COMMON STOCK SUBSCRIPTION AGREEMENT
This Common Stock Subscription Agreement (this "Agreement"), dated as
of April 2, 1999, is made and entered into by and between Diversicon Holdings
Corp., a Delaware corporation (the "Company") and Drel Investment Limited (the
"Purchaser"), a corporation organized under the laws of the Bahamas.
B A C K G R O U N D
A. The Company desires to issue and sell to Purchaser 3,700,000 shares
of its common stock, $.001 par value per share (the "Common Stock"), to be sold
at a price of $.50 per share, in accordance with and subject to the terms and
conditions set forth in this Agreement.
B. Purchaser desires to purchase the Common Stock at an aggregate
purchase price of $1,850,000.
A G R E E M E N T
In consideration of the above premises and the representations,
warranties, covenants and agreements contained in this Agreement, and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto agree as follows:
SECTION 1. PURCHASE AND SALE OF COMMON STOCK.
1.1 PURCHASE AND SALE. Upon the terms and conditions contained herein,
the Company, on this day hereby sells and issues to Purchaser, and Purchaser
hereby purchases from the Company, at a purchase price of $.50 per share,
3,700,000 shares of Common Stock (the "Shares").
1.2 PAYMENT AND DELIVERY. The Company has delivered to Purchaser a
stock certificate representing the Shares against delivery to the Company by
Purchaser of (i) cash in the amount of $3,700 and (ii) a promissory note in the
principal amount of $1,846,300, in the form of Exhibit A, collectively
representing the full purchase price for the Shares (the "Purchase Price").
SECTION 2. INVESTMENT REPRESENTATIONS. Purchaser acknowledges that the Shares
are not being registered under the Securities Act of 1933, as amended (the
"Act"), based, in part, on reliance that the issuance of the Shares is exempt
from registration under Section 4(2) of the Act as not involving any public
offering. Purchaser further acknowledges that the Company's reliance on such
exemption is predicated, in part, on the following representations made by
Purchaser to the Company:
(a) Purchaser is an "accredited investor" as such term is
defined under Rule 501(a) of the Act. Purchaser is acquiring the Shares
solely for Purchaser's own account, for investment purposes only, and
not with an intent to sell, or for resale in connection with any
distribution of all or any portion of the Shares within the meaning of
the Act;
(b) In evaluating the merits and risks of an investment in the
Shares, Purchaser has relied upon the advice of Purchaser's legal
counsel, tax advisors, and/or investment advisors;
(c) Purchaser is experienced in evaluating and investing in
companies such as the Company. The Company has afforded Purchaser or
Purchaser's advisors full and complete access to all information with
respect to the Company and its business and financial condition (to the
extent that such information was possessed by the Company or could be
acquired by the Company without unreasonable effort or expense) that
Purchaser or Purchaser's advisors deemed necessary in order to evaluate
the merits and risks of an investment in the Shares. Purchaser further
represents and warrants that Purchaser and Purchaser's advisors have
received satisfactory and complete information concerning the business
and financial condition of the Company in response to all inquiries
made by them in respect thereof;
(d) Purchaser is aware that an investment in securities of a
thinly-traded corporation such as the Company may be non-marketable and
may require Purchaser's capital to be invested for an indefinite period
of time, possibly without return. Purchaser has no need for liquidity
in this investment, has the ability to bear the economic risk of this
investment, and can afford a complete loss of the Purchase Price;
(e) Purchaser understands that the Shares being purchased
hereunder are characterized as "restricted securities" under the
federal securities laws since the shares are being acquired from the
Company 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 Act only in certain limited
circumstances. Purchaser represents that Purchaser is familiar with
Rule 144 promulgated under the Act, as presently in effect, and
understands the resale limitations imposed thereby and by the Act;
(f) At no time was an oral representation made to Purchaser
relating to the purchase or was Purchaser presented with or solicited
by any leaflet, public or promotional meeting, newspaper or magazine
article, radio or television advertisement or any other form of general
advertising relating to the purchaser hereunder; and
(g) Purchaser has two shareholders, namely Capital Services
Limited and Argosy Industries Limited, each of which owns 50 shares of
Purchaser and which collectively own 100% of the issued and outstanding
shares of Purchaser.
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SECTION 3. LIMITATIONS ON DISPOSITION. Purchaser agrees not to transfer
the Shares except in accordance with the express terms of this Section 3. Any
attempted transfer in violation of this Section 3 shall be void and of no
effect.
3.1 COMPLIANCE WITH SECURITIES LAWS. Without in any way limiting the
representations set forth above, Purchaser further agrees not to make any
disposition of all or any portion of the Shares, except in compliance with
applicable federal and state securities laws and unless and until:
(a) there is then in effect a registration statement under the
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement;
(b) such disposition is made in accordance with Rule 144 under
the Act; or
(c) Purchaser shall have notified the Company of the proposed
disposition and shall have furnished the Company with a statement of
the circumstances surrounding the proposed disposition, and if
requested by the Company, Purchaser shall have furnished the Company
with an opinion of counsel acceptable to Company counsel, that such
disposition will not require registration under the Act and will be in
compliance with applicable state securities laws.
SECTION 4. STOCK CERTIFICATE LEGEND. Purchaser understands and acknowledges that
the certificate evidencing the Shares purchased by Purchaser hereunder (or
evidencing any other securities issued with respect thereto pursuant to any
stock split, stock dividend, merger or other form of reorganization or
recapitalization) shall bear, in addition to any other legends which may be
required by this Agreement or applicable state securities law, the following
legend (or a similar legend):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("ACT") NOR HAVE THEY BEEN
REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. NO
TRANSFER OF SUCH SECURITIES WILL BE PERMITTED UNLESS A REGISTRATION
STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER, THE TRANSFER
IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR IN THE OPINION OF
COUNSEL (WHICH MAY BE COUNSEL FOR THE COMPANY), REGISTRATION UNDER THE
ACT IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT
AND WITH APPLICABLE STATE SECURITIES LAW.
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SECTION 5. MISCELLANEOUS.
5.1 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be an original, and all of which together
shall constitute one and the same agreement.
5.2 GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York without regard
to the conflicts of laws principles thereof.
5.3 ASSIGNMENTS. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by either party
without the prior written consent of the other.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
"THE COMPANY"
Diversicon Holdings Corp.
a Delaware corporation
By: /s/ Xxxxxx Xxxxxxxxx, Pres.
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"PURCHASER"
Drel Investment Limited
a Bahamas corporation
By: /s/ Xxxxxx Vergier
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