EXHIBIT 2.7
ASSUMPTION AGREEMENT
This Agreement is made and entered into as of the 15 th day of
December, 1999 by and among SITESTAR CORPORATION, a Nevada corporation
("Sitestar"), NEOCOM MICROSPECIALISTS, INC., a Virginia corporation
("Neocom"), XXX XXXXXXXX ("Xxx"), XXX XXXXXXXX ("Xxx") and XXXX XXXXXXX
("Xxxx") (Xxx, Xxx and Xxxx are referred to herein as the" Shareholders"),
with reference to the following facts:
A. Concurrently herewith the Shareholders and other shareholders of
Neocom have entered into that certain Plan and Agreement of Share Exchange
(" Reorganization Agreement") with Sitestar pursuant to which they have
exchanged all of their shares (the " Neocom Shares") of the Common Stock of
Neocom for shares of the Common Stock of Sitestar.
B. Neocom has certain indebtedness, as described in Exhibit" A" to
this Agreement (the "Assumed Debt), some of which has been guaranteed by one
or more of the Shareholders.
C. Shareholders are willing to assume and pay the Assumed Debt
in order to facilitate the Reorganization agreement between Sitestar and
Neocom.
NOW THEREFOR with reference to the foregoing facts, the parties agree
as follows:
1. Assumption of Assumed Debt.
1.1 The Shareholders hereby assume and agree to timely pay the
Assumed Debt and to fully and timely perform all obligations of Neocom under
the Assumed Debt. The Shareholders represent and warrant that the schedule
of the Assumed Debt attached as Exhibit A is accurate and complete, and that
Neocom has no other indebtedness other than trade payables in the ordinary
course of business and Lease obligations.
1.2 Xxxx hereby contributes to the capital of Neocom one-third of
any obligation or liability under that portion of the Assumed Debt which is
payable to him and is evidenced by that certain promissory note (the"
Original Xxxxxxx Note") dated as of December 15, 1999, bearing interest at
the rate of 10% per annum due and payable on demand and simultaneously with
the closing of the Plan and Agreement of Share Exchange, Xxx and Xxx assume
the other two-thirds of the Original Xxxxxxx Note. Each of Xxx and Xxx shall
execute and deliver to Xxxx a new note (the "Xxxxxxx Notes") in the amount
of one-third of the outstanding amount on the Note as of the Effective Date.
1.3 The Shareholders shall jointly and severally, indemnify, save
and hold harmless Sitestar, Neocom and each of their respective officers,
directors, employees, agents and
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affiliates, and each of their successors and assigns, other than the
Shareholders (individually, a" Neocom Indemnified Party" and collectively,
the" Neocom Indemnified Parties") from and against any and all costs,
losses, claims, liabilities, fines, penalties, and expenses (including
interest which may be imposed in connection therewith and court costs and
reasonable fees and disbursements of counsel) (" Damages") incurred in
connection with, arising out of, resulting from or incident to any breach
of, or any inaccuracy in any of, the representations or warranties, or any
default in any agreements, made by the Shareholders in this Agreement except
as provided below.
2. Payment of Assumed Debt.
2.1 Sitestar hereby agrees to file a registration statement with
the SEC and to grant the Shareholders registration rights as provided in the
Reorganization Agreement within 120 days following the effective date of the
Sitestar Form I OSB Registration Statement for a public offering of Sitestar
shares and to register a sufficient number of Sitestar shares such that the
proceeds to the Shareholders will be sufficient to satisfy the Assumed Debt,
and shall use its best efforts to cause the registration statement to be
declared effective by the SEC.
2.2 Neocom and Sitestar agree that until the Advance Termination
Date, and provided that no Shareholder is in breach of any obligation under
this Agreement they will advance all scheduled payments of principal and
interest on the Assumed Debt directly to the creditor on behalf of the
Shareholders. Each such advance (and "Advance) shall: (a) be deemed to be a
loan from Neocom or Sitestar which the Shareholders shall be jointly and
severally obligated to repay to Neocom or Sitestar (subject to the
provisions below); (b) shall bear interest from the date of the advance at
the rate of interest payable on the underlying Assumed Debt; (c) at the
request of Neocom or Sitestar, shall be evidenced by a Promissory Note
executed by the Shareholders; and (d) shall be due and payable on July 31,
2001, subject to earlier payment in accordance with this Agreement.
2.3 The" Advanced Termination Date" shall be the earlier to occur
of (i) the date which is six months from the date that Sitestar has
registered under the Securities Act of 1933 not less than 900, 000 shares of
Sitestar Common Stock (the" Sitestar Shares") for resale by the
Shareholders; provided, however, that if following the effective date of the
registration statement covering the Sitestar Shares, Sitestar requests that
the Shareholders not sell any Sitestar Shares for a certain period or until
further notice from Sitestar (each a " No-Sale Period") (and the
Shareholders hereby agree to comply with such request), them such six month
period shall be extended by the number of days in the No-Sale. The
Shareholders shall not be charged interest on Advances during the No-Sale
Period.
3. Pledge of Shares.
Shareholders agree that they shall pledge the Sitestar Shares to
Neocom or Sitestar to secure their obligations under this Agreement (the
value of such shares based upon
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a price of $1.02 not to exceed the Assumed Debt), and in connection
therewith shall (a) execute and deliver in favor of Neocom or Sitestar a
pledge agreement in form and substance reasonably acceptable to Neocom and
Sitestar; (b) deliver to Neocom or Sitestar certificates evidencing the
pledged shares accompanied by stock powers duly executed in blank. Sitestar
is hereby authorized to deliver certificates evidencing the pledged shares
directly to Neocom or hold them for its own account as the case may be. 4.
4. Proceeds from Sale of Sitestar Shares.
4.1 These Shareholders agree that all proceeds from the sale by
them of any shares of the Common Stock of Sitestar (whether pledged or not
or whether pursuant to the registration statement or otherwise), shall be
applied and paid as follows:
(a) First to Neocom or Sitestar, as the case maybe, until all
Advances and interest thereon shall have been repaid; and (b) second, to pay
the Assumed Debt, in such order as Neocom or Sitestar, as the case maybe,
shall reasonably request. The Shareholders agree that Neocom and Sitestar
may require any purchaser of the shares to make payment for the shares
directly to Neocom or Sitestar as a condition to registering the transfer of
the shares, such payment not to exceed any balances owed under this
paragraph.
5. The Legend and Certificates.
5.1 The Shareholders agree that until the Assumed Debt has been
paid and discharged in full, each certificates evidencing shares of Sitestar
Common Stock owned beneficially by such Shareholders shall contain a legend
evidencing the restrictions with regard to such shares under this Agreement
and the Shareholders hereby authorize Sitestar to place such legend on each
such certificate.
6. Miscellaneous.
6.1 Notices. All notices, requests, demands and other
communications (collectively, "Notices") given pursuant to this Agreement
shall be in writing and shall be delivered by personal service, courier,
facsimile transmission (which must be confirmed) or by United States first
class, registered or certified mail, postage prepaid, to the following
addresses:
(i) if to Neocom, to
Sitestar Corporation.
1613 0 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Facsimile No. (000) 000-0000
Attn Xxxxxxxx Xxxxxxxx
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(ii) if to the Shareholders, to.
Xxxxxx X. Xxxxxxxx
00 Xxxx Xxxx Xxxxxx
Martinsville, V A 24112
Facsimile No. 000-000-0000
Any Notice, other than a Notice sent by registered or certified mail, shall
be effective when received; a Notice sent by registered or certified mail,
postage prepaid return receipt requested, shall be effective on the earlier
of when received or the third day following deposit in the United States
mails. Any party may from time to time change its address for further
Notices hereunder by giving notice to the other parties in the manner
prescribed in this Section.
6.2 Entire Agreement. This Agreement and the Reorganization
Agreement contain the sole and entire agreement and understanding of the
parties with respect to the entire subject matter of this Agreement and any
and all prior discussions, negotiations, commitments and understandings,
whether oral or otherwise, related to the subject matter of this Agreement
are hereby merged herein.
6.3 Assignment. No party may assign this Agreement and any
attempted or purported assignment or any delegation of any party's duties or
obligations arising under this Agreement to any third party or entity shall
be deemed to be null and void, and shall constitute a material breach by
such party of its duties and obligations under this Agreement. This
Agreement shall inure to the benefit of and be binding upon any successors
of each party by way of merger or consolidation.
6.4 Waiver and Amendment. No provision of this Agreement may be
waived unless in writing signed by all the parties to this Agreement and
waiver of any one provision of this Agreement shall not be deemed to be a
waiver of any other provision. This Agreement may be amended only by a
written agreement executed by all of the parties to this Agreement.
6.5 Governing Law. This Agreement has been made and entered into
in the Commonwealth of Virginia and shall be construed in accordance with
the laws of the' Commonwealth of V Virginia without giving effect to the
principles of conflicts of law thereof.
6.6 Severability. Whenever possible each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be or
become prohibited or invalid under applicable law, such provisions shall be
ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
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6.7 Captions The various captions of this Agreement are for
reference only and shall not be considered or referred to in resolving
questions of interpretation of this Agreement.
6.8 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 and the same instrument.
6.9 Costs and Attorneys' Fees If any action, suit arbitration or
other proceeding is instituted to remedy, prevent or obtain relief from a
default in the performance by any party to this Agreement of its obligations
under this Agreement the prevailing party shall recover all of such party's
attorneys' fees incurred in each and every such action, suit arbitration or
other proceeding including any and all appeals or petitions therefrom. As
used in this Section, attorneys' fees shall be deemed to mean " reasonable
attorneys fees".
6.10 Rights Cumulative. No right granted to the parties under this
Agreement on default or breach is intended to be in full or complete
satisfaction of any damages arising out of such default or breach, and each
and every right under this Agreement or under any other document or
instrument delivered hereunder, or allowed by law or equity, shall be
cumulative and may be exercised from time to time.
6.11 Judicial Interpretation. Should any provision of this
Agreement require judicial interpretation, it is agreed that a court
interpreting or construing the same shall not apply a presumption that the
terms hereof shall be more strictly construed against any Person by reason
of the rule of construction that a document is to be construed more strictly
against the Person who itself or through its agent prepared the same, it
being agreed that all parties have participated in the preparation of this
Agreement.
6.12 Force Majeure. If any party to this Agreement is delayed in
the performance of any of its obligations under this Agreement or is
prevented from performing any such obligations due to causes or events
beyond its control, including without limitation, acts of God, fire, flood,
earthquake, strike or other labor problem injunction or other legal
restraint present or future law, governmental order, rule or regulation,
then such delay or nonperformance shall be excused and the time for
performance thereof shall be extended to include the period of such delay or
nonperformance
7. Shareholder Put.
7.1 If there is any Assumed Debt and/or Advances outstanding on
June 30, 2001, at any time prior to July 31, 2001 the Shareholders may by
written demand (the "Put Notice) require Neocom to cancel the Advances up to
fifty percent of the Total Amount
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and if the Advances are less than fifty percent of the Total Amount, to
assume such portion of the outstanding Assumed Debt as maybe necessary such
that the amount of the Advances canceled and Assumed Debt assumed shall
equal fifty percent of the Total Amount provided that the Shareholders
deliver to Neocom a number of shares of Sitestar Common Stock equal to fifty
percent of the Total Amount divided by $1.02 (the" Base Price").
The" Total Amount" shall mean the amount of Assumed Debt and Advances
outstanding on the date of the Put Notice.
Notwithstanding the foregoing, Neocom shall not be obligated to cancel
such portion of the Advances or assume such portion of the Assumed Debt as
shall equal an amount equal to the number of Saleable Shares multiplied by
the Base Price. "Saleable Shares shall be: (a) ff Sitestar or Neocom
advises the Shareholders of a potential qualified buyer of shares of
Sitestar in a private transaction for cash in excess of the Base Price and
such potential qualified buyer can be demonstrated to have been willing to
buy such stock "Saleable Shares" shares shall mean any shares which the
Shareholders refuse to sell to such buyer in such private transactions if
such sale would have been permissible under the applicable securities laws;
and (b) if Sitestar, following registration of the Sitestar Shares under
the Securities Act as contemplated by Section 2.2, requests that the
Shareholders sell up to a specified number of Sitestar shares pursuant to
the registration statement in the open market and at the time the market
price is at least one hundred ten percent of the Base Price and the
Shareholders refuse to consummate such sale, and such sale would have been
permissible under the applicable securities laws, "Saleable Shares" shall
mean such part of such specified shares as the Shareholders shall not sell
in the open market as aforesaid up to a number of shares per week equal to
one-half of the trading volume of the shares during the prior week.
IN WITNESS WHEREOF, this Agreement has been made and entered into
as of the date and year first above written.
SITESTAR CORPORATION,
a Nevada corporation
/s/ Xxxxxxx Xxxxxx
By - ----------------------------
Its: President
NEOCOM MICROSPECIALISTS, INC.
a Virginia corporation
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By /s/ Xxxxxx Xxxxxxxx
Its: President
------------------------
Xxx Xxxxxxxx
------------------------
Xxx Albanesee
------------------------
Xxxx Xxxxxxx
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ASSUMPTION AGREEMENT
EXHIBIT A
ASSUMED DEBT
Amount as of Description of
October 31, Underlying
Creditor & Description 1999 Agreements
---------------------- ----------- -------------
BB& T Bank $384,227 Loan Agreement dated
Prime plus 1.5% , payable in monthly -------------------
interest and principal payments of
$6,400 and balance due September 2003 Note dated --------
, secured by a deed of trust against
personal residences of
Xxxxxx Xxxxxxxx and Xxxxxxxxx Xxxxxxx.
Xxxx Xxxxxxx $312,573 Note dated
10.0% , payable in monthly interest only. -----------
Due on demand.
First Home Loan of Virginia $135,701
13.0% , payable in monthly interest and
principal payments of $1,784 and balance
due December 2002, guaranteed by Xxxxxx
Xxxxxxxx, Xxxxxxxxx Xxxxxxx and Xxxxxx
Xxxxxxxx.
----------------- $ 65,948 Note dated
8.5% , payable in monthly interest only ------------
payments. Due on demand.
X. Xxxxxx/Netsus LLC $ 19,863 Note dated
5.1 % , asset purchase note payable in ------------
monthly installments of $ 2,05 0 for 10
months and $1,700 for 12 months
D. Note Payable to Xx. Xxxxxx Xxxxxxxx $ 50,000 Note dated
under the amount as of October 31 plus accrued interest ------------
E. Note Payable to Xx. Xxxxx Xxxx. $ 50,000 Note dated
Due on demand plus accrued interest ----------
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