PURCHASE AGREEMENT
THIS AGREEMENT is made this 7th day of February, 2003, by and between
Xxxx Xxxxxxxx, a resident of Xxxxx County, State of Utah ("Xxxxxxxx");
Xxxxxxxx Xxxxxx, a resident of Xxxxxx County, State of Texas ("Hansel"); and
Highway One-OWEB, Inc., a Utah corporation (the "Company").
RECITALS
X. Xxxxxxxx is the founder and the sole director, President and
Secretary of the Company, and is the beneficial owner of 2,000,000 shares of
the Company's common stock, representing approximately 85% of the 2,348,000
shares that are issued and outstanding immediately prior to the execution of
this Agreement (the "Currently Outstanding Shares").
B. The Company was organized in March, 1999, for the purpose of
conducting a web site design, development and hosting business.
C. Following the Company's organization, it offered and sold 348,000
shares of its common stock at a price of $0.10 per share under Rule 504 of
Regulation D of the Securities and Exchange Commission (the "Commission") and
applicable state laws, rules and regulations.
D. The Company's common stock is registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended.
E. The Company is indebted to Xxxxxxxx in the principal amount of
$10,000 for Xxxxxxxx'x contribution of property, equipment and services to the
Company since inception.
F. Despite Xxxxxxxx'x efforts to develop the Company into a viable
business, it has conducted only minimal operations and has received total
revenues of less than $1,000 since its inception.
G. Due to the Company's lack of success to date, Xxxxxxxx wishes to take
action that will provide potential benefits and other opportunities for the
Company and its stockholders and to resign as a director and executive officer
and to pursue other business opportunities.
X. Xxxxxx has substantial experience and expertise in creating value for
the stockholders of public companies and has advised Xxxxxxxx that he has
identified a privately-held, operating entity that may be a suitable candidate
for a merger or acquisition transaction with the Company (an "Operating
Entity").
X. Xxxxxxxx believes that such a transaction would substantially
increase the value of his shares and the shares of the Company's other
stockholders.
J. The parties believe that a substantial reduction in Xxxxxxxx'x
ownership interest in the Company would make it more attractive to an
Operating Entity.
NOW, THEREFORE, in consideration of (i) the potential for a substantially
increased value in Xxxxxxxx'x shares of the Company's common stock and the
shares of the Company's other stockholders; (ii) Xxxxxxxx'x agreement to have
his ownership interest in the Company substantially diluted in order to make
the Company more attractive to an Operating Entity; (iii) Xxxxxxxx'x reliance
on Hansel's representations and the actions that Hansel agrees to take as set
forth herein; (iv) Xxxxxxxx'x purchase of the Company's Pentium III 600 MHz
full tower computer server as outlined in Paragraph 7, below (the "Server");
and (v) the significant financial benefits that Hansel may realize upon
completion of a reorganization with an Operating Entity, the parties agree as
follows:
1. Xxxxxxxx'x Resignation. Concurrent with the execution of this
Agreement, Xxxxxxxx will execute a resolution of the Company's sole director
by which he will resolve to issue 20,000,000 "unregistered" and "restricted"
shares of its common stock to Hansel in consideration of Hansel's agreement to
serve as a director and executive officer of the Company and Hansel's payment
of all of the Company's costs and expenses incurred in connection with this
Agreement as outlined in Paragraph 11 hereof (the "Shares"). Immediately
thereafter, Xxxxxxxx shall appoint Hansel to fill one of the existing
vacancies on the Company's Board of Directors due to the requirement of the
Utah Revised Business Corporation Act that a Utah corporation have at least
three directors, with Hansel to serve until the next annual meeting of the
Company's stockholders or his prior resignation or termination and the
appointment and qualification of his successor(s). Immediately after such
appointment, Xxxxxxxx shall resign as a director and the President and
Secretary of the Company.
2. Corporate Governance. At all times during which he is a director,
executive officer and/or controlling stockholder of the Company, Hansel shall:
(a) maintain the Company in good standing in the State of Utah and
any other states to which its domicile may be changed;
(b) ensure that the Company files all periodic reports and makes all
other required filings with the Commission and applicable state securities
regulators;
(c) ensure that the Company's common stock maintains its quotations
on the OTC Bulletin Board of the National Association of Securities Dealers,
Inc. (the "OTCBB"), or another national quotation system or stock market of
the same or better quality than the OTCBB; and
(d) ensure that all other acts of the Company are done in compliance
with all applicable federal and state laws, rules and regulations.
3. Reorganization with Operating Entity. Hansel and the Company will
use their best efforts to enter into a merger or acquisition agreement with a
suitable Operating Entity within 90 days after the change in control of the
Company as outlined in Paragraph 1 above.
4. Anti-dilution Provisions.
(a) While Hansel is a director of the Company, he will not vote to
authorize the Company to recapitalize or reclassify its common stock, effect
any stock dividend, split or reverse split of its common stock, issue shares
of its common stock or takes any other action that will have the effect of
reducing the collective holdings of the holders of the Currently Outstanding
Shares (i.e., 2,348,000 shares of the Company's common stock) to less than
6.5% of the Company's issued and outstanding common stock without Xxxxxxxx'x
prior written consent. For purposes of this Agreement, any such event shall
be termed a "Dilutive Event."
5. Limitations on Registration Statements. The Company shall not file
any registration statement on Forms S-8 or S-3 of the Commission for a period
of one year from the date hereof without Xxxxxxxx'x prior written consent.
Promptly upon execution of this Agreement, the Company shall instruct its
current counsel, Xxxxxxx X. Xxxxxxxxxx, Esq., to notify its transfer
agent, Colonial Stock Transfer, of these restrictions and the restrictions set
forth in Paragraph 4, above, and to provide the transfer agent with an
executed copy of this Agreement.
6. Present Outstanding Securities and Acceptance of Opinions of Counsel.
Neither the Company, nor Hansel shall contest the validity of any of the
pre-Agreement outstanding Company common stock; and the Company, subject to
concurrence by its legal counsel with any such opinion, agrees to accept
opinions covering the resale of any of the Company's securities in
accordance with Rule 144 of the Commission from Xxxxxxx X. Xxxxxxxxxx, Esq. or
Xxxxxxx X. Xxxxxxxxxx, Esq., which opinions shall be paid for by the party
requesting such opinions.
7. Purchase of Computer Server. Xxxxxxxx hereby agrees to purchase, and
the Company agrees to sell to Xxxxxxxx, the Server for the sum of $2,303,
which is the fair market value of the Server as disclosed in the Company's
unaudited balance sheet as of September 30, 2002, and the amount of the
Company's current indebtedness to Xxxxxxxx shall be reduced by that amount.
8. Representations and Warranties of Xxxxxxxx and the Company.
Xxxxxxxx and the Company represent and warrant to Hansel as follows:
(a) The Company is a Utah corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, with all requisite power and authority and all necessary
authorizations, approvals and licenses to own and use its properties
and assets and to carry on the business in which it is currently engaged.
(b) The Company's authorized capital consists of 100,000,000 shares
of common stock having a par value of one mill ($0.001) per share, of which
2,348,000 shares are currently issued and outstanding. Each such outstanding
share is validly authorized, fully paid and non-assessable. The foregoing
notwithstanding, due to the Company's lack of any significant operating
history since its inception, Xxxxxxxx and the Company make no representations
or warranties with respect to the Company's compliance with Rule 504 of
Regulation D of the Commission in connection with the offer, sale or issuance
of any of its issued and outstanding shares.
(c) The Company has delivered to Hansel copies of its Annual Report
on Form 10-KSB for the calendar year ended December 31, 2001, and its
Quarterly Reports on Form 10-QSB for the quarterly periods ended March 31,
2002; June 30, 2002; and September 30, 2002. The balance sheets contained
therein present fairly the financial condition, assets, liabilities and
stockholders' equity of the Company as of their respective dates. In
addition, except as otherwise contemplated by this Agreement, since September
30, 2002:
(i) There has at no time been a material adverse change in the
financial condition, results of operations, business, properties, assets,
liabilities or future prospects of the Company.
(ii) The Company has not authorized, declared, paid or
effected any dividend or liquidating or other distribution with respect to its
capital stock or any direct or indirect redemption, purchase or other
acquisition of any Company common stock.
(iii) The operations and business of the Company have been
conducted in all respects only in the ordinary course, except for the
transactions contemplated hereby.
(d) Except as indicated herein, there is no fact known to Xxxxxxxx
or to the Company that materially adversely affects or in the future (as far
as Xxxxxxxx and the Company can reasonably foresee) may materially adversely
affect the financial condition, results of operations, business, properties,
assets liabilities or future prospects of the Company. The Company has made
known, or caused to be made known, to the accountants or auditors who
have prepared, reviewed or audited its financial statements all material facts
and circumstances that could affect the preparation, presentation, accuracy or
completeness thereof.
(e) The Company does not have any material liability of any nature,
accrued or contingent, including, without limitation, liabilities for federal,
state, local or foreign taxes and penalties and interest, other than the
following:
(i) Liabilities for which full provision has been made on the
balance sheet and the notes thereto as of September 30, 2002 referred to in
Paragraph 6(c), above (the "Last Balance Sheet"); and
(ii) Other liabilities arising since the Last Balance Sheet
date and prior to the date hereof in the ordinary course of business or in
connection with the transactions contemplated hereby that are not inconsistent
with the Company's representations and warranties or any other provision of
this Agreement.
(f) There is no litigation, arbitration, claim, governmental or
other proceeding or investigation pending, threatened or, to the best of
Xxxxxxxx'x and the Company's knowledge, in prospect, with respect to the
Company or any of its businesses, properties or assets.
(g) Following Xxxxxxxx'x purchase of the Server, the Company will
hold no title or interest in any real or personal property, and it does not
own or have pending any material patent, patent application, trademark,
trademark application, copyright, copyright application, franchise or other
intangible property or asset.
(h) The Company is not a party to any material contracts,
agreements, instruments, leases or licenses.
(i) The Company has all requisite power and authority to execute,
deliver and perform this Agreement and all necessary corporate proceedings
have been duly taken in this regard. This Agreement has been duly authorized,
executed and delivered by the Company and it constitutes the legal, valid and
binding obligation of the Company and is enforceable against the
Company in accordance with its terms.
(j) There are no currently outstanding subscriptions, options,
warrants, contracts, calls, puts, agreements, demands or other commitments or
rights of any type to purchase or acquire any securities of the Company, nor
are there outstanding Company securities that are convertible into or
exchangeable for any shares of capital stock of the Company, and, except as
provided in this Agreement, the Company has no obligation of any kind to issue
any additional securities.
(k) Neither the execution and delivery of this Agreement, nor
compliance with the terms and provisions hereof, including without limitation
the consummation of the transactions contemplated hereby, will violate any
statute, regulation or ordinance of any governmental authority, or conflict
with or result in the material breach of any term, condition or provision of
the Articles of Incorporation, Bylaws or other charter documents of the
Company, nor of any agreement, deed, contract, mortgage, indenture, writ,
order, decree, legal obligation or instrument to which the Company is a party
or by which it or any of its assets or properties are or may be bound; or
constitute a material default (or an event which, with the lapse of time or
the giving of notice, or both, would constitute a material default)
thereunder, nor result in the creation or imposition of any lien, charge or
encumbrance, or restriction of any nature whatsoever with respect to any
properties or assets of the Company, nor give to others any interest or
rights, including rights of termination, acceleration or cancellation in or
with respect to any of the Company's properties, assets, contracts or
businesses.
(l) No representation or warranty by Xxxxxxxx and the Company in
this Agreement contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements made not misleading.
9. Representations and Warranties of Hansel. Hansel represents and
warrants to Xxxxxxxx and to the Company as follows:
(a) Hansel has been provided with a copy of the Company's Annual
Report on Form 10-KSB for the calendar year ended December 31, 2001, and its
Quarterly Reports on Form 10-QSB for the quarterly periods ended March 31,
2002; June 30, 2002; and September 30, 2002, which have been filed with the
Commission, and all other material information requested by Hansel or others
representing Hansel, including any information requested to verify any
information furnished, and there has been direct communication between the
Company and its representatives on the one hand and Hansel and his
representatives and advisors on the other in connection with information
regarding the purchase of securities and the change in control of the
Company made hereby. The Company has given Hansel the opportunity to ask
questions of and to receive answers from the Company and Xxxxxxxx and to
obtain any additional information (to the extent the Company possesses such
information or can acquire it without unreasonable effort or expense) desired
or necessary to verify the accuracy of the information provided, and Hansel
has been given the opportunity to discuss this Agreement and its legal
ramifications with legal counsel of his choosing.
(b) Hansel has no present intention of dividing the Shares with
others or of reselling or otherwise disposing of any portion of the Shares
unless registered pursuant to a registration statement filed with the
Commission or there is an available exemption from such registration.
(c) Hansel confirms that he is an "accredited investor" as defined
under Rule 501 of Regulation D of the Securities Act of 1933, as amended (the
"Securities Act"), or is a sophisticated investor with such knowledge and
experience in financial and business matters that he is capable of evaluating
the Company and the proposed activities thereof and the merits and risks of
his investment.
(d) Hansel understands that he must bear the economic risk of
ownership of the Shares for a long period of time, the minimum of which will
be one year, as these securities are "unregistered" securities and may not be
sold unless any subsequent offer or sale is registered with the Commission or
otherwise exempt from the registration requirements of the Securities Act, or
other applicable laws, rules and regulations.
(e) Hansel understands that all of the Shares shall be represented
by one certificate only, and that such certificate shall be imprinted with the
following legend or a reasonable facsimile thereof on the front and reverse
sides thereof:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may
not be sold or otherwise transferred unless compliance with the
registration provisions of such Act has been made or unless
availability of an exemption from such registration provisions has
been established, or unless sold pursuant to Rule 144 under the
Act.
(f) During the past five years, Hansel:
(i) has not been a general partner or executive officer of any
business against which any bankruptcy petition was filed, either at the time
of the bankruptcy or two years prior to that time;
(ii) has not been convicted in a criminal proceeding or named
subject to a pending criminal proceeding, excluding traffic violations and
other minor offenses;
(iii) has not been subject to any order, judgment or decree,
not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring, suspending or
otherwise limiting his involvement in any type of business, securities or
banking activities; and
(iv) has not been found by a court of competent jurisdiction
in a civil action, the Commission or the Commodity Futures Trading Commission
to have violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended or vacated.
(g) Neither the execution and delivery of this Agreement, nor
compliance with the terms and provisions hereof, including without limitation
the consummation of the transactions contemplated hereby, will violate any
statute, regulation or ordinance of any governmental authority, or conflict
with or result in the material breach of any agreement, deed, contract,
mortgage, indenture, writ, order, decree, legal obligation or instrument to
which Hansel is a party or by which he or any of his assets or properties are
bound; or constitute a material default (or an event which, with the lapse of
time or the giving of notice, or both, would constitute a material default)
thereunder, nor result in the creation or imposition of any lien, charge or
encumbrance, or restriction of any nature whatsoever with respect to any of
Hansel's properties or assets, nor give to others any interest or rights,
including rights of termination, acceleration or cancellation in or with
respect to any of Hansel's properties, assets, contracts or businesses. This
Agreement and each other document delivered by Hansel in connection herewith
have been duly executed and delivered by Hansel and constitute the binding
obligations of Hansel enforceable in accordance with their respective terms.
(h) No approval or authorization of or filing with any governmental
authority or any other person or entity on the part of Hansel is required as a
condition to the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby other than the filing of any documents
contemplated by this Agreement.
(i) No representation or warranty by Hansel in this Agreement
contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements made not misleading.
10. Indemnification.
(a) Xxxxxxxx hereby agrees to indemnify and hold the Company and
Hansel harmless from and against the following:
(i) Any and all liabilities, losses, claims, costs, expenses,
damages and judgments (including, without limitation, any legal or other
expenses incurred in connection with investigating or defending any matter,
including any action, that could give rise to such liabilities, losses,
claims, costs, expenses, damages and judgments and any action to enforce this
Paragraph 10(a)), resulting from or arising out of any breach of any
representation, warranty, or non-performance of any covenant or agreement on
the part of Xxxxxxxx contained in this Agreement;
(ii) Any and all losses resulting from or arising out of the
conduct of any business, any act or any omissions by or on behalf of the
Company prior to the date hereof, except as set forth in Paragraph 8(c)(ii),
below.
(b) Hansel hereby agrees to indemnify and hold Xxxxxxxx and the
Company harmless from and against any and all liabilities, losses, claims,
costs, expenses, damages and judgments (including, without limitation, any
legal or other expenses incurred in connection with investigating or defending
any matter, including any action, that could give rise to such liabilities,
losses, claims, costs, expenses, damages and judgments and any action to
enforce this Paragraph 10(b)), resulting from or arising out of any breach of
any representation, warranty, or non-performance of any covenant or agreement
on the part of Hansel contained in this Agreement;
(c) Hansel and the Company hereby agree to indemnify and hold
Xxxxxxxx harmless from and against the following:
(i) Any and all losses resulting from or arising out of the
conduct of any business, any act or any omissions by or on behalf of the
Company after the date hereof,
(ii) Any and all Company liabilities of any type or nature
whatsoever existing as of the date hereof, which includes all expenses related
to this Agreement.
11. Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby will be paid by Xxxxxx.
00. Brokers. No broker or finder is entitled to any brokerage or
finder's fee or other commission or fee from any company or based upon
arrangements made by or on behalf of any party with respect to the
transactions contemplated by this Agreement.
13. Other Actions. Each of the parties hereto agrees to execute,
deliver and file with the appropriate authorities such other documents,
including Current Reports on Form 8-K; certificates; agreements; and other
writings and to take such other actions as may be necessary or desirable to
consummate the transactions contemplated by this Agreement.
14. Entire Agreement; Waiver and Amendment. This Agreement constitutes
the entire agreement by and among Xxxxxxxx, the Company and Hansel with
respect to the transactions contemplated hereby. Any and all prior
discussions, negotiations, commitments and understandings relating to the
subject matter of this Agreement are superseded by this Agreement. This
Agreement may not be modified, amended or terminated except by a written
agreement specifically referring to this Agreement signed by all of the
parties hereto. No waiver of any breach or default hereunder shall be
considered valid unless in a writing signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach
or default of the same or similar nature.
15. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Utah without regard to its
principles of conflicts of laws. Any action, suit or proceeding arising out
of, based on, or in connection with this Agreement, any document relating
hereto or delivered in connection with the transactions contemplated hereby,
any breach of this Agreement or such documents, may be brought only in the
state courts of the State of Utah located in Xxxxx County, or in the United
States District Court for the District of Utah, and each party covenants and
agrees no to assert by way of motion, defense or otherwise, in any such
action, suit or proceeding any claim that he or it is not subject personally
to the jurisdiction of such court if he or it has been duly served with
process, that his or its property is exempt or immune from attachment or
execution, that the action, suit or proceeding is brought in an inconvenient
forum, that the venue of the action, suit or proceeding is improper, or that
this Agreement or the subject matter hereof may not be enforced in or by such
court.
16. Availability of Equitable Remedies. Since a breach of the
provisions of this Agreement could not adequately be compensated by money
damages, any party shall be entitled, in addition to any other right or remedy
available to him or to it, to an injunction restraining such breach or
threatened breach and to specific performance of any such provision of this
Agreement and, in either case, no bond or other security shall be required in
connection therewith, and the parties hereby consent to the issuance of such
an injunction and to the ordering of specific performance.
17. Descriptive Headings. The descriptive headings are for convenience
of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
18. Notices. All notices or other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally or
sent by registered or certified mail postage prepaid, addressed as follows:
If to Xxxxxxxx: Xxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxx, XX 00000
with a copy to: Xxxxxxx X. Xxxxxxxxxx, Esq.
Hermes Building, Suite 205
455 East Xxxxx Xxxxx
Xxxx Xxxx Xxxx, XX 00000-0000
If to the Company: Highway One-OWEB, Inc.
0000 Xxxxxxx
Xxxxxxx, XX 00000
with a copy to: ______________________
______________________
______________________
If to Hansel: Xxxxxxxx Xxxxxx
0000 Xxxxxxx
Xxxxxxx, XX 00000
with a copy to: ______________________
______________________
______________________
19. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one agreement.
20. Binding Effect. This Agreement will be binding upon and will inure
to the benefit of the parties and their respective heirs, personal
representatives, successors and permitted assigns. Except as herein provided,
no party will have the right to assign this Agreement, or any of such
party's rights hereunder, without the prior written consent of the other
parties.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto as of the date first
herein above written.
"Xxxxxxxx"
/s/ Xxxx Xxxxxxxx
-----------------
Xxxx Xxxxxxxx
"The Company"
HIGHWAY ONE-OWEB, INC., a Utah
corporation
By /s/ Xxxx Xxxxxxxx
-----------------
Xxxx Xxxxxxxx, President
"Hansel"
/s/ Xxxxxxxx Xxxxxx
-------------------
Xxxxxxxx Xxxxxx
