STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, made and entered into this 16th day of May,
2001, by and between Kattosko Communications, Inc., a New Jersey corporation
with its principal place of business located at 000 Xxxxxxxxx Xxxxxx, Xxxxxxx,
XX 00000 ("Purchaser"); and The Xxxxx Group, Inc., a Delaware corporation with
its principal place of business located at 00 Xxxxxxx Xxxxx, Xxxx Xxxxxxxx, XX
00000; Xxxxx Telecom, Inc., a Delaware corporation with its principal place of
business located at 00 Xxxxxxx Xxxxx, Xxxx Xxxxxxxx, XX 00000; and CT
Industries, Inc., a Delaware corporation with its principal place of business
located at 00 Xxxxxxx Xxxxx, Xxxx Xxxxxxxx, XX 00000 (collectively known as
"Seller").
R E C I T A L S:
FIRST, Seller is the owner of all of the issued and outstanding shares of
Xxxxxxx Telecard, Inc., a Delaware corporation ("Xxxxxxx").
SECOND, Seller desires to sell all of its issued and outstanding shares of
Xxxxxxx to Purchaser for the consideration set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
1.0 Transfer of Shares.
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Seller hereby transfers and delivers all of the issued and outstanding
shares of Xxxxxxx to Purchaser for the following consideration: the value of the
current bank account of Xxxxxxx, valued at approximately $528,000.00 (see
attachment), located at Valley National Bank, Account #00000000 (Xxxxx will
retain ownership of this account). This shall include Purchaser's and Mohd
Qattous' guarantee to pay any and all
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bounced checks, checks returned for insufficient funds or checks returned for
unavailable funds, all deposited up until May 11,2001, for such account
transferred into or the successor account established by Seller (Account Number:
040854590), within thirty days of the date hereof. If such payments are not made
within the thirty day time period set forth above, interest shall accrue on the
outstanding amount at the interest rate of the lower of 18% per annum or the
maximum allowed by law. If such payments are not made within 75 days from the
date hereof, Seller shall be entitled to institute any and all legal action to
collect such outstanding amount. Additional consideration is the forgiveness of
the entire indebtedness (approximately $160,000) of CT Industries, Inc. (a
wholly owned subsidiary of Seller). In addition, Seller agrees to forgive the
indebtedness of Xxxxxxx to Xxxxx Telecom, Inc. as of May 14, 2001. Seller hereby
agrees to undertake all standard and customary UCC, Lien and Tax Searches
(collectively, the "Searches") on Xxxxxxx. Upon receipt of the Searches, Seller
shall immediately send the results to Purchaser's attorney. If the results of
the Searches indicate there are any liens, taxes, judgements, security
instruments or the like (collectively, the "Liens") that Seller is responsible
for, Seller shall, in a reasonable time period, satisfy the Liens or Purchaser
can void this agreement by providing written notice to Seller. If Purchaser
allowed any Liens to be placed on Xxxxxxx, Seller shall not be responsible for
satisfying same.
2.0 Additional Consideration. (A) Purchaser shall execute a Promissory Note
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for $100,000 (one hundred thousand) payable to The Xxxxx Group, Inc., in the
form
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attached hereto and made a part hereof. Such promissory note shall be guaranteed
by Mohd Qattous. (B) Purchaser shall have the right to purchase prepaid
telephone cards from Xxxxx Telecom, Inc. with terms of net 21 and a maximum
credit limit of $50,000 at the current discounts, provided goods are in good
working condition. (C) Purchaser shall have the right to sell prepaid telephone
cards to Seller with terms of Net 21 days and a maximum credit limit of $50,000
with current discounts, provided goods are in good working condition. Such
account shall remain active provided Seller maintains account in good standing
(D) Both Purchaser and Seller agree not to deactivate any cards currently in
circulation. (E) Xxxxx and Xxxxxxx agree to have mutual and equal access and
ownership of all cards with service provided by Xxxxx Telecom currently in
stock, except "Original" phone card. (F) Seller agrees not sell any of Xxxxxxx
Telecard's ITG serviced products to any Xxxxxxx Telecard customers, not to sell
the "Original" phone card for more than a twenty-eight percent (28%) discount,
not to sell the "African Voice" for more than thirty percent (30%) discount. (G)
Purchaser retains the rights to all trademarks containing CTA logo and Xxxxx
Telecom retains the rights to all trademarks containing those serviced by Xxxxx
Telecom except the "Original" and Seller agrees not to print the "Original". (H)
Buyer and Seller agree to indemnify and hold harmless each other. (H) Xxxxxxx
Xxxxxxx shall resign as President of Operations and his employment contract
shall be immediately terminated. (I) Purchaser agrees to honor all activations
for all invoices to Seller placed by May 14, 2001 no later than May 17, 2001.
(J) Seller retains the right to sell product to Quick Stop (Xxxxxx) with out any
restrictions or stipulations. (K) Seller shall not be allowed to sell either the
"Original", "Northern Star"
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or "African Voice" to any of Purchaser's customers, attached hereto and made a
part hereof (with the exception of Quick Stop). (L) Purchaser shall be
responsible for Clifton's payroll as of May 14, 2001. (M) Seller shall not make
any prepaid telephone cards with Total Call, Inc. (Xxxx Leafstad) for a period
of one year from the date hereof.
3.0 Representations and Warranties of Seller. Seller hereby represents and
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warrants to Purchaser that:
3.1 Authority. Seller has the power and authority to execute and deliver
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this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by constitutes a valid and binding instrument, enforceable in
accordance with its terms.
3.2 Compliance with Other Instruments. The execution, delivery and
-------------------------------------
performance of this Agreement is in compliance with and does not conflict with
or result in a breach of or in violation of the terms, conditions or provisions
of any agreement, mortgage, lease or other instrument or indenture to which
Seller is a party or by which Seller is bound except for a pledge agreement
which will be released prior to the transfer of the shares.
3.3 Title to Seller's shares in Xxxxxxx. Seller is the legal and beneficial
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owner of its shares in Xxxxxxx and has good and marketable title thereto, free
and clear of any liens, claims, rights and encumbrances.
3.3 Litigation and Proceedings. To the best of Seller's knowledge and
------------------------------
belief, there are no actions, suits, proceedings or investigations pending or
threatened by or against Seller or affecting Seller or its properties, at law or
in equity, before any court or other governmental agency or instrumentality,
domestic or foreign or before any
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arbitrator of any kind that would have a material adverse affect on the
business, operations, financial condition or income of Seller. Seller does not
have any knowledge of any default on its part with respect to any judgment,
order, writ, injunction, decree, award, rule or regulation of any court,
arbitrator or governmental agency or instrumentality or of any circumstances
which, after reasonable investigation, would result in the discovery of such a
default.
3.4 Material Contract Defaults. To the best of Seller's knowledge and
------------------------------
belief, Seller is not in default in any material respect under the terms of any
outstanding contract, agreement, lease or other commitment which is material to
the business, operations, properties, assets or condition of Seller, and there
is no event of default in any material respect under any such contract,
agreement, lease or other commitment in respect of which Seller has not taken
adequate steps to prevent such a default from occurring.
3.5 No Conflict With Other Instruments. The execution of this Agreement and
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the consummation of the transactions contemplated by this Agreement will not
result in the breach of any term or provision of, or constitute an event of
default under, any material indenture, mortgage, deed of trust or other material
contract, agreement or instrument to which Seller is a party or to which any of
its properties or operations are subject.
3.6 Governmental Authorizations. To the best of Seller's knowledge, Seller
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has all licenses, franchises, permits or other governmental authorizations
legally required to enable Seller to conduct its business in all material
respects as conducted
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on the date hereof. Except for compliance with federal and state securities and
corporation laws, as hereinafter provided, no authorization, approval, consent
or order of, or registration, declaration or filing with, any court or other
governmental body is required in connection with the execution and delivery by
Seller of this Agreement and the consummation of Seller of the transactions
contemplated hereby.
3.7 Xxxx of Sale. Seller hereby agrees to provide Purchaser with a Xxxx of
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Sale, or similar document or any document necessary to effectuate this
transaction, upon Purchaser's request.
3.8 Seller hereby represents that Xxxxxxx Telecard, Inc. owns all
inventory, receivables, equipment, furnishings, website, company name, and all
other assets used in the operation of the business.
4.0 Representations and Warranties of Purchaser. Purchaser hereby
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unconditionally represents and warrants to Seller that:
4.1 Authority. Purchaser has the power and authority to execute and deliver
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this Agreement, to perform his obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Purchaser and constitutes a valid and binding instrument,
enforceable in accordance with its terms.
4.2 Compliance with Other Instruments. The execution, delivery and
--------------------------------------
performance of this Agreement is in compliance with and does not conflict with
or result in a breach of or in violation of the terms, conditions or provisions
of any agreement,
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mortgage, lease or other instrument or indenture to which Purchaser is a party
or by which Purchaser is bound.
4.3 Litigation and Proceedings. To the best of Purchaser's knowledge and
------------------------------
belief, there are no actions, suits, proceedings or investigations pending or
threatened by or against Purchaser or affecting Purchaser or its properties, at
law or in equity, before any court or other governmental agency or
instrumentality, domestic or foreign or before any arbitrator of any kind that
would have a material adverse affect on the business, operations, financial
condition or income of Purchaser. Purchaser does not have any knowledge of any
default on its part with respect to any judgment, order, writ, injunction,
decree, award, rule or regulation of any court, arbitrator or governmental
agency or instrumentality or of any circumstances which, after reasonable
investigation, would result in the discovery of such a default.
4.4 Material Contract Defaults. To the best of Purchaser's knowledge and
------------------------------
belief, Purchaser is not in default in any material respect under the terms of
any outstanding contract, agreement, lease or other commitment which is material
to the business, operations, properties, assets or condition of Purchaser, and
there is no event of default in any material respect under any such contract,
agreement, lease or other commitment in respect of which Purchaser has not taken
adequate steps to prevent such a default from occurring.
4.5 No Conflict With Other Instruments. The execution of this Agreement and
--------------------------------------
the consummation of the transactions contemplated by this Agreement will not
result in the breach of any term or provision of, or constitute an event of
default under,
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any material indenture, mortgage, deed of trust or other material contract,
agreement or instrument to which Purchaser is a party or to which any of its
properties or operations are subject.
4.6 Governmental Authorizations. To the best of Purchaser's knowledge,
-------------------------------
Purchaser have all licenses, franchises, permits or other governmental
authorizations legally required to enable Purchaser to conduct its business in
all material respects as conducted on the date hereof. Except for compliance
with federal and state securities and corporation laws, as hereinafter provided,
no authorization, approval, consent or order of, or registration, declaration or
filing with, any court or other governmental body is required in connection with
the execution and delivery by Purchaser of this Agreement and the consummation
of Purchaser of the transactions contemplated hereby.
4.7 Access to Financial Information. Purchaser hereby agrees to provide
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Seller, or its representatives, access to the financial information of Xxxxxxx
up to the date of closing for the purpose of preparing and filing all required
SEC documents.
5.0 Notices. Notice shall be given by certified mail, return receipt
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requested, the date of notice being deemed the date of postmarking. Notice,
unless either party has notified the other of an alternative address as provided
hereunder, shall be sent to the address as set forth herein.
6.0 Governing Law. This Agreement shall be interpreted and governed in
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accordance with the laws of the State of New Jersey.
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7.0 Severability. In the event that any term, covenant, condition, or other
----------------
provision contained herein is held to be invalid, void or otherwise
unenforceable by any court of competent jurisdiction, the invalidity of any such
term, covenant, condition, provision or Agreement shall in no way affect any
other term, covenant, condition or provision or Agreement contained herein,
which shall remain in full force and effect.
8.0 Entire Agreement. This Agreement contains all of the terms agreed upon
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by the parties with respect to the subject matter hereof. This Agreement has
been entered into after full investigation.
9.0 Invalidity. If any paragraph of this Agreement shall be
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held or declared to be void, invalid or illegal, for any reason, by any court of
competent jurisdiction, such provision shall be ineffective but shall not in any
way invalidate or effect any other clause, Paragraph, section or part of this
Agreement.
10.0 Gender and Number. Words importing a particular gender mean and
----------------------
include the other gender and words importing a singular number mean and include
the plural number and vice versa, unless the context clearly indicated to the
contrary.
11.0 Amendments. No amendments or additions to this Agreement shall be
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binding unless in writing, signed by both parties, except as herein otherwise
provided.
12.0 No Assignments. Neither party may assign nor delegate any of its
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rights or obligations hereunder without first obtaining the written consent of
the other party.
13.0 Indemnification. Each party hereby agrees to hold harmless and
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indemnify the other party, including but not limited to attorney fees, court
costs, damages, in the
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event of: (1) any misrepresentation of such party or breach of this agreement;
(2) any claims with regard to Sections 3.3 and 4.3 herein.
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IN WITNESS WHEREOF, and intending to be legally bound, the parties
hereto have signed this Agreement by their duly authorized officers the day and
year first above written.
ATTEST: THE XXXXX GROUP, INC.
/s/ Xxxxxx Xxxxxx By /s/ Xxxxxx Xxxxxxxxxxx
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ATTEST: XXXXX TELECOM, INC.
/s/ Xxxxxx Xxxxxxxxxxx By /s/ Xxxxxx Xxxxxx
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ATTEST: CT INDUSTRIES, INC.
/s/ Xxxxxx Xxxxxx By /s/
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ATTEST: KATTOSKO COMMUNICATIONS, INC.
/s/ Xxxx Xxxxxxx By /s/ Xxxx Xxxxxxx
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I HEREBY PERSONALLY AGREE TO ABIDE BY THE TERMS OF SECTION 1.0 HEREIN WITH
RESPECT TO MY PERSONAL GUARANTEE.
WITNESS:
/s/ Mohd Qattous
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MOHD QATTOUS
