SECURITIES PURCHASE AGREEMENT
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THIS SECURITIES PURCHASE AGREEMENT ("Agreement") is entered into on
March 16, 2000 by and between XXXXXXXXXXX.XXX, INC., a Delaware corporation
("Buyer") and ENTREPORT CORPORATION, a Florida corporation ("Seller").
R E C I T A L S
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A. Seller owns all of the issued and outstanding capital shares
("Shares") of ERT1 Inc., a Delaware corporation ("ERT1").
B. Seller wishes to sell, and Buyer wishes to acquire, all of the
Shares on the Closing Date (as defined below), in exchange for Buyer's issuance
of 100,000 shares ("Buyer Shares") of the $.002 par value common stock ("Buyer
Common Stock") of Buyer to Seller, subject to and upon the terms and conditions
hereinafter set forth.
A G R E E M E N T
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It is agreed as follows:
1. SECURITIES PURCHASE.
1.1 SALE OF SECURITIES. Subject to the terms and upon the
conditions set forth herein, Seller agrees to sell, assign, transfer and deliver
to Buyer, and Buyer agrees to purchase from Seller, at the Closing, the Shares
in consideration of Buyer's issuance of the Buyer Shares to Seller.
1.2 INSTRUMENTS OF TRANSFER.
(a) SHARES. The Seller shall deliver to Buyer at the
Closing certificates representing the Shares, along with duly executed stock
powers, in form and substance satisfactory to Buyer in order to vest in Buyer
all of Seller's right, title and interest in and to the Shares. From time to
time after the Closing Date, and without further consideration, Seller will
execute and deliver such other instruments of transfer and take such other
actions as Buyer may reasonably request in order to more effectively transfer to
Buyer the securities intended to be transferred hereunder.
(b) BUYER SHARES. Buyer shall deliver to Seller at
the Closing certificates representing the Buyer Shares, in form and substance
satisfactory to Seller, in order to effectively vest in Seller all right, title
and interest in and to the Buyer Shares. From time to time after the Closing
Date, and without further consideration, Buyer will execute and deliver such
other instruments and take such other actions as Seller may reasonably request
in order to more effectively issue to them the Buyer Shares.
1.3 CLOSING. The closing ("Closing") of the transaction under
this Agreement shall take place at the offices of Seller located at 10455
Xxxxxxxx Xxxxxx Xxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000 at 10 a.m., local
time, on March ___, 2000, or at such other time and place as may be agreed to by
Seller and Buyer ("Closing Date").
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2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER. Seller
represents, warrants and covenants to and with Buyer as follows:
2.1 POWER AND AUTHORITY. Seller has all requisite corporate
power and authority to enter into and to carry out all of the terms of this
Agreement and all other documents executed and delivered in connection herewith.
All corporate action on the part of Seller necessary for the authorization,
execution, delivery and performance of the Agreement by the Seller has been
taken and no further authorization on the part of Seller is required to
consummate the transactions provided for under this Agreement. When executed and
delivered by Seller, this Agreement shall constitute the valid and legally
binding obligation of Seller enforceable in accordance with its respective
terms.
2.2 OWNERSHIP OF AND TITLE TO SECURITIES. Seller represents
that Seller is the sole owner of the Shares, the Shares represent all of the
issued and outstanding capital shares of ERT1 and there are no warrants,
options, subscriptions, calls, or other similar rights of any kind for the
purchase of any securities of ERT1 by Seller or any other persons. Seller
represents that the Shares are duly authorized and have been validly issued,
fully paid and are nonassessable. Seller represents that Seller has and will
transfer to Buyer good and marketable title to the Shares, free and clear of all
pledges, security interests, mortgages, liens, claims, charges, restrictions or
encumbrances, except for any restrictions on resale of the Shares under
applicable federal and state securities laws.
2.3 ORGANIZATION AND GOOD STANDING. ERT1 is a company duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and is a duly qualified to do business and is in good standing as a
foreign company under the laws of each jurisdiction in which the character or
location of the assets owned or leased by it require qualification, except where
the failure to so qualify would not materially adversely affect the business or
condition, financial or otherwise, of ERT1. ERT1 has delivered or prior to the
Closing Date will deliver to Buyer complete and correct copies of its charter
documents, as amended, certified by an appropriate representative of ERT1 to be
complete and correct. ERT1 has no subsidiaries or equity ownership in any other
entities.
2.4 NO GOVERNMENTAL OR OTHER PROCEEDING OR LITIGATION. There
are no orders of any court or administrative agency in effect which restrains or
prohibits ERT1 or Seller from consummating the transactions contemplated hereby,
and no suit, action, investigation, inquiry or proceeding by any governmental
body or other person or legal or administrative proceeding has been instituted
or threatened which questions the validity or legality of Seller's consummation
of the transactions contemplated hereby.
2.5 APPROVALS AND CONSENTS. There are no permits, consents,
mandates or approvals of public authorities, either federal, state or local, or
of any third party necessary for the Seller's consummation of the transactions
contemplated hereby.
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2.6 CONTRACTS AND AGREEMENTS. Other than the Employment
Agreement ("Xxxxxx Agreement") dated April 2, 1999 between Seller and Xxx
Xxxxxx, which was later assumed by ERT1, there are no contracts or agreements to
which ERT1 is a party or by which it is bound.
2.7 ASSETS. ERT1 Disclosure Schedule attached hereto as
Exhibit A ("ERT1 Disclosure Schedule") sets forth all assets of ERT1, including
all intellectual property. ERT1 has not licensed, assigned or otherwise granted
to a third party any rights of use to any such assets.
2.8 ABSENCE OF LIABILITIES. Except for its obligations under
the Xxxxxx Agreement, ERT1 has no liabilities or commitments, fixed or
contingent, which in the aggregate are in excess of $1,000.
2.9 TAX MATTERS. ERT1 has timely filed all tax returns and all
information returns and reports required to be filed by or with respect to it
under the laws of its jurisdiction for all periods ending on or prior to the
date hereof and will timely file all such returns and reports required to be
filed from the date hereof through the Closing Date. ERT1 has paid all taxes
which have become due or payable, and will pay on or prior to the Closing Date
all taxes which have become due or payable on or prior to the Closing Date.
Following the Closing Date, Seller shall agree to cooperate with Buyer in
connection with the preparation of any tax returns due or payable following the
Closing Date.
2.10 INVESTMENT AND RELATED REPRESENTATIONS.
2.10.1 BUYER SHARES AS "RESTRICTED" SECURITIES.
Seller is aware that neither the Buyer Shares nor the offer or sale thereof to
the Seller has been registered under the Securities Act of 1933, as amended
("Securities Act"), or under any state securities law. Seller further
understands that no registration statement has been filed with the Securities
and Exchange Commission ("SEC"), nor with any other state regulatory authority
and that, as a result, any benefit which might normally accrue to an investor
such as Seller by an impartial review of such a registration statement by the
SEC or other regulatory commission will not be forthcoming. Seller acknowledges
that the Buyer Shares will be characterized as "restricted" securities under
federal securities laws inasmuch as they are being acquired in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act only
in certain limited circumstances. Seller represents that Seller is familiar in
general with Rule 144 under the Securities Act (which provides generally for a
one year holding period and limitations on the amount of "restricted" securities
that can be publicly resold in compliance with the rule upon completion of the
holding period), and understands the resale limitations imposed thereby and by
the Securities Act. Seller agrees that Seller will not sell any portion of Buyer
Shares except in accordance with an available exemption from registration under
the Securities Act. Seller understands that the certificate for the Buyer Shares
issued to Seller or to any subsequent transferee shall be stamped or otherwise
imprinted with an appropriate legend summarizing the restrictions described in
this Section 2.10.1 and that Buyer shall refuse to transfer the Buyer Shares
except in accordance with such restrictions, such legend to be substantially as
follows:
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THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
SUCH SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION, IN EACH CASE AS CONFIRMED IN AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY AND IN EACH CASE IN
ACCORDANCE WITH ANY OTHER APPLICABLE LAW.
2.10.2 INVESTMENT REPRESENTATION. This Agreement is
made with Seller in reliance upon Seller's representation, which by Seller's
execution of this Agreement Seller hereby confirms, that the Buyer Shares to be
received by Seller are being acquired pursuant to this Agreement for investment
and not with a view to the public resale or distribution thereof unless pursuant
to an effective registration statement or exemption under the Securities Act.
2.10.3 NO PUBLIC SOLICITATION. Seller is acquiring
the Buyer Shares after private negotiation and has not been attracted to the
acquisition of the Buyer Shares by any press release, advertising or
publication.
2.11 MARKET STANDOFF AGREEMENT. Seller shall agree to
execute a Market Standoff Agreement in the form attached hereto as Exhibit C
which restricts the sale of the Buyer Shares during the 180 day period
immediately following an underwritten registered public offering of the
securities of Buyer. Seller understands that the certificate for the Buyer
Shares issued to Seller or to any subsequent transferee shall be stamped or
otherwise imprinted with an appropriate legend summarizing the restrictions
described in this Section 2.11 in substantially the form set forth in the Market
Standoff Agreement.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER. Buyer
represents, warrants and covenants to and with Seller as follows:
3.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware and has full corporate power and authority to enter into and
perform its obligations under this Agreement. Buyer is the ultimate parent in
its corporate group and there is no corporation, partnership or any other entity
that owns in excess of twenty percent (20%) of the outstanding capital shares of
Buyer on a fully diluted basis.
3.2 CAPITALIZATION. The authorized capital stock of Buyer
consists of 44,000,000 shares of Buyer Common Stock, of which 12,127,067 shares
are issued and outstanding as of the date of this Agreement and 6,000,000 shares
of preferred stock of which 5,500,000 shares are issued and outstanding as of
the date of this Agreement. All outstanding shares of Buyer Common Stock have
been duly authorized and validly issued, and are fully paid, nonassessable, and
free of any preemptive rights. Except as disclosed on the Buyer Disclosure
Schedule attached hereto as Exhibit B ("Buyer Disclosure Schedule"), there are
no warrants, options, subscriptions, calls, or other similar rights of any kind
outstanding for the purchase of any securities of Buyer.
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3.3 NO GOVERNMENTAL OR OTHER PROCEEDING OR LITIGATION. Buyer
represents that no order of any court or administrative agency is in effect
which restrains or prohibits Buyer from consummating the transactions
contemplated hereby, and no suit, action, investigation, inquiry or proceeding
by any governmental body or other person or legal or administrative proceeding
has been instituted or threatened which questions the validity or legality of
Buyer's consummation of the transactions contemplated hereby.
3.4 VALIDITY OF TRANSACTIONS. This Agreement, and each
document executed and delivered by Buyer in connection with the transactions
contemplated by this Agreement, and the performance of the transactions
contemplated therein have been duly authorized, executed and delivered by Buyer
and is each the valid and legally binding obligation of Buyer, enforceable in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency reorganization and moratorium laws and other laws affecting
enforcement of creditor's rights generally and by general principles of equity.
The Buyer Shares issuable hereunder, when issued in accordance with the terms of
this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable. The Buyer Shares will be free of any liens or encumbrances,
except for any restrictions on resale imposed by federal or state securities
laws.
3.5 APPROVALS AND CONSENTS. Buyer represents that there are no
permits, consents, mandates or approvals of public authorities, either federal,
state or local, or of any third party necessary for Buyer's consummation of the
transactions contemplated hereby.
3.6 FINANCIAL STATEMENTS; DISCLOSURE PACKAGE. Buyer has
furnished to Seller its unaudited consolidated balance sheet as of the end of
its fiscal year ended December 31, 1999 and its unaudited consolidated
statements of earnings, shareholders' equity and cash flows for the fiscal year
ended December 31, 1999, together with appropriate notes to such unaudited
consolidated financial statements.
All of the foregoing unaudited consolidated financial
statements (collectively, the "Buyer Financial Statements"), including in each
case the related notes, have been prepared in conformity with generally accepted
accounting principles consistently applied and are correct and complete in all
material respects and such consolidated financial statements fairly present the
financial position of Buyer as of the dates of such balance sheets and the
results of operations for the respective periods indicated.
Buyer represents that it has delivered to Seller its Executive
Summary. The information in the Executive Summary, taken as a whole, is true and
correct in all material respects and does not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Buyer acknowledges that Seller is entering into this Agreement
based, in part, on Buyer's intention to pursue a public offering of its Common
Stock. Buyer hereby confirms such intent, without expressing any assurance or
likelihood that an initial public offering will take place or otherwise
committing itself to the transaction.
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3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Buyer has no material
liabilities, fixed or contingent, other than (i) liabilities fully reflected in
the Buyer Financial Statements, or (ii) liabilities incurred since December 31,
1999 in the ordinary course of business or as contemplated or permitted by this
Agreement, all of which in the aggregate, taking into consideration all other
changes in the financial condition of Buyer in the ordinary course of business,
have had no material adverse effect on the financial position or results of
operations of Buyer or on the conduct of its businesses.
3.8 ABSENCE OF ADVERSE CHANGES. Except as disclosed in the
Buyer Financial Statements or the Buyer Disclosure Schedule, since December 31,
1999, there has not been any material adverse change in the assets or
liabilities or in the condition, financial or otherwise, or business,
properties, earnings or net worth of Buyer, or (ii) any damage or destruction in
the nature of a casualty loss, whether covered by insurance or not, materially
and adversely affecting any property or business of Buyer which is material to
the consolidated financial condition, operation or business of Buyer.
3.9 OTHER INFORMATION. No portion of this Agreement, any
Schedule or Exhibit attached hereto or any other document furnished or to be
furnished by Buyer or any of its authorized representatives to Seller or any of
their authorized representatives is false or misleading or omits to state a fact
required to be stated therein in order to make any of the statements therein not
misleading in light of the circumstances under which they were made. There is no
fact known to Buyer which adversely affects or in the future is likely to
adversely affect Buyer which has not been described or set forth or referred to
in this Agreement, any Schedule or Exhibit hereto or any other document.
4. MISCELLANEOUS.
4.1 CUMULATIVE REMEDIES. Any person having any rights under
any provision of this Agreement will be entitled to enforce such rights
specifically, to recover damages by reason of any breach of any provision of
this Agreement, and to exercise all other rights granted by law, which rights
may be exercised cumulative and not alternatively.
4.2 SUCCESSORS AND ASSIGNS. The rights and obligations of the
parties under this Agreement shall not be assignable without the written consent
of the parties, on the other and any such purported assignment without their
written consent shall be void ab initio. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto will bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not.
4.3 SEVERABILITY. 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 prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement or the other documents.
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4.4 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts when taken together will constitute one and
the same agreement.
4.5 NOTICES. Any approvals, consents or notices required or
permitted to be sent or given shall be delivered in writing personally or
mailed, certified mail, return receipt requested, to the following addresses and
shall be deemed to have been received within five days after such mailing:
If to Buyer: XxxxxXxxxxx.xxx, Inc.
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxxxxxx X. Xxxx,
President and Chief Executive Officer
with a copy to:
Xxxxxxx X. Xxxxx
Central Park Tower
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
If to Seller: EntrePort Corporation
00000 Xxxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxx, Chief Executive
Officer
5.7 SCHEDULES AND EXHIBITS. All schedules and exhibits are an
integral part of this Agreement.
5.8 LITIGATION COSTS. If any legal action or any arbitration
or other proceeding is brought for the enforcement of this Agreement, or because
of an alleged dispute, breach, default, or misrepresentation in connection with
any of the provisions thereof, the successful or prevailing party or parties
shall be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it or
they may be entitled.
5.9 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties with respect to the subject matter
thereof, and supersedes all prior and contemporaneous agreements and
understandings.
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IN WITNESS WHEREOF, each of the parties to this Agreement has executed
or caused this Agreement to be executed as of the date first above written.
"BUYER"
XXXXXXXXXXX.XXX, INC.
a Delaware corporation
By: /S/ Xxxxxxxxxxx X. Xxxx
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Xxxxxxxxxxx X. Xxxx,
President and Chief Executive Officer
"SELLER
ENTREPORT CORPORATION,
a Florida corporation
By: /S/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx, Chief Executive Officer
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EXHIBIT A
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SCHEDULE OF ASSETS
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1. The XXX0.xxx logo
2. The XXX0.xxx slogan: "The Success Engine for Men and Women of "Color"
3. The XXX0.xxx letterhead including the logo and faces of various
individuals
4. The XXX0.xxx business card including logo
5. The entire XXX0.xxx internet website
6. A four color brochure including the XXX0.xxx logo
7. All other intellectual property including any and all software, source
and object codes, copyrights, patents and trade secrets relating to the
XXX0.xxx internet website, including the right to xxx for any past
infringement of any intellectual property rights.
8. The following domain names: The following domain names: XXX0.xxx,
XXX0.xxx, XXXXxx.xxx, XXXXxx.xxx, XxxxxxxXxxxxx.xxx, XxxxxxxXxxxxx.xxx,
XxxxxxXxxxxXxx.xxx, and XxxxxxXxxxxXxx.xxx.
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EXHIBIT B
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BUYER DISCLOSURE SCHEDULE
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