Exhibit 10.7
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this 6th day of August, 1999, by
and among ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (collectively, "Seller"),
▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation with a business address at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Purchaser") and SolutioNet, Ltd., a
Delaware corporation with a business address at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company").
WHEREAS, the Seller is the record owner and holder of all of the issued
and outstanding shares of stock of the Company, being 2,5000 shares of common
stock, $0.01 par value, and
WHEREAS, the Purchaser desires to purchase 1,375 shares of said stick
and the Seller desires to sell 1, 375 shares of said stock (the "Stock"), upon
terms and subject to the conditions hereinafter set forth;
WHEREAS, Seller, Purchaser and the Company previously entered into a
Letter of Intent dated April 13, 1999, outlining the terms and conditions that
will govern the purchase and sale of the Stock, a copy of which respecting the
Stock; and
WHEREAS, because the purchase and sale of the Stock is contingent upon
the Seller obtaining a certain release from the Bankruptcy Trustee for the
estate of Selectech, Ltd. by September 30, 1999, the transaction contemplated
hereby will be effected by escrow.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, the receipt and sufficiency of which is hereby
acknowledged, and in order to consummate the purchase and the sale of the Stock
aforementioned, it is hereby agreed as follows:
1. DELIVERY TO ESCROW AGENT: Subject to the terms and conditions hereinafter set
forth, upon execution of this Agreement, the Seller shall deliver to the Escrow
Agent certificates representing the Stock, and the Purchaser shall deliver to
the Escrow Agent the Purchase Price, less the Deposit currently held by the
Seller. The certificates representing the Stock shall be duly executed in favor
of Purchaser. In addition, both parties (as necessary) shall execute and deliver
(or cause to be executed and delivered) to the Escrow Agent the following six
documents (collectively, the "Ancillary Documents"):
o Amended By-Laws of the Company
o Amended Certificate of Incorporation of the Company
o Unanimous written consent of the Shareholders electing a three-person
Board of Directors and approving such Amendments to the Bylaws and
Articles;
o Unanimous written consent of the Board of Directors approving such
Amendments to the Bylaws and Articles and approving the Shareholder's
Agreement;
o A Shareholder Agreement by and among the Company, Seller and Purchaser;
and
o Consulting Agreement between the Company and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III.
Under the Shareholder Agreement, Seller and Purchaser each agree to take all
actions necessary to vote all shares of Stock which he or it now owns or may
hereafter own (i) to fix the number of directors that constitute the entire
Board of Directors of the Corporation at three (3), and (ii) to elect as members
of the Board of Directors one designee of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III, one designee
of Purchaser and one director mutually acceptable to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III and
Purchaser has not yet been selected by the date this Agreement is executed ad
delivered, then such third person shall be selected on or promptly after the
date Closing.
2. CLOSING. the closing of the transaction contemplated by this agreement
("closing"), shall be contingent upon the Closing Condition contained in the
Agreement, and shall in no even occur later than September 30, 1999, unless
extended by mutual agreement. The date for the Closing shall be the first
business day after the satisfaction of the Closing Condition. Upon receipt of
written notice executed by the Purchaser and the Seller (which written notice
may be executed and delivered separately by each party), the Escrow Agent shall
effect the Closing by a) releasing the cash held in the amount of the Purchase
Price less the Deposit ($245,000), together with any interest earned on such
account, to the Seller, b) releasing the stock certificates evidencing the Stock
to the Purchaser, and c) filing, recording and/or releasing the Ancillary
Documents to the Seller and Purchaser and the Company. The Company shall then
make such filings of the Ancillary Documents as ▇▇▇ be necessary and shall
record eNote's ownership of the Stock on the corporate stock ledger of the
Company.
3. AMOUNT AND PAYMENT OF PURCHASE PRICE.
(a) Consideration. As total consideration for the purchase and sale of the Stock
pursuant to this Agreement, the Purchaser shall pay to the Seller the sum of Two
Hundred and Fifty Thousand Dollars ($250,000) such total consideration to be
referred to in this Agreement as the "Purchase Price."
(b) Deposits. The seller hereby acknowledges its prior receipt of Five Thousand
Dollars ($5,000), paid by Purchaser as a good faith deposit and held for the
benefit of the Seller, to be credited toward Purchaser payment of the full
Purchase Price (the "Deposit"). Such Deposit shall be forfeited if the Closing
does not occur.
(c) Payment. The Purchase Price, less the Deposit, shall ne delivered to the
Escrow Agent upon the execution of this Agreement, to be disturbed to the Seller
at Closing unless earlier returned for failure to meet the Closing Condition or
on account of any party's default. The Purchase Price shall ne payable in the
form of either a cashier's check or by wire transfer to the Escrow Agent's
attorney-client trust account as set forth in the written instructions form the
Escrow Agent. The Purchase Price, less the Deposit, shall be held by the Escrow
Agent in an interest-bearing attorney-client account, with any interest earned
credited to such account and distributed as provided herein. In the event that
such account is not established upon receipt of funds hereunder, Escrow Agent
will take such reasonable steps to have such account created promptly after the
receipt of funds hereunder.
(d) Escrow Agent: The Escrow Agent shall be ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq. The Escrow Agent
shall not be personally liable to any party except in instances of willful
misconduct. The
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parties shall jointly and severally indemnify and hold the Escrow Agent harmless
from all loss or expense of any nature, including attorney's fees, arising out
of the holding of the Purchase Price, the Stock and the Ancillary Documents
(collectively, the "Goods"). In the event of a dispute, the Escrow Agent may
deposit the Goods into a court of competent jurisdiction for the purpose of the
holding of the Goods. All costs and expenses of such action including attorney's
fees incurred by the Escrow Agent shall be borne jointly and severally by
Seller, the Company and the Purchaser.
4. REPRESENTATIONS AND WARRANTIES OF COMPANY and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,III
A. The Company hereby warrants and represents that is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware and has conducted and to take any
and all actions contemplated by or attendant to this transaction.
B. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III represents and warrants to the Purchaser as
follows:
(a) Capitalization. The aggregate number of shares which the Company
is authorized to issue is 2500 common shares, $0.01 par value, of
which 2500 shares are issued and presently outstanding. All such
issued have been validly issued and are fully paid and
non-accessible.
(b) Financial statements. The Seller has delivered to the Buyer
non-audited balance sheet and profit and loss statements for the
year ending December 31, 1998. Except to the extent reflected or
reserved against in the Company's financial statements as at
December 31, 1998 or interim financial statements for fiscal year
1999 provided to the Purchaser, the Company as of December 31,
1998 had no liabilities of any nature, whether accrued, absolute,
or contingent, including, without limitation, tax liabilities due
or to become due, and whether incurred in respect of or measure by
the Company's income for any period prior to December 31, 1998, or
arising out of transactions entered into, or any state of facts
existing, prior thereto. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ represents that he does
not know or have reasonable grounds to know of any basis for the
assertion against the Company, as at December 31, 1998,od any
liability of any nature or in any amount not fully reflected or
reserved against in the financial statements so provided to the
Purchaser.
(c) Litigation. Other than the proceeding entitles Selectech, Ltd ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ Superior Court, which has been previously
disclosed to the Purchaser, thee is not litigation or proceeding
pending, against or relating to the Company, its properties, or
business.
C. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ hereby agrees to indemnify Purchaser against any loss,
damage or deficiency resulting form any misinterpretation or breach of any
warranty set forth in Section 4B above or Section 5 below; provided, however
that any such liability for indemnification shall be limited to an amount not to
exceed the Purchaser Price,
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5. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents and
warrants (a) Seller is not a party to any agreement, written or oral, creating
rights with respect to the Company's stock in any third person r relating to the
voting of the Company's stock, except for the Letter of Intent dated as of April
13, 1999 and entered into among Seller, the Company and Purchaser; and (b)
Seller is the lawful owner of the Stock, free and clear of all security
interests and liens.
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER. The Purchaser hereby warrants
and represents is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power and
authority to carry on its business as it is now being conducted and to take any
and all actions contemplated by or attendant to this transaction. The Purchaser
acknowledges that all documents, records and books pertaining to the purchase of
the Stock and/or the Company have been made available for inspection by
Purchaser and its agents and that the books and records of the Company were
available during reasonable business hours at the Company's principal place of
business. The Purchaser and/or its adviser(s) have had a reasonable opportunity
to ask questions of and receive answers from the Company, or from Seller
concerning the Stock and the Company. All such questions have been answered to
the full satisfaction of the Purchaser. The Purchaser understands that the Stock
has not been registered under any federal state securities laws.
7. REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER. Seller and Purchaser
hereby represent and warrant that there has been no act or omission by Seller,
Purchaser or the Company which would give rise to any valid claim against any of
the parties hereto for a brokerage commission, finder's fee, or other like
payment in connection with the transaction contemplated hereby.
8. CLOSING CONDITION. It shall be a condition to closing that Seller and/or the
Company provide to Purchaser a release, obtained from the Bankruptcy Trustee for
the estate of Selectech, Ltd., releasing ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III from any and all
claims the estate may have against him relating to the pending civil suit
entitled Selectech, Ltd. ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ Superior Court Docket No.
S861-96-CnC. Seller and Purchaser agree that upon receipt of such document,
Seller and Purchaser will each provide written instructions to the Escrow Agent
to effect the Closing by disbursing the Goods to the appropriate parties as
provided in paragraph 2.
9. OPTIONS:
Purchaser's Option: For a period of one (1) year after the Closing (if
such closing occurs), the Purchaser;s shall have the right and option to require
Seller to re-purchase the Stock for an amount equal to the Purchase Price if the
Purchaser is named as a defendant in any litigation arising from (1) it being a
shareholder in the Company, and (2) such lawsuit arises from facts and
circumstances relating to the Company and occurring prior to the date of the
Closing. Payment for repurchase of the Stock shall be in the form of a
promissory note for which the Stock shall serve as collateral. If requested by
the Purchaser, the Company shall grant a security interest in its intellectual
property as collateral for such note.
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The term of such note shall be as specified by the maker and shall be for no
more than ten (10) years and bear interest at a fixed interest rate of 7% per
annum.
Seller's Option: For a period of two (2) years after the Closing, Seller
shall have the right and option, in his sole and absolute discretion, to
re-purchase the Stock for an mount equal to the Purchase Price if exercised
during the first year or for an amount determined by independent appraisal of
the value of the Stock if exercised during the second year, if (i) Seller's
employment by the Purchaser is terminated for any reason; (ii) any of the terms
of Seller's employment by the Purchaser are changes in any way detrimental to
Seller; (iii) Purchaser becomes insolvent, is dissolved or liquidated takes any
action related to its dissolution or winding up, or enters proceedings under any
law relating to bankruptcy, insolvency, reorganization or relief from debts;
(iv) Purchaser's market value declines to less than $15,000,000; or (v) Seller's
level of equity ownership in Purchaser (based upon his current level of 250, 000
shares to 17,000,000 shares issued and outstanding) is diluted by more than
thirty percent (30%). Payment for re-purchase of the Stock shall be in the from
of a promissory note for which the Stock shall serve as collateral. If requested
by the Purchaser, the Company shall grant a security interest in its
intellectual property as collateral for such note. The term of such note shall
be as specific by the maker and shall be for not more than ten (10) years and
bear interest at a fixed interest rate of 7% per annum.
8. DEFAULT AND TERMINATION.
(a) In the event that the Closing Condition set forth above is not satisfied on
or before September 30, 1999, Purchaser may, as its election, either a)
terminate this Agreement by providing written notice to Seller and to the Escrow
Agent, in which case the Purchase Price, less the Deposit, shall be returned to
the Purchaser, the Stock shall be returned to the Seller, and the Ancillary
Documents shall be destroyed, or b) waive the satisfaction of the Closing
Conditions and proceed with the Closing.
(b) If the event that Purchaser breaches its obligations to close under this
Agreement, or in the event Purchaser breaches any of the representations and
warrantee that it had made herein, Seller may terminate this Agreement by
written notice to Purchaser and to the Escrow Agent, and may then seek
reimbursement from Purchaser for all costs and expenses actually incurred by
Seller in connection with this transaction, and may seek legal and equitable
remedies including specific performance.
(c) In the event that Seller breaches its obligations to close under this
Agreement, or in the even Seller breaches any of the representations and
warranties that it has made herein, Purchaser may terminate this Agreement by
written notice to Seller and to the Escrow Agent, and shall be entitled to seek
reimbursement from Seller for all costs and expenses actually incurred by
Purchaser in connection with this transaction, such amount not to exceed %5,000.
Such remedy shall be Purchaser's sole remedy at law or in equity.
11. NOTICES. Any notice or other communication to be given hereunder shall
be in writing and mailed. certified with return receipt requested, by facsimile
or sent by nationally recognized overnight courier (e.g., Federal Express) to
such party at the address or
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number set forth below (which may be changes by either party by notice given to
the other party in the following manner):
If to Seller: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, III
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No: ▇▇▇-▇▇▇-▇▇▇▇
If to Company: SolutioNet, Ltd.
Attn: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: 802/▇▇▇-▇▇▇▇ ▇-▇▇▇
Facsimile No.: 802/872-2888
If to Purchaser: ▇▇▇▇▇.▇▇▇, Inc.
Attn: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: 802/▇▇▇-▇▇▇▇
Facsimile No.: 802/288-9330
If to Escrow Agent: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: 802/▇▇▇-▇▇▇▇
Facsimile No.: 802/658-5685
12. CLARIFICATIONS OF INTENTION. The parties hereby acknowledge and agree
that the Seller and the Company may continue to use and disburse the Company's
cash, including making distributions to its shareholder(s), as if this
transaction was not pending. Pending the Closing, the Company shall continue to
operate its business in the ordinary course.
13. GENERAL PROVISIONS.
(a) Captions The captions contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of any
provision in this Agreement.
(b) Governing Law. This Agreement and all transactions contemplated
hereby, shall be governed by, construed and enforced in accordance with the laws
of the State of Vermont.
(c) Entire Agreement. This Agreement, together with the Ancillary
Documents and the Letter of Intent, embodies the entire agreement and
understanding between the parties
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relating to the subject matter hereof and there are no covenants, promises,
agreements, conditions, or understandings, oral or written, except as set forth
herein or in the Ancillary Documents and the Letter of Intent. All Exhibits
hereto and the terms contained therein are made a part of this Agreement and the
contents thereof are hereby incorporated by reference.
(d) Amendment. This Agreement may not be amended, waived or discharged
except by an instrument in writing executed by the party against whom such
amendment, waiver or discharge is to be enforced.
(e) Assignment. The rights and obligations set forth in this Agreement may
not be transferred, delegated or assigned to any third party or parties without
the prior written consent of all the parties to this Agreement, such consent to
be within he sole discretion of every party hereto.
(f) Severability. In the event that any provision of this Agreement or the
application of such provision to any party or circumstance shall, for any
reason, be determined to be invalid, illegal, or unenforceable in any respect,
the remaining provisions of this Agreement or the application of the provisions
to any party or circumstances other than those as to which the provision was
held invalid, illegal, or unenforceable, shall not be affected by such
determination and shall be valid and enforceable to the fullest extent permitted
by law.
[Signature Page follows]
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IN WITNESS WHEREOF, this Agreement has been executed by each of its
parties hereto on the date first above written.
Signed, sealed and delivered in the presence of:
SolutioNet, Ltd.
_____________________________ By: ____________________________
Witness ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III, President
----------------------------- ----------------------------
Witness ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III
----------------------------- ----------------------------
Witness ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇.▇▇▇, Inc
_____________________________ By: ____________________________
Witness ▇▇▇▇ ▇▇▇▇▇▇▇▇, President & CEO
Acknowledged:
Escrow Agent:
----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
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