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EXHIBIT 2.4
STOCK PURCHASE AND SHAREHOLDERS AGREEMENT
THIS AGREEMENT, entered into as of the 12th day of May, 1998, by and
among Xxxxxx X. Xxxxxxx (the "Purchaser"), Xxxx X. Xxxx (the "Seller") and
Xxxxxxxx Xxxxxx, Xxxxxxx Xxxxxxx, Xxxxx Xxxxxxxx and Xxxxxxx Xxxx (collectively
referred to as the "Seller's Associates").
WITNESSETH:
WHEREAS, Seller is currently the majority and controlling stockholder
of Next Generation Media Corporation, a Nevada Corporation, ("NexGen"); and
WHEREAS, Seller's Associates are also stockholder's in or Officers or
Directors of or are otherwise interested in NexGen and Seller; and
WHEREAS, Contemporaneous with the execution hereof NexGen is entering
into a definitive agreement to acquire United Marketing Solutions, Inc., a
Virginia corporation (referred to herein as "United" and the "United
Acquisition"), whose current President and Chief Executive Officer is the
Purchaser; and
WHEREAS, Seller and Seller's Associates are desirous of inducing
Purchaser, in connection with the United Acquisition, to continue as the
President and Chief Executive Officer of United and to assume the office of
Director and Chief Executive Officer of NexGen and for such purposes are
desirous of entering into this agreement; and
WHEREAS, Seller owns, of record and beneficially, 2,045,929 shares of
the issued and outstanding shares of commons stock of NexGen, representing
Sixty-Four and 9/10ths percent (64.9%) of the issued and outstanding shares of
common stock (computed on a fully diluted basis); and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, Nine Hundred Thirty-Five Thousand (935,000) shares of the
aforesaid NexGen Common Stock owned by Seller (the "Shares") upon the terms and
conditions hereinafter set forth; and
NOW THEREFORE, in consideration of the mutual promises and
representations herein set forth and for other good and valuable consideration,
the parties agree as follows:
1. Sale and Transfer of Shares: Upon and subject to the terms and conditions set
forth in this Agreement, Seller agrees to sell, assign, and transfer the Shares
to Purchaser, free and clear of liens, charges, encumbrances, equities, claims,
and options of any kind.
2. Purchase Price: Subject to the terms and conditions of this
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Agreement, in reliance upon the representations, warranties and agreements of
Seller and Seller's Associates contained herein, and in consideration of the
aforesaid sale, assignment and delivery of the Shares, Purchaser shall at the
Closing (as defined herein) pay to Seller the amount of One Hundred Fifty-Six
Thousand, One Hundred Forty-Five and No/100 Dollars ($156,145) (the "Purchase
Price") in the form of a Non-Recourse Secured Promissory Note, payable in
twenty-four (24) equal installments of principal and interest (the "Purchaser's
Note"). The Purchaser's Note shall bear interest at the rate of 5.83% per annum.
The Purchaser's Note shall be transferred by Seller to NexGen in satisfaction of
$156,145 of that certain note from Seller to NexGen in the principal amount of
$359,050 ("Seller's Note") that is secured by certain of Seller's common stock
in NexGen, including the Shares.
3. Closing: The purchase and sale of the Shares (the "Closing") shall take place
within ten (10) days of the execution of this Agreement and prior to the
effective date of the United Acquisition (the "United Closing Date") or as
otherwise agreed by the parties. Prior to the Closing, Seller and Seller's
Associates shall have caused the NexGen approval recited in paragraph 13(b)(4)
hereof to have been obtained to consummate the transactions contemplated in this
agreement. At Closing, Seller shall deliver to Purchaser all certificates
representing the Shares, properly endorsed or accompanied by stock powers duly
executed in blank for transfer on the books of NexGen.
4. Resignations and Management Participation Upon Closing: Upon Closing, Seller
shall deliver to Purchaser a written resignation of Seller as a Director and
Officer of NexGen. Seller further represents and warrants that, upon Closing, he
shall relinquish all rights, in any capacity whatsoever, to participate in the
management, operation, conduct or control of NexGen and its subsidiaries'
day-to-day operations, without the specific authorization of Purchaser.
5. Appointment and Election of Purchaser as Director and President: Upon the
United Closing Date, Seller and Seller's Associates shall cause Purchaser to be
elected as a Director of NexGen and appointed as NexGen's President and Chief
Executive Officer ("CEO"). As compensation for assuming the office of NexGen's
President and Chief Executive Officer, Seller and Seller's Associates shall
cause NexGen to issue Purchaser options to purchase 150,000 shares of NexGen
common stock at an exercise price of $.50 per share valid for ten years from the
date of issue. Seller's and Seller's Associates' agreements to cause Purchaser
to be appointed or elected as a director and CEO of NexGen, as set forth in this
paragraph 5, shall continue in full force and effect so long as Purchaser is
employed by NexGen or United.
6. Purchaser as Consultant: To facilitate an efficient
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implementation of the NexGen/United business plan, Seller and Seller's
Associates shall cause Purchaser to be appointed a consultant to NexGen
contemporaneous with the execution hereof until the United Closing Date. As
compensation for and to induce Purchaser to accept such appointment as
consultant, Seller and Seller's Associates shall cause NexGen to cancel and
forgive the Purchaser's Note and to pay to Purchaser, compensation in an amount
equal to the income tax obligations incurred by Purchaser as a consequence of
the aforesaid cancellation and forgiveness of Purchaser's Note. As such
consultant, Purchaser shall oversee the prompt implementation of all preparatory
actions contemplated in the NexGen/United business plan approved by the NexGen
Board of Directors.
7. Appointment and Election of Additional Directors; Insurance: In addition to
the provisions of Paragraph 5 hereof, upon Closing, the NexGen Board of
Directors shall have five seats, one of which shall be vacant because of the
resignation of Seller. Seller's Associates shall (i) cause three additional
directors from among the Seller's Associates to resign by the United Closing
Date; (ii) appoint and elect two designees of Purchaser as Directors by the
United Closing Date; (iii) cause a designee of the holders of the NexGen Series
A Preferred Stock to be appointed and elected as a Director (the "Series A
Director") after the Closing; and (iv) appoint and elect a person mutually
selected by the holders of the NexGen Series A Preferred Stock and Purchaser as
an independent Director, initially identified hereby as Xxxxxx Xxxxxxx (the
"Independent Director") by the United Closing Date. As and when the Series A
Preferred Stock is redeemed or converted to NexGen common stock and the rights
of the holders thereof to nominate and elect a Director have been terminated,
the parties agree (i) to seek the resignation of the Series A Director and the
Independent Director; (ii) to appoint and elect a designee of Seller as a
Director to fill the vacancy created by the resignation of the Series A
Director; and (iii) to then mutually select an agreed upon independent Director
to replace the Independent Director. In addition, Purchaser and Seller agree to
cause NexGen to obtain directors' and officers' insurance no later than as and
when the common stock of NexGen is listed on any stock exchange. The parties'
agreements, as set forth in this paragraph 7, shall continue in full force and
effect so long as Purchaser is employed by NexGen or United. The parties hereto
agree to vote their shares of stock in NexGen, if necessary, at any shareholder
meeting in order to effectuate the purposes of this paragraph 7.
8. Cancellation of Debt: At Closing, Seller and Seller's Associates agree to the
following cancellations of indebtedness between each of Seller and Seller's
Associates and NexGen:
(a) Seller will owe $202,905 on the Seller's Note upon
transfer of the Shares to Purchaser. NexGen owes Seller $37,198.91 in working
capital advanced by Seller. Seller and
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NexGen will net these obligations in the amount of $15,000, resulting in
outstanding debts of $187,905 owed by Seller to NexGen and $22,198.91 owed by
NexGen to Seller. In satisfaction of NexGen's debt to Seller, Seller shall
accept NexGen common stock in lieu of payment at a sale price of $0.334 per
share, resulting in the issuance (rounded to the nearest whole share) of 66,464
shares of NexGen common stock to Seller. NexGen, in recognition of Seller's
contribution to the business shall forgive $152,905 of Seller's debt to NexGen
and pay to Seller as a special bonus, cash in an amount sufficient for Seller to
pay income tax due on this cancellation of indebtedness. Seller will owe NexGen
$35,000 remaining on Seller's Note.
(b) NexGen owes Xxxxxxx Xxxxxxx, one of Seller's Associates
("Xxxxxxx"), $35,000 in working capital advanced by Xxxxxxx. Xxxxxxx agrees to
accept, in payment of NexGen's debt to him, transfer of the remaining balance of
Seller's Note in the amount of $35,000.
(c) NexGen owes Xxxxxxxx Xxxxxx, one of Seller's Associates,
and X.X. Xxxxxx & Co. (collectively, "Xxxxxx"), $6,255 in working capital and
$17,500 in commissions, respectively. Xxxxxx hereby agrees to release NexGen
from such obligations which such obligations Seller hereby agrees to assume and
for which Seller shall exchange such debt for 71,123 shares of NexGen common
stock.
9. Capital Infusion/Lock Up Agreement/Payment of Certain NexGen Obligations:
(a) Seller agrees to cause additional working capital in the
sum of $210,000 to be obtained as a result of equity investments in NexGen, at a
minimum price of $1.00 per share, prior to the United Closing Date.
Alternatively, Seller may make a no-interest loan to NexGen in said amount,
repayable only as and when such capital, together with additional capital
necessary to pay the costs incurred in connection with the United Acquisition
are also obtained. The proceeds of raising such capital or loan of $210,000
shall be to loaned to Unico on the same terms provided for in Section 6.15 of
the Stock Purchase Agreement and Plan of Merger executed contemporaneously
herewith for working capital referred to in such Section 6.15. Purchaser agrees
to use up to $50,000 from the $210,000 in equity capital raised to pay
additional legal fees of NexGen incurred by a law firm agreed to by Purchaser
relating to the preparation of an S-4 registration statement. In the event that
Seller fails to obtain the $210,000 in equity capital or make the loan described
herein within the time recited, then Seller shall surrender to NexGen shares of
NexGen common stock that he owns equal to the deficiency, valuing such shares
for purposes hereof at $0.50 per share. Purchaser shall have the option to
purchase such shares from NexGen at the aforesaid price of $0.50 per share.
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(b) Seller represents and warrants that:
(1) Upon the Closing, Seller shall own 1,248,516
shares of NexGen common stock.
(2) Except as provided for in subparagraph
9(b)(3), Seller shall not sell, transfer or
otherwise dispose of any of Seller's NexGen
common stock until the earlier of (i) two
years from the Closing or (ii) the time when
all of the 250,000 shares of NexGen's Series
A Preferred stock and 70,000 shares of
Series B Preferred stock issued in
connection with the United Acquisition is
either redeemed or converted to common
stock.
(3) Notwithstanding subparagraph 9(b)(2), Seller
may sell up to (i) 150,000 shares of NexGen
common stock held by Seller to the persons
and in the amounts provided for in Exhibit A
hereto and (ii) 150,000 shares of NexGen
common stock held by Seller in private
transactions and in compliance with
applicable securities laws; provided, that
Seller may not sell any of the stock
provided for in subparagraph 9(b)(3)(ii)
until the payment of $48,267.49 in debt owed
by NexGen's subsidiary, Independent News
Inc. ("INI"), to certain employees of INI
(the "INI Debt"); and, provided, further,
that Seller may use the proceeds of the sale
of stock provided for in subparagraph
9(b)(3)(ii) to lend to NexGen an amount
sufficient to pay the INI Debt.
(c) Seller covenants that Seller shall be responsible for
providing sufficient funds, through a sale of Seller's NexGen common stock as
provided for in subparagraph 9(b)(3), through a loan by Seller to NexGen or by
causing NexGen to sell newly issued common stock (at a price no less than $1.00
per share), to cause NexGen to pay the INI Debt within 30 days of the execution
of this Agreement and thereafter up to $50,000 of existing NexGen legal fees.
Any funds advanced to NexGen by Seller to pay the INI Debt or the existing legal
fees shall be evidenced by a note from NexGen to Seller to provide for repayment
of the funds advanced plus interest. Principal and interest shall be due at the
time of repayment which shall be the earlier of (i) two years from the Closing
or (ii) the time when all of the 250,000 shares of NexGen's Series A Preferred
stock and 70,000 shares of Series B Preferred stock issued in connection with
the United Acquisition is either redeemed or converted to common stock. The note
shall bear interest at the applicable federal rate as
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provided for in section 1274(d) of the Internal Revenue Code, as amended, based
on the term of the note, as determined at the time of repayment. In lieu of such
payment, Seller may elect to receive NexGen Common stock at an exchange rate
equal to the sale price Seller obtained for his stock.
(d) Notwithstanding the provisions of Paragraph 9(c) above,
Purchaser agrees that Seller may provide for the payment of the INI Debt and the
existing legal fees of NexGen contemporaneous with the provision of $210,000 in
working capital to United by causing NexGen to sell newly issued shares of
common stock at a price no less than $1.00 per share, provided however, that the
proceeds of such sales shall be applies: 1st to the payment of the INI Debt, 2nd
to the $210,000 in working capital to United, 3rd to the payment of NexGen's
obligations pursuant to the Merger Agreement, and 4th to the aforesaid legal
fees.
10. Representations and Warranties of Seller and Seller's Associates: Seller and
Seller's Associates represents and warrants to Purchaser as follows:
(a) As of the date hereof and as of the Closing, Seller's
ownership of NexGen stock is and shall be as set forth in the Recitals and
Paragraph 1 hereof.
(b) Seller acquired the Shares for investment for his own
account and his own beneficial interest and not for the account or interest of
any other person or persons and had, at the time he acquired the Shares, no
present intention of reselling or otherwise distributing the Shares, but rather
intended to hold the Shares as a long-term investment. Seller has not offered or
agreed to sell his Shares through any advertisement or general solicitation,
instrumentality of interstate commerce or the mail.
(c) Seller and Seller's Associates have the power and
authority to execute, deliver and perform this Agreement and to consummate the
transaction intended hereby. This Agreement and all such other agreements and
obligations entered into and undertaken in connection with the transaction
contemplated hereby, constitute the valid and legally binding obligations of
Seller and Seller's Associates, enforceable against Seller and Seller's
Associates in accordance with their respective terms. Except as provided herein,
no consent, approvals or waivers are required to be obtained in connection with
Seller's or Seller's Associates performance of the transaction contemplated
hereby. The execution and performance of this Agreement does not conflict, or
constitute breach of or result in a default under any contract or indenture to
which Seller or Seller's Associates is a party or to which any of them is
subject.
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(d) No commission, finder's fee or other consideration of any
kind is being paid by any party to any entity or person in connection with this
Agreement.
(e) No representation or warranty by Seller or Seller's
Associates in this Agreement, or any schedule hereto, contains or shall contain
any untrue statement or omit to state a material fact.
11. Representations and Warranties of Purchaser:
(a) The Purchaser is acquiring the Shares for his own account
for investment, with no present intention of reselling or otherwise distributing
the Shares. The certificates representing the Shares, when and if issued to the
Purchaser, shall bear a legend substantially as follows:
The Shares represented by this Certificate have not been
registered under the Securities Act of 1933, as amended, or
the securities acts of any state (the "Acts"). The Shares have
not been acquired with a view to, or in connection with, any
distribution thereof and may not be sold, pledged,
hypothecated, transferred or otherwise disposed of in the
absence of an effective registration statement for the shares
under the Acts or opinion of counsel in a form reasonably
acceptable to the Corporation that registration is not
required under such Acts.
(b) Purchaser has full power and authority to execute, deliver
and perform this Agreement.
12. Survival of Representation and Warranties: The covenants, agreements,
representations and warranties set forth in this Agreement shall survive the
Closing and shall not be affected by any investigation, verification, or prior
knowledge by any party hereto or by anyone on behalf of any such parties.
13. Conditions Precedent to Closing:
(a) Purchaser. The obligation of the Purchaser to consummate
the transactions contemplated hereby shall be subject to the following
conditions precedent having occurred at or prior to Closing:
(1) The representation and warranties made by
the Seller and Seller's Associates shall be
true and correct in all material respects as
of the Closing; and
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(2) The delivery by the Seller of the stock
certificates required by Paragraph 3.
(3) Fulfillment of the conditions specified in
Paragraphs 4, 5, 6 and 7 hereof, to the
extent that such conditions are to be
completed on or by the Closing.
(b) Seller and Seller's Associates. The obligations of the
Seller and Seller's Associates to consummate the transactions contemplated
hereby shall be subject to the following condition precedent having occurred at
or prior to Closing:
(1) The representation and warranties made by
the Purchaser shall be true and correct in
all material respects as of the Closing;
(2) The delivery by the Seller of the
Purchaser's Note in a form satisfactory to
the parties;
(3) Execution of the definitive agreement for
the United Acquisition; and
(4) Approval by NexGen of: (i) the transfer of
Shares to Purchaser in exchange for the
transfer of the Purchaser's Note from Seller
to NexGen; and (ii) the cancellation and
forgiveness of Purchaser's Note as set forth
in Paragraph 6 hereof; and (iii) the
reduction in the Seller's Note in an amount
equal to the Purchase Price.
14. Successors and Assigns; Joint and Several Liability: This Agreement shall be
binding on, and shall inure to the benefit of, the parties hereto and their
respective heirs, legal representatives, successors and assigns. The
representations, warranties, covenants and agreements of Seller and Seller's
Associates made herein shall be deemed to be jointly and severally made by
Seller. The liability of any Seller's Associate shall be limited to a breach of
his respective representations, warranties, covenants and agreements.
15. Validity of Agreement: In the event any provision, or portion thereof, of
this Agreement is held by a court having proper jurisdiction to be for any
reason unenforceable or invalid, the remaining provisions, or portions thereof,
of this Agreement shall continue to exist and shall remain in full force and
effect.
16. Other Agreements: This Agreement sets forth all of the promises, agreements,
conditions, understandings,
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warranties, and representations between the parties hereto with respect to the
Shares, and there are no other promises, agreements, conditions, understandings,
warranties, or representations, oral or written, express or implied, between
them with respect to the Shares. No change, amendment or modification of this
Agreement shall be valid unless in writing and signed by the parties hereto.
17. Specific Performance: The parties hereto agree that the Shares are unique,
that failure of Seller or Seller's Associates to consummate the sale and other
transactions intended hereby will result in irreparable damage to Purchaser, and
that specific performance of these obligations or any other applicable
equitable, legal, or other decree, order, writ, or remedy that shall require
performance by each of the parties or one or both of them, may be obtained by
suit in law or in equity.
18. Governing Law: This Agreement shall be construed in accordance with, and
governed by the laws of, the Commonwealth of Virginia.
19. Assignment: This Agreement may not be assigned by any party without the
prior written consent of all other parties hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first shown above.
SELLER:
/s/ Xxxx X. Xxxx
---------------------
Xxxx X. Xxxx
SELLERS ASSOCIATES:
/s/ Xxxxx Xxxxxx
---------------------
Xxxxxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxxx
---------------------
Xxxxxxx Xxxxxxx
/s/ Xxxxx Xxxxxxxx
---------------------
Xxxxx Xxxxxxxx
/s/ Xxxxxxx Xxxx
---------------------
Xxxxxxx Xxxx
BUYER:
/s/ Xxxxxx Xxxxxxx
---------------------
Xxxxxx X. Xxxxxxx
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Exhibit A
NAME SHARES OF SELLER
---- ----------------
Xxxxxxx Xxxxxxx 30,000
Xxxxxxx Xxxx 25,000
Xxxxxx Xxxx 25,000
Xxxxxx Xxxxxx 30,000
Xxxxxx Xxxx 5,000
Xxxxxxx Xxxxxxx 21,000
Xxxx Xxxxxxxxxx 2,000
Xxxx Xxxxx 2,000
Xxxx Xxxxxxx 10,000
TOTAL 150,000
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