STOCK PURCHASE AGREEMENT
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THIS STOCK EXCHANGE AGREEMENT (the "Agreement") is made this 2nd day of
January, 1999 (the "Closing Date") between the shareholders of HOS-Pillow,
Corp., an Illinois corporation (the "Sellers") listed on Schedule A hereto, and
Circle Group Internet, Inc., an Illinois corporation ("CGI").
W I T N E S S E T H :
WHEREAS, HOS-Pillow, Corp., (the "HOS") has 100 shares of common stock,
par value $.00 per share (the "HOS Common Stock") authorized of which 100 shares
of HOS Common Stock are currently issued and outstanding; and
WHEREAS, Sellers own 100 shares of the HOS' Common Stock, and
WHEREAS, the CGI desires to purchase an aggregate of 100 shares of
Common Stock (the "HOS Shares") from Sellers on the terms and conditions set
forth in this Agreement; and
WHEREAS, the Sellers desires to sell the Shares to the CGI on the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the Sellers and CGI hereby agree as follows:
1. Incorporation by reference. The above recitals are herein incorporated by
reference.
2. Purchase and Sale. CGI shall purchase from Sellers, and the Sellers shall
sell to CGI, the Shares on the terms and conditions of this Agreement.
3. Consideration/Exchange Shares. In consideration of the transfer by Sellers of
the Shares to CGI, CGI shall transfer to Sellers 200,000 shares of common stock,
par value $0.0001 per share of CGI ("CGI Shares") on the Closing Date as set
forth on Schedule A hereto, of which 50,000 CGI Shares ("CGI Shares") shall be
restricted from resale for a period of ninety (90) days following the effective
date of such registration statement and the remaining 150,000 CGI Shares shall
be restricted under Rule 144 for a period of 12 months from the signing of this
agreement.
4. Obligations of Sellers. At the Closing of this transaction (as defined
herein), Sellers shall deliver to CGI (i) the Shares registered in the name of
CGI or
if the Shares are registered in the name of Sellers, duly endorsed to CGI; and
(ii) a receipt for the CGI Shares delivered to Sellers by CGI pursuant to
Section 3 hereof.
5. Obligations of CGI. At the Closing, CGI shall deliver to Sellers the Exchange
Shares pursuant to the terms of Section 3 of this Agreement.
6. Closing and Condition to Closing.
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6.1 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices CGI or at such other
place mutually agreed upon between CGI and Sellers on the Closing Date, to be
effective as of the 2nd day of January, 1999.
6.2 Condition to Closing. The Closing shall be subject to satisfaction
of the condition that (i) the representations and warranties of the Sellers
contained in Section 7 hereof, and CGI contained in Section 8 hereof, are true
and correct as of the Closing Date; (ii) the Sellers shall have delivered to CGI
the items required by Section 4 hereof; (iii) CGI shall have delivered to
Sellers the items required by Section 5 hereof; and (iv) CGI and Sellers shall
have performed and complied with all agreements and conditions required by this
Agreement to be performed and complied with by such party prior to or as of the
Closing Date.
7. Representations and Warranties of the Sellers.
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7.1 Authority of Sellers, Consents; Execution of Agreement. Sellers
have all requisite power, authority, and capacity to enter into this Agreement
and to perform the transactions and obligations to be performed by them
hereunder. No consent, authorization, approval, license, permit or order of, or
filing with, any person or governmental authority is required in connection with
the execution or the transactions and obligations to be performed by it
hereunder. This Agreement has been duly executed and delivered by Sellers and
constitutes a valid and legally binding obligation of Sellers, enforceable in
accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws. To the
best of the Seller's knowledge, HOS is a corporation duly organized, validly
existing and in good standing under the laws of the state of Illinois, and is
entitled to own or lease its property and to carry on its business as and in the
places where such properties are now owned, leased or operated. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby will not by themselves result in a breach or default under
result on the creation of any lien, security interest, charge an encumbrance
upon the HOS Shares, or any of the properties or assets of HOS as a result of
the terms, conditions or provisions of any contract, note mortgage or on any HOS
or any of its properties or assets may be bound.
7.2 Capitalization. The authorized capital stock of HOS consists of
1000 shares of Common Stock, of which 100 shares of HOS Common Stock are
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presently issued and outstanding. There are currently no outstanding warrants,
options, subscription rights or other commitments of any character granted by
HOS or the Sellers relating to the issued or unissued shares of HOS Common
Stock.
7.3 Unaudited Financial Statements.
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7.4 Investment. The Sellers warrant and acknowledge that:
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7.4.1 CGI Shares have not been registered under the Securities Act
of 1933, as amended ("Act"), or under applicable state blue sky laws;
7.4.2 the Sellers are acquiring the CGI Shares for their own
account;
7.4.3 the Sellers are experienced and sophisticated investors, and
are able to fend for themselves in the transactions contemplated by this
Agreement, and have such knowledge and experience in financial and business
matters that they are capable of evaluating the risks and merits of acquiring
the CGI Shares;
7.4.4 the Sellers are aware that the CGI Shares may not be sold
unless such securities are registered pursuant to the Act or qualify for an
exemption from such registration.
7.5 The HOS Shares. The HOS Shares are free and clear of all liens,
pledges, hypothecation, option, contract and other encumbrance, except for such
restrictions provided in this Agreement and pursuant to applicable law.
7.6 Disclosure Documents. Sellers acknowledge that they have been
given a copy, and have review, CGI's Post-Effective Amendment No. 1 to Form 1-A
dated September 14, 1998 as filed with the Securities and Exchange Commission.
7.7 True as of Closing Date. Sellers warrant and represent that the
warranties and representations contained in this Agreement are true and correct
in all respects as of the Closing Date.
8. Representations and Warranties of CGI.
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8.1 Authority of CGI; Execution of Agreement. CGI is a corporation
duly organized, validly existing and in good standing under the laws of the
state of Florida, and is entitled to own or lease its property and to carry on
its business as and in the places where such properties are now owned, leased or
operated. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of HOS, and will not by themselves
result in a breach or default under, or result in the creation of any lien,
security interest, charge or encumbrance upon the CGI Shares, or any of the
properties or assets of HOS as
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a result of the terms, conditions or provisions of any contract, note, mortgage
or any other agreement, instrument or obligation to which HOS is a party or by
which HOS or any of its properties or assets may be bound. CGI has all requisite
power, authority, and capacity to enter into this Agreement and to perform the
transactions and obligations to be performed by it hereunder. No consent,
authorization, approval, license, permit or order of, or filing with, any person
or governmental authority is required in connection with the execution of the
transactions and obligations to be performed by it hereunder. This Agreement has
been duly executed and delivered by CGI and constitutes a valid and legally
binding obligation of CGI, enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws.
8.2 Investment. CGI warrants and acknowledges that:
8.2.1 the HOS Shares have not been registered under the Securities
Act of 1933, as amended ("Act"), or under applicable state blue sky laws;
8.2.2 CGI is acquiring the HOS Shares for its own account and not
with a view towards distribution;
8.2.3 CGI is an experienced and sophisticated investor, is able to
fend for itself in the transactions contemplated by this Agreement, and has such
knowledge and experience in financial and business matters that it is capable of
evaluating the risks and merits of acquiring the HOS Shares;
8.2.4 CGI is aware that the Shares may not be sold unless such
securities are registered pursuant to the Act or qualify for an exemption from
such registration.
8.3 True as of Closing Date. CGI warrants and represents that the
warranties and representations contained in this Agreement are true and correct
in all respects as of the Closing Date.
9. Notices. All notices or other communications required or permitted hereunder
shall be in writing and shall be deemed to have been duly given if physically
delivered; delivered by overnight delivery, confirmed telecopy, telegram or
courier; or three days after having been deposited in the United States Mail, as
certified mail with return receipt requested and with postage prepaid, addressed
to the recipient at the address as follows. Any of the foregoing addresses may
be changed by giving notice of such change in the foregoing manner, except that
notices for changes of address will be effective only upon receipt.
If to CGI: CGI
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx
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If to HOS: 0000 Xxxxxx Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
10. Miscellaneous.
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(a) Assignment. This Agreement and the rights granted hereunder may not
be assigned in whole or in part by any of the parties without the prior written
consent of the other parties.
(b) Further Assurances. All parties hereto shall execute and deliver
such other instruments and do such other acts as may be necessary to carry out
the intent and purposes of this Agreement.
(c) Gender. Whenever the context may require, any pronouns used herein
shall include the corresponding masculine, feminine or neuter forms and the
singular form of nouns and pronouns shall include the plural and vice versa.
(d) Captions. The captions contained in this Agreement are inserted
only as a matter of convenience and in no way define, limit, extend or prescribe
the scope of this Agreement or the intent of any of the provisions hereof.
(e) Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof. It
supersedes all prior negotiations, letters and understandings relating to the
subject matter hereof.
(f) Amendment. This Agreement may not be amended, supplemented or
modified in whole or in part except by an instrument in writing signed by the
party or parties against whom enforcement of any such amendment, supplement or
modification is sought.
(g) Choice of Law. This Agreement will be interpreted, construed and
enforced in accordance with the laws of the State of Illinois.
(h) Effect of Waiver. The failure of any party at any time or times to
require performance of any provision of this Agreement will in no manner affect
the right to enforce the same. The waiver by any party of any breach of any
provision of this Agreement will not be construed to be a waiver by any such
party of any succeeding breach of that provision or a waiver by such party of
any breach of any other provision.
(i) 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 invalid, illegal or
unenforceable in any respect under any applicable law
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or rule in any jurisdiction, such invalidity, illegality or unenforceability
will not affect any other provision or any other jurisdiction, but this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision had never been contained
herein.
(j) Jurisdiction. Should it become necessary for any party to institute
legal action to enforce the terms and conditions of this Agreement, the
successful party will be awarded reasonable attorneys' fees at all trial and
appellate levels, expenses and costs. Venue for any such action, in addition to
any other venue permitted by statute, will be Lake County, Illinois.
(k) Binding Nature. This Agreement will be binding upon and will inure
to the benefit of any successor or successors of the parties to this Agreement.
(l) Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
(m) Construction. This Agreement shall be construed within the fair
meaning of each of its terms and not against the party drafting the document.
The parties, as evidenced by their signatures below, acknowledge that
this Agreement has been presented to their attorneys and that their attorneys
have had the opportunity to review and explain to them the terms and provisions
of the Agreement, and that they fully understand those terms and provisions.
IN WITNESS WHEREOF, the parties have respectively caused this Agreement
to be executed on the date first above written.
Sellers:
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx Xxxxxxx
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx Xxxxxxx
CIRCLE GROUP INTERNET, INC.
By: /s/ Xxxxxxx Xxxxxxx, CEO & President
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Xxxxxxx Xxxxxxx, Chief Executive
Officer and President
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SCHEDULE A
Name HOS Shares CGI Shares
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