Exhibit 1
SECURITIES PURCHASE AGREEMENT
AGREEMENT, dated as of July 10, 2002, by and among X.X.
XxXxxxxxx, an individual residing in the Commonwealth of Massachusetts (the
"Seller") and Xxxxxxx Xxxxxxx, an individual with an address at c/o Baytree
Capital Associates, LLC, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
"Purchaser"). Seller and Purchaser may be referred to herein individually as a
"Party" or collectively as the "Parties".
RECITALS
WHEREAS, Seller is the owner of 1,889,497 shares of common
stock (the "Shares") of Activeworlds Corp. (the "Company");
WHEREAS, at the Closing, Seller desires to sell to Purchaser
500,000 of such Shares and Purchaser desires to purchase 500,000 of such Shares
in consideration of the amount of $50,000.00 (the "Purchased Shares"); and
WHEREAS, as a condition to the aforementioned purchase, Seller
has agreed to grant to Purchaser a proxy to vote the Purchased Shares, as well
as an additional 1,389,497 shares beneficially owned by Seller, 1,289,497 of
which shares are being sold back to the Company, in furtherance of the
transaction (the "Transaction") contemplated by that certain Agreement and Plan
of Exchange (the "Exchange Agreement") between the Company, Activeworlds, Inc.,
Seller and Xxxxxxx X. Xxxx;
NOW, THEREFORE, in consideration of the premises and mutual
agreements contained herein, the parties hereby agree as follows:
1. Sale of Shares. Subject to and upon the terms and conditions
set forth in this Agreement, including but not limited to, the completion of
Transaction, the Seller agrees at the closing of the sale of the Shares (the
"Closing") to sell, transfer, convey, assign and deliver to the Purchaser, the
Shares in consideration of a purchase price of $50,000 (the "Purchase Price").
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Simultaneously, with the execution of this Agreement, an amount equal
to the Purchase Price shall be tendered to the law firm of Xxxxxxx, Savage,
Kaplowitz, Wolf & Marcus, LLP to be released (a) to Seller upon the Closing of
the sale to which this Agreement pertains, or (b) to the Purchaser in the event
the Transaction, as contemplated in the Exchange Agreement, is not consummated
by August 15, 2002 (the "Termination Date").
The Closing will take place at the offices of Xxxxxxx, Savage,
Kaplowitz, Wolf & Marcus, LLP ("GSK"), at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, simultaneous with the closing of the Transaction provided that the
conditions precedent set forth in Section 5 have been satisfied or waived by the
Parties, or on such other date or in such other manner as the Parties shall
agree, but in any event no later than the Termination Date. At the Closing the
Seller shall execute and deliver a stock power with a medallion guarantee
transferring the Shares to the Purchaser and shall take such actions as are
necessary as to effectuate such a sale with the Company's transfer agent.
2. Representations and Warranties of the Seller. The Seller
represents and warrants to the Purchaser as follows:
a. Non-Encumbrance. The Seller owns the Shares free and clear
of any liens or encumbrances.
b. Due Execution. The execution, delivery and performance by
the Seller of this Agreement are within the Seller's powers and do not violate
any contractual restriction contained in any agreement which binds or affects or
purports to bind or affect the Seller.
c. Ownership of the Company's Common Stock. Seller does not
own any other shares of the Company's common stock or have the right to vote any
other shares of the Company's common stock other than the 1,889,497 shares of
the Company's common stock beneficially owned by Seller as of the date of this
Agreement.
d. Binding Effect. This Agreement, when executed and delivered
by Seller, will constitute the legal, valid and binding obligations of the
Seller enforceable against the Seller in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency, moratorium and other laws
of general application affecting enforcement of creditors' rights generally.
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3. Representations and Warranties by the Purchaser. The Purchaser
represents and warrants to the Seller as follows:
a. Due Execution. The execution, delivery and performance by
the Purchaser of this Agreement are within the Purchaser's powers and do not
violate any contractual restriction contained in any agreement which binds or
affects or purports to bind or affect the Purchaser.
b. Adequate Information. The Purchaser represents that he is
purchasing the Shares after having made adequate investigation of the business,
finances and prospects of the Company and he acknowledges that there can be no
assurance that a market will continue to exist for the Shares.
c. Status of Purchaser. The Purchaser represents that; (i) he
is an "accredited investor" as such term is defined under the Securities Act of
1933, as amended; and (ii) he is purchasing the Shares for investment purposes
with no current intent to divide or resell such securities.
d. Certificates Representing the Shares. The Purchaser
acknowledges that the certificates representing the Shares have not been
registered under the Securities Act of 1933 and bear the following legends;
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. SUCH SECURITIES MAY NOT BE SOLD OR
OFFERED FOR SALE, TRANSFERRED, HYPOTHECATED OR OTHERWISE
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
WITH RESPECT THERETO UNDER SUCH ACT OR AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO THE COMPANY THAT AN EXEMPTION FROM
REGISTRATION FOR SUCH SALE, OFFER, TRANSFER, HYPOTHECATION OR
OTHER ASSIGNMENT IS AVAILABLE UNDER SUCH ACT."
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e. Binding Effect. This Agreement, when executed and delivered
by Purchaser, will constitute the legal, valid and binding obligations of the
Purchaser enforceable against the Purchaser in accordance with its terms, except
as may be limited by applicable bankruptcy, insolvency, moratorium and other
laws of general application affecting enforcement of creditors' rights
generally.
4. Grant of Irrevocable Proxy. Seller hereby agrees to appoint
Purchaser or his assigns as Seller's proxy over 1,889,497 shares of the
Company's common stock beneficially owned by him (without taking in to account
the sale of the Shares hereby), with full voting power over such shares in any
and all matters (the "Purchaser's Proxy"). The Purchaser's Proxy shall be
irrevocable. The form of the Purchaser's Proxy is attached hereto as Exhibit A.
5. Conditions.
a. Conditions Precedent to the Obligations of the Parties. The
obligations of the Parties as provided herein shall be subject to each of the
following conditions precedent, unless waived by each of the parties:
(i) The Transaction. The closing of the Transaction
contemplated by the Exchange Agreement shall have occurred.
(ii) Execution and Delivery of Mutual Release and
Settlement Agreement. X.X. XxXxxxxxx, Xxxxxxx X. Xxxx, Activeworlds Corp.,
Activeworlds, Inc., Xxxx Xxxxx, Xxxxxxxxx Xxxxxxx, Xxxxx Xxxxxx, Xxxxxxx
Xxxxxxx, and the other plaintiffs in the action filed in the Court of Chancery
for the State of Delaware in and for New Castle County, captioned Xxxxxx Xxxxxx,
et al v. X.X. XxXxxxxxx and Xxxxxxx X. Xxxx (the "Suit") shall have entered into
a mutual release and settlement agreement (the "Settlement Agreement") which
shall be in the form of Exhibit B attached hereto and which shall dismiss the
Suit with prejudice.
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b. Conditions Precedent to the Obligations of the Seller.
The obligations of the Seller as provided herein shall be subject to
each of the following conditions precedent, unless waived by the Seller:
(i) Representations and Warranties. The representations
and warranties by Buyer herein shall be true and accurate in all material
respects on and as of the Closing with the same force and effect as though such
representations and warranties had been made at and as of the Closing, except to
the extent that any changes therein are specifically contemplated by this
Agreement.
(ii) Performance. Buyer shall have performed and complied
in all material respects with all agreements to be performed or complied with by
him pursuant to this Agreement at or prior to the Closing.
c. Conditions Precedent to the Obligations of the Buyer. The
obligation of the Buyer on the Closing as provided herein shall be subject to
the satisfaction, on or prior to the Closing, of the following conditions
precedent, unless waived by the Buyer:
(i) Representations And Warranties. The representations
and warranties of Seller herein shall be true and accurate in all material
respects on and as of the Closing with the same force and effect as though such
representations and warranties had been made at and as of the Closing, except to
the extent that any changes therein are specifically contemplated by this
Agreement.
(ii) Performance. Seller shall have performed and complied
in all material respects with all agreements to be performed or complied with by
it pursuant to this Agreement prior to or at the Closing.
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6. Confidentiality; No Disparagement.
a. Confidentiality. The Parties agree to keep completely
confidential all matters relating to the existence and contents of this
Agreement, including any and all discussions pertaining to the Settlement
Agreement ("Agreement Related Information"). Notwithstanding the foregoing, the
Parties may disclose Agreement-Related Information (a) to each of their counsel
and their financial advisors, provided that such individuals agree to keep all
Agreement-Related Information completely confidential; (b) to state or federal
tax authorities, if necessary, (c) to the extent reasonably necessary to enforce
this Agreement, (d) to the Company and its counsel since the Parties recognize
that the Company shall disclose the substance of this Agreement in disclosure
documents and press releases, or (e) to Xxxxxxx X. Xxxx. If any of the Parties
breaches the confidentiality provisions of this section, that Party will be
liable for such damages as permitted by law as a result of his breach as well as
the costs incurred in the course of any action brought to enforce the terms of
this Agreement or to recover sums paid pursuant to this Agreement.
b. No Disparagement. Both Parties hereby agree not to make
directly or indirectly any disparaging or negative remarks, either verbally or
in writing, privately or in public, with respect to the other Party.
7. Termination.
This Agreement may be terminated and the sale of Shares may be
abandoned at any time prior to the Effective Time:
(i) Upon the mutual written consent of the Parties;
(ii) If the Company shall have breached in any material
respect any of their representations, warranties, covenants or other agreements
contained in the Exchange Agreement;
(iii) If Xxxx or XxXxxxxxx shall have breached in any
material respect any of their representations, warranties, covenants or other
agreements contained in the Exchange Agreement;
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(iv) Without any action on the part of the Parties if
required by Applicable Laws;
(v) By the Purchaser, in the event any suit has been
filed by any third party contesting the Transaction which the Purchaser
considers to be burdensome or costly to resolve; and
(vi) By any Party if the Closing has not occurred by the
Termination Date.
8. Effect of Termination.
If this Agreement is terminated as provided in Section 7, written
notice of such termination shall be given by the terminating Party to the other
Party specifying the provision of this Agreement pursuant to which such
termination is made, this Agreement shall become null and void and there shall
be no liability on the part of any of the Parties, provided, that nothing in
this Agreement shall relieve any Party from any liability or obligation with
respect to any willful breach of this Agreement.
9. Miscellaneous.
a. Amendments, Etc. No amendment of any provision of this
Agreement shall in any event be effective unless the amendment shall be in
writing and signed by each of the parties to this Agreement, and no waiver nor
consent to any departure by any party therefrom shall in any event be effective
unless such waiver or consent shall be in writing and signed by the party
waiving or consenting to such provision, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.
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b. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including telegraphic, facsimile, telex or
cable communication) and mailed, telegraphed, telecopied, telexed, cabled or
delivered:
(1) if to the Seller,
X.X. XxXxxxxxx
c/o Activeworlds, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
with a copy to (which shall not constitute
notice):
Xxxxxx Xxxxxx LLP
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
(2) if to the Purchaser,
Xxxxxxx Xxxxxxx
c/o Baytree Capital Associates, LLC
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
with a copy to (which shall not constitute
notice):
Xxxxxxx, Savage, Kaplowitz, Wolf & Marcus, LLP
000 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxx X. Xxxxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 212-980-5192
or, as to any such party, at such other address as shall be designated by such
party in a written notice to the other parties.
c. No Waiver; Remedies. No failure on the part of the
Purchaser or the Seller to exercise, and no delay in exercising, any right under
this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
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d. Survival of Agreements, etc. The representations,
warranties, covenants and provisions contained in this Agreement shall survive
the date hereof and the purchase of the Shares by the Purchaser hereunder.
e. Severability of Provisions. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or thereof
or affecting the validity or enforceability of such provision in any other
jurisdiction.
f. Integration. This Agreement coupled with the Purchaser's
Proxy, Seller's Proxy, the Settlement Agreement and the Exchange Agreement set
forth the entire understanding of the parties hereto with respect to all matters
contemplated hereby and thereby supersedes any previous agreements and
understandings among them concerning such matters. No statements or agreements,
oral or written, made prior to or at the signing hereof, shall vary, waive or
modify the written terms hereof.
g. Binding Effect; Governing Law. This Agreement shall be
binding upon and inure to the benefit of the Seller and the Purchaser and their
respective successors and assigns, except that neither the Seller nor the
Purchaser may assign this Agreement, or the rights or obligations hereunder,
without the prior written consent of the other party. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of Delaware
applicable to agreements and instruments executed and performed in the State of
Delaware.
h. Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which when taken together shall constitute but one and
the same agreement.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement.
PURCHASER SELLER
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Xxxxxxx Xxxxxxx X.X. XxXxxxxxx
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Exhibit A
Proxy
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Exhibit B
Settlement Agreement
[TO BE SUPPLIED]
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