware Act.
Except as otherwise set forth in this Article XII, the Company is intended to have perpetual existence. An Event of Withdrawal shall not cause a dissolution of the Company and the Company shall continue in existence subject to the terms and conditions of this Agreement.
12.2 Liquidation. On the dissolution of the Company, the Board shall act as liquidator or (in its discretion) may appoint one or more representatives, Members or other Persons as liquidator(s). The liquidators shall proceed diligently to wind up the affairs of the Company and make final distributions as provided herein and in the Delaware Act. The costs of liquidation shall be borne as a Company expense. Until final distribution, the liquidators shall continue to operate the Company properties with all of the power and authority of the Board. The steps to be accomplished by the liquidators are as follows:
(a) the liquidators shall pay, satisfy or discharge from Company funds all of the debts, liabilities and obligations of the Company (including all expenses incurred in liquidation) or otherwise make adequate provision for payment and discharge thereof (including the establishment of a cash fund for contingent liabilities in such amount and for such term as the liquidators may reasonably determine); and
(b) the liquidators shall promptly distribute the Company’s remaining assets to the holders of Units in accordance with Section 4.1(a). Any non-cash (or non-cash equivalent) assets will first be written up or down to their Fair Market Value, thus creating Profit or Loss (if any), which shall be allocated in accordance with Article IV. In making such distributions, the liquidators shall allocate each type of remaining assets (i.e., cash or cash equivalents, capital stock of the Company’s Subsidiaries, etc.) among the Members ratably based upon the aggregate amounts to be distributed with respect to the Units held by each such holder in accordance with Section 4.1(a). The distribution of cash and/or property to a Member in accordance with the provisions of this Section 12.2 constitutes a complete return to the Member of its Capital Contributions and a complete distribution to the Member of its interest in the Company and all the Company’s property and constitutes a compromise to which all Members have consented within the meaning of the Delaware Act. To the extent that a Member returns funds to the Company, it has no claim against any other Member for those funds.
32
12.3 Cancellation of Certificate. On completion of the distribution of Company assets as provided herein, the Company is terminated (and the Company shall not be terminated prior to such time), and the Board (or such other Person or Persons as the Delaware Act may require or permit) shall file a certificate of cancellation with the Secretary of State of the State of Delaware, cancel any other filings made pursuant to this Agreement that are or should be canceled and take such other actions as may be necessary to terminate the Company. The Company shall be deemed to continue in existence for all purposes of this Agreement until it is terminated pursuant to this Section 12.3.
12.4 Reasonable Time for Winding Up. A reasonable time shall be allowed for the orderly winding up of the business and affairs of the Company and the liquidation of its assets pursuant to Section 12.2 in order to minimize any losses otherwise attendant upon such winding up.
12.5 Return of Capital. The liquidators shall not be personally liable for the return of Capital Contributions or any portion thereof to the Members (it being understood that any such return shall be made solely from Company assets).
12.6 Sale of the Company. Subject to Section 15.19, each Member shall receive the same portion of the aggregate consideration from a Sale of the Company that such Member would have received if such aggregate consideration (in the case of an asset sale, after payment or provision for all liabilities) had been distributed by the Company pursuant to Section 12.2.
ARTICLE XIII
CONVERSION
In the event that a Conversion Event shall occur, the Board shall, without any vote or consent of the Members, take all necessary and desirable action to incorporate the Company or take such other action as it may deem advisable, including (A) dissolving the Company, creating one or more Subsidiaries of the newly formed corporation and transferring to such Subsidiaries any or all of the assets of the Company (including by merger), (B) causing the Members to exchange their Units for shares of the newly formed corporation, or (C) effecting the conversion of the Company into a corporation pursuant to Section 18-216 of the Delaware Act. In connection with any such transaction, the Members shall receive, in exchange for their respective Units, shares of capital stock of such corporation or its Subsidiaries having the same relative economic interest and other rights and obligations in such corporation or its Subsidiaries as is set forth in this Agreement, subject to any modifications (as reasonably determined by the Board) required solely as a result of the conversion to corporate form. At the time of such transaction, the Members shall, and hereby agree to, take any and all actions deemed reasonably necessary and appropriate by the Board to effect such transaction, including entering into a stockholders’ agreement providing for, among other provisions, the restrictions on Transfer set forth in this Agreement. Prior to consummating any such transaction, the Board shall approve the proposed forms of a certificate of incorporation, bylaws, stockholders’ agreement and any other governing documents proposed to be established for such corporation and its Subsidiaries, if any, all of which shall, as nearly as practicable (as reasonably determined by the Board), reflect the rights and obligations of the Members under this Agreement and comparable agreements applicable to any Subsidiary as of the date of such transaction.
33
ARTICLE XIV
TERMINATION
14.1 Termination of this Agreement. This Agreement shall terminate automatically, without further act or deed of any other Person, upon and after the occurrence of (a) a Sale of the Company or (b) the agreement by all Members to terminate this Agreement; provided, however, that the provisions of Sections 3.6 (Negative Capital Accounts), 5.10 (Limitation of Liability), 5.11 (Indemnification), 5.13 (Expenses; Fees), 6.3 (Limitation of Liability), Article XV (General Provisions) and this Article XIV, shall survive any termination of this Agreement (including in connection with a dissolution of the Company).
ARTICLE XV
GENERAL PROVISIONS
15.1 Amendments. This Agreement may be amended, modified or waived in writing only with the consent of the Board, and such amendment, modification or waiver shall be binding upon and effective as to each other Member; provided, that if any amendment, modification or waiver disproportionately adversely affects the powers, preferences or rights of a particular Member as compared to all other similarly situated Members, the consent of that particular Member shall be required to effect such amendment, modification or waiver.
15.2 Title to Company Assets. Assets of the Company shall be deemed to be owned by the Company as an entity, and no Member, individually or collectively, shall have any ownership interest in such assets of the Company or any portion thereof. Legal title to any or all assets of the Company may be held in the name of the Company, the Board or one or more nominees, as the Board may determine. Any assets of the Company for which legal title is held in the name of the Board or the name of any Manager or nominee shall be held in trust by the Board or such Manager or nominee for the use and benefit of the Company in accordance with the provisions of this Agreement. All assets of the Company shall be recorded as the property of the Company on its Books and Records, irrespective of the name in which legal title to such assets of the Company is held.
15.3 Remedies. Each Member and the Company shall have all rights and remedies set forth in this Agreement and all rights and remedies which such Person has been granted at any time under any other agreement or contract and all of the rights which such Person has under any law. Any Person having any rights under any provision of this Agreement or any other agreements contemplated hereby shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law.
15.4 Successors and Assigns. All covenants and agreements contained in this Agreement shall bind and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, legal representatives and permitted assigns, whether so expressed or not; provided, however, that this Agreement shall inure to the benefit of successors and assigns only in the event of Transfers in compliance with Article VIII.
34
15.5 Severability. Unless otherwise specified herein, whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.
15.6 Counterparts. This Agreement may be executed simultaneously in two or more separate counterparts, any one of which need not contain the signatures of more than one party, but each of which will be an original and all of which together shall constitute one and the same agreement binding on all the parties hereto.
15.7 Descriptive Headings; Interpretation. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a substantive part of this Agreement. Whenever required by the context, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa. The use of the word “including” in this Agreement shall be by way of example rather than by limitation. Reference to any agreement, document or instrument means such agreement, document or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and if applicable hereof. Wherever required by the context, references to a Fiscal Year shall refer to a portion thereof. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Wherever a conflict exists between this Agreement and any other agreement, this Agreement shall control but solely to the extent of such conflict.
15.8 Applicable Law; Submission to Jurisdiction.
(a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.
(b) Each party hereto agrees that any legal action or other legal proceeding (whether in tort, contract or otherwise) relating to this Agreement or the enforcement of any provision of this Agreement or any of the transactions contemplated hereby, or in respect of any oral representations made or alleged to be made in connection herewith, shall be brought or otherwise commenced exclusively in any state or federal court located in the State of California (the “Chosen Courts”). Each party hereto:
(i) expressly and irrevocably consents and submits to the exclusive jurisdiction of the Chosen Courts in connection with any such legal proceeding, including to enforce any settlement, order or award;
35
(ii) consents to service of process in any such proceeding in any manner permitted by the Laws of the State of Delaware, and agrees that service of process by registered or certified mail, return receipt requested, at its address specified pursuant to Section 15.9 is reasonably calculated to give actual notice;
(iii) agrees that each Chosen Court shall be deemed to be a convenient forum;
(iv) waives and agrees not to assert (by way of motion, as a defense or otherwise), in any such legal proceeding commenced in the Chosen Courts, any claim that such party is not subject personally to the jurisdiction of such court, that such legal proceeding has been brought in an inconvenient forum, that the venue of such proceeding is improper or that this Agreement or the subject matter hereof or thereof may not be enforced in or by such court; and
(v) agrees to the entry of an order to enforce any resolution, settlement, order or award made pursuant to this Section 15.8 by the Chosen Courts and in connection therewith hereby waives, and agrees not to assert by way of motion, as a defense, or otherwise, any claim that such resolution, settlement, order or award is inconsistent with or violative of the laws or public policy of the Laws of the State of Delaware or any other jurisdiction.
15.9 Addresses and Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given or made when (a) delivered personally to the recipient, (b) telecopied to the recipient (with hard copy sent to the recipient by reputable overnight courier service (charges prepaid) that same day) if telecopied before 5:00 p.m. Los Angeles time on a Business Day, and otherwise on the next Business Day, or (c) one Business Day after being sent to the recipient by reputable overnight courier service (charges prepaid). Such notices, demands and other communications shall be sent to the address for such recipient set forth in the Company’s Books and Records, or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Any notice to the Company shall be deemed given if received by the Company at the principal office of the Company designated pursuant to Section 2.6.
15.10 Creditors. None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the Company or any of its Affiliates, and no creditor who makes a loan to the Company or any of its Affiliates may have or acquire (except pursuant to the terms of a separate agreement executed by the Company in favor of such creditor) at any time as a result of making the loan any direct or indirect interest in Profits, Losses, Distributions or the Company’s capital or property other than as a secured creditor.
15.11 Waiver. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute a waiver of any such breach or any other covenant, duty, agreement or condition.
36
15.12 Further Action. The parties agree to execute and deliver all documents, provide all information and take or refrain from taking such actions as may be necessary or appropriate to achieve the purposes of this Agreement.
15.13 Entire Agreement. This Agreement, those documents expressly referred to herein and other documents dated as of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.
15.14 Delivery by Facsimile or Electronic PDF. This Agreement, the agreements referred to herein and each other agreement or instrument entered into in connection herewith or therewith or contemplated hereby or thereby, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine or electronic pdf, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall reexecute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine or computer or similar machine with respect to an electronic pdf to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of any such machine as a defense to the formation or enforceability of a contract and each such party forever waives any such defense.
15.15 Waiver of Jury Trial. To the extent not prohibited by applicable law that cannot be waived, each party hereby waives, and covenants that it will not assert (whether as plaintiff, defendant or otherwise), any right to trial by jury in any forum in respect of any issue, claim, demand, action or cause of action arising in whole or in part under, related to, based on or in connection with this Agreement or the subject matter hereof, whether now existing or hereafter arising and whether sounding in tort or contract or otherwise. Any party hereto may file an original counterpart or a copy of this Section 15.15 with any court as written evidence of the consent of each such party to the waiver of its right to trial by jury.
15.16 Acknowledgements. Upon execution and delivery of a counterpart to this Agreement or a joinder to this Agreement, each party hereto, each Member and each Additional Member shall be deemed to acknowledge to the Board as follows: (a) the determination of such Member or Additional Member to purchase Units pursuant to this Agreement and any other agreement referenced herein has been made by such Member or Additional Member independent of any other Member and independent of any statements or opinions as to the advisability of such purchase or as to the properties, business, prospects or condition (financial or otherwise) of the Company and its Subsidiaries which may have been made or given by any other Member or by any agent or employee of any other Member and (b) no other Member has acted as an agent of such Member or Additional Member in connection with making its investment hereunder and that no other Member shall be acting as an agent of such Member or Additional Member in connection with monitoring its investment hereunder.
37
15.17 Reservation of Other Business Opportunities. No business opportunities other than those actually exploited by the Company pursuant to Section 2.4 shall be deemed the property of the Company, and except as provided herein any Manager or Member may engage in or possess an interest in any other business venture, independently or with others, of any nature or description; and neither any other Manager or Member nor the Company shall have any rights by virtue hereof in and to such other business ventures, or to the income or profits derived therefrom. No Manager or Member shall have any obligation to communicate, present or offer first to the Company or any of its Subsidiaries any business opportunity or venture of any kind. The provisions of this Section 15.17 shall be subject to, and not in any way affect the enforceability of, any separate agreement by a Manager or Member or any Affiliate thereof restricting or prohibiting certain business activities of such Manager or Member or such Affiliate(s) thereof including any Joinder Agreement.
38
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.
| COMPANY: | ||
| THE CATALYST GROUP ENTERTAINMENT LLC | ||
| By: | /s/ Khiow Hui Lim | |
|
Khiow Hui Lim, Manager | |
| By: | /s/ Joseph Lanius | |
|
Joseph Lanius, Manager | |
| By: | /s/ Nicholas Burnett | |
|
Nicholas Burnett, Manager | |
MEMBERS: | ||
| /s/ Joseph Lanius | ||
| Joseph Lanius | ||
| /s/ Khiow Hui Lim | ||
| Khiow Hui Lim | ||
| /s/ Nicholas Burnett | ||
| Nicholas Burnett | ||
39
EXHIBIT A
SCHEDULE OF MEMBERS
| Member | No. of Units | Percentage Interest |
| Khiow Hui Lim | 3333.34 | 33.34% |
| Joseph Lanius | 3333.33 | 33.33% |
| Nicholas Burnett | 3333.33 | 33.33% |
| Totals: | 10,000 | 100% |
A-1
EXHIBIT B
FORM OF JOINDER AGREEMENT
LIMITED LIABILITY COMPANY AGREEMENT JOINDER
By execution of this Joinder, the undersigned agrees to become a party to that certain Limited Liability Company Operating Agreement dated as of April 1, 2019, by and among The Catalyst Group Entertainment LLC and each of the Members which are parties thereto (as the same may be amended, restated or otherwise modified from time-to-time). The undersigned shall have all the rights, and shall observe all the obligations, applicable to a Member thereunder.
| Name: |
| Address for Notices: | With copies to: | |
B-1
Exhibit 3.5
Exhibit 3.6
| ARTICLE I | OFFICE | 1 | |||
| SECTION 1.1 | PRINCIPAL EXECUTIVE OFFICE | 1 | |||
| SECTION 1.2 | BRANCH OFFICES | 1 | |||
| SECTION 1.3 | REGISTERED AGENT | 1 | |||
| ARTICLE II | ANNUALLY SHAREHOLDERS’ MEETING | 2 | |||
| SECTION 2.1 | PLACE OF MEETINGS | 2 | |||
| SECTION 2.2 | ANNUAL MEETING | 2 | |||
| SECTION 2.3 | CALL FOR SHAREHOLDERS’ MEETING | 2 | |||
| SECTION 2.4 | NOTICES OF SHAREHOLDERS’ MEETING | 2 | |||
| SECTION 2.5 | SPECIAL MEETINGS OF SHAREHOLDERS | 3 | |||
| SECTION 2.6 | LIST OF SHAREHOLDERS | 3 | |||
| SECTION 2.7 | WAIVER OF NOTICE | 3 | |||
| SECTION 2.8 | WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS | 3 | |||
| SECTION 2.9 | ACTION WITHOUT MEETING | 3 | |||
| SECTION 2.10 | QUORUM | 4 | |||
| SECTION 2.11 | VOTING | 4 | |||
| SECTION 2.12 | CUMULATIVE VOTING | 5 | |||
| SECTION 2.13 | PROXIES | 5 | |||
| SECTION 2.14 | SHAREHOLDERS’ AGREEMENT | 5 | |||
| ARTICLE III | DIRECTORS | 6 | |||
| SECTION 3.1 | RESPONSIBILITY OF DIRECTORS | 6 | |||
| SECTION 3.2 | NUMBER OF DIRECTORS | 6 | |||
| SECTION 3.3 | ELECTION AND TENURE OF OFFICE | 6 | |||
| SECTION 3.4 | VACANCIES | 6 | |||
| SECTION 3.5 | REMOVAL OF DIRECTORS | 7 | |||
| SECTION 3.6 | NOTICE, PLACE, AND MANNER OF MEETING | 7 | |||
| SECTION 3.7 | ANNUAL AND REGULAR MEETINGS | 7 | |||
| SECTION 3.8 | SPECIAL MEETING – NOTICE AND WAIVERS | 7 | |||
i
| SECTION 3.9 | QUORUM | 7 | |||
| SECTION 3.10 | COMPENSATION | 7 | |||
| ARTICLE IV | OFFICERS | 8 | |||
| SECTION 4.1 | OFFICERS | 8 | |||
| SECTION 4.2 | ELECTION | 8 | |||
| SECTION 4.3 | REMOVAL AND RESIGNATION OF OFFICERS | 8 | |||
| SECTION 4.4 | SUBORDINATE OFFICER | 8 | |||
| SECTION 4.5 | VACANCIES | 8 | |||
| SECTION 4.6 | PRESIDENT | 8 | |||
| SECTION 4.7 | VICE PRESIDENT | 8 | |||
| SECTION 4.8 | SECRETARY | 9 | |||
| SECTION 4.9 | TREASURER | 9 | |||
| SECTION 4.10 | SALARIES | 9 | |||
| ARTICLE V | COMMITTEES | 10 | |||
| SECTION 5.1 | BOARD OF COMMITTEES | 10 | |||
| ARTICLE VI | RECORDS AND REPORTS | 11 | |||
| SECTION 6.1 | RIGHTS TO INSPECTION | 11 | |||
| SECTION 6.2 | RECORDS AND BOOKS | 11 | |||
| SECTION 6.3 | INSPECTION BY SHAREHOLDERS | 11 | |||
| SECTION 6.4 | INSPECTION BY DIRECTORS | 11 | |||
| SECTION 6.5 | AVAILABLE OF RECORD IN WRITTEN FORM | 11 | |||
| SECTION 6.6 | ANNUAL FILINGS | 11 | |||
| SECTION 6.7 | RECORD OF CHECKS & DRAFTS | 11 | |||
| SECTION 6.8 | EXECUTION OF CONTRACTS | 11 | |||
| SECTION 6.9 | ANNUAL REPORT TO SHAREHOLDERS | 11 | |||
| ARTICLE VII | CERTIFICATES AND TRANSFERS OF SHARES | 12 | |||
| SECTION 7.1 | CERTIFICATES FOR SHARES | 12 | |||
| SECTION 7.2 | TRANSFER OF SHARES | 12 | |||
ii
| SECTION 7.3 | LOST OR DESTROYED CERTIFICATES FOR SHARES | 12 | |||
| SECTION 7.4 | RECORD DATE FOR SHAREHOLDERS | 12 | |||
| SECTION 7.5 | CLOSE CORPORATION CERTIFICATES | 12 | |||
| ARTICLES VIII | AMENDMENT OF ARTICLES | 13 | |||
| SECTION 8.1 | AMENDMENT OF ARTICLES | 13 | |||
| SECTION 8.2 | AMENDMENT BEFORE SHARES ISSUED | 13 | |||
| SECTION 8.3 | AMENDMENT AFTER SHARES ISSUED | 13 | |||
| SECTION 8.4 | AMENDMENT BY INCORPORATOR | 13 | |||
| ARTICLES IX | SALES OF ASSETS | 14 | |||
| SECTION 9.1 | ASSETS APPROVED BY THE BOARD | 14 | |||
| ARTICLES X | MERGER & CONVERSION | 15 | |||
| SECTION 10.1 | TERMS OF MERGER | 15 | |||
| SECTION 10.2 | TERMS OF CONVERSION | 15 | |||
| ARTICLES XI | BANKRUPTCY, REORGANIZATIONS AND ARRANGEMENTS | 16 | |||
| SECTION 11.1 | BANKRUPTCY ARRANGEMENTS | 16 | |||
| ARTICLES XII | DISSOLUTION | 17 | |||
| SECTION 12.1 | DISSOLUTION BY SHAREHOLDERS | 17 | |||
| SECTION 12.2 | DISSOLUTION BY INCORPORATORS | 17 | |||
| SECTION 12.3 | CERTIFICATE OF DISSOLUTION | 18 | |||
| ARTICLE XIII | MISCELLANEOUS | 19 | |||
| SECTION 13.1 | ACCOUNTING YEAR | 19 | |||
| SECTION 13.2 | SUBSIDIARY CORPORATIONS | 19 | |||
| SECTION 13.3 | MISCELLANEOUS | 19 | |||
| CERTIFICATE OF ADOPTION OF THE BYLAWS | 20 | ||||
iii
BYLAWS OF
| IQI MEDIA INC. |
| (A California Corporation) |
| ARTICLE I | OFFICE |
| SECTION 1.1 | PRINCIPAL EXECUTIVE OFFICE |
The location of the principal executive office of the corporation shall be fixed by the board of directors. It may be located at any place within or without the state of California. If the office is located in California, the secretary of this corporation shall keep the original or a copy of these bylaws as amended to date at the principal executive office. If the principal executive office is located without the state of California, the bylaws shall be kept at the principal business office in California. As required by Section 1502 of the California Corporation Code, the officers of this corporation shall cause the corporation to file annual statement specifying the street address of the corporation principal executive office.
| SECTION 1.2 | BRANCH OFFICES |
The corporation may have any other offices either within or without the state of California, the board of directors may designate from time to time, or may required by the corporation for day-to-day business activities.
| SECTION 1.3 | REGISTERED AGENT |
The corporation shall have and maintain a registered agent in the State of California and in all other states in which it is required by applicable law.
1
| ARTICLE II | ANNUALLY SHAREHOLDERS’ MEETING |
| SECTION 2.1 | PLACE OF MEETINGS |
Unless otherwise provided in the Articles of Incorporation, all meetings of the Shareholders shall be held at the principal executive office of the corporation within the State of California unless some other appropriate and convenient geographical location is designated for that purpose from time to time by a resolution of the Board of Directors.
| SECTION 2.2 | ANNUAL MEETING |
An annually meeting of shareholders shall be held, each year, at the time and on the day and place of following:
Time of meeting:
Date of meeting:
Place of meeting
If the fixed day for annual meeting falls on a weekend day or a legal holiday, such meeting shall be held on the following business day at the same time or other time on such other day within such month shall be fixed by the Board of Directors. At the annual meeting, the shareholders shall elect a Board of directors to report the affairs of the corporation and for the transaction of business as may come before the meeting.
| SECTION 2.3 | CALL FOR SHAREHOLDERS’ MEETING |
Shareholder’s meeting may be called by the Directors, the Chairman of the Board of Directors, the Vice Chairman of the Board of Director, the President, the Secretary, or by any Officers instructed by the Board of Directors to call for meeting. Special meeting may be called by one or more shareholders who hold not less than one-tenth of all outstanding shares of the corporation entitled to vote at the meeting.
| SECTION 2.4 | NOTICES OF SHAREHOLDERS’ MEETING |
Notices of annual meeting or special meetings shall be given to shareholders in writing form not less than ten (10) nor more than sixty (60) days before the date of the meeting to each shareholder entitled to vote at the meeting. Such notice shall state the place, date and time of the meeting, and in case of a special meeting, the nature of the business to be transacted, and that no other business may be transacted, or in the case of an annual meeting, those matters which the board at the time of the mailing of the notice, intends to present for action by the shareholders, but subject to the provisions of Section 2.5 of this Article, any proper matter may be presented at the annual meeting for such action. The notice of any meeting at which directors are to be elected shall include the names of the nominees which intends at the time of meeting to be presented for election by the management.
Such notices shall be given either personally or by first-class mail or other means of written communication, addressed to the shareholder at the address of such shareholder appearing on the stock transfer records of the corporation or given by the shareholder to corporation for the purpose of notice, or, if no such address appears or is given, at the place where the principal executive office of the corporation is located or by publication at least once in a newspaper of general circulation in the county in which the said principal executive office is located.
Evidence of the giving of notices of meetings shall be deemed to be given at the time when such notices delivered personally or deposited in the United State mail with first-class postage prepaid or sent by any means of written communication.
When a meeting is adjourned to another place or time, notice of the adjourned meeting need not be given if the place and time thereof are announced at the meeting at which the adjournment is taken. If a meeting is adjourned for forty-five (45) days or more from the date set for the original meeting, or after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting.
2
| SECTION 2.5 | SPECIAL MEETINGS OF SHAREHOLDERS |
Special meetings of the Shareholders may be called at any time by the Board of Directors, Chairman of the Board of Directors, the President, or by one or more Shareholders holding not less than one-tenth (1/10) of the votes entitled to be cast on any issue proposed to be considered at the special meeting.
Upon receipt of a written request addressed to the Chairman, President, Vice President, or Secretary, mailed or delivered personally to such officer by any person (other than the Board) entitled to call a special meeting of Shareholders, such officer shall cause notice to be given to the Shareholders entitled to vote, and a meeting will be held at a time requested by the person or persons calling the meeting, not less than thirty-five (35) nor more than sixty (60) days after the receipt of such request.
| SECTION 2.6 | LIST OF SHAREHOLDERS |
After the record date for a meeting has been fixed, the corporation shall prepare an alphabetized list of names, addresses and number of shares of all Shareholders for inspection by any shareholder beginning two days after the notice of the meeting is given.
| SECTION 2.7 | WAIVER OF NOTICE |
The transaction of any meeting of shareholders, however, called and noticed, and wherever held, as valid as though had at a meeting duly held after regular call and notice, if a quorum is present, whether in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof. All such waivers and/or consents shall be filed with the corporate records or made part of the minutes of the meeting. No business to be transacted at the meeting, or the purpose of any annual or special meeting of the shareholders need to be specified in any written waiver of notice.
| SECTION 2.8 | WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS |
After called or noticed the transactions of any meeting of shareholders shall be valid as though had at a meeting duly, if a quorum is presented either in person or by proxy, either before or after the meeting, all shareholders entitled to vote not present in person or by proxy, sign a written waiver of notice, or a consent to the holding of such meeting or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Shareholders attend the meeting shall constitute a waiver of notice, unless objection shall be made as provided in Sec. 601(e).
| SECTION 2.9 | ACTION WITHOUT MEETING |
Unless otherwise provided in the Bylaws, any action that may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice if a consent, in writing, setting forth the action so taken, shall be signed by the shareholders having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.
Unless the consents of all shareholders entitled to vote have been solicited in writing, notice given to shareholders if less than unanimous written consent before the consummation of the action authorized by such approval.
| (1) | Notice of any shareholder approval pursuant to California Corporation Code Section 310 (approval of a contract or other transaction between the corporation and one or more of its directors has a material financial interest), Section 317 (indemnification by corporation of its director, officer, employee or agent arising out of court for administration and/or investigation proceeding), section 1201 (approval of the principal term of a reorganization), or section 2007 (approval of a plan of distribution of shares as part of the winding up of the corporation)without a meeting by less than unanimous written consent shall be given at least ten (10) days before the consummation of the action authorized by such approval, and |
3
| (2) | Prompt notice shall be given of the taking of any other corporate action approved by shareholders without a meeting by less than unanimous written consent, to all shareholders entitled to vote who have not consented in writing. |
Notwithstanding any of the foregoing provisions of this bylaws, directors may not be elected by written consent except by the unanimous written consent of all shares entitled to vote for the election of directors.
| SECTION 2.10 | QUORUM |
The holders of a majority of the share entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders for the transaction of any business unless otherwise provided by law, by the Article of Incorporation, or by provisions of these bylaws. If a quorum is present, the affirmative vote of the majority of shareholders represented at the meeting and entitled to vote on any matter shall be the act of the shareholders, unless the vote of a greater number is required by law and except as provided in the following paragraphs of this section.
The shareholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough shareholder to leave less than a quorum, if any action is approved by a majority of the shareholders require to initially constitute a quorum.
In the absence of a quorum, any meeting of shareholders may be adjourned from time to time by the vote of a majority of the shares represented either in person or by proxy, but no other business may be transacted unless otherwise provided in the foregoing paragraph of this section.
| SECTION 2.11 | VOTING |
Only shareholders’ name stand on the stock records of the corporation are entitled to vote on any shareholder’s meeting, unless some other day be fixed by the board of directors for determination of shareholders of record, then on such other day be entitled to vote on such meeting.
According to California Corporation Code Section 13401 (d) a “disqualified person” shall have no voting power.
All qualified shareholders entitled to vote on any matter or issue to one vote for each share held, unless otherwise provided by law, by the Articles of Incorporation, or by provisions of these bylaws. Shareholders entitled to vote may vote his or her shares in favor of, or against any matter, proposal, or issue. Any shareholder entitled to vote may vote part of his or her shares and refrain from voting the remaining shares. If shareholder fails to specify the number of shares he or she is affirmatively voting, it will be conclusively presumed that the shareholder’s approving votes is with respect to all shares the shareholder is entitled to vote.
In order for a corporation to determine the shareholders entitled to notice of and to vote on any shareholder’s meeting, or entitled to receive payment of any cash or stock dividend or distribution, or any allotment of rights, or to exercise rights in respect to any lawful action. The board of directors may fix a record date in future not more than sixty (60)days or less than ten (10) days preceding the date of any shareholder’s meeting or entitled to receive payment of any cash or stock dividend or distribution, or any allotment of rights, or to exercise rights in respect to any lawful action.
If no record day is fixed:
| (1) | The record date for determining shareholders entitled to notice of, or to vote, at a meeting of shareholders, shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held. |
| (2) | The record date for determining the shareholders entitled to give consent to corporate actions in writing a meeting, when no prior action by the board is necessary, shall be the day on which the first written consent is given. |
| (3) | The record date for determining shareholders for any other purpose shall be at the close of business on the day on which the board adopts the resolution relating thereof, or the 60th day prior to the date of such other action, whichever is later. |
4
| SECTION 2.12 | CUMULATIVE VOTING |
All qualified shareholders are entitled to vote at any election of directors, may cumulate their votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which the shareholders’ shares are entitled, or distributed the shareholders’ votes on the same principle among as many candidates as he or she think fit.
All qualified shareholders shall not be entitled to cumulate votes unless the candidates’ names have been placed in nomination prior to vote and the shareholders have given notice at the meeting before the voting has begun that his or her intention to cumulate votes.
| SECTION 2.13 | PROXIES |
Every shareholder entitled to vote may authorize another person or person to act by proxy in a meeting by filling a written proxy with the secretary of the corporation.
A proxy is invalid after the expiration of eleven (11) months from the date thereof unless otherwise provided in the proxy. Every proxy continues in full force and effect until revoked by the person executing it prior to the vote pursuant thereto unless otherwise provided by the General Corporation Law.
A “proxy” is a written authorization signed by a shareholder or a shareholder’s attorney in fact giving another person rights to vote or consent in writing with respect to the shares of such shareholder, and “signed” name on the proxy whether by manual signature, computer image – included but not limited to scanner and laser printer output, typewriting, telegraphic transmission or by any other means by such shareholder or such shareholder’s attorney in fact.
Revocation of proxy may be effected by sending a written statement stated that the proxy is revoked or by a subsequent proxy executed by the person executive the prior proxy and presented to the meeting, or attended at such meeting and vote in person by person executing the proxy. The dates contained on the forms of proxy presumptively determine the order of execution, regardless of the postmark on the envelope in which they were mailed.
A proxy is not revoked by the death or incapacity of the maker, unless, before the vote is counted, written statement of such death or incapacity is received by the corporation.
| SECTION 2.14 | SHAREHOLDERS’ AGREEMENT |
A corporation elects to become a close corporation, an agreement between two or more shareholders thereof, if in writing and signed by the shareholders may provide that in exercising any voting rights the shares held by them shall be voted as provided therein or in section 706, any may otherwise modify these provisions as to shareholders’ meeting and actions.
Any shareholder’s agreement authorized by section 300 (b), shall only be effective to modify the term of these bylaws if this corporation elects to become a close corporation with appropriate filing or amendment of its Articles of Incorporation as required by section 202 and shall terminate when this corporation ceases to be a close corporation. Such an agreement cannot waive or alter Section 158, (defining close corporations), Section 202 (requirements of Articles of Incorporation), Section 500 and Section 501 relative to distributions, Section 111 (merger), Section 1201 (e) (reorganization) or Chapters 15 (Records and Reports) or Section 16 (Rights of Inspection), Section 18 (Involuntary Dissolution) or Section 22 (Crimes and Penalties), all of the California Corporations Code. Any other provisions of the Code or these Bylaws may be altered or waived thereby, but to the extent they are not so altered or waived, these Bylaws shall be applicable.
5
| ARTICLE III | DIRECTORS |
| SECTION 3.1 | RESPONSIBILITY OF DIRECTORS |
Subject to the provisions of California Corporation Code Section 300 and any limitations in the articles relating to action required to be approved by the shareholders (section 153) or by the outstanding shares (section 152), or by a less than majority vote of a class or series of preferred shares (section 402.5), the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the board.
| SECTION 3.2 | NUMBER OF DIRECTORS |
The authorized number of directors of the corporation shall be one (1) until changed by a duly adopted amendment of Articles of Incorporation or by an amendment to this bylaws by the vote or written consent of majority shareholders entitled to vote, as provided in section 212.
| SECTION 3.3 | ELECTION AND TENURE OF OFFICE |
The directors shall be elected at the annual shareholders meeting to hold office until the next annual meeting. Each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term and until a successor has been elected and qualified.
Director(s) is/are not required be citizen of the United States of America, resident of the State of California or any other states, or shareholder of this corporation.
| SECTION 3.4 | VACANCIES |
A vacancy on the board of directors shall exist in case of death, resignation, unable to perform the duties of a director due to declared of unsound mind by an court or has been convicted of a felony, or in case of the shareholders fail to elect the full authorized number of qualified directors at any annual shareholder or special meeting.
Unless otherwise provided in the Articles of Incorporation or in this bylaws and except for a vacancy created by the removal of a director, vacancies on the board of directors may be filled by approval of the board, or if the number of directors in office is less than a quorum, by (1) the unanimous written consent of the directors in office, (2) the affirmative vote of a majority of the directors in office at a meeting held pursuant to notice or waivers of notice complying with this bylaws, or (3) a sole remaining director. Unless otherwise provided in the Articles of Incorporation or in this bylaws, vacancies occurred on the board due to removal of directors may be filled only by approval of the shareholders, elected director shall hold office until next annual shareholders meeting or a successor has been elected or qualified.
The shareholders may elect a director or directors at any time to fill any vacancy not filled by the directors, however, any such election by written consent shall require the consent of a majority of the shareholders entitled to vote.
No reduction of the authorized number of directors shall be removed before his or her term of office expires.
Any director may resign effective upon giving a written notice to the chairman of the board of directors, the president, the secretary, or vice-chairman of the board of director if any, unless the notice specifies a later time for the effectiveness of the resignation. If the resignation is effective at a later time, a successor may be elected to take office when the resignation becomes effective.
6
| SECTION 3.5 | REMOVAL OF DIRECTORS |
The entire board of directors or any one of the directors may be removed without cause if such removal is approved by a majority of the shareholders entitled to vote, subject to the provisions of California Corporation Code section 303. Unless otherwise provided in the Articles of Incorporation, in this bylaws and exception of the provisions of the California Corporation Code section 302, 303 and 304, no director can be removed prior to the expiration of his or her term of office.
The superior Court of the proper county may, on the suite of shareholders holding at least 10 percent of the number of outstanding shares of any class, remove any directors in case of fraudulent or dishonest acts or gross abuse of authority or discretion with reference to the corporation and may bar from re-election any director so removed for a period prescribed by the court. The corporation shall be made a party to such action.
| SECTION 3.6 | NOTICE, PLACE, AND MANNER OF MEETING |
Meetings of the board of directors may be called by the Chairman, the Secretary, , or the President, or the Vice-Chairman if any, or any two (2) of the directors. The meeting can held at any place, within or without the State of California, if not stated in the notice or if there is no notice, at the principal executive office of the corporation. Meetings of the board of directors may be held through use of video or telephone conference or any other communications equipment, as long as all directors participating in the meeting can hear one another. Accurate time of any meeting of the board of directors shall be maintained as required by General Corporation Code section 1500.
| SECTION 3.7 | ANNUAL AND REGULAR MEETINGS |
An annual meeting of the board of directors shall be held without notice, at the same place as the annual shareholders meeting.
Regular meetings of the board of directors shall be held at such times and places as may be fixed by the board of directors, or in this bylaws. No call or notice is required for regular meetings.
| SECTION 3.8 | SPECIAL MEETING – NOTICE AND WAIVERS |
Special meetings of the board of directors shall be held upon four (4) days’ notice by mail, or forty-eight hours’ notice delivered personally or by telephone, by telegraph, by fax or by email. If a notice is sent to a director by mail, it shall addressed to him or her at the address as it is shown in the corporate records, if the notice is sent by mail it shall be deposited in the United State mail, postage prepaid. A notice or waiver of notice need not specify the purpose of any special meeting of the board of directors.
When all the directors are present at any meeting of the board of directors, called or noticed, and either (a) sign a written consent thereto on the records of such meeting, or, (b) if a majority of the directors are present and if those not present sign a waiver of notice of such meeting or a consent to holding the meeting or an approval of the minutes thereof, whether before or after such meeting, consent or approval shall be filed with the secretary of the corporation, or, (c) if a director attends a meeting without notice but without protesting, prior thereto or at its commencement, then the transactions thereof are as valid as if had at a meeting regularly called and noticed.
| SECTION 3.9 | QUORUM |
A quorum for any meeting of the board of directors shall consist of one-third of authorized number of directors or at least two directors, whichever is greater, until changed by amendment of this bylaws. Solely director constitutes a quorum, if the authorized number of director is only one.
Every act or decision done or made majority of the directors present at a meeting duly held at which a quorum is present is the act of the board, subject to the provision of California Corporation Code section 310 (approval of contracts and transactions in which a director has material financial interest); section 311 (designation of committees); and section 317(e) (indemnification of directors). A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approval by at least a majority of the required quorum for such meeting.
| SECTION 3.10 | COMPENSATION |
No salary shall be paid for the directors for their services but, by resolution, the board of directors may be paid for fixed sum and expense of attendance any regular or special meeting of the board of directors; provided that nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation.
7
| ARTICLE IV | OFFICERS |
| SECTION 4.1 | OFFICERS |
The officers of the corporation shall be a president, a vice-president, a secretary, and a chief financial officer. The corporation also may have such other officers with such titles and duties as shall be determined by the board of directors. The same person can hold more than one office at the same time.
| SECTION 4.2 | ELECTION |
All officers of the corporation shall be elected by the board of directors at the annually or special board of directors’ meeting. All officers shall hold office until he or she shall resign or shall be removed or otherwise disqualified to serve, or a successor shall be elected and qualified.
| SECTION 4.3 | REMOVAL AND RESIGNATION OF OFFICERS |
An officer under any contract of employment may be removed at any time, either with or without clause, by the board of directors at any regular or special meeting of the board of directors.
Any officer may resign at any time by giving a written notice to the board of directors, or to the president, or to the secretary of the corporation. Any such resignation shall take effect at the date of receipt of such notice or at any time specified in such notice; and, unless otherwise specified in such notice, the acceptance of the resignation shall not be necessary to make it effective. The removal or resignation of any office shall be without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.
| SECTION 4.4 | SUBORDINATE OFFICER |
Any other officers may be appointed by the board of directors as the business of the corporation may require, each of them shall hold office for such period, have such authority and perform such duties which are provided in the bylaws or determine by the board of directors at any time.
| SECTION 4.5 | VACANCIES |
A vacancy in any office due to death, removal, disqualification or any other cause shall be filled in the manner described in this bylaws for regular appointment to such office.
| SECTION 4.6 | PRESIDENT |
The president, subject to the direction and controlled by the board of directors, shall be the chief executive officer of the corporation and, have general supervision, direction, and control of the business and affairs of the corporation. He or she shall preside at all board of directors and shareholders’ meeting. Unless otherwise stated by the board of directors and by these bylaws, the president shall have general powers and duties of management usually vested in the office of the president of a corporation, and shall have other powers and duties which may be prescribed by the board of directors or by these bylaws. The president shall be ex officio a member of all standing committee, including but not limited to executive committee.
| SECTION 4.7 | VICE PRESIDENT |
In the absence or disability of the president, the vice president, in order of their rank as fixed by the board of directors, or if not ranked, any one of the vice president may appointed by the board of directors, shall perform all the powers and duties of the president, and be subject to all restriction, direction and control as the president have. Any one of the vice president shall have such other powers and perform such other duties at any time be prescribed by the board of directors or in these bylaws.
8
| SECTION 4.8 | SECRETARY |
The secretary shall keep (a) a book of minutes of all regular and special meetings of directors and shareholders which stated that accurate time and place where the meeting held, in special meeting, how called and authorized; the notice given or waivers of notice received; the name of the directors present at the meeting, and the number of share present at the shareholders’ meetings; (b) a share register shows the names of the shareholders and their address, the number and classes of share held by each shareholder, the number and date of certificates issued for shares, and the number and date of cancellation of each certificate was surrendered for cancellation; (c) a copy or the original of the bylaws of the corporation, if any, amended or altered which was certified by him or her; (d) give notice to all meetings of directors and shareholders as required by law or by provisions of these bylaws; (e) be custody the seal of the corporation; (f) have such other powers and perform such other duties from time to time be prescribed by the board of directors or by these bylaws.
| SECTION 4.9 | TREASURER |
The treasurer shall be the chief financial office of the corporation, shall (a) keep and maintain adequate and correct accounting records and books; (b) shall deposit and credit all moneys and any valuable items under the name of the corporation with such depositaries as may be designated by the board of directors; (c) keep and maintain adequate and correct accounts of the properties and all business transactions of the corporation, including accounts of assets, liabilities, receipts, disbursements, profits, losses, capital, and shares, the accounting records shall be inspect by any directors at any reasonable times; (d) disburse the fund as may be ordered by the board of directors and surrender all accounts of transactions of the corporation; (e) have such other powers and duties as may prescribed by the board of directors or in these bylaws.
| SECTION 4.10 | SALARIES |
All officers in this cooperation shall pay a fixed amount of salary as their compensation for services. This fixed amount of salary may be reviewed by the board of directors annually.
9
| ARTICLE V | COMMITTEES |
| SECTION 5.1 | BOARD OF COMMITTEES |
The board of committees, by resolution, be appointed and passed by a majority of the authorized number of directors, designate one or more committees, each consists of two or more directors, to serve at the pleasure of the board. Any director may be designated as alternate member of any committee, to replace any absent or disqualified member of at any meeting of the committee. Any such committee, to the extent provided in the resolution of the board, shall have all the authority of the board, except with respect to:
| (1) | The approval of any action for which is required the approval of the shareholders or the approval of the outstanding shares. |
| (2) | The filling of vacancies on the board or in any committee. |
| (3) | The fixing of salary of the directors for serving on the board or in any committee. |
| (4) | The amendment or repeal of bylaws or the adoption of new bylaws. |
| (5) | The amendment or repeal of any resolution of the board which is not so amendable or repealable. |
| (6) | A distribution to the shareholders of the corporation, except at a rate or in a periodic amount or within a price range which is determined by the board of directors. |
| (7) | The appointment of other committees of the board or the members thereof. |
10
| ARTICLE VI | RECORDS AND REPORTS |
| SECTION 6.1 | RIGHTS TO INSPECTION |
In accordance with California Corporation Code section 1500, all books and records shall be open for inspection by any directors and shareholders at reasonable time, in the manner provided by California Corporation Code section 1600-1605.
| SECTION 6.2 | RECORDS AND BOOKS |
The corporation shall keep and maintain adequate and correct accounting records and books, and record of all business transactions and properties. All such books, records and accounts shall be kept at its principal executive office in the State of California, as fixed by the board of directors at any time.
| SECTION 6.3 | INSPECTION BY SHAREHOLDERS |
Inspection by a shareholder or a holder of voting trust certificate may be done in person or by attorney or by representative, the rights of inspection included by not limited to copy and make extracts.
Any shareholders or holders of voting trust certificate can open to inspection and copying share register at any time during usual business hours upon written demand on the corporation, for a purpose reasonably related to such holders’ interest as a shareholder or holder of voting trust certificate.
Any shareholders and holders of voting trust certificate can open to inspection the accounting books and records and minutes of proceedings of the shareholders and the board and committees of the board upon the written demand of the corporation at any reasonable time during usual business hours, for any proper purpose reasonably related to such holders’ interest as a shareholder or shareholders or holders of voting trust certificate.
Shareholders shall have all rights to inspect the original or copy of these bylaws, as amended to date and kept at the corporation’s principal executive office, at all reasonable times during business hours.
| SECTION 6.4 | INSPECTION BY DIRECTORS |
All directors shall have absolute right to inspect and copy all books, records, and documents of every kind and to inspect the physical properties of the corporation, domestic of foreign at any reasonable time during usual business hours. Such inspection made by done by person or by attorney or by representative. The right of inspection included by not limited to copy and make extracts.
| SECTION 6.5 | AVAILABLE OF RECORD IN WRITTEN FORM |
If any record is not maintained in written form, a request for inspection is not compiled with unless and until the corporation at its expense makes such record available in written form.
| SECTION 6.6 | ANNUAL FILINGS |
Required by the Corporation Law, the corporation shall file statement of information annually and pay the filing fee.
| SECTION 6.7 | RECORD OF CHECKS & DRAFTS |
All checks, drafts or other orders for payment of money, notes or indebtedness issued under the name of the corporation, shall be signed and endorsed by the person or persons, shall be determined by the Board of Directors.
| SECTION 6.8 | EXECUTION OF CONTRACTS |
The Board of Directors may authorize any office or officers, agent or agents, to enter into any contract or execute any agreements on behalf of the corporation. Unless authorize by the Board of Directors, no officer, agent, or employees shall have any right to bind the corporation by any contract or agreement, or to pledge its credit, or to render liable for any amount.
| SECTION 6.9 | ANNUAL REPORT TO SHAREHOLDERS |
The Board of Directors shall cause an annual report to be sent to the shareholders no later than 120 days after the close of the fiscal or calendar year. Waive of annual report send to shareholders so long as the corporation shall have less than 100 shareholders.
11
| ARTICLE VII | CERTIFICATES AND TRANSFERS OF SHARES |
| SECTION 7.1 | CERTIFICATES FOR SHARES |
The corporation shall issue certificates for its share when fully paid. Each certificate of share of the corporation shall be issued in numerical order, and shall set forth the name of the recordholder of the shares represented thereby; the number , the designation, if any, and the class or series of shares represented thereby; the par value, if any, of the shares represented thereby, and such other statements, as applicable, prescribed by section 416-419 of the General Corporation Law of the State of California. The name and address of the recordholder, the number of share issued and the date of issue shall be entered on the stock transfer legend.
Each certificate for the shares shall be signed in the name of the corporation by the Chairman of the Board of Directors, if any, or by Vice Chairman of the Board of Directors, if any, or by the President, if any, or by the Vice President, if any, and by the Chief Financial Officer or the Secretary or an Assistance Secretary. Any of all of the signatures on a certificate for share may be a facsimile, a electronic or digitized signature. If any officer, transfer agent or registrar who has signed or placed a facsimile or electronic or digitized signature on the certificate for share, has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were an office, transfer agent or registrar at the date of issue.
| SECTION 7.2 | TRANSFER OF SHARES |
According to the General Corporation Law and/or Corporate Securities Law of 1968 which may restrict the transferable of shares. Transfer of shares of the corporation shall be made only on the recordholders of the corporation by the registered holders thereof, or by his/her legal representative who shall provide proper evidence of authority to transfer, or by his/her attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the corporation or with a transfer agent or a registrar, and on surrender of the cancellation of such shares.
| SECTION 7.3 | LOST OR DESTROYED CERTIFICATES FOR SHARES |
The corporation may issue a new certificates for shares or for any other security in the place of any certificate which is alleged to have been lost, stolen or destroyed. Under such condition, the corporation may require such owner or his or her legal representative to give the corporation a bond, or other adequate security, sufficient to indemnify it against any claim that may be made against it, including any expense or liability, on the account of the alleged, theft or destruction of any certification or the issuance of such new certificate.
| SECTION 7.4 | RECORD DATE FOR SHAREHOLDERS |
The Board of Directors may fix a time in the future as a record date for the determination of the shareholders entitled to notice of and to vote at any shareholders’ meeting or entitled to receive payment of any cash or stock dividend or distribution, or any allotment of rights, or to exercise rights in respect to any other lawful action. The fixed record date shall not more than sixty (60) days or less than ten (10) days prior to the date of the meeting nor more than sixty (60) days prior to any other action.
| SECTION 7.5 | CLOSE CORPORATION CERTIFICATES |
All certificates representing shares of this corporation, in the event it shall elect to become a close corporation, shall contain the legend required by Section 418(c).
12
| ARTICLES VIII | AMENDMENT OF ARTICLES |
| SECTION 8.1 | AMENDMENT OF ARTICLES |
A corporation may amend its articles from time to time, in any and as many respects as may be desired, so long as its articles as amended contain only such provisions as it would be lawful to insert in original articles filed at the time of the filing of the amendment and, if a change in shares or the rights of shareholders or an exchange, reclassification or cancellation of shares or rights of shareholders is to be made, such provisions as may be necessary to effect such change, exchange, reclassification or cancellation.
| SECTION 8.2 | AMENDMENT BEFORE SHARES ISSUED |
Before any shares have been issued, any amendment of the articles may be adopted by a writing signed by a majority of the incorporators, if directors were not named in the original articles and have not been elected, or, if directors were named in the original articles or have been elected, by a majority of the directors.
| SECTION 8.3 | AMENDMENT AFTER SHARES ISSUED |
After any shares have been issued, amendments may be adopted if approved by the board and approved by more than 50% the outstanding shares.
| SECTION 8.4 | AMENDMENT BY INCORPORATOR |
If the amendments adopted by the incorporators or the board, the corporation shall file a certificate of amendment signed and verified by a majority of the incorporators or of the board, as the case may be, which shall state that the signers thereof constitute at least a majority of the incorporators or of the board, that the corporation has issued no shares and that they adopt the amendment or amendments therein set forth. In the case of amendments adopted by the incorporators, the certificate shall also state that directors were not named in the original articles and have not been elected.
A proposed amendment must be approved by the outstanding shares of a class, whether or not such class is entitled to vote thereon by the provisions of the articles, if the amendment would:
| 1. | Increase or decrease the aggregate number of authorized shares of such class |
| 2. | Effect an exchange, reclassification, or cancellation of all or part of the shares of such class, including a reverse stock split but excluding a stock split. |
| 3. | Effect an exchange, or create a right of exchange, of all or part of the shares of another class into the shares of such class. |
| 4. | Change the rights, preferences, privileges or restrictions of the shares of such class. |
| 5. | Create a new class of shares having rights, preferences or privileges prior to the shares of such class, or increase the rights, preferences or privileges or the number of authorized shares of any class having rights, preferences or privileges prior to the shares of such class. |
| 6. | In the case of preferred shares, divide the shares of any class into series having different rights, preferences, privileges or restrictions or authorize the board to do so. |
| 7. | Cancel or otherwise affect dividends on the shares of such class which have accrued but have not been paid. |
13
| ARTICLES IX | SALES OF ASSETS |
| SECTION 9.1 | ASSETS APPROVED BY THE BOARD |
Any mortgage, deed of trust, pledge or other hypothecation of all or any part of the corporation’s property, real or personal, for the purpose of securing the payment or performance of any contract or obligation may be approved by the board. Unless the articles otherwise provide, no approval of shareholders or of the outstanding shares shall be necessary for such action.
A corporation may sell, lease, convey, exchange, transfer, or otherwise dispose of all or substantially all of its assets when the principal terms are approved by the board, and, unless the transaction is in the usual and regular course of its business, approved by the outstanding shares, either before or after approval by the board and before or after the transaction.
Notwithstanding approval of the outstanding shares, the board may abandon the proposed transaction without further action by the shareholders, subject to the contractual rights, if any, of third parties.
The sale, lease, conveyance, exchange, transfer or other disposition may be made upon those terms and conditions and for that consideration as the board may deem in the best interests of the corporation. The consideration may be money, securities, or other property.
14
| ARTICLES X | MERGER & CONVERSION |
| SECTION 10.1 | TERMS OF MERGER |
A corporation may merge with one or more domestic corporations, foreign corporations, or other business entities. The board of each corporation which desires to merge shall approve an agreement of merger. The constituent corporations shall be parties to the agreement of merger and other persons, including a parent party, may be parties to the agreement of merger. The agreement shall state all of the following:
| 1. | The terms and conditions of the merger. |
| 2. | The amendments of the articles of the surviving corporation to be effected by the merger, if any. If any amendment changes the name of the surviving corporation the new name may be the same as or similar to the name of a disappearing domestic or foreign corporation. |
| 3. | The name and place of incorporation of each constituent corporation and which of the constituent corporations is the surviving corporation. |
| 4. | The manner of converting the shares of each of the constituent corporations into shares or other securities of the surviving corporation and, if any shares of any of the constituent corporations are not to be converted solely into shares or other securities of the surviving corporation, the cash, rights, securities, or other property which the holders of those shares are to receive in exchange for the shares, which cash, rights, securities, or other property may be in addition to or in lieu of shares or other securities of the surviving corporation, or that the shares are canceled without consideration. |
| 5. | Other details or provisions as are desired, if any, including, without limitation, a provision for the payment of cash in lieu of fractional shares or for any other arrangement with respect thereto consistent with the provisions. |
Each share of the same class or series of any constituent corporation (other than the cancellation of shares held by a constituent corporation or its parent or a wholly owned subsidiary of either in another constituent corporation) shall, unless all shareholders of the class or series consent, be treated equally with respect to any distribution of cash, rights, securities, or other property. Except in a short-form merger, and in the merger of a corporation into its subsidiary in which it owns at least 90 percent of the outstanding shares of each class, the nonredeemable common shares or nonredeemable equity securities of a constituent corporation may be converted only into nonredeemable common shares of the surviving party or a parent party if a constituent corporation or its parent owns, directly or indirectly, prior to the merger shares of another constituent corporation representing more than 50 percent of the voting power of the other constituent corporation prior to the merger, unless all of the shareholders of the class consent.
| SECTION 10.2 | TERMS OF CONVERSION |
The corporation may be converted into a domestic other business entity if,
| 1. | Each share of the same class or series of the converting corporation shall, unless all the shareholders of the class or series consent, be treated equally with respect to any cash, rights, securities, or other property to be received by, or any obligations or restrictions to be imposed on, the holder of that share, and |
| 2. | Nonredeemable common shares of the converting corporation shall be converted only into nonredeemable equity securities of the converted entity unless all of the shareholders of the class consent; provided, however, that clause shall not restrict the ability of the shareholders of a converting corporation to appoint one or more managers, if the converted entity is a limited liability company, or one or more general partners, if the converted entity is a limited partnership, in the plan of conversion or in the converted entity’s governing documents. Notwithstanding this section, the conversion of a corporation into a domestic other business entity may be effected only if both of the following conditions are complied with: |
| a) | The law under which the converted entity will exist expressly permits the formation of that entity pursuant to a conversion. |
| b) | The corporation complies with any and all other requirements of any other law that applies to conversion to the converted entity. |
15
| ARTICLES XI | BANKRUPTCY, REORGANIZATIONS AND ARRANGEMENTS |
| SECTION 11.1 | BANKRUPTCY ARRANGEMENTS |
Any domestic corporation with respect to which a proceeding has been initiated under any applicable statute of the United States, as now existing or hereafter enacted, relating to reorganizations or arrangements of corporations, has full power and authority to put into effect and carry out any plan of reorganization or arrangement and the orders of the court or judge entered in such proceeding and may take any proceeding and do any act provided in the plan or directed by such orders, without further action by its board or shareholders. Such power and authority may be exercised and such proceedings and acts may be taken, as may be directed by such orders, by the trustee or trustees of such corporation appointed in the reorganization or arrangement proceeding (or a majority thereof), or if none is appointed and acting, by officers of the corporation designated or a master or other representative appointed by the court or judge, with like effect as if exercised and taken by unanimous action of the board and shareholders of the corporation.
A corporation may, alter, amend or repeal its bylaws; constitute or reconstitute its board and name, constitute or appoint directors and officers in place of or in addition to all or some of the directors or officers then in office; amend its articles; make any change in its capital stock; make any other amendment, change, alteration or provision authorized by this division; be dissolved, transfer all or part of its assets or merge as permitted by this division, in which case, however, no shareholder shall have any statutory dissenter’s rights; change the location of its principal executive office or remove or appoint an agent to receive service of process; authorize and fix the terms, manner and conditions of the issuance of bonds, debentures or other obligations, whether or not convertible into shares of any class or bearing warrants or rights to purchase or subscribe to shares of any class; or lease its property and franchises to any corporation, if permitted by law.
16
| ARTICLES XII | DISSOLUTION |
| SECTION 12.1 | DISSOLUTION BY SHAREHOLDERS |
The corporation may elect voluntarily to wind up and dissolve by the vote of shareholders holding shares representing 50 percent or more of the voting power. The corporation which comes within one of the following descriptions may elect by approval by the board to wind up and dissolve:
| 1. | the corporation as to which an order for relief has been entered under Chapter 7 of the federal bankruptcy law. |
| 2. | the corporation which has disposed of all of its assets and has not conducted any business for a period of five years immediately preceding the adoption of the resolution electing to dissolve the corporation. |
| 3. | the corporation which has issued no shares. |
| SECTION 12.2 | DISSOLUTION BY INCORPORATORS |
Notwithstanding any other provision of this division, when a corporation has not issued shares, a majority of the directors, or, if no directors have been named in the articles or been elected, the incorporator or a majority of the incorporators may sign and verify a certificate of dissolution stating the following:
| 1. | That the certificate of dissolution is being filed within 12 months from the date the articles of incorporation were filed. |
| 2. | That the corporation does not have any debts or other liabilities. |
| 3. | That the tax liability will be satisfied on a taxes paid basis or that a person or corporation or other business entity assumes the tax liability, if any, of the dissolving corporation and is responsible for additional corporate taxes, if any, that are assessed and that become due after the date of the assumption of the tax liability. |
| 4. | That a final franchise tax return, as described by Section 23332 of the Revenue and Taxation Code, has been or will be filed with the Franchise Tax Board as required under Part 10.2 (commencing with Section 18401) of Division 2 of the Revenue and Taxation Code. |
| 5. | That the corporation has not conducted any business from the time of the filing of the articles of incorporation. |
| 6. | That the known assets of the corporation remaining after payment of, or adequately providing for, known debts and liabilities have been distributed to the persons entitled thereto or that the corporation acquired no known assets, as the case may be. |
| 7. | That a majority of the directors, or, if no directors have been named in the articles or been elected, the incorporator or a majority of the incorporators authorized the dissolution and elected to dissolve the corporation. |
| 8. | That the corporation has not issued any shares, and if the corporation has received payments for shares from investors, those payments have been returned to those investors. |
| 9. | That the corporation is dissolved. |
17
| SECTION 12.3 | CERTIFICATE OF DISSOLUTION |
A certificate of dissolution signed shall be filed with the Secretary of State. Upon filing a certificate of dissolution a corporation shall be dissolved and its powers, rights, and privileges shall cease.
If the corporation has elected to wind up and dissolve a certificate evidencing such election shall forthwith be filed. The certificate shall be an officers’ certificate or shall be
signed and verified by at least a majority of the directors then in office or by one or more shareholders authorized to do so by shareholders holding shares representing 50 percent or more of the voting power and shall set forth:
| 1. | That the corporation has elected to wind up and dissolve. |
| 2. | If the election was made by the vote of shareholders, the number of shares voting for the election and that the election was made by shareholders representing at least 50 percent of the voting power. |
| 3. | If the certificate is executed by a shareholder or shareholders, that the subscribing shareholder or shareholders were authorized to execute the certificate by shareholders holding shares representing at least 50 percent of the voting power. |
If a voluntary election to wind up and dissolve may be revoked prior to distribution of any assets by the vote of shareholders holding shares representing a majority of the voting power, or by approval by the board. The certificate shall set forth:
| 1. | That the corporation has revoked its election to wind up and dissolve. |
| 2. | That no assets have been distributed pursuant to the election. |
| 3. | If the revocation was made by the vote of shareholders, the number of shares voting for the revocation and the total number of outstanding shares the holders of which were entitled to vote on the revocation. |
| 4. | If the election and revocation was by the board, that shall be stated. |
18
| ARTICLE XIII | MISCELLANEOUS |
| SECTION 13.1 | ACCOUNTING YEAR |
The accounting year shall be fix by the resolution of the Board of Directors. The Accounting year shall be fiscal or calendar year.
| SECTION 13.2 | SUBSIDIARY CORPORATIONS |
Shares of this corporation owned by a subsidiary shall not be entitled to vote on any matter.
| SECTION 13.3 | MISCELLANEOUS |
19
CERTIFICATE OF ADOPTION OF THE BYLAWS
This is to certify that I am the duly-elected, qualified and acting Secretary of the above mentioned corporation and that the above and foregoing code of bylaws was submitted to the shareholders at their first meeting held on the date set forth in these bylaws and recorded in the minutes thereof, was ratified by the vote of shareholders entitled to exercise the majority of the voting power of said corporation.
In the witness whereof, I have hereunto set my hand this
1st day of April , 2022.
| /s/ Khiow Hui Lim | |
| / Secretary |
20
Exhibit 4.1
DEFINITIVE SHARE EXCHANGE AGREEMENT
This Definitive Share Exchange Agreement (“Agreement”), dated as of May 16, 2022, is between IQI Media, Inc. (“IQI”), a California corporation located at 1055 East Colorado Boulevard, Suite 500, Pasadena, California 91106, United States, Lim Khiow Hui (“Hui”), the owner of IQI, The Catalyst Group Entertainment, LLC (“TCG”), a Delaware corporation located at 8383 Wilshire Blvd, Suite 310, Beverly Hills, CA 90211, Joseph Lanius (“Lanius”), Hui, and Nicholas Burnett (“Burnett”), the members of TCG (collectively, the “TCG Members”), Winvest Group Ltd. (“WNLV”), a Nevada corporation located at 50 West Liberty Street Suite 880, Reno NV 89501, and Wan Nyuk Ming (“Sky”), the Chairman of WNLV. Collectively, IQI, Hui, TCG, Lanius, Burnett, WNLV, and Sky are the “Parties.”
The parties hereby enter into this Agreement, following which,
| 1. | WNLV will own (i) 1,000,000 units of IQI, representing all of its issued and outstanding equity of IQI, and (ii) 10,000 units of TCG, representing all of the issued and outstanding equity of TCG; |
| 2. | Hui, Lanius, and Burnett will own an aggregate of 900,000 shares of WNLV common shares, out of the 17,411,217 shares to be issued and outstanding shares of WNLV, following the Closing (the “Share Exchange”), calculated post-issuance; |
| 3. | Hui will relinquish her 1,000,000 units of IQI, to WNLV, in IQI becoming the wholly-owned subsidiary of WNLV; |
| 4. | Hui, Lanius, and Burnett will relinquish their 10,000 units of TCG, to WNLV, in TCG becoming the wholly-owned subsidiary of WNLV; |
| 5. | The newly issued shares of WNLV shall be issued to the Parties as described in Exhibit A attached hereto, at the Closing of the Share Exchange; |
As a result of this Agreement, WNLV will be filing a Form 8-K reflecting this change of control (sometimes called a “Super 8-K”). The first consolidated post-acquisition report will be the Form 10-Q for the quarter ended June 30, 2022.
RECITALS
WHEREAS, Hui currently hold all 1,000,000 units of IQI, with a stated capital of $5,000.00, of the issued and outstanding shares of IQI and is desirous of relinquishing all of her IQI shares so that she would own 450,000 shares of WNLV common stock, for IQI; and that IQI would be a wholly-owned subsidiary of WNLV.
WHEREAS, The TCG Members currently hold all 10,000 units of TCG, with a stated capital of $35,100.00, of the issued and outstanding shares of TCG and are desirous of relinquishing all of their TCG shares so that they would own an aggregate of 450,000 shares of WNLV common stock, for TCG, and that 17,411,217 shares of WNLV common stock would be outstanding; and that TCG would be a wholly-owned subsidiary of WNLV.
1
WHERES, the aggregate ownership of Lanius, Hui, and Burnett would be 5.169% of outstanding shares on WNLV.
WHEREAS, IQI is desirous of becoming a wholly-owned subsidiary of WNLV, a fully reporting public company.
WHEREAS, TCG is desirous of becoming a wholly-owned subsidiary of WNLV, a fully reporting public company.
WHEREAS, WNLV and IQI are desirous of WNLV acquiring 100% of the outstanding shares of IQI, issuing 450,000 shares of WNLV common stock to Hui in the process, making IQI a wholly-owned subsidiary of WNLV.
WHEREAS, WNLV and TCG are desirous of WNLV acquiring 100% of the outstanding shares of TCG, issuing 450,000 shares of WNLV common stock to Lanius, Hui, and Burnett, as applicable, in the process, making TCG a wholly-owned subsidiary of WNLV.
WHEREAS, the board of directors and shareholders of WNLV, IQI, and TCG, respectively, have each agreed to exchange and issue shares, as necessary to cause the forgoing results (the “Share Exchange”), upon the terms, and subject to the conditions, set forth in this Agreement.
WHEREAS, it is intended that, for federal income tax purposes, the Share Exchange shall qualify as a reorganization under the provisions of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the “Code”), and the rules and regulations promulgated thereunder, and be tax-free pursuant to Section 351(a) of the Code.
AND WHEREAS, the Parties desire to make certain representations, warranties, covenants and agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual promises herein made, and in consideration of the representations, warranties, covenants and agreements herein contained, and intending to be legally bound hereby, the Parties agree as follows:
INCORPORATION OF RECITALS BY REFERENCE. The Recitals are hereby incorporated herein by this reference, as if fully restated herein.
ARTICLE
I
DEFINITIONS
I.1 Certain Definitions. The following terms shall, when used in this Agreement, have the following meanings:
“Acquisition” means the acquisition of any businesses, assets or property other than in the ordinary course, whether by way of the purchase of assets or stock, by WNLV acquiring all of the outstanding shares of IQI pursuant to this Share Exchange Agreement and WNLV issuing shares of common stock to the Parties, as contemplated herein.
“Affiliate” means, with respect to any Person: (i) any Person directly or indirectly owning, controlling or holding with power to vote ten percent (10%) or more of the outstanding voting securities of such other Person (other than passive or institutional investors); (ii) any Person ten percent (10%) or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with power to vote, by such other Person; (iii) any Person directly or indirectly controlling, controlled by or under common control with such other Person; and (iv) any officer, director or partner of such other Person. “Control” for the foregoing purposes shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or voting interests, by contract or otherwise.
2
“Business Day” means any day other than Saturday, Sunday or a day on which banking institutions in Los Angeles, California, are required or authorized to be closed.
“Code” means the United States Internal Revenue Code of 1986, as amended.
“Collateral Documents” mean the Exhibits and any other documents, instruments and certificates to be executed and delivered by the Parties hereunder or there under.
“Commission” means the Securities and Exchange Commission or any Regulatory Authority that succeeds to its functions.
“Effective Time” means, the moment in time when the shares of the IQI and TCG are exchanged for the shares of WNLV.
“Encumbrance” means any material mortgage, pledge, lien, encumbrance, charge, security interest, security agreement, conditional sale or other title retention agreement, limitation, option, assessment, restrictive agreement, restriction, adverse interest, restriction on transfer or exception to or material defect in title or other ownership interest (including restrictive covenants, leases and licenses).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations there under.
“Exchange Shares” means (i) the 1,000,000 outstanding units of IQI (the “IQI Shares”), exchanged by Hui to WNLV, and (ii) the 10,000 outstanding units of TCG (the “TCG Shares”), exchanged by Lanius, Hui, and Burnett to WNLV, for an aggregate of 900,000 newly issued shares of WNLV (the “WNLV Shares”), to be issued to the Parties, as applicable.
“GAAP” means United States generally accepted accounting principles as in effect from time to time.
“IQI Business” means the business conducted by IQI.
“IQI Common Stock” means the common shares of IQI.
“Legal Requirement” means any statute, ordinance, law, rule, regulation, code, injunction, judgment, order, decree, ruling, or other requirement enacted, adopted or applied by any Regulatory Authority, including judicial decisions applying common law or interpreting any other Legal Requirement.
“Losses” shall mean all damages, awards, judgments, assessments, fines, sanctions, penalties, charges, costs, expenses, payments, diminutions in value and other losses, however suffered or characterized, all interest thereon, all costs and expenses of investigating any claim, lawsuit or arbitration and any appeal there from, all actual attorneys’, accountants’ investment bankers’ and expert witness’ fees incurred in connection therewith, whether or not such claim, lawsuit or arbitration is ultimately defeated and, subject to Section 9.4, all amounts paid incident to any compromise or settlement of any such claim, lawsuit or arbitration.
3
“Liability” means any liability or obligation (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes.
“Material Adverse Effect” means a material adverse effect on (i) the assets, Liabilities, properties or business of the Parties, (ii) the validity, binding effect or enforceability of this Agreement or the Collateral Documents or (iii) the ability of any Party to perform its obligations under this Agreement and the Collateral Documents; provided, however, that none of the following shall constitute a Material Adverse Effect on WNLV: (i) the filing, initiation and subsequent prosecution, by or on behalf of shareholders of any Party, of litigation that challenges or otherwise seeks damages with respect to the Share Exchange, this Agreement and/or transactions contemplated thereby or hereby, (ii) occurrences due to a disruption of a Party’s business as a result of the announcement of the execution of this Agreement or changes caused by the taking of action required by this Agreement, (iii) general economic conditions, or (iv) any changes generally affecting the industries in which a Party operates.
“Permit” means any license, permit, consent, approval, registration, authorization, qualification or similar right granted by a Regulatory Authority.
“Permitted Liens” means (i) liens for Taxes not yet due and payable or being contested in good faith by appropriate proceedings; (ii) rights reserved to any Regulatory Authority to regulate the affected property; (iii) statutory liens of banks and rights of set off; (iv) as to leased assets, interests of the lessors and sub-lessors thereof and liens affecting the interests of the lessors and sub-lessors thereof; (v) inchoate material men’s, mechanics’, workmen’s, repairmen’s or other like liens arising in the ordinary course of business; (vi) liens incurred or deposits made in the ordinary course in connection with workers’ compensation and other types of social security; (vii) licenses of trademarks or other intellectual property rights granted by WNLV, in the ordinary course and not interfering in any material respect with the ordinary course of the business of WNLV; and (viii) as to real property, any encumbrance, adverse interest, constructive or other trust, claim, attachment, exception to or defect in title or other ownership interest (including, but not limited to, reservations, rights of entry, rights of first refusal, possibilities of reversion, encroachments, easement, rights of way, restrictive covenants, leases, and licenses) of any kind, which otherwise constitutes an interest in or claim against property, whether arising pursuant to any Legal Requirement, under any contract or otherwise, that do not, individually or in the aggregate, materially and adversely affect or impair the value or use thereof as it is currently being used in the ordinary course.
“Person” means any natural person, corporation, partnership, trust, unincorporated organization, association, Limited Liability Company, Regulatory Authority or other entity.
“Proposed Acquisition” means any of the following transactions (other than the transactions contemplated by this Agreement): (i) a merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving WNLV pursuant to which the shareholders of WNLV immediately preceding such transaction hold less than fifty percent (50%) of the aggregate equity interests in the surviving or resulting entity of such transaction, (ii) a sale or other disposition by WNLV of assets representing in excess of fifty percent (50%) of the aggregate fair market value of WNLV Business immediately prior to such sale or (iii) the acquisition by any person or group (including by way of a tender offer or an exchange offer or issuance by WNLV), directly or indirectly, of beneficial ownership or a right to acquire beneficial ownership of shares representing in excess of fifty percent (50%) of the voting power of the then outstanding shares of capital stock of WNLV.
4
“Regulatory Authority” means: (i) the United States of America; (ii) any state, commonwealth, territory or possession of the United States of America and any political subdivision thereof (including counties, municipalities and the like); (iii) Canada and any other foreign (as to the United States of America) sovereign entity and any political subdivision thereof; or (iv) any agency, authority or instrumentality of any of the foregoing, including any court, tribunal, department, bureau, commission or board.
“Representative” means any director, officer, employee, agent, consultant, advisor or other representative of a Person, including legal counsel, accountants and financial advisors.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations there under.
“Subsidiary” of a specified Person means (a) any Person if securities having ordinary voting power (at the time in question and without regard to the happening of any contingency) to elect a majority of the directors, trustees, managers or other governing body of such Person are held or controlled by the specified Person or a Subsidiary of the specified Person; (b) any Person in which the specified Person and its subsidiaries collectively hold a fifty percent (50%) or greater equity interest; (c) any partnership or similar organization in which the specified Person or subsidiary of the specified Person is a general partner; or (d) any Person the management of which is directly or indirectly controlled by the specified Person and its Subsidiaries through the exercise of voting power, by contract or otherwise.
“Tax” means any U.S. or non U.S. federal, state, provincial, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, intangible property, recording, occupancy, sales, use, transfer, registration, value added minimum, estimated or other tax of any kind whatsoever, including any interest, additions to tax, penalties, fees, deficiencies, assessments, additions or other charges of any nature with respect thereto, whether disputed or not.
“Tax Return” means any return, declaration, report, claim for refund or credit or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“TCG Business” means the business conducted by TCG.
“TCG Common Stock” means the common shares of TCG.
“Treasury Regulations” means regulations promulgated by the U.S. Treasury Department under the Code.
“WNLV Business” means the business conducted by WNLV.
“WNLV Common Stock” means the common shares of WNLV.
“WNLV Securities Filings” means WNLV’s Annual Report on Form 10-K and its quarterly reports on Form 10-Q, and all other reports filed and to be filed with the Commission prior to the Effective Time.
5
ARTICLE
II
THE SHARE EXCHANGE
II.1 Share Exchange. In accordance with and subject to the provisions of this Agreement and the Nevada Corporations, Partnerships and Associations Law Annotated (the “Code”), at the Effective Time, IQI and TCG shall become wholly-owned subsidiaries of WNLV, and WNLV shall be their only shareholder and shall continue in its existence with one owner, WNLV, until a merger, if any. Pursuant to the Share Exchange, (i) Hui is relinquishing all of her 1,000,000 IQI units, constituting all issued and outstanding shares of IQI (the “IQI Shares”), and is acquiring 450,000 shares of WNLV for IQI, representing 2.58% of the outstanding shares of WNLV, and (ii) the TCG Members are relinquishing all of their 10,000 TCG units, constituting all issued and outstanding shares of TCG (the “TCG Shares”), and are acquiring an aggregate of 450,000 shares of WNLV for TCG, representing an aggregate of 2.58%of the outstanding shares of WNLV; WNLV is issuing 900,000 of its shares, and is acquiring the IQI Shares and the TCG Shares; and IQI and TCG are becoming the wholly-owned subsidiaries of WNLV.
II.2 Stock Transfer Books. Effective immediately, the stock transfer books of WNLV shall be closed, and there shall be no further issuance or registration of transfers of shares hereafter on the records of WNLV, until after the completion of the Share Exchange.
II.3 Restriction on Transfer. The Exchange Shares may not be sold, transferred, or otherwise disposed of without registration under the Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Share Exchange Shares or any available exemption from registration under the Act, the Share Exchange Shares must be held indefinitely. The Parties are aware that the Share Exchange Shares may not be sold pursuant to Rule 144 promulgated under the Act unless all of the conditions of that Rule are met. Among the conditions for use of Rule 144 may be the availability of current information to the public about the Surviving Company.
II.4 Restrictive Legend. All certificates representing the Exchange Shares shall contain an appropriate restrictive legend.
II.5 Closing. The closing of the transactions contemplated by this Agreement and the Collateral Documents (the “Closing”) shall take place via conference call at the offices of McMurdo Law Group, LLC, 1185 Avenue of the Americas, 3rd Floor, New York, NY 10036, or at such other location as the parties may agree at 10:00 AM, EST Time on the agreed date, which, shall be concurrent with the signing hereof (the “Closing Date”).
ARTICLE
III
REPRESENTATIONS AND WARRANTIES OF WNLV
WNLV represents and warrants to Hui, Lanius, and Burnett that the statements contained in this ARTICLE III are correct and complete as of the date of this Agreement and, except as provided in Section 7.1, will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this ARTICLE III, except in the case of representations and warranties stated to be made as of the date of this Agreement or as of another date and except for changes contemplated or permitted by this Agreement).
6
III.1 Organization and Qualification. WNLV is a corporation duly organized, validly existing and in good standing under the laws of its respective jurisdiction of organization. WNLV has all requisite power and authority to own, lease and use its assets as they are currently owned, leased and used and to conduct its business as it is currently conducted. WNLV is duly qualified or licensed to do business in and is in good standing in each jurisdiction in which the character of the properties owned, leased or used by it or the nature of the activities conducted by it make such qualification necessary, except any such jurisdiction where the failure to be so qualified or licensed would not have a Material Adverse Effect on WNLV or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of WNLV to perform its obligations under this Agreement or any of the Collateral Documents.
III.2 Capitalization.
(a) The authorized capital stock and other ownership interests of WNLV, a Nevada corporation, consists of 4,500,000,000 common shares of Common Stock, of which 16,510,573 were issued and outstanding as of March 31, 2022. WNLV has 300,000,000 shares of Preferred Stock authorized, with 227,838,680 shares of Series A Preferred Stock outstanding as of March 31, 2022. All of the outstanding WNLV Common Stock and Preferred Stock have been duly authorized and are validly issued, fully paid and non-assessable.
(b) Other than what has been described herein or in WNLV’s SEC Documents, there are no outstanding or authorized options, warrants, purchase rights, preemptive rights or other contracts or commitments that could require WNLV to issue, sell, or otherwise cause to become outstanding any of its capital stock or other ownership interests (collectively “Options”).
(c) All of the issued and outstanding shares of WNLV Common Stock have been duly authorized and are validly issued and outstanding, fully paid and non-assessable and have been issued in compliance with applicable securities laws and other applicable Legal Requirements or transfer restrictions under applicable securities laws.
III.3 Authority and Validity. WNLV has all requisite corporate power to execute and deliver, to perform its obligations under, and to consummate the transactions contemplated by, this Agreement (subject to the approval of WNLV Shareholders as contemplated herein and subject to the receipt of any necessary consents, approvals, authorizations or other matters referred to herein). The execution and delivery by WNLV of, the performance by WNLV of its obligations under, and the consummation by WNLV of the transactions contemplated by, this Agreement have been duly authorized by all requisite action of WNLV (subject to the approval of WNLV Shareholders as contemplated herein). This Agreement has been duly executed and delivered by WNLV and (assuming due execution and delivery by Hui, Lanius, and Burnett and approval by WNLV Shareholders) is the legal, valid and binding obligation of WNLV, enforceable against it in accordance with its terms, except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally and (ii) general equitable principles. Upon the execution and delivery of the Collateral Documents by each Person (other than by Hui, Lanius, and Burnett) that is required by this Agreement to execute, or that does execute, this Agreement or any of the Collateral Documents, and assuming due execution and delivery thereof by Hui, Lanius, and Burnett, the Collateral Documents will be the legal, valid and binding obligations of WNLV, enforceable against WNLV in accordance with their respective terms, except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally and (ii) general equitable principles.
7
III.4 No Breach or Violation. Subject to obtaining the consents, approvals, authorizations, and orders of and making the registrations or filings with or giving notices to Regulatory Authorities and Persons identified herein, the execution, delivery and performance by WNLV of this Agreement and the Collateral Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby in accordance with the terms and conditions hereof and thereof, do not and will not conflict with, constitute a violation or breach of, constitute a default or give rise to any right of termination or acceleration of any right or obligation of WNLV under, or result in the creation or imposition of any Encumbrance upon WNLV, WNLV Assets, WNLV Business or WNLV Common Stock by reason of the terms of (i) the articles of incorporation, by laws or other charter or organizational document of WNLV or any Subsidiary of WNLV, (ii) any material contract, agreement, lease, indenture or other instrument to which WNLV is a party or by or to which WNLV, or the Assets may be bound or subject and a violation of which would result in a Material Adverse Effect on WNLV, (iii) any order, judgment, injunction, award or decree of any arbitrator or Regulatory Authority or any statute, law, rule or regulation applicable to WNLV or (iv) any Permit of WNLV, which in the case of (ii), (iii) or (iv) above would have a Material Adverse Effect on WNLV or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of WNLV to perform its obligations under this Agreement or any of the Collateral Documents.
III.5 Consents and Approvals. Except for requirements described in Schedule 3.5, no consent, approval, authorization or order of, registration or filing with, or notice to, any Regulatory Authority or any other Person is necessary to be obtained, made or given by WNLV in connection with the execution, delivery and performance by WNLV of this Agreement or any Collateral Document or for the consummation by WNLV of the transactions contemplated hereby or thereby, except to the extent the failure to obtain any such consent, approval, authorization or order or to make any such registration or filing would not have a Material Adverse Effect on WNLV or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of WNLV to perform its obligations under this Agreement or any of the Collateral Documents.
III.6 Intellectual Property. WNLV warrants that it has good title to or the right to use all material company intellectual property rights and all material inventions, processes, designs, formulae, trade secrets and know how necessary for the operation of WNLV Business without the payment of any royalty or similar payment.
III.7 Compliance with Legal Requirements. WNLV has operated its business in compliance with all Legal Requirements applicable to WNLV except to the extent the failure to operate in compliance with all material Legal Requirements would not have a Material Adverse Effect on WNLV or Material Adverse Effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents.
III.8 Litigation. There are no outstanding judgments or orders against or otherwise affecting or related to WNLV, WNLV Business or WNLV Assets and there is no action, suit, complaint, proceeding or investigation, judicial, administrative or otherwise, that is pending or, to WNLV’s knowledge, threatened that, if adversely determined, would have a Material Adverse Effect on WNLV or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents, except as noted in the audited Company Financial Statements or documented by WNLV to Hui, Lanius, and Burnett.
8
III.9 Taxes. WNLV has duly and timely filed in proper form all Tax Returns for all Taxes required to be filed with the appropriate Regulatory Authority, and has paid all taxes required to be paid in respect thereof except where such failure would not have a Material Adverse Effect on WNLV, except where, if not filed or paid, the exception(s) have been documented by WNLV to Hui, Lanius, and Burnett.
III.10 Books and Records. The books and records of WNLV accurately and fairly represent WNLV Business and its results of operations in all material respects.
III.11 Brokers or Finders. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by WNLV and/or its Affiliates/Representatives in connection with the transactions contemplated by this Agreement, neither WNLV, nor any of its Affiliates/Representatives have incurred any obligation to pay any brokerage or finder’s fee or other commission in connection with the transaction contemplated by this Agreement.
III.12 Disclosure. No representation or warranty of WNLV in this Agreement or in the Collateral Documents and no statement in any certificate furnished or to be furnished by WNLV pursuant to this Agreement contained, contains or will contain on the date such agreement or certificate was or is delivered, or on the Closing Date, any untrue statement of a material fact, or omitted, omits or will omit on such date to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.
III.13 No Undisclosed Liabilities. WNLV is not subject to any material liability (including unasserted claims), absolute or contingent, which is not shown or which is in excess of amounts shown or reserved for in the balance sheet as of September 30, 2021 other than liabilities of the same nature as those set forth in WNLV Financial Statements and reasonably incurred in the ordinary course of its business after December 31, 2021.
III.14 Absence of Certain Changes. Since December 31, 2021, WNLV has not: (a) suffered any material adverse change in its financial condition, assets, liabilities or business; (b) contracted for or paid any capital expenditures; (c) incurred any indebtedness or borrowed money, issued or sold any debt or equity securities, declared any dividends or discharged or incurred any liabilities or obligations except in the ordinary course of business as heretofore conducted; (d) mortgaged, pledged or subjected to any lien, lease, security interest or other charge or encumbrance any of its properties or assets; (e) paid any material amount on any indebtedness prior to the due date, forgiven or cancelled any material amount on any indebtedness prior to the due date, forgiven or cancelled any material debts or claims or released or waived any material rights or claims; (f) suffered any damage or destruction to or loss of any assets (whether or not covered by insurance); (g) acquired or disposed of any assets or incurred any liabilities or obligations; (h) made any payments to its affiliates or associates or loaned any money to any person or entity; (i) formed or acquired or disposed of any interest in any corporation, partnership, limited liability company, joint venture or other entity; (j) entered into any employment, compensation, consulting or collective bargaining agreement or any other agreement of any kind or nature with any person. Or group, or modified or amended in any respect the terms of any such existing agreement; (k) entered into any other commitment or transaction or experience any other event that relates to or affect in any way this Agreement or to the transactions contemplated hereby, or that has affected, or may adversely affect WNLV Business, operations, assets, liabilities or financial condition; or (1) amended its Articles of Incorporation or By-laws, except as otherwise contemplated herein.
9
III.15 Contracts. A true and complete list of all contracts, agreements, leases, commitments or other understandings or arrangements, written or oral, express or implied, to which WNLV is a party or by which it or any of its property is bound or affected requiring payments to or from, or incurring of liabilities by, WNLV in excess of $100,000 (the “Contracts”). The Company has complied with and performed, in all material respects, all of its obligations required to be performed under and is not in default with respect to any of the Contracts, as of the date hereof, nor has any event occurred which has not been cured which, with or without the giving of notice, lapse of time, or both, would constitute a default in any respect there under. To the best knowledge of WNLV, no other party has failed to comply with or perform, in all material respects, any of its obligations required to be performed under or is in material default with respect to any such Contracts, as of the date hereof, nor has any event occurred which, with or without the giving of notice, lapse of time or both, would constitute a material default in any respect by such party there under. WNLV knows of and has no reason to believe that there are any facts or circumstances which would make a material default by any party to any contract or obligation likely to occur subsequent to the date hereof.
III.16 Permits and Licenses. WNLV has all certificates of occupancy, rights, permits, certificates, licenses, franchises, approvals and other authorizations as are reasonably necessary to conduct its business and to own, lease, use, operate and occupy its assets, at the places and in the manner now conducted and operated, except those the absence of which would not materially adversely affect its business. WNLV has not received any written or oral notice or claim pertaining to the failure to obtain any material permit, certificate, license, approval or other authorization required by any federal, state or local agency or other regulatory body, the failure of which to obtain would materially and adversely affect its business.
III.17 Assets Necessary to Business. WNLV owns or leases all properties and assets, real, personal, and mixed, tangible and intangible, and is a party to all licenses, permits and other agreements necessary to permit it to carry on its business as presently conducted.
III.18 Labor Agreements and Labor Relations. WNLV has no collective bargaining or union contracts or agreements. WNLV is in compliance with all applicable laws respecting employment and employment practices, terms and conditions of employment and wages and hours, and is not engaged in any unfair labor practices; there are no charges of discrimination or unfair labor practice charges” or complaints against WNLV pending or threatened before any governmental or regulatory agency or authority; and, there is no labor strike, dispute, slowdown or stoppage actually pending or threatened against or affecting WNLV.
III.19 Employment Arrangements. WNLV has no employment or consulting agreements or arrangements, written or oral, which are not terminable at the will of WNLV, or any pension, profit-sharing, option, other incentive plan, or any other type of employment benefit plan as defined in ERISA or otherwise, or any obligation to or customary arrangement with employees for bonuses, incentive compensation, vacations, severance pay, insurance or other benefits. No employee of WNLV is in violation of any employment agreement or restrictive covenant.
10
ARTICLE
IV
REPRESENTATIONS AND WARRANTIES OF HUI AND IQI
Hui and IQI represent and warrant to WNLV that the statements contained in this ARTICLE IV are correct and complete as of the date of this Agreement and, except as provided in Section 9.1, will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this ARTICLE IV, except in the case of representations and warranties stated to be made as of the date of this Agreement or as of another date and except for changes contemplated or permitted by the Agreement).
IV.1 Organization and Qualification. IQI have all requisite power and authority to own, lease and use IQI’s assets as they are currently owned, leased and used and to conduct its business as it is currently conducted. IQI is duly qualified or licensed to do business in and are each in good standing in each jurisdiction in which the character of the properties owned, leased or used by it or the nature of the activities conducted by it makes such qualification necessary, except any such jurisdiction where the failure to be so qualified or licensed and in good standing would not have a Material Adverse Effect on IQI or a Material Adverse Effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of WNLV or Hui to perform her obligations under this Agreement or any of the Collateral Documents.
IV.2 Capitalization.
(a) The authorized capital stock of IQI is 1,000,000. All outstanding shares of IQI Common Stock are owned by Hui, consisting of 1,000,000 units. IQI has no shares of Preferred Stock outstanding. All 1,000,000 units are duly issued and outstanding, and have been duly authorized, validly issued and outstanding and fully paid and non-assessable, which shares are exchanged hereby, as above provided.
(b) There are no outstanding or authorized options, warrants, purchase rights, preemptive rights or other contracts or commitments that could require IQI to issue, sell, or otherwise cause to become outstanding any of its capital stock or other ownership interests.
(c) All of the issued and outstanding shares of the IQI units have been duly authorized and are validly issued and outstanding, fully paid and non-assessable and have been issued in compliance with applicable securities laws and other applicable Legal Requirements.
IV.3 Authority and Validity. Hui has all requisite power to execute and deliver to perform her obligations under, and to consummate the transactions contemplated by, this Agreement and the Collateral Documents. The execution and delivery by Hui and the performance by Hui of her obligations under, and the consummation by Hui of the transactions contemplated by, this Agreement and the Collateral Documents have been duly authorized by all requisite action of Hui. This Agreement has been duly executed and delivered (assuming due execution and delivery by Hui) is the legal, valid and binding obligation of Hui, enforceable in accordance with its terms except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally and (ii) general equitable principles. Upon the execution and delivery by Hui of the Collateral Documents to which he is a party, and assuming due execution and delivery thereof by the other parties thereto, the Collateral Documents will be the legal, valid and binding obligations, enforceable in accordance with their respective terms except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally and (ii) general equitable principles.
11
IV.4 No Breach or Violation. Subject to obtaining the consents, approvals, authorizations, and orders of and making the registrations or filings with or giving notices to Regulatory Authorities and Persons identified herein, the execution, delivery and performance by Hui of this Agreement and the Collateral Documents to which she is a party and the consummation of the transactions contemplated hereby and thereby in accordance with the terms and conditions hereof and thereof, do not and will not conflict with, constitute a violation or breach of, constitute a default or give rise to any right of termination or acceleration of any right or obligation of Hui under, or result in the creation or imposition of any Encumbrance upon the property of Hui by reason of the terms of (i) the articles of incorporation, by laws or other charter or organizational document of IQI , (ii) any contract, agreement, lease, indenture or other instrument to which Hui or IQI is a party or by or to which Hui or IQI or its property may be bound or subject and a violation of which would result in a Material Adverse Effect on Hui and/or IQI taken as a whole, (iii) any order, judgment, injunction, award or decree of any arbitrator or Regulatory Authority or any statute, law, rule or regulation applicable to Hui or IQI or (iv) any Permit of IQI, which in the case of (ii), (iii) or (iv) above would have a Material Adverse Effect on IQI or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of Hui or IQI to perform their obligations hereunder or there under.
IV.5 Consents and Approvals. Except for requirements under applicable United States or state securities laws, no consent, approval, authorization or order of, registration or filing with, or notice to, any Regulatory Authority or any other Person is necessary to be obtained, made or given by Hui in connection with the execution, delivery and performance by her of this Agreement or any Collateral Documents or for the consummation by them of the transactions contemplated hereby or thereby, except to the extent the failure to obtain such consent, approval, authorization or order or to make such registration or filings or to give such notice would not have a Material Adverse Effect on IQI or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of Hui to perform her obligations under this Agreement or any of the Collateral Documents.
IV.6 Compliance with Legal Requirements. IQI’s Business has operated in compliance with all material Legal Requirements including, without limitation, the Exchange Act and the Securities Act applicable to IQI, except to the extent the failure to operate in compliance with all material Legal Requirements, would not have a Material Adverse Effect on IQI or a Material Adverse Effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents.
IV.7 Litigation. There are no outstanding judgments or orders against or otherwise affecting or related to IQI, or the business or assets; and there is no action, suit, complaint, proceeding or investigation, judicial, administrative or otherwise, that is pending or, to the best knowledge of Hui, threatened that, that has not been disclosed and if adversely determined, would have a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents.
IV.8 Ordinary Course. Since the date of its most recent balance sheet, there has not been any occurrence, event, incident, action, failure to act or transaction involving IQI, which is reasonably likely, individually or in the aggregate, to have a Material Adverse Effect on IQI.
12
IV.9 Assets and Liabilities. As of the date of this Agreement, IQI has no Assets or Liability, except for the Assets and Liabilities disclosed in the balance sheet disclosed to WNLV through the date hereof.
IV.10 Taxes. IQI has duly and timely filed in proper form all Tax Returns for all Taxes required to be filed with the appropriate Governmental Authority, except where such failure to file would not have a Material Adverse Effect on IQI.
IV.11 Books and Records. The books and records of IQI accurately and fairly represent the IQI Business and its results of operations in all material respects. All accounts receivable and inventory of the IQI Business are reflected properly on such books and records in all material respects.
IV.12 Financial and Other Information.
(a) At the cost of WNLV, two years of audited historical financial statements of IQI, and nine months of unaudited financials, will be prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby (except as may be indicated in the notes thereto), and present fairly the financial condition of IQI and its results of operations as of the dates and for the periods indicated, subject in the case of the unaudited financial statements only to normal year-end adjustments (none of which will be material in amount) and the omission of footnotes.
(b) To the knowledge of current management, IQI’s financials do not contain (directly or by incorporation by reference) any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein (or incorporated therein by reference), in light of the circumstances under which they were or will be made, not misleading.
IV.13 Brokers or Finders. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by IQI and/or its Affiliates/Representatives in connection with the transactions contemplated by this Agreement, neither IQI, nor any of its Affiliates/Representatives have incurred any obligation to pay any brokerage or finder’s fee or other commission in connection with the transaction contemplated by this Agreement.
IV.14 Disclosure. No representation or warranty of Hui in this Agreement or in the Collateral Documents and no statement in any certificate furnished or to be furnished by Hui pursuant to this Agreement contained, contains or will contain on the date such agreement or certificate was or is delivered, or on the Closing Date, any untrue statement of a material fact, or omitted, omits or will omit on such date to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.
IV.15 Filings. Neither IQI nor Hui is subject to filings required by the Securities Act of 1933, as amended, and the Exchange Act of 1934, as amended. Once WNLV acquires control of IQI, IQI and Hui will provide WNLV with all required information and documents necessary for WNLV to make filings required to be made under such statutes and no such information or documents will contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, not misleading.
13
IV.16 Conduct of Business. Prior to the Closing Date, IQI shall conduct its business in the normal course, and shall not sell, pledge, or assign any assets, without the prior written approval of WNLV, except in the regular course of business. Except as otherwise provided herein, IQI shall not amend its Articles of Incorporation or By-Laws, declare dividends, redeem or sell stock or other securities, acquire or dispose of fixed assets, change employment terms, enter into any material or long-term contract, guarantee obligations of any third party, settle or discharge any material balance sheet receivable for less than its stated amount, pay more on any liability than its stated amount or enter into any other transaction other than in the regular course of business.
ARTICLE
V
REPRESENTATIONS AND WARRANTIES OF THE TCG MEMBERS, AND TCG
The TCG Members, and TCG represent and warrant to WNLV that the statements contained in this ARTICLE IV are correct and complete as of the date of this Agreement and, except as provided in Section 9.1, will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this ARTICLE V, except in the case of representations and warranties stated to be made as of the date of this Agreement or as of another date and except for changes contemplated or permitted by the Agreement).
V.1 Organization and Qualification. TCG have all requisite power and authority to own, lease and use TCG’s assets as they are currently owned, leased and used and to conduct its business as it is currently conducted. TCG is duly qualified or licensed to do business in and are each in good standing in each jurisdiction in which the character of the properties owned, leased or used by it or the nature of the activities conducted by it makes such qualification necessary, except any such jurisdiction where the failure to be so qualified or licensed and in good standing would not have a Material Adverse Effect on TCG or a Material Adverse Effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of WNLV or the TCG Members to perform their obligations under this Agreement or any of the Collateral Documents.
V.2 Capitalization.
(a) The authorized capital stock of TCG is 10,000. All outstanding shares of TCG Common Stock are owned by the TCG Members, consisting of 10,000 units. TCG has no shares of Preferred Stock outstanding. All 10,000 units are duly issued and outstanding, and have been duly authorized, validly issued and outstanding and fully paid and non-assessable, which shares are exchanged hereby, as above provided.
(b) There are no outstanding or authorized options, warrants, purchase rights, preemptive rights or other contracts or commitments that could require TCG to issue, sell, or otherwise cause to become outstanding any of its capital stock or other ownership interests.
(c) All of the issued and outstanding shares of the TCG units have been duly authorized and are validly issued and outstanding, fully paid and non-assessable and have been issued in compliance with applicable securities laws and other applicable Legal Requirements.
14
V.3 Authority and Validity. The TCG Members have all requisite power to execute and deliver to perform their obligations under, and to consummate the transactions contemplated by, this Agreement and the Collateral Documents. The execution and delivery by the TCG Members and the performance by the TCG Members of their obligations under, and the consummation by the TCG Members of the transactions contemplated by, this Agreement and the Collateral Documents have been duly authorized by all requisite action of the TCG Members. This Agreement has been duly executed and delivered (assuming due execution and delivery by the TCG Members) is the legal, valid and binding obligation of the TCG Members, enforceable in accordance with its terms except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally and (ii) general equitable principles. Upon the execution and delivery by the TCG Members of the Collateral Documents to which he is a party, and assuming due execution and delivery thereof by the other parties thereto, the Collateral Documents will be the legal, valid and binding obligations, enforceable in accordance with their respective terms except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally and (ii) general equitable principles.
V.4 No Breach or Violation. Subject to obtaining the consents, approvals, authorizations, and orders of and making the registrations or filings with or giving notices to Regulatory Authorities and Persons identified herein, the execution, delivery and performance by the TCG Members of this Agreement and the Collateral Documents to which they are parties and the consummation of the transactions contemplated hereby and thereby in accordance with the terms and conditions hereof and thereof, do not and will not conflict with, constitute a violation or breach of, constitute a default or give rise to any right of termination or acceleration of any right or obligation of the TCG Members under, or result in the creation or imposition of any Encumbrance upon the property of the TCG Members by reason of the terms of (i) the articles of incorporation, by laws or other charter or organizational document of TCG , (ii) any contract, agreement, lease, indenture or other instrument to which any of TCG Members or TCG is a party or by or to which TCG Members or TCG or its property may be bound or subject and a violation of which would result in a Material Adverse Effect on the TCG Members, and/or TCG taken as a whole, (iii) any order, judgment, injunction, award or decree of any arbitrator or Regulatory Authority or any statute, law, rule or regulation applicable to the TCG Members or TCG or (iv) any Permit of TCG, which in the case of (ii), (iii) or (iv) above would have a Material Adverse Effect on TCG or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of the TCG Members or TCG to perform their obligations hereunder or there under.
V.5 Consents and Approvals. Except for requirements under applicable United States or state securities laws, no consent, approval, authorization or order of, registration or filing with, or notice to, any Regulatory Authority or any other Person is necessary to be obtained, made or given by the TCG Members in connection with the execution, delivery and performance by them of this Agreement or any Collateral Documents or for the consummation by them of the transactions contemplated hereby or thereby, except to the extent the failure to obtain such consent, approval, authorization or order or to make such registration or filings or to give such notice would not have a Material Adverse Effect on TCG or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of the TCG Members to perform their obligations under this Agreement or any of the Collateral Documents.
15
V.6 Compliance with Legal Requirements. TCG’s Business has operated in compliance with all material Legal Requirements including, without limitation, the Exchange Act and the Securities Act applicable to TCG, except to the extent the failure to operate in compliance with all material Legal Requirements, would not have a Material Adverse Effect on TCG or a Material Adverse Effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents.
V.7 Litigation. There are no outstanding judgments or orders against or otherwise affecting or related to TCG, or the business or assets; and there is no action, suit, complaint, proceeding or investigation, judicial, administrative or otherwise, that is pending or, to the best knowledge of the TCG Members, threatened that, that has not been disclosed and if adversely determined, would have a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents.
V.8 Ordinary Course. Since the date of its most recent balance sheet, there has not been any occurrence, event, incident, action, failure to act or transaction involving TCG, which is reasonably likely, individually or in the aggregate, to have a Material Adverse Effect on TCG.
V.9 Assets and Liabilities. As of the date of this Agreement, TCG has no Assets or Liability, except for the Assets and Liabilities disclosed in the balance sheet disclosed to WNLV through the date hereof.
V.10 Taxes. TCG has duly and timely filed in proper form all Tax Returns for all Taxes required to be filed with the appropriate Governmental Authority, except where such failure to file would not have a Material Adverse Effect on TCG.
V.11 Books and Records. The books and records of TCG accurately and fairly represent the TCG Business and its results of operations in all material respects. All accounts receivable and inventory of the TCG Business are reflected properly on such books and records in all material respects.
V.12 Financial and Other Information.
(a) At the cost of WNLV, two years of audited historical financial statements of TCG, and nine months of unaudited financials, will be prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby (except as may be indicated in the notes thereto), and present fairly the financial condition of TCG and its results of operations as of the dates and for the periods indicated, subject in the case of the unaudited financial statements only to normal year-end adjustments (none of which will be material in amount) and the omission of footnotes.
(b) To the knowledge of current management, TCG’s financials do not contain (directly or by incorporation by reference) any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein (or incorporated therein by reference), in light of the circumstances under which they were or will be made, not misleading.
V.13 Brokers or Finders. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by TCG and/or its Affiliates/Representatives in connection with the transactions contemplated by this Agreement, neither TCG, nor any of its Affiliates/Representatives have incurred any obligation to pay any brokerage or finder’s fee or other commission in connection with the transaction contemplated by this Agreement.
16
V.14 Disclosure. No representation or warranty of the TCG Members in this Agreement or in the Collateral Documents and no statement in any certificate furnished or to be furnished by the TCG Members pursuant to this Agreement contained, contains or will contain on the date such agreement or certificate was or is delivered, or on the Closing Date, any untrue statement of a material fact, or omitted, omits or will omit on such date to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.
V.15 Filings. Neither TCG nor the TCG Members are subject to filings required by the Securities Act of 1933, as amended, and the Exchange Act of 1934, as amended. Once WNLV acquires control of TCG, TCG will provide WNLV with all required information and documents necessary for WNLV to make filings required to be made under such statutes and no such information or documents will contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, not misleading.
V.16 Conduct of Business. Prior to the Closing Date, TCG shall conduct its business in the normal course, and shall not sell, pledge, or assign any assets, without the prior written approval of WNLV, except in the regular course of business. Except as otherwise provided herein, TCG shall not amend its Articles of Incorporation or By-Laws, declare dividends, redeem or sell stock or other securities, acquire or dispose of fixed assets, change employment terms, enter into any material or long-term contract, guarantee obligations of any third party, settle or discharge any material balance sheet receivable for less than its stated amount, pay more on any liability than its stated amount or enter into any other transaction other than in the regular course of business.
ARTICLE
VI
COVENANTS OF WNLV
Between the date of this Agreement and the Closing Date:
VI.1 Additional Information. WNLV shall provide to Hui, Lanius, and Burnett and their Representatives such financial, operating and other documents, data and information relating to WNLV, WNLV Business and WNLV Assets and Liabilities, as Hui, Lanius, and Burnett or their Representatives may reasonably request. In addition, WNLV shall take all action necessary to enable Hui, Lanius, and Burnett and their Representatives to review, inspect and review WNLV Assets, WNLV Business and Liabilities of WNLV and discuss them with WNLV’s officers, employees, independent accountants, customers, licensees, and counsel. Not withstanding any investigation that Hui, Lanius, and Burnett may conduct of WNLV, WNLV Business, WNLV Assets and the Liabilities of WNLV, Hui, Lanius, and Burnett may fully rely on WNLV’s warranties, covenants and indemnities set forth in this Agreement.
VI.2 Consents and Approvals. As soon as practicable after execution of this Agreement, WNLV shall use commercially reasonable efforts to obtain any necessary consent, approval, authorization or order of, make any registration or filing with or give any notice to, any Regulatory Authority or Person as is required to be obtained, made or given by WNLV to consummate the transactions contemplated by this Agreement and the Collateral Documents.
17
VI.3 No Solicitations. From and after the date of this Agreement until the Effective Time or termination of this Agreement pursuant to ARTICLE X, WNLV will not nor will it authorize or permit any of its officers, directors, affiliates or employees or any investment banker, attorney or other advisor or representative retained by it, directly or indirectly, (i) solicit or initiate the making, submission or announcement of any other acquisition proposal, (ii) participate in any discussions or negotiations regarding, or furnish to any person any non-public information with respect to any other acquisition proposal, (iii) engage in discussions with any Person with respect to any other acquisition proposal, except as to the existence of these provisions, (iv) approve, endorse or recommend any other acquisition proposal or (v) enter into any letter of intent or similar document or any contract agreement or commitment contemplating or otherwise relating to any other acquisition proposal.
VI.4 Notification of Adverse Change. WNLV shall promptly notify Hui, Lanius, and Burnett of any material adverse change in the condition (financial or otherwise) of WNLV.
VI.5 Notification of Certain Matters. WNLV shall promptly notify Hui, Lanius, and Burnett of any fact, event, circumstance or action known to it that is reasonably likely to cause WNLV to be unable to perform any of its covenants contained herein or any condition precedent in ARTICLE VII not to be satisfied, or that, if known on the date of this Agreement, would have been required to be disclosed to Hui, Lanius, and Burnett pursuant to this Agreement or the existence or occurrence of which would cause any of WNLV’s representations or warranties under this Agreement not to be correct and/or complete. WNLV shall give prompt written notice to Hui, Lanius, and Burnett of any adverse development causing a breach of any of the representations and warranties in ARTICLE III as of the date made.
VI.6 The Company Disclosure Schedule. For purposes of determining the satisfaction of any of the conditions to the obligations of Hui, Lanius, and Burnett in ARTICLE VII, WNLV disclosures shall be deemed to include only (a) the information contained therein on the date of this Agreement and (b) information provided by written supplements delivered prior to Closing by WNLV that (i) are accepted in writing by Hui, Lanius, and Burnett, or (ii) reflect actions taken or events occurring after the date hereof prior to Closing.
VI.7 State Statutes. WNLV and its Board of Directors shall, if any state takeover statute or similar law is or becomes applicable to the Share Exchange, this Agreement or any of the transactions contemplated by this Agreement, use all reasonable efforts to ensure that the Share Exchange and the other transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to minimize the effect of such statute or regulation on the Share Exchange, this Agreement and the transactions contemplated hereby.
VI.8 Conduct of Business. Prior to the Closing Date, WNLV shall conduct its business in the normal course, and shall not sell, pledge, or assign any assets, without the prior written approval of Hui, Lanius, and Burnett, except in the regular course of business. Except as otherwise provided herein, WNLV shall not amend its Articles of Incorporation or Bylaws, declare dividends, redeem or sell stock or other securities, acquire or dispose of fixed assets, change employment terms, enter into any material or long-term contract, guarantee obligations of any third party, settle or discharge any material balance sheet receivable for less than its stated amount, pay more on any liability than its stated amount, or enter into any other transaction other than in the regular course of business.
18
VI.9 Securities Filings. Until closing, WNLV will timely file all reports and other documents relating to the operation of WNLV required to be filed with the Securities and Exchange Commission, which reports and other documents do not and will not contain any misstatement of a material fact, and do not and will not omit any material fact necessary to make the statements therein not misleading.
VI.10 Election to WNLV’s Board of Directors. At the Effective Time of the Share Exchange, WNLV shall take all steps necessary so that there will be at least one (1) continuing director.
ARTICLE
VII
COVENANTS OF HUI, LANIUS, AND BURNETT
Between the date of this Agreement and the Closing Date,
VII.1 Additional Information. Hui, Lanius, and Burnett shall provide to WNLV and its Representatives such financial, operating and other documents, data and information relating to(i) IQI, the IQI Business and the IQI Assets and the Liabilities of IQI, and/or (ii) TCG, the TCG Business and the TCG Assets and the Liabilities of TCG as WNLV or its Representatives may reasonably request. In addition, subject to prior written notice, during normal business hours, Hui, Lanius, and Burnett shall take all action necessary to enable WNLV and its Representatives to review and inspect the (A) IQI Assets, the IQI Business and the Liabilities of IQI, and/or (B) TCG Assets, the TCG Business and the Liabilities of TCG and discuss them with WNLV’s officers, employees, independent accountants and counsel. Notwithstanding any investigation that WNLV may conduct of (i) IQI, the IQI Business, the IQI Assets and the Liabilities of the IQI, or (ii) TCG, the TCG Business, the TCG Assets and the Liabilities of the TCG, WNLV may fully rely on the Hui’s, Lanius’, and Burnett’s warranties, covenants and indemnities set forth in this Agreement.
VII.2 No Solicitations. From and after the date of this Agreement until the Effective Time or termination of this Agreement pursuant to ARTICLE X, Hui, Lanius, and Burnett will not nor will it authorize or permit any of IQI’s or TCG’s officers, directors, affiliates or employees or any investment banker, attorney or other advisor or representative retained by it, directly or indirectly, with respect to the IQI Assets and TCG assets (i) solicit or initiate the making, submission or announcement of any other acquisition proposal regarding TCG or IQI, (ii) participate in any discussions or negotiations regarding, or furnish to any person any non-public information with respect to any other acquisition proposal regarding TCG or IQI , (iii) engage in discussions with any Person with respect to any other acquisition proposal, except as to the existence of these provisions, (iv) approve, endorse or recommend any other acquisition proposal of TCG or IQI or (v) enter into any letter of intent or similar document or any contract agreement or commitment contemplating or otherwise relating to any other acquisition proposal of TCG or IQI.
VII.3 Notification of Adverse Change. Hui, Lanius, or Burnett, as applicable shall promptly notify WNLV of any material adverse change in the condition (financial or otherwise) of IQI or TCG.
VII.4 Consents and Approvals. As soon as practicable after execution of this Agreement, Hui, Lanius, and Burnett shall use their commercially reasonable efforts to obtain any necessary consent, approval, authorization or order of, make any registration or filing with or give notice to, any Regulatory Authority or Person as is required to be obtained, made or given by Hui, Lanius, and Burnett to consummate the transactions contemplated by this Agreement and the Collateral Documents.
19
VII.5 Notification of Certain Matters. Hui, Lanius, Burnett, as applicable, shall promptly notify WNLV of any fact, event, circumstance or action known to it that is reasonably likely to cause IQI or TCG to be unable to perform any of its covenants contained herein or any condition precedent if not to be satisfied, or that, if known on the date of this Agreement, would have been required to be disclosed to WNLV pursuant to this Agreement or the existence or occurrence of which would cause Hui’s, Lanius’, and Burnett’s representations or warranties under this Agreement not to be correct and/or complete. Hui, Lanius, and Burnett shall give prompt written notice to WNLV of any adverse development causing a breach of any of the representations and warranties in ARTICLE IV or V.
VII.6 Audited Financial Statements. Prior to Closing, Hui, Lanius, and Burnett shall provide WNLV with audited historical financial statements of IQI and TCG, as applicable, for its last two calendar years, of prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby (except as may be indicated in the notes thereto), and presenting fairly the financial condition of IQI and TCG and their results of operations as of the dates and for the periods indicated, subject only to normal year-end adjustments (none of which will be material in amount) and the omission of footnotes.
ARTICLE
VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PARTIES
All obligations of the Parties under this Agreement shall be subject to the fulfillment at or prior to Closing of each of the following conditions, it being understood that the Parties may, in their sole discretion, to the extent permitted by applicable Legal Requirements, waive any or all of such conditions in whole or in part.
VIII.1 Accuracy of Representations. All representations and warranties of WNLV contained in this Agreement, the Collateral Documents and any certificate delivered by any of WNLV at or prior to Closing shall be, if specifically qualified by materiality, true in all respects and, if not so qualified, shall be true in all material respects, in each case on and as of the Closing Date with the same effect as if made on and as of the Closing Date, except for representations and warranties expressly stated to be made as of the date of this Agreement or as of another date other than the Closing Date and except for changes contemplated or permitted by this Agreement.
VIII.2 Covenants. WNLV shall, in all material respects, have performed and complied with each of the covenants, obligations and agreements contained in this Agreement and the Collateral Documents that are to be performed or complied with by them at or prior to Closing.
VIII.3 Consents and Approvals. All consents, approvals, permits, authorizations and orders required to be obtained from, and all registrations, filings and notices required to be made with or given to, any Regulatory Authority or Person as provided herein.
VIII.4 Delivery of Documents. WNLV shall have delivered, or caused to be delivered, to Hui, Lanius, and Burnett the following documents:
(i) Copies of WNLV articles of incorporation and by laws and certified resolutions of the board of directors of WNLV authorizing the execution of this Agreement and the Collateral Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby.
20
(ii) Such other documents and instruments as Hui, Lanius, and Burnett may reasonably request: (A) to evidence the accuracy of WNLV’s representations and warranties under this Agreement, the Collateral Documents and any documents, instruments or certificates required to be delivered hereunder; (B) to evidence the performance by WNLV of, or the compliance by WNLV with, any covenant, obligation, condition and agreement to be performed or complied with by WNLV under this Agreement and the Collateral Documents; or (C) to otherwise facilitate the consummation or performance of any of the transactions contemplated by this Agreement and the Collateral Documents.
VIII.5 No Material Adverse Change. Since the date hereof, there shall have been no material adverse change in WNLV Assets, WNLV Business or the financial condition or operations of WNLV, taken as a whole.
ARTICLE
IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF SKY AND WNLV
All obligations of Sky and WNLV under this Agreement shall be subject to the fulfillment at or prior to Closing of the following conditions, it being understood that WNLV may, in its sole discretion, to the extent permitted by applicable Legal Requirements, waive any or all of such conditions in whole or in part.
IX.1 Accuracy of Representations. All representations and warranties of TCG, IQI, Hui, Lanius, and Burnett contained in this Agreement and the Collateral Documents and any other document, instrument or certificate delivered by TCG, IQI, Hui, Lanius, and Burnett at or prior to the Closing shall be, if specifically qualified by materiality, true and correct in all respects and, if not so qualified, shall be true and correct in all material respects, in each case on and as of the Closing Date with the same effect as if made on and as of the Closing Date, except for representations and warranties expressly stated to be made as of the date of this Agreement or as of another date other than the Closing Date and except for changes contemplated or permitted by this Agreement.
IX.2 Covenants. TCG, IQI, Hui, Lanius, and Burnett shall, in all material respects, have performed and complied with each obligation, agreement, covenant and condition contained in this Agreement and the Collateral Documents and required by this Agreement and the Collateral Documents to be performed or complied with by TCG, IQI, Hui, Lanius, and Burnett at or prior to Closing.
IX.3 Consents and Approvals. All consents, approvals, authorizations and orders required to be obtained from, and all registrations, filings and notices required to be made with or given to, any Regulatory Authority or Person as provided herein.
IX.4 Delivery of Documents. TCG, IQI, Hui, Lanius, and Burnett shall have executed and delivered, or caused to be executed and delivered, to WNLV the following documents:
Documents and instruments as WNLV may reasonably request: (A) to evidence the accuracy of the representations and warranties of TCG, IQI, Hui, Lanius, and Burnett under this Agreement and the Collateral Documents and any documents, instruments or certificates required to be delivered hereunder; (B) to evidence the performance by TCG, IQI, Hui, Lanius, and Burnett of, or the compliance by TCG, IQI, Hui, Lanius, and Burnett with, any covenant, obligation, condition and agreement to be performed or complied with by TCG, IQI, Hui, Lanius, and Burnett under this Agreement and the Collateral Documents; or (C) to otherwise facilitate the consummation or performance of any of the transactions contemplated by this Agreement and the Collateral Documents.
21
IX.5 No Material Adverse Change. There shall have been no material adverse change in the business, financial condition or operations of IQI and TCG taken as a whole.
IX.6 No Litigation. No action, suit or proceeding shall be pending or threatened by or before any Regulatory Authority and no Legal Requirement shall have been enacted, promulgated or issued or deemed applicable to any of the transactions contemplated by this Agreement and the Collateral Documents that would: (i) prevent consummation of any of the transactions contemplated by this Agreement and the Collateral Documents; (ii) cause any of the transactions contemplated by this Agreement and the Collateral Documents to be rescinded following consummation; or (iii) have a Material Adverse Effect on IQI and TCG.
ARTICLE
X
INDEMNIFICATION
X.1 Indemnification by WNLV. WNLV shall indemnify, defend and hold harmless (i) Hui, Lanius, and Burnett, (ii) any of Hui’s, Lanius’, and Burnett’s assigns and successors in interest to WNLV Shares, and (iii) each of their respective shareholders, members, partners, directors, officers, managers, employees, agents, attorneys and representatives, from and against any and all Losses which may be incurred or suffered by any such party and which may arise out of or result from (A) any breach of any material representation, warranty, covenant or agreement of WNLV contained in this Agreement, or (B) the actions of any Regulatory Authority, including but not limited to the Commission. All claims to be assorted hereunder must be made for the first anniversary of the Closing.
X.2 Indemnification by Hui, Lanius, and Burnett. TCG, IQI, Hui, Lanius, and Burnett shall, jointly and severally, indemnify, defend and hold harmless WNLV from and against any and all Losses which may be incurred or suffered by any such party hereto and which may arise out of or result from any uncured, material breach of any material representation, warranty, covenant or agreement of Hui, Lanius, and Burnett contained in this Agreement. All claims to be assorted hereunder must be made for the first anniversary of the Closing.
X.3 Notice to Indemnifying Party. If any party (the “Indemnified Party”) receives notice of any claim or other commencement of any action or proceeding with respect to which any other party (or parties) (the “Indemnifying Party”) is obligated to provide indemnification pursuant to Sections 9.1 or 9.2, the Indemnified Party shall promptly give the Indemnifying Party written notice thereof, which notice shall specify in reasonable detail, if known, the amount or an estimate of the amount of the liability arising here from and the basis of the claim. Such notice shall be a condition precedent to any liability of the Indemnifying Party for indemnification hereunder, but the failure of the Indemnified Party to give prompt notice of a claim shall not adversely affect the Indemnified Party’s right to indemnification hereunder unless the defense of that claim is materially prejudiced by such failure. The Indemnified Party shall not settle or compromise any claim by a third party for which it is entitled to indemnification hereunder without the prior written consent of the Indemnifying Party (which shall not be unreasonably withheld or delayed) unless suit shall have been instituted against it and the Indemnifying Party shall not have taken control of such suit after notification thereof as provided in Section 10.4.
22
X.4 Defense by Indemnifying Party. In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any claim or legal proceeding by a Person who is not a party to this Agreement, the Indemnifying Party at its sole cost and expense may, upon written notice to the Indemnified Party, assume the defense of any such claim or legal proceeding (i) if it acknowledges to the Indemnified Party in writing its obligations to indemnify the Indemnified Party with respect to all elements of such claim (subject to any limitations on such liability contained in this Agreement) and (ii) if it provides assurances, reasonably satisfactory to the Indemnified Party, that it will be financially able to satisfy such claims in full if the same are decided adversely. If the Indemnifying Party assumes the defense of any such claim or legal proceeding, it may use counsel of its choice to prosecute such defense, subject to the approval of such counsel by the Indemnified Party, which approval shall not be unreasonably withheld or delayed. The Indemnified Party shall be entitled to participate in (but not control) the defense of any such action, with its counsel and at its own expense; provided, however, that if the Indemnified Party, in its sole discretion, determines that there exists a conflict of interest between the Indemnifying Party (or any constituent party thereof) and the Indemnified Party, the Indemnified Party (or any constituent party thereof) shall have the right to engage separate counsel, the reasonable costs and expenses of which shall be paid by the Indemnified Party. If the Indemnifying Party assumes the defense of any such claim or legal proceeding, the Indemnifying Party shall take all steps necessary to pursue the resolution thereof in a prompt and diligent manner. The Indemnifying Party shall be entitled to consent to a settlement of, or the stipulation of any judgment arising from, any such claim or legal proceeding, with the consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed; provided, however, that no such consent shall be required from the Indemnified Party if (i) the Indemnifying Party pays or causes to be paid all Losses arising out of such settlement or judgment concurrently with the effectiveness thereof (as well as all other Losses theretofore incurred by the Indemnified Party which then remain unpaid or unreimbursed), (ii) in the case of a settlement, the settlement is conditioned upon a complete release by the claimant of the Indemnified Party and (iii) such settlement or judgment does not require the encumbrance of any asset of the Indemnified Party or impose any restriction upon its conduct of business.
ARTICLE
XI
TERMINATION
XI.1 Termination. This Agreement may be terminated, and the transactions contemplated hereby may be abandoned, at any time prior to it being fully executed, or thereafter:
(a) by mutual written agreement of Hui, Lanius, and Burnett and WNLV hereto duly authorized by action taken by or on behalf of the respective Boards of Directors; or
(b) by either WNLV or Hui, Lanius, and Burnett upon notification to the non-terminating party by the terminating party:
(i) if the terminating party is not in material breach of its obligations under this Agreement and there has been a material breach of any representation, warranty, covenant or agreement on the part of the non-terminating party set forth in this Agreement such that the conditions will not be satisfied; provided, however, that if such breach is curable by the non-terminating party and such cure is reasonably likely to be completed prior to the date specified in Section 11.1(b)(i), then, for so long as the non-terminating party continues to use commercially reasonable efforts to effect and cure, the terminating party may not terminate pursuant to this Section 11.1(b)(i); or
23
(ii) if any court of competent jurisdiction or other competent Governmental or Regulatory Authority shall have issued an order making illegal or otherwise permanently restricting, preventing or otherwise prohibiting the Share Exchange and such order shall have become final.
(c) Effect of Termination. If this Agreement is validly terminated by either WNLV or Hui, Lanius, and Burnett pursuant to Section 11.1, this Agreement will forthwith become null and void and there will be no liability or obligation on the part of the parties hereto, except that nothing contained herein shall relieve any party hereto from liability for willful breach of its representations, warranties, covenants or agreements contained in this Agreement.
ARTICLE
XII
MISCELLANEOUS
XII.1 Parties Obligated and Benefited. This Agreement shall be binding upon the Parties and their respective successors by operation of law and shall inure solely to the benefit of the Parties and their respective successors by operation of law, and no other Person shall be entitled to any of the benefits conferred by this Agreement. Without the prior written consent of the other Party, no Party may assign this Agreement or the Collateral Documents or any of its rights or interests or delegate any of its duties under this Agreement or the Collateral Documents.
XII.2 Publicity. The initial press release and/or Form 8-K shall be a joint press release and thereafter WNLV and Hui, Lanius, and Burnett each shall consult with each other prior to issuing any press releases or otherwise making public announcements with respect to the Share Exchange and the other transactions contemplated by this Agreement and prior to making any filings with any third party and/or any Regulatory Authorities (including any national securities inter dealer quotation service) with respect thereto, except as may be required by law or by obligations pursuant to any listing agreement with or rules of any national securities inter dealer quotation service.
XII.3 Notices. Any notices and other communications required or permitted hereunder shall be in writing and shall be effective upon delivery by hand or upon receipt if sent by certified or registered mail (postage prepaid and return receipt requested) or by a nationally recognized overnight courier service (appropriately marked for overnight delivery) or upon transmission if sent by telex or facsimile (with request for immediate confirmation of receipt in a manner customary for communications of such respective type and with physical delivery of the communication being made by one or the other means specified in this Section as promptly as practicable thereafter). Notices shall be addressed as follows:
| If to IQI: | Lim Khiow Hui
1055 East Colorado Boulevard, Suite 500, Pasadena, California 91106, United States. | |
| If to TCG: | Joseph Lanius, Lim Khiow Hui, Nicholas Burnett.
8383 Wilshire Blvd, Suite 255, Beverly Hills, CA 90211 | |
| If to WNLV: | Wan Nyuk Ming
50 West Liberty Street, Suite 880 Reno NV 89501 |
24
XII.4 Address Change. Any Party may change the address to which notices are required to be sent by giving notice of such change in the manner provided in this Section.
XII.5 Attorneys’ Fees. In the event of any action or suit based upon or arising out of any alleged breach by any Party of any representation, warranty, covenant or agreement contained in this Agreement or the Collateral Documents, the prevailing Party shall be entitled to recover reasonable attorneys’ fees and other costs of such action or suit from the other Party.
XII.6 Headings. The Article and Section headings of this Agreement are for convenience only and shall not constitute a part of this Agreement or in any way affect the meaning or interpretation thereof.
XII.7 Choice of Law. This Agreement and the rights of the Parties under it shall be governed by and construed in all respects in accordance with the laws of the State of Nevada, without giving effect to any choice of law provision or rule (whether of Saskatchewan, Canada or any other jurisdiction).
XII.8 Rights Cumulative. All rights and remedies of each of the Parties under this Agreement shall be cumulative, and the exercise of one or more rights or remedies shall not preclude the exercise of any other right or remedy available under this Agreement or applicable law.
XII.9 Further Actions. The Parties shall execute and deliver to each other, from time to time at or after Closing, for no additional consideration and at no additional cost to the requesting party, such further assignments, certificates, instruments, records, or other documents, assurances or things as may be reasonably necessary to give full effect to this Agreement and to allow each party fully to enjoy and exercise the rights accorded and acquired by it under this Agreement.
XII.10 Time of the Essence. Time is of the essence under this Agreement. If the last day permitted for the giving of any notice or the performance of any act required or permitted under this Agreement falls on a day which is not a Business Day, the time for the giving of such notice or the performance of such act shall be extended to the next succeeding Business Day.
XII.11 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
XII.12 Entire Agreement. This Agreement (including the Exhibits, disclosures made as to WNLV, and any other documents, instruments and certificates referred to herein, which are incorporated in and constitute a part of this Agreement) contains the entire agreement of the Parties.
XII.13 Survival of Representations and Covenants. Notwithstanding any right of Hui, Lanius, and Burnett to fully investigate the affairs of WNLV and notwithstanding any knowledge of facts determined or determinable by Hui, Lanius, and Burnett pursuant to such investigation or right of investigation, Hui, Lanius, and Burnett shall have the right to rely fully upon the representations, warranties, covenants and agreements of WNLV contained in this Agreement. Each representation, warranty, covenant and agreement of WNLV contained herein shall survive the execution and delivery of this Agreement and the Closing and shall thereafter terminate and expire on the first anniversary of the Closing Date unless, prior to such date, Hui, Lanius, and Burnett has delivered to WNLV Shareholders a written notice of a claim with respect to such representation, warranty, covenant or agreement.
25
IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of the day and year first above written.
Dated: May 16, 2022
| Winvest Group Ltd. | ||
| By: | /s/ Wan Nyuk Ming | |
| Name: | Wan Nyuk Ming | |
| Title: | Chairman | |
| Wan Nyuk Ming | ||
| /s/ Wan Nyuk Ming | ||
| Wan Nyuk Ming | ||
| IQI Media, Inc. | ||
| By: | Lim Khiow Hui | |
| Name: | Lim Khiow Hui | |
| Title: | Founder | |
| /s/ Lim Khiow Hui | ||
| Lim Khiow Hui | ||
| The Catalyst Group Entertainment, LLC | ||
| By: | /s/ Joseph Lanius | |
| Name: | Joseph Lanius | |
| Title: | Founder | |
| /s/ Joseph Lanius | ||
| Joseph Lanius | ||
| /s/ Lim Khiow Hui | ||
| Lim Khiow Hui | ||
| /s/ Nicholas Burnett | ||
| Nicholas Burnett | ||
26
EXHIBIT A
| Lim Khiow Hui- | 450,000 shares of common stock of WNLV for IQI; |
| Lim Khiow Hui- | 150,000 shares of common stock of WNLV for TCG; |
| Joseph Lanius- | 150,000 shares of common stock of WNLV for TCG; |
| Nicholas Burnett- | 150,000 shares of common stock of WNLV for TCG; |
A-1