Prepared by MERRILL CORPORATION www.edgaradvantage.com QuickLinks Exhibit 2.1 CONTRACT FOR SALE OF STOCK This Contract for Sale of Stock is made effective November 8, 1999, between, John R. Marsh ("Marsh"), Ronald W. Hogan ("Hogan") and Charles E....
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Exhibit 2.1
CONTRACT FOR SALE OF STOCK This Contract for Sale of Stock is made effective November 8, 1999, between, ▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., ("▇▇▇▇▇") (together as "Sellers"), and Internet Law Library, Inc., a Delaware corporation ("Buyer"). The parties agree to the following terms and conditions of sale and purchase. 1. Purchase Price. Sellers agrees to sell and Buyer agrees to buy all of Sellers' stock in GoverNet Affairs, Inc., a Georgia corporation, for a total price of One Million Three Hundred Thousand Dollars ($1,300,000) to be paid in shares of common stock of Buyer. The number of such shares shall be determined by dividing a numerator consisting of $1,300,000 by a denominator consisting the average of the closing price of the Buyer's common stock during the five (5) trading days preceding the effective date of this Contract as reported by ▇▇▇▇▇▇▇▇▇.▇▇▇. 2. If, after the closing of this Contract, there is a public offering for purposes of registering newly issued shares of Buyer's common stock pursuant to the Securities Act of 1933, as amended, other than a registration for consultants or market makers, Sellers' stockholders, are each granted the right of registration for not more than fifteen percent (15%) of their holdings at the time of such registration. 3. ▇▇▇▇▇ will serve on the Executive Committee of Internet Law Library, Inc., and on the Board of Directors of GoverNet Affairs, Inc. for at least three (3) years following the closing of this Contract. 4. Stock Option. At the closing of this Contract, an option to purchase 320,000 shares of Buyer's common stock, will be granted to Sellers Hogan, Bowen, and ▇▇▇▇▇ (i.e. 166,250 shares to ▇▇▇▇▇; 78,750 shares to ▇▇▇▇▇; and 75,000 shares to ▇▇▇▇▇) under the terms summarized in this paragraph and as described in form and substance in the Stock Option Agreement attached as Exhibit A to this Contract (to be executed contemporaneously with this Contract): (a) Subject to fully satisfying the conditions set forth in paragraph 4 (c) below, the options will vest, pro rata, beginning on August 31, 2000, according to the following schedule: (1) Series No. 1, 100,000 shares at August 31, 2000; (2) Series No. 2, 100,000 shares at August 31, 2001; and (3) Series No. 3, 120,000 shares at August 31, 2002. and, to the extent vesting occurs, each option will have a term of ) five (5) years from the date of vesting, during which term the option may be exercised in whole or in part; (b) The exercise price for each option shall be the closing price of the Buyer's common stock on the effective date of this Contract. (c) The options will vest if the financial results of Sellers' revenues and earnings before interest, taxes, depreciation and amortization ("EBITDA"), as determined from the application of generally accepted accounting principles, consistently applied, during each of the periods specified below, equal or exceed the following conditions:
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(i.)As
to Series No. 1 shares, for the eight months ended June 30, 2000, revenue of $977,450, and EBITDA that is equal to or greater than
6.0 % of revenue,
(ii.)As
to Series No. 2 shares, for the year ended June 30, 2001, revenue of $1,425,225, and EBITDA that is equal to or greater than 8.0 %
of revenue, and
(iii.)As
to Series No. 3 shares, for the year ended June 30, 2002, revenue of $1,781,530, and EBITDA that is equal to or greater than 10.0
% of revenue.
(iv.)Buyer
agrees in good faith not to take any actions (or omit to take any actions) that would adversely affect Sellers' ability to meet these goals.
In addition, the Compensation Committee may nevertheless vest all or part of the options.
5. Employment Agreements. Buyer agrees to cause GoverNet Affairs, Inc. to offer employment
agreements to ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇, which agreements will provide for the terms generally described on Exhibit C to this Contract and such other terms as the parties shall mutually agree.
6. Right of First Refusal. If at any time during three (3) years after closing of this Contract,
Buyer considers selling all or a controlling interest in GoverNet Affairs, Inc. (or all or substantially all of its assets), as a stand-alone or independent business unit, then ▇▇▇▇▇ may
exercise a right of first refusal to purchase GoverNet Affairs, Inc. from Buyer under terms that are at least identical to the terms offered to Buyer by a third party. ▇▇▇▇▇ will have fifteen
(15) business days from receipt of Buyer's written notification in which to exercise this option.
7. Unregistered Shares of Common Stock. The shares of Buyer's common stock to be conveyed to Sellers as
purchase consideration and pursuant to any stock option agreements referred to in this Contract are not registered with the United States Securities and Exchange Commission, nor the Securities
Commission of any state and will be subject to Section 144 of the SEC rules.
8. Representations of Sellers
(a) GoverNet
Affairs, Inc. is a validly organized and existing Georgia corporation and has the corporate power and authority to carry on its business as it is
now being conducted.
(b) Sellers
have full power and authority to sign and enter into this Contract and carry out the transactions contemplated by it. The signing, delivery, and performance
of this Contract will not violate the Certificate of Incorporation, Bylaws, or, to Sellers' knowledge, any law, agreement, or instrument to which GoverNet Affairs, Inc. is a party or by which
it is bound. To Sellers' knowledge, none of Sellers' actions in selling their stock are prohibited by or have violated or will violate any law in effect on the date of this Contract or on the date of
closing.
(c) Sellers
warrant that GoverNet Affairs, Inc. has timely prepared and filed all federal, state, and local tax returns and reports as required and all taxes due
have been paid in full. Sellers agree to assume responsibility for any and all income tax liabilities and penalties, whether arising from Federal, state or local jurisdictions and whether attributable
to corporate or personal tax events, arising prior to or as a result of the closing this Contract.
(d) Sellers
have good and merchantable title to their stock sold under this Contract, and their stock is not subject to any mortgage, pledge, sales agreement, security
agreement, secured or unsecured charge or encumbrance, and to Sellers' knowledge, there are no claims, asserted or unasserted, against GoverNet Affairs, Inc., Sellers' stock, or any asset of
GoverNet Affairs, Inc., except as disclosed in this Contract and any attached exhibits.
(e) The
documents of GoverNet Affairs, Inc. listed in Exhibit B attached to and made a part of this Contract are, to Sellers' knowledge, true and accurate.
(f) Sellers
have not sold or conveyed or transferred any assets or committed to any obligations since the completion of the due diligence.
9. Representations of Buyer
(a) Buyer
represents that it is qualified to purchase these shares under the relevant rules and regulations of the United States Securities and Exchange
Commission and the Securities Commission of any state that may have jurisdiction.
(b) Buyer
further represents that it is not purchasing these shares with an intention of resale, nor will it take any actions that may result in it being considered an
underwriter of the shares.
10. Confidentiality. Buyer and Sellers acknowledge that during the course of their discussions leading
to and in any way relating to this Contract, certain confidential information about both parties has been and will be divulged to the other. Buyer and Sellers agree not to disclose such confidential
information to any person, other than attorneys, accountants, and employees with a need to know, without first obtaining the written consent of the other party. Prior to closing of this Contract, the
parties agree not to disclose the existence of this Contract nor of any discussions relating to it or to the sale and purchase outlined in this Contract.
11. Other Agreements.
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(a)Buyer
agrees to reimburse ▇▇▇▇▇ and/or ▇▇▇▇▇ for any and all funds loaned or advanced to GoverNet Affairs, Inc. to pay reasonable operating expenses not to exceed $22,000;
and
(b)Buyer
agrees to assume and pay the Optima debt of GoverNet Affairs, Inc. as of October 1, 1999, as well as ▇▇▇▇▇'▇ Optima debt as of October 1, 1999, that were
incurred to acquire and otherwise pay for specific computer equipment, programming, and related services, not to exceed $19,000.
12. Buyer
and Sellers represent that they have had adequate opportunity to obtain any information relevant to the decision to enter into this Contract, and have also
had adequate opportunity to consult with advisors of their choice.
13. The
closing of this Contract is conditioned on approval by the Board of Directors of Buyer.
14. Any
amendments, addenda, modifications, or changes to this Contract must be in writing and signed by the parties.
15. Rights
and obligations created by this Contract are binding upon the parties, their successors and assigns.
16. Notices. Any notices required to be sent will be delivered to the parties at these addresses: