EXHIBIT 2.4
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Purchase Agreement") made as of this __ day
of August, 2000 among iParty Corp., a Delaware corporation (the "Company"),
Xxxxx Xxxx ("Khan") and Xxxxxx X. Xxxxxx ("Xxxxxx" together with Khan, the
"Purchasers" or each individually a "Purchaser").
WHEREAS, the Company and the Purchasers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 under Regulation D as promulgated by the United States Securities
and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "Securities Act");
WHEREAS, the Company has authorized a new series of preferred stock,
designated as Series E Convertible Preferred Stock (the "Series E Preferred
Stock"), having the rights, preferences and privileges set forth in the
Certificate of Designations, Rights and Preferences attached hereto as Exhibit A
(the "Certificate of Designation");
WHEREAS, the Series E Preferred Stock are convertible into shares of
common stock $.001 par value, per share of the Company (the "Common Stock") upon
the terms and subject to the limitations and conditions set forth in the
Certificate of Designation.
WHEREAS, the Purchasers desire to purchase and the Company desires to
issue and sell, upon the terms and conditions set forth in this Purchase
Agreement an aggregate of Five Hundred Thirty-Three Thousand Three Hundred
Thirty-Three (533,333) shares of Series E Preferred Stock of the Company;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:
I. SUBSCRIPTION FOR SHARES AND CLOSING.
1.1 Purchase. At the Closing (as defined below), the Company shall
issue and sell to each Purchaser and each Purchaser severally agrees to purchase
from the Company such number of Series E Preferred Stock as is set forth
immediately below such Purchaser's name of the signature pages hereto. Subject
to the terms and conditions hereinafter set forth, the Purchasers hereby
subscribe for and agree to purchase from the Company, Five Hundred Thirty-Three
Thousand Three Hundred Thirty-Three (533,333) shares of Series E Preferred Stock
at a price equal to $3.75 per share which shares shall convert into Five Million
Three Hundred Thirty-Three Thousand Three Hundred Thirty-Three (5,333,333)
shares of Common Stock ("Conversion Shares"). The Series E Preferred Stock shall
have the rights and preferences as set forth in the Certificate of Designation
attached hereto as Exhibit A.
1.2 Closing. The Closing of the purchase and sale of the Series E
Preferred Stock (the "Closing") shall take place on or before August __, 2000 at
the offices of Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P, 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000. The Company shall issue to the Purchasers certificates
representing the Series E Preferred Stock.
II. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
2.1 Each Purchaser recognizes that the purchase of Series E
Preferred Stock involves a high degree of risk in that (i) the Company has
incurred substantial losses from operations; (ii) an investment in the Company
is highly speculative and only investors who can afford the loss of their entire
investment should consider investing in the Company; (iii) an investment in the
Series E Preferred Stock is illiquid; and (iv) transferability of the securities
comprising the Series E Preferred Stock is extremely limited, as well as other
risk factors of which the undersigned has been advised.
2.2 Each Purchaser represents and warrants that it is an "accredited
investor" as such term is defined in Rule 501 of Regulation D promulgated under
the Securities Act.
2.3 Each Purchaser hereby represents that it has been furnished by
the Company during the course of this transaction with all information regarding
the Company which it has requested or desires to know and that it has been
afforded the opportunity to ask questions of and receive answers from duly
authorized officers or other representatives of the Company concerning the terms
and conditions of this offering and the business of the Company.
2.4 Each Purchaser acknowledges that this offering of Series E
Preferred Stock has not been reviewed by the SEC because of the Company's
representations that this is intended to be a nonpublic offering pursuant to
Sections 4(2) or 3(b) of the Securities Act. Each Purchaser represents that the
Series E Preferred Stock are being purchased for its own account, for investment
and not for distribution or resale to others. Each Purchaser agrees that it will
not sell or otherwise transfer the Series E Preferred Stock unless they are
registered under the Securities Act or unless an exemption from such
registration is available.
2.5 Each Purchaser consents to the placement of a legend on any
certificate or other document evidencing the Series E Preferred Stock, and the
shares of Common Stock issuable upon conversion thereof, stating that they have
not been registered under the Securities Act and setting forth or referring to
the restrictions on transferability and sale thereof, and to the issuance of
stop transfer instructions with respect thereto. The legend shall state as
follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE SECURITIES MAY NOT BE
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT, OR AN OPINION OF COUNSEL, IN FORM, SUBSTANCE
AND SCOPE CUSTOMARY FOR TRANSACTIONS, THAT
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REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OR
UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES ACT."
2.6 Each Purchaser represents and warrants that: (i) it was not
formed for the purpose of investing in the Company; (ii) it is authorized and
otherwise duly qualified to purchase and hold the Series E Preferred Stock; and
(iii) that this Purchase Agreement has been duly and validly authorized,
executed and delivered constitutes the legal, binding and enforceable obligation
of the undersigned.
2.7 No Purchaser has engaged any broker, finder, commission agent or
other such intermediary in connection with the sale of the Series E Preferred
Stock and the transactions contemplated by the Purchase Agreement.
2.8 The Purchasers agree that they will not convert their shares of
the Series E Preferred Stock in to Common Stock until the Company files an
amendment to its Certificate of Incorporation increasing the number of
authorized shares of its Common Stock.
III. REPRESENTATIONS BY THE COMPANY
3.1 The Company represents and warrants to the Purchasers that as of
the date hereof and at the Closing:
(a) The Company is a corporation duly organized, existing and
in good standing under the laws of the State of Delaware and has the corporate
power to conduct the business which it conducts and proposes to conduct. The
Company is duly qualified to do business as a foreign corporation in each
jurisdiction in which the conduct of its business requires such qualification,
except where the failure to so qualify would not have a material adverse effect
on the Company's business. The Company has furnished the Purchasers with true,
correct and complete copies of the Company's Certificate of Incorporation and
the Company's Bylaws, as then in effect.
(b) All corporate action on the part of the Company necessary
for the authorization, execution, delivery and performance by the Company of
this Purchase Agreement and the consummation of the transactions contemplated
herein, and for the authorization, issuance and delivery of the Series E
Preferred Stock has been taken or will be taken prior to the Closing except as
set forth below.
(c) This Purchase Agreement is a valid and binding obligation
of the Company, enforceable in accordance with its terms, subject to laws of
general application relating to bankruptcy, insolvency, and the relief of
debtors and other laws of general application affecting enforcement of
creditors' rights generally, rules of law governing specific performance,
injunctive relief or other equitable remedies, and limitations of public policy.
(d) The execution, delivery and performance by the Company of
this Purchase Agreement and compliance herewith and the sale and issuance of the
Series E Preferred
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Stock will not result in any violation of and will not conflict with, or result
in a breach of any of the terms of, or constitute a default under the Company's
Certificate of Incorporation or Bylaws, or any material provision of any
material mortgage, indenture, agreement, instrument, judgment, decree, order,
law, rule or regulation or other restriction to which the Company is a party or
by which it is bound, or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the Company.
(e) The Series E Preferred Stock Shares have been duly and
validly authorized and when issued and paid for in accordance with the terms
hereof, will be duly and validly issued and fully paid and non-assessable;
provided, however, that the Series E Preferred Stock may be subject to
restrictions on transfer under state and/or federal securities laws. Upon proper
conversion of the Series E Preferred Stock, the Conversion Shares will be duly
and validly issued and fully paid and non-assessable; provided, however, that
the Conversion Shares may be subject to restrictions on transfer under state
and/or federal securities laws.
(f) The Company shall amend its Certificate of Incorporation
to increase the number of authorized Common Stock and shall reserve a sufficient
number of Conversion Shares (the "Reserved Shares") to provide for conversion of
the Series E Preferred Stock.
(g) The Company has, to the best of its knowledge, obtained,
or is in the process of obtaining, all licenses, permits and other governmental
authorizations necessary to the conduct of its business; such licenses, permits
and other governmental authorizations obtained are in full force and effect; and
the Company is in all material respects complying therewith; except where such
failure to obtain such licenses, permits and other governmental authorizations
necessary to the conduct of its business would not have a material adverse
effect on the Company's business or financial condition.
(h) The Company knows of no pending or threatened legal or
governmental proceedings to which the Company is a party which could materially
adversely affect the business, property, financial condition or operations of
the Company. There is no action, suit, proceeding or investigation pending or
currently threatened against the Company that questions the validity of this
Agreement, or the right of the Company to enter into this agreement, or to
consummate the transactions contemplated hereby, or that might result, either
individually or in the aggregate, in any material adverse changes in the assets,
condition, affairs or prospects of the Company.
(i) Except as set forth in the Company's public documents,
there has not been:
(i) any change in the assets, liabilities, financial
condition or operating results of the Company from that reflected in the public
documents, except changes in the ordinary course of business that have not been,
in the aggregate, materially adverse;
(ii) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the assets, properties,
financial condition, operating
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results, prospects or business of the Company (as such business is presently
conducted and as it is presently proposed to be conducted);
(iii) any waiver by the Company of a valuable right or
of a material debt owed to it;
(iv) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not material to the assets, properties, financial
condition, operating results or business of the Company (as such business is
presently conducted and as it is presently proposed to be conducted);
(v) any material change or amendment to a material
contract or arrangement by which the Company or any of its assets or properties
is bound or subject;
(vi) receipt of notice that there has been a loss of, or
material order cancellation by, any major customer of the Company;
(vii) any mortgage, pledge, transfer of a security
interest in, or lien, created by the Company, with respect to any of its
material properties or assets, except liens for taxes not yet due or payable;
(viii) any declaration, setting aside or payment or
other distribution in respect of any of the Company's capital stock, or any
direct or indirect redemption, purchase or other acquisition of any of such
stock by the Company; or
(ix) to the Company's knowledge, any other event or
condition of any character that might materially and adversely affect the
assets, properties, financial condition, operating results or business of the
Company (as such business is presently conducted and as it is presently proposed
to be conducted).
(j) The Company, to its knowledge, has sufficient title and
ownership of all trademarks, service marks, trade names, copyrights, trade
secrets, information, proprietary rights and processes necessary for its
business as now conducted and as presently proposed to be conducted without any
conflict with or infringement of the rights of others. Other than an agreement
with the Company's fulfillment agent, Taymark, a division of Xxxxxx corporation,
which has a license to use the Company's trademark in connection with the
fulfillment of orders placed on the Company's web site, there are no outstanding
options, licenses, or agreements of any kind relating to the foregoing, nor is
the Company bound by or a party to any options, licenses or agreements of any
kind with respect to these, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, proprietary rights and processes of any
other person or entity. The Company has not received any communications alleging
that the Company has violated or, by conducting its business as now conducted
and as presently proposed to be conducted, would violate any of the, trademarks,
service marks, trade names, copyrights or trade secrets or other proprietary
rights of any other person or entity. To the Company's knowledge, none of its
employees is obligated under any contract (including licenses, covenants or
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commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
the use of his or her best efforts to promote the interests of the Company or
that would conflict with the Company's business as presently proposed to be
conducted. Neither the execution nor delivery of this Agreement, nor the
carrying on of the Company's business by the employees of the Company, nor the
conduct of the Company's business as now conducted and as presently proposed to
be conducted, will, to the Company's knowledge, conflict with or result in a
breach of the terms, conditions or provisions of, or constitute a default under,
any contract, covenant or instrument under which any of such employees is now
obligated.
(k) The Company has filed all tax returns and reports
(including information returns and reports) as required by law. These returns
and reports are true and correct in all material respects. The Company has paid
all taxes and other assessments due. The Company has never had any tax
deficiency proposed or assessed against it and has not executed any waiver of
any statute of limitations on the assessment or collection of any tax or
governmental charge. None of the Company's federal income tax returns and none
of its state income or sales or use tax returns has ever been audited by
governmental authorities. Since the date of the public documents, the Company
has not incurred any taxes, assessments or governmental charges other than in
the ordinary course of business. The Company has withheld or collected from each
payment made to each of its employees, the amount of all taxes (including, but
not limited to, federal income taxes, Federal Insurance Contribution Act taxes
and Federal Unemployment Tax Act taxes) required to be withheld or collected
therefrom, and has paid the same to the proper tax receiving officers or
authorized depositories.
(l) The Company is not bound by or subject to (and none of its
assets or properties is bound by or subject to) any written or oral, express or
implied, contract, commitment or arrangement with any labor union, and no labor
union has requested or, to the Company's knowledge, has sought to represent any
of the employees, representatives or agents of the Company. There is no strike
or other labor dispute involving the Company pending, or to the Company's
knowledge, threatened, that could have a material adverse effect on the assets,
properties, financial condition, operating results, or business of the Company
(as such business is presently conducted and as it is presently proposed to be
conducted), nor is the Company aware of any labor organization activity
involving its employees. The Company is not aware that any officer or key
employee, or that any group of key employees, intends to terminate their
employment with the Company, nor does the Company have a present intention to
terminate the employment of any of the foregoing. To its knowledge, the Company
has complied in all material respects with all applicable state and federal
equal employment opportunity and other laws related to employment.
(m) The Company has no contract, arrangement or understanding
with any broker, finder or similar agent with respect to the transactions
contemplated by this Agreement.
(n) The Company has all, permits, licenses, and any similar
authority necessary for the conduct of its business as now being conducted by
it, the lack of which could materially and adversely affect the business,
properties, prospects, or financial condition of the
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Company, and the Company believes it can obtain, without undue burden or
expense, any similar authority for the conduct of its business as planned to be
conducted. The Company is not in default in any material respect under any of
such permits, licenses or other similar authority.
(o) Assuming the correctness of the representations and
warranties set forth in Sections 3.1(d) and 3.1(e) hereof, the offer and sale of
the Series E Preferred Stock and the issuance of the Common Stock, if any, to
the Purchasers hereunder is exempt from the registration and prospectus delivery
requirements of the Securities Act. In the case of each offer or sale of the
Series E Preferred Stock, no form of general solicitation or general advertising
was used by the Company and its representatives, including, but not limited to,
advertisements, articles, notices or other communications published in any
newspaper, magazine or similar medium or broadcast over television, radio or any
seminar or meeting whose attendees have been invited by any general solicitation
or general advertising.
IV. CONDITIONS TO CLOSING
The obligation of each Purchaser to purchase and pay for the Series
E Preferred Stock to be purchased hereunder at the Closing is subject to the
satisfaction of the following conditions precedent (unless waived by such
Purchasers). The Company shall use its best efforts to ensure that all
conditions to the Closing set forth in this Article IV are satisfied on or prior
to the Closing Date, including executing and delivering all documents required
to be delivered by the Company at the Closing.
4.1 Certificate of Designation. The Certificate of Designation shall
have been filed with and accepted by the Secretary of the State of Delaware and
evidence of such filing.
4.2 Issuance of Purchased Securities. The Company shall have duly
issued and delivered to each Purchaser of the Series E Preferred Stock at the
Closing the certificate(s) for the number of the Series E Preferred Stock
purchased by such Purchasers.
4.3 Registration Rights Agreement. The Company shall have executed
and delivered that certain Registration Rights Agreement by and among the
Company and the Purchasers.
4.4 Officer's Certificate. The Company shall deliver a certificate,
executed by an officer of the Company hereof stating, among other things, that
(a) the representations and warranties contained in Article III are true,
correct and complete in all material respects on and as of the Closing Date and
(b) the Company has performed and complied in all material respects with all
agreements and conditions contained in the documents required to be performed or
complied with by it prior to or at the Closing.
4.5 All Proceedings to Be Satisfactory. All corporate and other
proceedings to be taken and all waivers, consents, approvals, qualifications and
registrations required to be obtained or effected in connection with the
execution, delivery and performance of this Purchase Agreement and the other
documents and the transactions shall have been taken, obtained or effected
(except for the filing of any notice subsequent to the Closing that may be
required under
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applicable Federal or state securities laws, which notice shall be filed on a
timely basis following the Closing as so required), and all documents incident
thereto shall be reasonably satisfactory in form and substance to such
Purchasers. Such Purchasers shall have received all such originals or certified
or other copies of such documents as have been reasonably requested by them.
4.6 No Litigation or Legislation. No legislation shall have been
enacted after the date hereof and no proceeding shall be pending which prohibits
or seeks to prohibit, or materially restricts or delays the consummation of the
transactions contemplated by the documents or materially restricts or impairs
the ability of the Purchasers to own Series E Preferred Stock of the Company.
V. MISCELLANEOUS
5.1 Notices. All notices and other communications delivered
hereunder (whether or not required to be delivered hereunder) shall be deemed to
be sufficient and duly given if contained in a written instrument (a) personally
delivered, (b) sent by telecopier, (c) sent by nationally recognized overnight
courier guaranteeing next Business Day delivery or (d) sent by first class
registered or certified mail, postage prepaid, return receipt requested, in each
case addressed as follows:
(a) if to the Company:
iParty Corp.
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Chief Executive Officer
Telecopy: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx X. Xxxxxx, Esq.
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
(b) If to any Purchaser, to the address of such Purchaser set
forth on the signature page of this Purchase Agreement.
(c) Any such notice or communication shall be deemed to have
been received (i) when delivered, if personally delivered, (ii) when sent, if
sent by telecopy on a business day (or, if not sent on a business day, on the
next business day after the date sent by telecopy), (iii) on the next business
day after dispatch, if sent by nationally recognized, overnight courier
guaranteeing next business day delivery, and (iv) on the fifth (5th) business
day following the date on which the piece of mail containing such communication
is posted, if sent by mail.
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5.2 Amendments. This Purchase Agreement shall not be changed,
modified or amended except by a writing signed by the parties to be charged, and
this Purchase Agreement may not be discharged except by performance in
accordance with its terms or by a writing signed by the party to be charged.
5.3 Successor and Assigns. This Purchase Agreement shall be binding
upon and inure to the benefit of the parties hereto and to their respective
heirs, legal representatives, successors and assigns. This Purchase Agreement
and the documents referenced herein set forth the entire agreement and
understanding between the parties as to the subject matter thereof and merges
and supersedes all prior discussions, agreements and understandings of any and
every nature among them.
5.4 Governing Law. Notwithstanding the place where this Purchase
Agreement may be executed by any of the parties hereto, the parties expressly
agree that all the terms and provisions hereof shall be construed in accordance
with and governed by the laws of the State of New York without regard to such
states laws regarding conflicts of laws. The parties hereby agree that any
dispute which may arise between them arising out of or in connection with this
Purchase Agreement shall be adjudicated before a court located in New York City
and they hereby submit to the exclusive jurisdiction of the courts of the State
of New York located in New York, New York and of the federal courts in the
Southern District of New York with respect to any action or legal proceeding
commenced by any party, and irrevocably waive any objection they now or
hereafter may have respecting the venue of any such action or proceeding brought
in such a court or respecting the fact that such court is an inconvenient forum,
relating to or arising out of this Purchase Agreement or any acts or omissions
relating to the sale of the securities hereunder, and consent to the service of
process in any such action or legal proceeding by means of registered or
certified mail, return receipt requested, in care of the address set forth below
or such other address as the undersigned shall furnish in writing to the other.
5.5 Counterparts. This Purchase Agreement may be executed in
counterparts. Upon the execution and delivery of this Purchase Agreement by the
Purchasers, this Purchase Agreement shall become a binding obligation of the
Purchasers with respect to the purchase of Series E Preferred Stock as herein
provided; subject, however, to the right hereby reserved to the Company to enter
into the same agreements with other Purchasers and to add and/or to delete other
persons as Purchasers.
5.6 Severability. The holding of any provision of this Purchase
Agreement to be invalid or unenforceable by a court of competent jurisdiction
shall not affect any other provision of this Purchase Agreement, which shall
remain in full force and effect.
5.7 Waiver. It is agreed that a waiver by either party of a breach
of any provision of this Purchase Agreement shall not operate, or be construed,
as a waiver of any subsequent breach by that same party.
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5.8 Further Assurances. The parties agree to execute and deliver all
such further documents, agreements and instruments and take such other and
further action as may be necessary or appropriate to carry out the purposes and
intent of this Purchase Agreement.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the parties have executed this Purchase Agreement as
of the day and year first written above.
iPARTY CORP.
By:/s/ Xxx Xxxxxxxx
---------------------------------------
Xxx Xxxxxxxx
Chief Executive Officer
PURCHASER
/s/ Xxxxx Xxxx
------------------------------------------
Xxxxx Xxxx
Verus Support Services Inc.
000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
No. of Shares of Series E Preferred
Stock: 266,666
PURCHASER
/s/ Xxxxxx X. Xxxxxx
------------------------------------------
Xxxxxx X. Xxxxxx
Wit Soundview
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
No. of Shares of Series E Preferred
Stock: 266,666
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