EXHIBIT 2.4
THE SECURITIES TO WHICH THIS AGREEMENT RELATES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY
STATE SECURITIES LAWS ("STATE LAWS") OR ANY SECURITIES LAWS OF JURISDICTIONS
OUTSIDE OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED IN THE UNITED STATES OR TO A "U.S. PERSON" (AS DEFINED HEREIN)
EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE
SECURITIES ACT COVERING THE SECURITIES, OR (2) UPON DELIVERY TO THE ISSUER OF AN
OPINION OF U.S. COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT THE
SECURITIES MAY BE TRANSFERRED WITHOUT REGISTRATION PURSUANT TO (A) RULE 144 OR
RULE 904 OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT OR (B) ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS
OF THE SECURITIES ACT. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE
SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement ("Agreement") is made and entered into
as of the _____ day of December, 1999, by and between Advanced Knowledge, Inc.
("AKI") and the undersigned shareholder of Soccer Magic Inc. ("SMI")
(hereinafter referred to as the "undersigned").
R E C I T A L S
A. AKI and SMI have entered into an acquisition agreement (the
"Acquisition Agreement") which sets forth terms and conditions for the
acquisition by AKI (the "Acquisition") of all of the outstanding common shares
of SMI (the "SMI Shares") in exchange for a total of 10,000,000 newly issued
shares of AKI common stock (the "AKI Shares"). All capitalized terms appearing
in this Agreement which are not otherwise defined herein shall have the meanings
given them in the Acquisition Agreement.
B. As a condition to the Closing of the Acquisition, the
Acquisition Agreement requires that each of the shareholders of SMI execute a
Purchase and Sale Agreement in the form of this Agreement, signifying such
shareholder's agreement to subscribe for and receive AKI Shares in exchange for
all of the SMI Shares owned by such shareholder.
C. The undersigned is a shareholder of SMI who owns that number
of SMI Shares which is set forth on the signature page of this Agreement. The
undersigned and AKI desire to enter into this Agreement with each other for the
purposes contemplated by the Acquisition Agreement.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:
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1. Sale and Purchase of SMI Shares. On the terms and subject to
the conditions set forth herein and in the Acquisition Agreement, the
undersigned hereby agrees to sell to AKI, and AKI agrees to purchase from the
undersigned, all of the SMI Shares owned by the undersigned.
2. Purchase and Sale of AKI Shares. On the terms and subject to
the conditions set forth herein and in the Acquisition Agreement, the
undersigned hereby agrees to purchase from AKI, and AKI agrees to sell to the
undersigned, that number of the AKI Shares which is determined as follows:
2.1 Calculation of Exchange Ratio. The number of AKI
Shares to be issued to each of the SMI Shareholders for their respective SMI
Shares shall be calculated in accordance with the formula in Section 2.2, using
an exchange ratio of 0.8424408206385 (the "Exchange Ratio"). The Exchange Ratio
was derived by dividing the total number of AKI Shares to be issued (10,000,000)
by the total number of SMI Shares (11,870,270).
2.2 Calculation of AKI Shares to Be Issued. The number of
AKI Shares to be issued to each of the SMI Shareholders for their respective
shares shall be calculated by (i) multiplying (a) the total number of SMI Shares
held by each SMI Shareholder by (b) the Exchange Ratio and (ii) rounding the
product to the nearest whole number (subject to other reasonable adjustments
needed to maintain the total number of AKI Shares to be issued at 10,000,000).
No fractional shares of AKI common stock shall be issued in connection with the
Acquisition.
3. Escrow Agreement; Possible Automatic Rescission. The
undersigned acknowledges and understands that, as more particularly set forth in
Section 3.02 of the Acquisition Agreement and in the Escrow Agreement referenced
in Section 3.02, certain items (the "Escrowed Items") will be placed in an
escrow with an Escrow Agent at the Closing of the Acquisition; that such
Escrowed Items will include the certificates representing the SMI Shares sold by
the undersigned and the certificates representing the AKI Shares purchased by
the undersigned; and the Escrowed Items will remain in escrow until either of
the following events occurs:
3.1 No Rescission. The president and secretary of AKI
jointly certify in writing to the Escrow Agent that (a) AKI has completed the
Private Placement of newly issued shares of AKI common stock for gross proceeds
of at least $3,000,000 prior to the Private Placement Deadline, which is 5:00
p.m. Pacific Time on the date which is six months after the Effective Time of
the Acquisition, and (b) AKI is then current in making all required filings with
the U.S. Securities and Exchange Commission under Sections 13(a) and 14 of the
Securities Exchange Act of 1934, as amended (the "Joint Certification"). In this
event, the Escrow Agent shall be required to release all of the Escrowed Items
and deliver them in accordance with Section 3(a) of the Escrow Agreement,
including delivery to the undersigned of the certificates representing the AKI
Shares purchased by the undersigned pursuant to this Agreement.
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3.2 Rescission. If the Escrow Agent does not receive a
Joint Certification from the president and secretary of AKI prior to the Private
Placement Deadline, then the Acquisition shall be rescinded and the Escrow Agent
shall release all of the Escrowed Items and deliver them in accordance with
Section 3(b) of the Escrow Agreement, including delivery to the undersigned of
the certificates representing the SMI Shares sold by the undersigned pursuant to
this Agreement. Rescission may also occur under Section 3.06 of the Acquisition
Agreement.
4. Representations and Warranties of the Undersigned. Unless the
context otherwise requires, all references in this section to AKI Shares shall
mean those AKI Shares which are being purchased by the undersigned pursuant to
this Agreement. The undersigned hereby represents and warrants to AKI that:
4.1 Investment Intent. The undersigned is acquiring the
AKI Shares solely for the undersigned's own account for investment purposes, and
not with a view to, or for offer or sale in connection with, any distribution of
the AKI Shares in violation of the Securities Act.
4.2 Access to Information. The undersigned has received
copies of the Acquisition Agreement, the Escrow Agreement and AKI's annual
report on Form 10-KSB for the year ended August 31, 1999 (the "Annual Report")
and has reviewed them carefully. If desired, the undersigned has also sought and
obtained from management of AKI such additional information concerning the
business, management and financial affairs of AKI as the undersigned has deemed
necessary or appropriate in evaluating an investment in AKI and determining
whether or not to purchase the AKI Shares. Further, the undersigned has also had
full access from the management of SMI to all desired information concerning the
business, management and financial affairs of SMI.
4.3 Preexisting Relationship; Knowledge and Experience.
The undersigned has a preexisting personal and/or business relationship with AKI
and certain of its officers, directors and/or controlling persons, or has such
knowledge and experience in financial and business matters that the undersigned
is capable of evaluating the merits and risks of an investment in the AKI Shares
and of protecting its interests in connection with such an investment.
4.4 Suitability. The undersigned has carefully considered
and has, to the extent the undersigned deems it necessary, discussed with the
undersigned's own professional legal, tax and financial advisers the suitability
of an investment in the AKI Shares for the undersigned's particular tax and
financial situation, and the undersigned has determined that the AKI Shares are
a suitable investment for the undersigned.
4.5 Illiquidity; Ability to Bear Risk of Loss. The
undersigned has no need for liquidity in its investment in the AKI Shares, is
financially able to hold the AKI Shares subject to restrictions on transfer for
an indefinite period of time, and is capable of bearing the economic risk of
losing up to the entire amount of its investment in the AKI Shares.
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4.6 Private Offering. The offer of the AKI Shares was
directly communicated to the undersigned by AKI or by AKI through
representatives of SMI. At no time was the undersigned presented with or
solicited by any leaflet, newspaper or magazine article, radio or television
advertisement, or any other form of general advertising or solicited or invited
to attend a promotional meeting otherwise than in connection and concurrently
with such directly communicated offer.
4.7 Truth and Accuracy. All representations and
warranties made by the undersigned in this agreement are true and accurate as of
the date hereof and shall be true and accurate as of the date AKI issues the AKI
Shares. If at any time prior to the issuance of the AKI Shares any
representation or warranty shall not be true and accurate in any respect, the
undersigned shall so notify AKI.
4.8 Authority. If the undersigned is an entity, the
individual executing and delivering this agreement on behalf of the undersigned
has been duly authorized to execute and deliver this agreement on behalf of the
undersigned, the signature of such individual is binding upon the undersigned,
the undersigned is duly organized and subsisting under the laws of the
jurisdiction in which is was organized, and the undersigned was not formed for
the specific purpose of acquiring the AKI Shares.
4.9 No Violation. The execution and delivery of this
agreement and the consummation of the transactions or performance of the
obligations contemplated by this agreement do not and will not violate any term
of the undersigned's organizational documents (if the undersigned is an entity)
and will not result in a breach of any term of, or constitute a default under,
any statute, indenture, mortgage, other agreement or instrument to which the
undersigned is a party or by which it is bound, or any order, writ, judgment or
decree.
4.10 Enforceability. The undersigned has duly executed and
delivered this agreement and (subject to its execution by AKI) it constitutes a
valid and binding agreement of the undersigned enforceable in accordance with
its terms against the undersigned, except as such enforceability may be limited
by principles of public policy, and subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies.
4.11 Reliance on Own Advisers. In connection with the
undersigned's investment in the AKI Shares, the undersigned has not relied upon
AKI or its advisers for legal or tax advice, and has, if desired, in all cases
sought the advice of the undersigned's own legal counsel and tax advisers.
4.12 No Directed Selling Efforts. The undersigned is not
aware of any Directed Selling Efforts (as hereinafter defined) having been made
in the United States with respect to the AKI Shares by AKI, its affiliates, or
any person acting on behalf of any of the foregoing. In addition, the
undersigned, its affiliates, and persons acting on behalf of the foregoing have
not made and will not make any Directed Selling Efforts in the United States
with respect to the AKI Shares. For purposes of this Agreement, "Directed
Selling Efforts" means any activity undertaken for the purpose of, or that could
reasonably be expected to have the effect of, conditioning the market in the
United States for the AKI Shares, including, but not limited to, the placement
of an
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advertisement in a publication with a general circulation in the United States
that refers to the offering of the AKI Shares.
4.13 Offshore Transaction. The offer and sale of the AKI
Shares to the undersigned qualifies as an Offshore Transaction. For purposes of
this Agreement, the term "Offshore Transaction" means that:
(a) The undersigned was outside the United
States at the time the AKI Shares were offered for sale to the undersigned; and
(b) The undersigned was outside the United
States at the time the undersigned originated the buy order for the AKI Shares,
including, but not limited to, the time when the undersigned signed and
delivered this Agreement and otherwise offered or agreed to purchase the AKI
Shares.
In this Agreement, the term "United States" means the United States of America,
its territories and possessions, any State of the United States, and the
District of Columbia. Notwithstanding the foregoing definition of "Offshore
Transaction," the offer and sale of the AKI Shares to the undersigned shall not
constitute an "Offshore Transaction" if the undersigned is acquiring the AKI
Shares for the account or benefit of any specifically targeted, identifiable
group of U.S. citizens abroad, such as members of the U.S. armed forces serving
overseas, but shall constitute an "Offshore Transaction" if the undersigned is a
person excluded from the definition of "U.S. Person" pursuant to Section
4.14(b)(6) of this Agreement or is a person holding an account excluded from the
definition of "U.S. Person" pursuant to Section 4.14(b)(1) of this Agreement,
solely in its capacity as a holder of such an account.
4.14 Non-U.S. Person. The undersigned is not a U.S.
Person, as such term is defined below, and is not acquiring the AKI Shares for
the account or benefit of any U.S. Person.
(a) Definition of U.S. Person. For purposes of
this Agreement, the term "U.S. Person" means:
(1) Any natural person resident in the
United States;
(2) Any partnership or corporation
organized or incorporated under the laws of the United States;
(3) Any estate of which any executor or
administrator is a U.S. Person;
(4) Any trust of which any trustee is a
U.S. Person;
(5) Any agency or branch of a foreign
entity located in the United States;
(6) Any non-discretionary account or
similar account (other than an estate or trust) held by a dealer or other
fiduciary for the benefit or account of a U.S. Person;
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(7) Any discretionary account or
similar account (other than an estate or trust) held by a dealer or other
fiduciary organized, incorporated, or (if an individual) resident in the United
States; and
(8) Any partnership or corporation if
organized or incorporated under the laws of any foreign jurisdiction and formed
by a U.S. Person principally for the purpose of investing in securities not
registered under the Securities Act, unless it is organized or incorporated, and
owned, by accredited investors (as defined in Rule 501(a) under the Securities
Act), who are not natural persons, estates or trusts.
(b) Exclusions from Definition. Notwithstanding
the foregoing definition of "U.S. Person":
(1) Any discretionary account or
similar account (other than an estate or trust) held for the benefit or account
of a non-U.S. Person by a dealer or other professional fiduciary organized,
incorporated, or (if an individual) resident in the United States shall not be
deemed a U.S. Person.
(2) Any estate of which any
professional fiduciary acting as executor or administrator is a U.S. Person
shall not be deemed a U.S. person if an executor or administrator of the estate
who is not a U.S. Person has sole or shared investment discretion with respect
to the assets of the estate, and the estate is governed by foreign law.
(3) Any trust of which any professional
fiduciary acting as trustee is a U.S. Person shall not be deemed a U.S. Person
if a trustee who is not a U.S. Person has sole or shared investment discretion
with respect to the trust assets, and no beneficiary of the trust (and no
settlor if the trust is revocable) is a U.S. Person.
(4) An employee benefit plan
established and administered in accordance with the law of a country other than
the United States and customary practices and documentation of such country
shall not be deemed a U.S. Person.
(5) Any agency or branch of a U.S.
Person located outside the United States shall not be deemed a U.S. Person if
the agency or branch operates for valid business reasons, and the agency or
branch is engaged in the business of insurance or banking and is subject to
substantive insurance or banking regulation, respectively, in the jurisdiction
where located.
(6) The International Monetary Fund,
the International Bank for Reconstruction and Development, the Inter-American
Development Bank, the Asian Development Bank, the African Development Bank, the
United Nations, and their agencies, affiliates and pension plans, and any other
similar international organizations, their agencies, affiliates and pension
plans shall not be deemed U.S. Persons.
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5. AKI's Representations and Warranties. AKI hereby represents
and warrants to the undersigned that:
5.1 Authority. The individual executing and delivering
this agreement on behalf of AKI has been duly authorized to execute and deliver
this agreement on behalf of AKI, the signature of such individual is binding
upon AKI, and AKI is duly organized and subsisting under the laws of the
jurisdiction in which it was organized.
5.2 Enforceability. AKI has duly executed and delivered
this agreement and (subject to its execution by the undersigned) it constitutes
a valid and binding agreement of AKI enforceable in accordance with its terms
against AKI, except as such enforceability may be limited by principles of
public policy, and subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies.
5.3 Capitalization.
(a) AKI has no outstanding capital stock other
than common stock as of the date of this agreement. AKI is authorized to issue
25,000,000 shares of common stock, of which 4,000,000 shares are issued and
outstanding. All of the outstanding shares of common stock of AKI have been duly
and validly issued and are fully paid, non-assessable and not subject to any
preemptive or similar rights; and the AKI Shares have been duly authorized and,
when issued and delivered to the undersigned against payment therefor as
provided by this agreement, will be validly issued, fully paid and
non-assessable, and the issuance of such AKI Shares will not be subject to any
preemptive or similar rights.
(b) To AKI's knowledge, the legal and beneficial
ownership of the common and preferred stock of AKI is as set forth in the Annual
Report. Except as set forth in the Annual Report, AKI is not a party to or
otherwise bound by any agreement, arrangement or understanding relating to the
issuance, sale or transfer of any securities of AKI (including, without
limitation, as relates to options, warrants, or similar rights).
5.4 No Violation. The issuance and sale of the AKI Shares
to the undersigned as contemplated hereby will not violate or conflict with
AKI's Certificate of Incorporation or By-laws or any agreements to which AKI is
a party or by which it is otherwise bound or, to AKI's knowledge, any statute,
rule or regulation (federal, state, local or foreign) to which it is subject.
5.5 Annual Report. AKI has provided the Annual Report to
the undersigned. As of the date hereof, the Annual Report does not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The financial
statements of AKI included in the Annual Report have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present the financial position of AKI as of the dates thereof and the
results of its operations and cash flows for the periods then ended. AKI has
included in the Annual Report all material agreements, contracts and other
documents that it reasonably believes are required to be filed as exhibits to
the Annual Report.
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5.6 Incorporation by Reference of Other Representations
and Warranties. Each of the representations and warranties given and made by AKI
to SMI in Article Five of the Acquisition Agreement is incorporated herein by
this reference as representations and warranties given and made by AKI to the
undersigned.
6. Restrictions on Transfer.
6.1 Resale Restrictions. The undersigned understands that
the offer and sale of the AKI Shares to the undersigned has not been registered
or qualified under the Securities Act, any State Laws, or any laws of
jurisdictions outside of the United States. The undersigned agrees not to offer,
sell or otherwise transfer the AKI Shares, or any interest in the AKI Shares,
and agrees that AKI shall be required by this Agreement to refuse to register
any transfer of the AKI Shares, unless made (i) in accordance with the
provisions of Regulation S promulgated under the Securities Act, (ii) pursuant
to registration under the Securities Act, or (iii) pursuant to an available
exemption from registration. The undersigned understands and agrees that AKI may
require the undersigned to furnish an opinion of U.S. counsel reasonably
satisfactory to AKI that the requirements of the preceding sentence have been
satisfied. The undersigned further understands and agrees that hedging
transactions involving the AKI Shares may not be conducted unless in compliance
with the Securities Act.
6.2 Restrictive Legend. The undersigned understands and
agrees that a legend in substantially the following form will be placed on the
certificate representing the AKI Shares:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
UNDER ANY STATE SECURITIES LAWS OR ANY SECURITIES LAWS OF JURISDICTIONS
OUTSIDE OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A "U.S. PERSON," AS
THAT TERM IS DEFINED IN REGULATION S UNDER THE SECURITIES ACT, EXCEPT
(1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE
SECURITIES ACT COVERING THE SECURITIES, OR (2) UPON DELIVERY TO THE
ISSUER OF AN OPINION OF U.S. COUNSEL REASONABLY SATISFACTORY TO THE
ISSUER THAT THE SECURITIES MAY BE TRANSFERRED WITHOUT REGISTRATION
PURSUANT TO (A) RULE 144 OR RULE 904 OF REGULATION S OR (B) ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE SECURITIES ACT."
6.3 No Registration; Illiquid Investment. AKI is under no
obligation and has no intention of registering any resale of the AKI Shares by
the undersigned. The undersigned acknowledges that it must bear the economic
risk of its investment in the AKI Shares for an indefinite period of time, until
such time, if ever, that an exemption from registration is available. The
undersigned acknowledges that the soonest that the Rule 144 exemption from
registration could become available would be after the undersigned has paid for
and held the AKI Shares for one year.
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7. Reliance. The undersigned understands and agrees that AKI and
its officers, directors, employees and agents may, and will, rely on the
accuracy of the undersigned's representations and warranties in this agreement
to establish compliance with applicable securities laws. The undersigned agrees
to indemnify and hold harmless all such parties against all losses, claims,
costs, expenses and damages or liabilities which they may suffer or incur caused
or arising from their reliance on such representations and warranties.
8. Miscellaneous.
8.1 Survival. The representations and warranties made in
this agreement shall survive the closing of the transactions contemplated by
this agreement.
8.2 Assignment. This Agreement is not transferable or
assignable.
8.3 Execution and Delivery of Agreement. AKI shall be
entitled to rely on delivery by facsimile transmission of an executed copy of
this agreement, and acceptance by AKI of such facsimile copy shall create a
valid and binding agreement between the undersigned and AKI.
8.4 Titles. The titles of the sections and subsections of
this agreement are for the convenience of reference only and are not to be
considered in construing this agreement.
8.5 Severability. The invalidity or unenforceability of
any particular provision of this agreement shall not affect or limit the
validity or enforceability of the remaining provisions of this agreement.
8.6 Entire Agreement. This agreement constitutes the
entire agreement and understanding between the parties with respect to the
subject matters herein and supersedes and replaces any prior agreements and
understandings, whether oral or written, between them with respect to such
matters.
8.7 Waiver and Amendment. Except as otherwise provided
herein, the provisions of this agreement may be waived, altered, amended or
repealed, in whole or in part, only upon the mutual written agreement of the
undersigned and AKI.
8.8 Counterparts. This agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one and the same instrument.
8.9 Governing Law. This agreement is governed by and
shall be construed in accordance with the internal law of the State of
California without reference to its rules as to conflicts of law.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement as of the date first above mentioned.
THE "ISSUER" THE "UNDERSIGNED"
ADVANCED KNOWLEDGE, INC. -------------------------------------------
Name of the undersigned (please type or print)
By:___________________________ -------------------------------------------
Xxxxx Xxxxx, President and Signature and, if applicable, title of person
Chief Executive Officer signing
-------------------------------------------
Number of SMI Shares to be exchanged for AKI
Shares
-------------------------------------------
The undersigned's street address
-------------------------------------------
City, state/province, country and postal code
-------------------------------------------
The undersigned's telephone number
-------------------------------------------
The undersigned's Tax ID Number (if any)
Delivery. The address for delivery of the
certificate representing the AKI Shares is as
follows:
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