PURCHASE AND SALE AGREEMENT
This Purchase Agreement (the "Agreement") is made, entered into and
effective the 6th day of April 1999, between and among ▇▇▇▇▇.▇▇▇, Inc, a
Delaware corporation having an office at One Lawson, Lane, Third Floor,
Burlington, Vermont 05402 (the "Company"), and ▇▇▇▇▇▇▇▇▇▇▇ International
Limited, a corporation organized under the laws of the Commonwealth of the
Bahamas and having an office at c/o Morning Star Ireland Limited, 132 ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ (the "Purchaser"). The parties hereto agree as
follows.
1. Sale and Purchase of Securities.
(a) Agreement to Purchase and Sell. The Company agrees to sell to the
Purchaser and, in reliance on the representations, warranties and covenants made
herein by the Company, the Purchaser agrees to purchase from the Company,
5,000,000 shares of the Company's $.01 par value Convertible Preferred Stock
(the "Preferred Stock") and 2,000,000 common stock purchase warrants (the
"Warrants"). The Preferred Stock is more particularly described in the
"Certificate Of Powers, Designations, Preferences And Rights" which is attached
hereto as Exhibit "A" and the Warrants are more particularly described in the
"Common Stock Purchase Warrant" attached hereto as Exhibit "B," both of which
are incorporated herein by reference.
(b) Purchase Price of Securities. The purchase price payable by the Purchaser
for the securities shall be $5,000,000. Such Purchase Price shall be paid by
bank wire transfer upon the Company's delivery to Bear ▇▇▇▇▇▇▇ & Co., or another
agent designated in writing by Purchaser, of certificates for the Preferred
Stock and Warrants, together with a certificate signed by the President and
Secretary of the Company that the Reorganization Agreement attached hereto as
Exhibit "C" has been closed and that all conditions precedent to the closing of
this Agreement have been satisfied.
(c) Repayment of Debenture. ▇▇▇▇▇▇▇▇▇▇▇ Capital Management Corporation, an
affiliate of the Purchaser, has previously purchased a $100,000 debenture from
certain corporations that will be acquired by the Company. It is hereby agreed
that immediately upon Closing, the Purchaser's agent will repay such debenture
from the proceeds of this stock purchase and remit the $4,900,000 balance to the
Company as full performance of the Purchaser's obligations hereunder.
2A. Representations and Warranties. To induce the Purchaser to enter into
and perform its obligations under this Agreement, the Company hereby represents
and warrants to the Purchaser as follows:
(a) Organization and Existence. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of Delaware;
it has obtained all licenses and permits and has filed all registrations in all
jurisdictions that are necessary to the operation of its present business. The
Company is duly qualified as a foreign corporation in all jurisdictions where
such qualification is required.
(b) Authorization and Non-Contravention. The execution and delivery of this
Agreement by the Company and the performance of the duties of the Company set
forth herein are within the Company's corporate powers, have been duly
authorized by all necessary corporate action, have been approved by the
Company's Board of Directors, do not require the approval of the Company's
stockholders and do not contravene (i) the Company's Certificate of
Incorporation or Bylaws or (ii) any statute, rule, regulation or other law or
any contractual restriction binding on or affecting the Company, and do not
result in or require the creation of any lien, security interest or other charge
or encumbrance upon or with respect to any of its properties.
(c) Fully-Paid and Nonassessable Securities. The Preferred Stock and
Warrants which will be delivered to the Purchaser pursuant to the terms of this
Agreement and the Common Stock issuable to the Purchaser upon conversion of the
Preferred Stock and/or exercise of the Warrants will, on delivery in accordance
with the terms hereof and thereof, be duly authorized, validly issued, fully
paid, nonassessable and free and clear of any and all liens, encumbrances or
restrictions, other than the express restrictions on resale described elsewhere
herein.
(d) Enforceability of Obligations. This Agreement is the legal, valid and
binding obligation of the Company, enforceable against it in accordance with its
terms.
(e) Claims and Litigation. There are no claims, actions or proceedings,
pending or threatened, by or against or affecting the Company, including actions
before a court, governmental agency or arbitrator, other than those arising or
instituted after the date of this Agreement and prior to Closing in which the
amount claimed as loss or damage (or if no specific amount is claimed, then the
Company's good faith reasonable estimate of the amount that will be claimed)
exceeds $20,000 in the aggregate. Furthermore, the Company has no knowledge of
any conflict between its rights respecting the tvemail technologies and the
rights of others or of the basis for any claim that has not yet been asserted.
(f) Taxes. The Company has filed all required federal, state and other tax
returns and paid any and all income, sales, property or other taxes due pursuant
thereto or pursuant to any assessment received by the Company, except such
taxes, if any, as are being contested in good faith and as to which adequate
reserves have been provided. All such tax returns filed by the Company
accurately reflect the tax due by the Company for the fiscal periods for which
such returns were filed.
(g) Closing of Reorganization. Prior to the closing of this Agreement, the
Company will have held a closing under the Reorganization Agreement attached
hereto as Exhibit "C" and will have acquired good and marketable title to all of
the Transaction Properties specified therein.
(h) Stock and Records. All outstanding capital stock of the Company was and is
properly issued, duly paid and non-assessable, and all books and records of the
Company, including but not limited to its minute books, bylaws, and books of
account, are accurate and complete; the Company's authorized capital on the date
of this Agreement consists of 25,000,000 shares of $0.0l par value common stock
and 5,000,000 shares of $0.01 par value preferred stock; after giving effect to
the reorganization transactions described herein the Company's outstanding
capital stock will consist of not more than 10,000,000 shares of Common Stock
which are owned beneficially and of record by not less than 750 holders.
(i) Convertible Securities and Stock Purchase Rights. No shares of the Company's
unissued capital stock are reserved for any purpose other than for issuance upon
conversion of the Preferred Stock and/or exercise of the Warrants. Except for
the common stock issuable upon conversion of the Preferred Stock and/or exercise
of the Warrants purchased hereby, there are no outstanding commitments,
warrants, options, securities convertible into the Company's stock or other
rights to acquire any shares of the Company's capital stock; there are no
preemptive or similar rights with respect to the issuance or sale of the
Company's capital stock; there is no commitment of the Company to issue or sell
any shares of its capital stock; there are no agreements that now or in the
future require the Company to repurchase, redeem, retire or otherwise acquire
any shares of its capital stock; and there are no agreements (other than
agreements designed to require compliance with federal or state securities laws)
restricting the transfer of any shares of the Company's capital stock .
(j) Title to Property. The Company has good and marketable title to all
property and assets purported to be owned by it including, without limitation,
all of the Intellectual Property and all assets shown in the Company's December
31, 1998 balance sheet, free of all liens, encumbrances, pledges and security
interests.
(k) Investments. The Company has no ownership interest or other investment
in any other person, corporation, partnership or other entity.
(l) Outstanding Guaranties. The Company has no outstanding guaranties or
other agreements relating to the debts or liabilities of any other Person.
(m) SEC Filings. The Company filed a voluntary petition under Chapter 11 of
the Bankruptcy Act on February 1, 1989 in the U.S. Bankruptcy Court for the
Eastern District of New York (Brooklyn) (Case # 89-10328). On October 16, 1990,
the Company's Chapter 11 case was voluntarily converted to a case in Chapter 7
which subsequently closed on November 13, 1996. As a result of the Bankruptcy,
the Company was inactive and engaged in no business activities until December
26, 1996 when its corporate charter was restored. On December 31, 1996 the
Company filed with the Securities and Exchange Commission an omnibus Annual
Report on Form 10-K for the fiscal years ended March 31, 1988 through March 31,
1996, together with quarterly reports for the periods ended June 30 and
September 30, 1996. Since December 31, 1996, the Company has filed (i) all
forms, reports, statements and other documents required to be filed with (A) the
Securities and Exchange Commission ("SEC"), including, without limitation (1)
all Annual Reports on Form 10-KSB, (2) all Quarterly Reports on Form 10-QSB, (3)
all proxy statements relating to meetings of stockholders (whether annual or
special), (4) all Reports on Form 8-K, (5) all other reports or registration
statements and (6) all amendments and supplements to all such reports and
registration statements (collectively, the "the Company SEC Reports") and (B)
any applicable Blue Sky Laws and (ii) all forms, reports, statements and other
documents required to be filed with any other applicable federal or state
regulatory authorities (all such forms, reports, statements and other documents
being referred to herein, collectively, as the "the Company Reports"). The the
Company Reports were prepared in all material respects in accordance with the
requirements of applicable Law (including, with respect to the the Company SEC
Reports, the Securities Act and Exchange Act, as the case may be, and the rules
and regulations of the SEC thereunder applicable to such the Company SEC
Reports) and (y) did not at the time they were filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(n) Survival of Representations and Warranties. The representations and
warranties made in sub-paragrraphs (a) through (l) of this Paragraph 2 are true
and correct on the date of this Agreement and shall be true and correct on the
date of the Closing, (ii) shall survive the sale of Common Stock for a period of
three years after the date of the Closing, except to the extent that such
representations and warranties are determined to have been untrue as of the date
hereof or the date of the Closing because of claims or actions (whether based on
alleged violations of securities laws, fraud, preemptive rights or otherwise) by
current or former stockholders of the Company based on events which occurred
prior to the date of this Agreement. All of such representations and warranties
are deemed to be material.
2B. Affirmative Covenants.
(a) Designation of Directors. Until the fifth anniversary of the date of
this Agreement, or until the Purchaser is the beneficial owner of less than 10%
of the issued and outstanding voting securities of the Company, whichever occurs
first, the Purchaser shall be entitled to appoint two members of the
Corporation's Board of Directors and the Corporation shall promptly take such
action as may be required to amend its By-laws to provide that for so long as
the Purchaser has a right to appoint two members of the Board of Directors, the
total number of members constituting the entire Board of Directors shall not
exceed seven.
(b) SEC Reporting Obligations. For so long as the Company's common stock is
registered under the Securities Exchange Act of 1934, as amended, the Company
(i) will file all forms, reports, statements and other documents required to be
filed with (A) the Securities and Exchange Commission ("SEC"), including,
without limitation (1) all Annual Reports on Form 10-KSB, (2) all Quarterly
Reports on Form 10-QSB, (3) all proxy statements relating to meetings of
stockholders (whether annual or special), (4) all Reports on Form 8-K, (5) all
other reports or registration statements and (6) all amendments and supplements
to all such reports and registration statements and (B) any applicable Blue Sky
Laws and (ii) all forms, reports, statements and other documents required to be
filed with any other applicable federal or state regulatory authorities. The
Company Reports shall be prepared in all material respects in accordance with
the requirements of applicable Law (including, the Securities Act and Exchange
Act, as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Company Reports) and shall not at the time they are filed
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading.
(c) Reports to Stockholders. For so long as the Company's common stock is
registered under the Securities Exchange Act of 1934, as amended, the Company
will hold an annual meeting of shareholders for the election of directors within
180 days after the end of each of the Company's fiscal years and, within 180
days after the end of each of the Company's fiscal years, will provide the
Company's shareholders with the audited financial statements of the Company as
of the end of the fiscal year just completed prior thereto. Such financial
statements shall be those required by Rule 14a-3 under the Securities Exchange
Act of 1934, as amended, and shall be included in an annual report meeting the
requirements of the Rule. Further, the Company agrees to make available to the
Company's shareholders in printable form within 60 days after the end of each
fiscal quarter of the Company (other than the last fiscal quarter in any fiscal
year) reasonably itemized financial statements of the Company and its
subsidiaries, if any, for the fiscal quarter just ended and a narrative
discussion of such financial statements and the business conducted by the
Company and its subsidiaries, if any, during such quarter.
3. Closing. The Purchaser shall not be obligated to perform its obligations
hereunder unless all of the following conditions which the Company is hereby
obligated to satisfy and perform shall have been satisfied and performed on or
prior to the Closing.
(a) Authorization. Execution and performance of all terms and conditions
hereof by the Company shall have been approved by its Board of Directors and the
Company's shareholders, if necessary, in resolutions in a manner satisfactory in
form and substance to the Purchaser, and the Company shall have duly executed
and delivered this Agreement and stock certificates evidencing the Preferred
Stock and Warrants purchased hereunder.
(b) Performance. The Company shall have delivered to Bear ▇▇▇▇▇▇▇ & Co., or
another agent designated in writing by Purchaser, all of the schedules,
certificates and other papers required to be delivered on or before the date of
this Agreement. None of the Company's representations and warranties set forth
in this Agreement or any information contained in any schedule, attachment or
exhibit hereto or in any writing delivered to the Purchaser shall be or shall
have been discovered by the Purchaser or its attorneys, accountants, employees
or other personnel to be untrue or incorrect in any material respect on the date
of the Closing.
(c) Closing Papers. The Company shall have delivered to the Purchaser all
of the following: (i) an officers' certificate dated the date of the Closing
satisfactory in form and substance to the Purchaser stating that the
representations in Paragraph 2 are true and correct as of such date; (ii)
certified copies satisfactory in form and substance to the Purchaser of the
resolutions described in sub-paragraph 3(a); (iii) certified copies of the
Company's articles of incorporation and bylaws, as amended through the Closing,
certified by the Company's President as true, accurate, correct and complete;
(iv) an authenticated copy of the Company's Registration Statement on Form S-8
for the securities specified in Section 3(d) below, certified by the Company's
President as true, accurate, correct and complete and (v) such other materials
as the Purchaser shall reasonably require.
(d) Certain Expenses. The Company shall pay the fees of Purchaser's legal
counsel in connection with the transactions contemplated by this agreement in
the amount of $40,000. The first $20,000 of such expenses shall be payable in
cash at closing and the $20,000 balance shall be paid through the issuance of
20,000 shares of the Company's common stock at an agreed value of $1 per share.
Prior to issuance, such shares shall be registered under the Securities Act of
1933, as amended, by means of a Registration Statement on Form S-8 which may
include up to 1,440,000 shares issuable to other employess of and consultants to
the Company.
(e) Waiver. Any Closing condition or covenant specified in this Paragraph 3
may be waived by the Purchaser, provided that no such waiver shall be effective
unless it shall be set forth in writing.
4. Investor Representations; Transfer. The Purchaser represents and
warrants that it: (i) is an "accredited investor" as defined under federal
securities laws; (ii) has its principal place of business in the Republic of
Ireland; (iii) acknowledges and understands that subject to the registration
rights provided for elsewhere herein the Preferred Stock and Warrants purchased
pursuant hereto are unregistered securities and must be held indefinitely unless
subsequently registered under the Securities Act of 1933, as amended (the
"Securities Act") and all applicable state securities laws or exemptions from
registration are available. The Purchaser further represents and warrants: (i)
that the Preferred Stock and Warrants are being acquired by the Purchaser for
its own account, (ii) that such acquisition is made without any present
intention of reoffering, reselling or distributing such Preferred Stock and
Warrants, (iii) prior to making such acquisition, the Purchaser was given
unrestricted access to all of the Company's books and records for the purpose of
personally examining any such documents as the Purchaser deemed material to his
investment decision, (iv) prior to making such acquisition, the Purchaser was
given an opportunity to ask questions of and receive answers from the Company's
officers, directors, attorneys and accountants respecting any matter which the
Purchaser deemed material to its investment decision and all such questions have
been answered to the full satisfaction of the Purchaser. The Purchaser further
understands that all certificates representing shares of the Preferred Stock and
Warrants shall bear the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAW, AND THEY MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND UNDER ALL
APPLICABLE STATE SECURITIES LAWS.
The foregoing restrictions on the transferability of Preferred Stock and
Warrants shall cease and terminate (i) when such securities shall have been
effectively registered under the Securities Act and all applicable state
securities laws, or otherwise disposed of in accordance with the the
requirements of the Securities Act, or (ii) the Company shall have received an
opinion of counsel reasonably acceptable to the Company to the effect that such
restrictions are no longer required in order to ensure compliance of any future
transfer with the Securities Act and all applicable state securities laws.
Whenever such restrictions shall terminate as to any Preferred Stock, Warrants
or Common Stock issued upon the conversion of Preferred Stock or the exercise of
Warrants, the holder thereof shall be entitled to receive from the Company,
without expense, new certificates of like tenor not bearing the legend set forth
above.
5. Notice. All notices, requests, demands and other communications relating
to this Agreement shall be in writing, including by facsimile or e-mail,
addressed to the address set forth herein or such other address as any party
shall notify the other party in writing, and shall be effective, in the case of
written notice by mail, upon placement into the mails (first class, postage
prepaid), and in the case of notice by facsimile or e-mail, on the day sent.
6. Other Provisions. This Agreement shall be binding upon, inure to the
benefit of and be enforceable by the original parties hereto and their
respective heirs, personal representatives, successors and assigns. This
Agreement shall be governed by the laws of the State of Delaware except to the
extent such laws are preempted by federal law. If any of the provisions
contained in this Agreement are invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby. Any provision of this
Agreement may be waived by the person entitled to the benefit thereof; provided,
no delay or failure on the part of any person in exercising any right hereunder,
and no partial or single exercise thereof, shall constitute a waiver of any
other rights hereunder. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may only
be modified in a writing signed by all the parties hereto. All rights granted in
this Agreement to holders of Preferred Stock and Warrants, or common stock
issuable upon conversion or exercise thereof, shall inure to and be to the
benefit of subsequent holders of such securities until such securities have been
registered under the Securities Act or sold pursuant to Rule 144 or any other
applicable exemption promulgated under the Securities Act.
IN WITNESS WHEREOF, the parties have executed this Stock Purchase and Sale
Agreement, effective as of the date first above written.
▇▇▇▇▇.▇▇▇. Inc.
(Signature of Investor).
(Name Printed) By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
(Street Address)
(City, State, Zip)