STOCK PURCHASE AGREEMENT
EXHIBIT
10.1
W I T N E S S E T H
WHEREAS,
the Purchaser desires to subscribe for and purchase _____________________ shares
of Common Stock, par value $0.001, of the Company (the "Shares"), for an
aggregate purchase price of $______ (the "Purchase Price");
WHEREAS,
the Company is willing to sell the Shares to the Purchaser on the terms and
conditions set forth herein.
NOW,
THEREFORE, in consideration of the mutual agreements and considerations set
forth herein, the parties hereby agree as follows.
1. Subscription
for and Purchase of Stock
Subject
to the terms and conditions stated herein, the Purchaser hereby subscribes
for
and agrees to purchase, and the Company agrees to sell to the Purchaser, the
Shares in consideration of the payment by the Purchaser of the Purchase
Price.
2. Representations
of the Purchaser; Restrictions on Transfer
2.1 General
Restriction on Transfer.
Except
for transfers otherwise permitted by this Agreement or applicable law, the
Purchaser agrees that it will not transfer any of the Shares.
2.2 Not
for Resale.
The
Purchaser represents that it is acquiring the Securities for investment for
its
own account and not with a view to, or for resale in connection with, the
distribution or other disposition thereof. The Purchaser agrees that it will
not, directly or indirectly, offer, transfer, sell, assign, pledge, hypothecate
or otherwise dispose of (each a "Transfer") any of the Shares unless such
Transfer complies with the provisions of this Agreement and (i) the Transfer
is
pursuant to an effective registration statement under the Securities Act of
1933, as amended, and the rules and regulations in effect thereunder (the
"Securities Act"), or (ii) counsel for the Purchaser shall have furnished the
Company with an opinion, acceptable to the Company, that no such registration
is
required because of the availability of an exemption under the Securities
Act.
2.3 Certain
Permitted Transfers.
Notwithstanding the general prohibition on Transfers contained herein, the
Company acknowledges and agrees that any Transfer in a private transaction
which
does not include a public distribution is permitted and need not require an
opinion of counsel, provided,
that
prior to such Transfer, the transferee shall deliver to the Company a valid
written undertaking to be bound by the terms of this Agreement.
2.4 Rule
144 Sales.
The
Purchaser may sell at any time any of the Shares in a Rule 144 Transaction
(as
hereinafter defined); provided,
that,
each such sale shall be made in compliance with this Section
2.4.
If any
of the Shares are disposed of according to Rule 144 ("Rule 144 Transaction")
under the Securities Act or otherwise, the Purchaser shall promptly notify
the
Company of such intended disposition and shall deliver to the Company at or
prior to the time of such disposition such documentation as the Company may
reasonably request in connection with such sale and, in the case of a
disposition pursuant to Rule 144, shall deliver to the Company an executed
copy
of any notice on Form 144 required to filed with the Securities and Exchange
Commission.
2.5 Legend.
Each
certificate representing the Shares shall bear the standard restrictive
legend.
"THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED
FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
OR
AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED."
2.6 Qualified
Investor The
Purchaser hereby represents and warrants to the Company as follows:
(a) The
Purchaser is an “accredited investor” as defined by Rule 501 under the
Securities Act, and the Purchaser is capable of evaluating the merits and risks
of Purchaser’s investment in the Company and has the capacity to protect the
Purchaser’s own interests.
The
Purchaser meets the requirements of at least one of the suitability standards
for an “accredited investor” as set forth on the Accredited Investor
Certification contained herein;
(b)
None
of the Shares have been registered under the Securities Act or any state
securities laws. The Purchaser understands that the offering and sale of the
Shares is intended to be exempt from registration under the Act, by virtue
of
Section 4(2) and/or Section 4(6) thereof and the provisions of Regulation D
promulgated thereunder, based, in part, upon the representations, warranties
and
agreements of the Purchaser contained in this Agreement;
(c) The
Purchaser has the requisite knowledge and experience in financial and business
matters to be capable of evaluating the merits and risks of this investment
and
to make an informed investment decision with respect thereto, and it or its
advisors have received such information requested by them concerning the Company
in order to evaluate the merits or risks of making this investment. Further,
it
is acknowledged that the Purchaser or its attorney, accountant or advisor have
had the opportunity to ask questions of, and receive answers from, the officers
of the Company concerning the terms and conditions of this investment and to
obtain information relating to the Company.
(d) The
purchase of the Shares involves risks which it has evaluated, and is able to
bear the economic risk of such purchase including the total loss of its
investment. It has been advised of the current financial condition of the
Company and of the possible adverse effects of such financial condition on
the
Company's general business.
2.7 (i)
Notwithstanding anything above in this Section 2 Purchaser shall not Transfer
the Shares (otherwise than to a Permitted Transferee, as defined below, or
by
will or by the laws of descent) without the written consent of the Company
(“Consent”), not to be unreasonably withheld. The Purchaser agrees that the
stock certificates representing his holdings in the Company as a result of
this
Agreement shall contain a restrictive legend prohibiting such transfers and
making reference to this Agreement. Provided however, that Consent to Transfer
is not required for an aggregate Transfer of 10% of the number of Shares being
purchased under this Agreement by Purchaser.
In
this
Agreement, “Permitted Transferee” shall mean: spouse or children or children’s
spouse or grandchildren or an entity which controls or is controlled by,
directly or indirectly by the Purchaser. For this purpose - "Control" shall
mean
holding at least 50% of the share capital and voting control of the relevant
entity and provided the Permitted Transferee agrees in writing to be bound
by
the terms herein.
(ii)
In
the event that the Company provides its Consent to a person who is listed on
Appendix A to this Agreement for Transfer of the shares (being purchased as
of
the date of this Agreement) listed beside such persons’ name, or any part of
them, then the Purchaser shall thereafter be entitled any time and from time
to
time to Transfer in the aggregate Y (as defined below) percentage of the Shares,
without Consent
For
the
purposes hereof:
‘Y’
is
equal to the quotient of the number of shares permitted to be Transferred in
the
total Consents given in any calendar month divided by the total number of shares
of Schedule A Stock (defined below) .
“Schedule
A Stock” is equal to 4,387,497 being the total number of shares set forth on
Schedule A.
3. Company's
Representations and Warranties
3.1 Organization.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to carry on its business as now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power and authority could not be reasonably expected
to
(i) prevent or materially delay the consummation of the sell of the Shares
or
(ii) have a material adverse effect on the Company. The Company is duly
qualified or licensed to do business and in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary, except
in such jurisdictions where the failure to be so duly qualified or licensed
and
in good standing could not reasonably be expected to have a material adverse
effect on the Company or prevent or materially delay the consummation of the
sell of the Shares. The Company has made available to the Purchaser complete
and
correct copies of its certificate of incorporation and bylaws.
3.2 The
Company has all requisite power and authority to issue, sell and deliver the
Shares in accordance with and upon the terms and conditions set forth in this
Agreement, and all corporate action required to be taken by the Company for
the
due and proper authorization, issuance and delivery of the Shares will, upon
delivery thereof, have been validly and sufficiently taken. The Shares, when
sold and paid for as contemplated in this Agreement, will be duly authorized,
validly issued, fully paid and non-assessable and, except as otherwise provided
by applicable law, free of all liens, claims and encumbrances.
3.3 (i)
The
Company has full corporate right, power and authority to enter into this
Agreement and to issue the Shares, and this Agreement and the Shares have been
or will be duly authorized, executed and delivered by the Company and
constitutes or will constitute the valid and binding agreement of the
Company.
(ii) The
Board
of Directors of the Company duly and unanimously adopted resolutions approving
this Agreement.
3.4 The
Company currently has issued and outstanding 2,112,500 shares of Common Stock.
The Company intends to sale for a xxxxx per share an additional 7,887,500 shares
(including the Shares) of Common Stock during May 2006.
3.5 No
Subsidiaries. The Company does not own, directly or indirectly, any capital
stock or other ownership interest in any corporation, partnership, joint venture
or other entity.
3.6 Consents
and Approvals; No Violations. Except for filings, permits, authorizations,
consents and approvals as may be required under, and other applicable
requirements of, the Securities Exchange Act of 1934 (the “Exchange Act”),
Section ____ of the Nevada revised Statutes Chapter 78, neither the execution,
delivery or performance of this Agreement by the Company nor the consummation
by
the Company of the transactions contemplated hereby will (i) conflict with
or
result in any breach of any provision of the certificate or articles of
incorporation or bylaws of the Company, (ii) require any filing with, or permit,
authorization, consent or approval of, any Governmental Entity (except where
the
failure to obtain such permits, authorizations, consents or approvals or to
make
such filings could not be reasonably expected to prevent or materially delay
the
consummation of the sell of the Shares), (iii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation
or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, lease, contract, agreement or other
instrument or obligation to which the Purchaser is a party or by which it or
any
of its properties or assets may be bound or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company or
any
of its properties or assets, except in the case of clauses (iii) and (iv) for
violations, breaches or defaults that could not be reasonably be expected to
have a material adverse effect on the Company or prevent or materially delay
the
consummation of the sell of the Shares.
3.7 SEC
Reports and Financial Statements. The Company
has
filed
with the SEC, and has heretofore made available to the Vendors and Company
true
and complete copies of, all forms, reports, schedules, statements and other
documents (other than preliminary materials) required to be filed by it under
the Exchange Act from and after January 26, 2004 (such forms, reports,
schedules, statements and other documents, including any financial statements
or
schedules included therein, are referred to as the “Company
SEC
Documents”). The Company
SEC
Documents, at the time filed, (a) did 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, and (b) complied in all material
respects with the applicable requirements of the Exchange Act and the applicable
rules and regulations of the SEC thereunder (and to the extent applicable,
the
PCAOB). The financial statements of the Company included in the Company SEC
Documents (the “Company Financial Statements”), heretofore delivered to the
Company, as of the dates thereof comply as to form in all material respects
with
applicable accounting requirements and with the published rules and regulations
of the SEC and the PCAOB with respect thereto, have been prepared in accordance
with GAAP applied on a consistent basis during the periods involved (except
as
may be indicated in the notes thereto or, in the case of the unaudited
statements, as permitted by Rule 10-01 of Regulation S-X promulgated by the
SEC)
and fairly present (subject, in the case of the unaudited statements, to normal,
recurring audit adjustments, none of which will be material) the consolidated
financial position of the Company as at the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended.
3.8 Absence
of Certain Changes or Events. The
Company, has conducted its businesses only in the ordinary course consistent
with past practice, and there has not been any material adverse change with
respect to the Company. Since the date of the last Company Financial Statements,
there has not been (i) any declaration, setting aside or payment of any dividend
or other distribution with respect to the Company’s capital stock or any
redemption, purchase or other acquisition of any of its capital stock, (ii)
any
split, combination or reclassification of any of the Company’s capital stock or
any issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock,
(iii)
any material change in accounting methods, principles or practices by the
Company (except insofar as may be required by a change in GAAP), (iv) (w) any
granting by the Company, to any executive officer of the Company of any increase
in compensation, except in the ordinary course of business (including in
connection with promotions) consistent with past practice or as was required
under employment agreements in effect as of the date of the last Company
Financial Statements, (x) any granting by the Company to any such officer of
any
increase in severance or termination pay, except as part of a standard
employment package to any person promoted or hired, or as was required under
employment, severance or termination agreements in effect as of the date of
the
last Company Financial Statements, (y) except employment arrangements in the
ordinary course of business consistent with past practice with employees other
than any executive officer of the Company, any entry by the Company into any
employment, severance or termination agreement with any such employee or
executive officer, or (z) any increase in or establishment of any bonus,
insurance, deferred compensation, pension, retirement, profit-sharing, stock
option (including the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards or the amendment of any existing
stock options, stock appreciation rights, performance awards or restricted
stock
awards), stock purchase or other employee benefit plan or agreement or
arrangement, (v) any damage, destruction or loss, whether or not covered by
insurance, that has or reasonably could be expected to have a material adverse
effect on the Company, (vi) any amendments or changes in the certificate or
articles of incorporation or bylaws of the Company, (vii) any material
revaluation by the Company of any of its assets, including writing down the
value of inventory or writing off notes or accounts receivable other than in
the
ordinary course of business,
(viii)
any increase in debt over $100,000.
3.9 No
Undisclosed Liabilities.
To the
knowledge of the Company, except as and to the extent set forth in the Company
SEC Documents, as of the date of the last Company Financial Statements, the
Company has had no any liabilities or obligations of any nature, whether or
not
accrued, contingent or otherwise, that would be required by GAAP to be reflected
on a consolidated balance sheet of the Company (including the notes thereto).
To
the knowledge of the Company, since the date of the last Company Financial
Statements, except as and to the extent set forth in the Company SEC Documents
and except for liabilities or obligations incurred in the ordinary course of
business consistent with past practice, the Company have not incurred any
liabilities of any nature, whether or not accrued, contingent or otherwise,
that
could be reasonably expected to have a material adverse effect on the Company,
or would be required by GAAP to be reflected on a consolidated balance sheet
of
the Company, (including the notes thereto).
3.10 Benefit
Plans. The
Company
has
no
benefit plans or other plan, arrangement or policy (written or oral) relating
to
stock options, stock purchases, compensation, deferred compensation, bonuses,
severance, fringe benefits or other employee benefits, maintained or contributed
to, or required to be maintained or contributed to, by the Company
for the
benefit of any present or former employee, officer or director.
3.11 Other
Compensation Arrangements. Except as provided in this Agreement, as of the
date
of this Agreement, the Company
is not a
party to any oral or written (i) consulting agreement that is not terminable
on
not more than 30 calendar days notice, or union or collective bargaining
agreement, (ii) agreement with any executive officer or other key employee
of
the Company
(iii)
agreement with a third party in which a Company
officer
or other employee is a shareholder, partner, consultant or employee or (iv)
agreement or plan, including any stock option plan, stock appreciation right
plan, restricted stock plan or stock purchase plan.
3.12 Litigation. Except
as
disclosed in the Company SEC Documents, there is no suit, claim, action,
proceeding or investigation pending before any Governmental Entity or, to the
best knowledge of the Company, threatened against the Company that could
reasonably be expected to have a material adverse effect on the Company or
prevent or materially delay the consummation of the Purchase. Except as
disclosed in the Company SEC Documents, the Company is not subject to any
outstanding order, writ, injunction or decree that could reasonably be expected
to have a material adverse effect on the Company or prevent or materially delay
the consummation of the Purchase.
3.13 Permits;
Compliance with Law.
The
Company
hold all permits, licenses, variances, exemptions, orders and approvals of
all
Governmental Entities necessary for the lawful conduct of their respective
businesses (the “Company Permits”), except for failures to hold such permits,
licenses, variances, exemptions, orders and approvals that could not reasonably
be expected to have a material adverse effect on the Company. The Company is
in
compliance with the terms of the Company Permits, except where the failure
so to
comply could not reasonably be expected to have a material adverse effect on
the
Company. Except as disclosed in the Company SEC Documents, to the knowledge
of
the Company, the businesses of the Company, is not being conducted in violation
of any law, ordinance or regulation of any Governmental Entity, except for
possible violations that could not reasonably be expected to have a material
adverse effect on the Company or prevent or materially delay the consummation
of
the Purchase. As of the date of this Agreement, no investigation, inquiry or
review by any Governmental Entity with respect to the Company is pending or,
to
the best knowledge of the Company, threatened, nor has any Governmental Entity
indicated an intention to conduct any such investigation, inquiry or review,
other than, in each case, those the outcome of which could not be reasonably
expected to have a material adverse effect on the Company or prevent or
materially delay the consummation of the Purchase.
3.14 Tax
Matters.
(a) The
Company
has
filed all tax returns and reports required to be filed by it, the failure of
which filing would be reasonably expected to have a material adverse effect
on
the Company
or
prevent or materially delay the consummation of the Purchase. All such returns
are complete and correct in all material respects (except to the extent a
reserve has been established on its most recent financial statements contained
in the Company
SEC
Documents). The Company
has
paid
all taxes required to be paid by it (without regard to whether a tax return
is
required or to the amount shown on any tax return), except taxes for which
an
adequate reserve has been established on its most recent financial statements.
The most recent financial statements reflect an adequate reserve for all taxes
payable by the Company
for
all
taxable periods and portions thereof through the date of such financial
statements. The unpaid taxes do not exceed that reserve as adjusted for the
passage of time through the Closing Date in accordance with the past custom
and
practice of the Company
in
filing
its tax returns.
(b) No
material tax return of the Company
is
under
audit or examination by any taxing authority, and no written or unwritten notice
of such an audit or examination has been received by the Company.
Each
material deficiency resulting from any audit or examination relating to taxes
by
any taxing authority has been paid, except for deficiencies being contested
in
good faith. No material issues relating to taxes were raised in writing by
the
relevant taxing authority during any presently pending audit or examination,
and
no material issues relating to taxes were raised in writing by the relevant
taxing authority in any completed audit or examination that can reasonably
be
expected to recur in a later taxable period. The tax returns of the Company
have
not
been examined by and/or settled with any Governmental Entity. No claim has
ever
been made by an authority in a jurisdiction where the Company
does
not
file tax returns that it is or may be subject to taxation by that
jurisdiction.
(c) With
regard to the Company,
there
is no agreement or other document extending, or having the effect of extending,
the period of assessment or collection of any taxes and no power of attorney
with respect to any taxes has been executed or filed with any taxing
authority.
(d) No
liens
for taxes exist with respect to any assets or properties of the Company,
except
for liens for taxes not yet due.
(e) The
Company
is not
liable for taxes of any other person or is a party to or is bound by any tax
sharing agreement, tax indemnity obligation or similar agreement, arrangement
or
practice with respect to taxes (including any advance pricing agreement, closing
agreement or other agreement relating to taxes with any taxing
authority).
(f) The
Company
is not a
party to any joint venture, partnership, or other arrangement or contract which
could be treated as a partnership for tax purposes.
(g) The
Company
has not
entered
into any sale leaseback or any leveraged lease transaction that fails to satisfy
the requirements of Revenue Procedure 75-21 (or similar provisions of foreign
law).
(h) All
material elections with respect to taxes affecting the Company
are
disclosed or attached to the Company’s
tax
returns.
(i) There
are
no private letter rulings in respect of any tax pending between the Company
and any
taxing authority.
3.15 Intellectual
Property. The Company
has
no
intellectual property.
3.16 Labor
Matters. The
Company
has no
liabilities and we unaware of controversies with employees, which controversies
could be reasonably expected to have a material adverse effect on the
Company.
3.17 Title
to
Property.
The
Company has good and defensible title to all of its properties and assets,
free
and clear of all liens, charges and encumbrances, except liens for taxes not
yet
due and payable and such liens or other imperfections of title, if any, as
do
not materially detract from the value of or interfere with the present use
of
the property affected thereby or which could not reasonably be expected to
have
a material adverse effect; and, to the knowledge of the Company, all leases
pursuant to which the Company leases from others material amounts of real or
personal property are in good standing, valid and effective in accordance with
their respective terms, and there is not, to the knowledge of the Company,
under
any of such leases, any existing default or event of default (or event which
with notice or lapse of time, or both, would constitute a default), except
where
the lack of such good standing, validity and effectiveness or the existence
of
such default or event of default could not reasonably be expected to have a
material adverse effect.
3.18 Absence
of Certain Payments.
Neither
the
Company nor any of its affiliates, officers, directors, employees or agent
or
other people acting on behalf of any of them have (i) engaged in any activity
prohibited by the United States Foreign Corrupt Practices Act of 1977, or any
other similar law, regulation, decree, directive or order of any other country
and (ii) without limiting the generality of the preceding clause (i), used
any
corporate or other funds for unlawful contributions, payments, gifts or
entertainment, or made any unlawful expenditures relating to political activity
to government officials or others. Neither
the
Company nor any of its affiliates, directors, officers, employees or agents
of
other persons acting on behalf of any of them, has accepted or received any
unlawful contributions, payments, gifts or expenditures.
3.19 Real
Property. The Company does not own any real property nor is it a party to a
lease that is (i) terminable on more than 30 days’ notice or (ii) could be
reasonably expected to have a material adverse effect on the
Company.
4. Pre-emption
Right.
For so
long as the Purchaser owns at least 100,000 Shares the Purchaser has the right
to purchase its proportionate share of any new shares of Common Stock issued
by
the Company from treasury except for the issuance of shares (i) to employees
or
other service providers (in transactions with primarily non-financing purposes),
(ii) to an investor that the board of directors determines to be a “strategic
investor”, (iii) from the exercise of options or warrants or convertible
securities or (iv) from conversion of debt. The procedure for, and the terms
or
conditions of, the exercise of this right are set out in Schedule
B.
5. Miscellaneous
5.1 Notices.
All
notices and other communications provided herein shall be in writing and shall
be deemed to have been duly given if delivered personally or sent by certified
mail, postage prepaid, to a party's designated address set froth above, if
sent
by facsimile, to its facsimile number at such address.
5.2
Counterparts;
Entire Agreement.
This
Agreement may be executed in counterparts. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter
hereof.
5.3 Binding
Effect.
The
provisions of this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
successors and assigns.
5.4 Amendment.
This
Agreement may be amended only by a written instrument signed by the parties
hereto which specifically states that it is amending this
Agreement.
5.5 Applicable
Governing Law.
This
Agreement and the rights and obligations of the parties hereto shall be governed
by and construed and enforced in accordance with, the laws of the State of
New
York.
5.6 Headings.
The
headings herein are for convenience of reference only, do not constitute a
part
of this Agreement, and shall not be deemed to limit, expand or otherwise affect
any of the provisions hereof.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first written above.
By:______________________
Purchaser
_________________________
