1
Exhibit 99.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is entered into this 10 day of July,
2000, by and among Xxxxxxx Xxxxx, a resident of Florida, and his assigns
(hereinafter referred to as "Buyer"); and XXXXXX X. XXXXX, (hereinafter referred
to as "Seller"), being a shareholder of NETWORK SYSTEMS INTERNATIONAL, INC., a
Nevada corporation (hereafter referred to as "Company").
WHEREAS, Seller is the owner of record and beneficially owns One Million Nine
Hundred Thousand (1,900,000) shares of the issued and outstanding shares of
Common Stock of the Company (herein referred to as"Shares"); and
WHEREAS, Seller desires to sell the Shares to Buyer, and Buyer desires to
purchase the Shares, upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, and for other good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged, and subject to the accuracy of the
representations and warranties of the parties, the parties hereto agree as
follows:
I.
SALE AND PURCHASE OF THE SHARES
1.1 Sale and Purchase. Subject to the terms and conditions hereof,
at the Closing (as defined in paragraph 1.2 below), Seller
agrees to sell, assign, transfer, convey and deliver to Buyer,
and Buyer agrees to purchase the Shares from Seller.
1.2 Closing. The purchase shall be consummated at a closing
("Closing") to take place at 9:00 o'clock a.m., at the
offices of Network Systems International, Inc. on or about
July 21, 2000 ("Closing Date").
1.3 Purchase Price. The purchase price ("Purchase Price") for the
Shares shall be a cash payment of One Million Fifty-Five
Thousand Five Hundred Fifty Five Dollars ($1,055,555) payable
to the Seller in certified funds. At the closing, the Purchase
Price will be delivered and deposited with G. Xxxxx Xxxxxx &
Associates, P.C., as escrow agent ("Escrow Agent"). If the Put
Option described in Section 4.3 is exercised by the Company,
the Escrow Agent will deliver the Purchase Price to the Company
as the Seller's portion of the initial cash payment provided
for therein. If the Put Option is not exercised by the Company
prior to its expiration, the Escrow Agent will immediately
release the Purchase Price to Seller.
2
II.
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Seller. Seller
represents and warrants to Buyer as follows:
(a) Title to the Shares. At Closing, Seller shall own of
record and beneficially the Shares of the Company, free
and clear of all liens, encumbrances, pledges, claims,
options, charges and assessments of any nature
whatsoever, with full right and lawful authority to
transfer the Shares to Buyer. No person has any rights of
first refusal with respect to any of the Shares. There
exists no voting agreement, voting trust, or outstanding
proxy with respect to any of the Shares. There are no
outstanding rights, options, warrants, calls,
commitments, or any other agreements of any character,
whether oral or written, with respect to the Shares.
(b) Authority. Seller has full power and lawful authority to
execute and deliver this Agreement to which he is a party
and to consummate and perform the Agreement as
contemplated thereby. This Agreement to which Seller is a
party constitutes (or shall, upon execution, constitute)
valid and legally binding obligations upon Seller,
enforceable in accordance with their terms. Neither the
execution and delivery of this Agreement to which he is a
party by Seller, nor the consummation and performance of
the Agreement contemplated thereby, conflicts with,
requires the consent, waiver or approval of, results in a
breach of or default under, or gives to others any
interest or right of termination, cancellation or
acceleration in or with respect to, any agreement by
which Seller is a party or by which Seller or any of his
properties or assets are bound or affected.
(c) Full Disclosure. All statements of Seller contained in
this Agreement and in any other written documents
delivered by or on behalf of Seller to Buyer are true and
correct in all material respects and do not omit any
material fact necessary to make the statements contained
therein not misleading in light of the circumstances
under which they were made.
2.2 Representations and Warranties of Buyer. Buyer represents
and warrants to Seller as follows:
(a) Authority. Buyer has full power and lawful authority
to execute and deliver this Agreement to which Buyer
is a party and to consummate and perform the
Agreement as contemplated thereby. This Agreement to
which Buyer is a party constitutes (or shall, upon
execution, constitute) valid
3
and legally binding obligations upon Buyer,
enforceable in accordance with their terms. Neither
the execution and delivery of this Agreement to
which Buyer is a party by Buyer, nor the
consummation and performance of this Agreement
contemplated thereby, conflicts with, requires the
consent, waiver or approval of, results in a breach
of or default under, or gives to others any interest
or right of termination, cancellation or
acceleration in or with respect to, any agreement by
which Buyer is a party or by which Buyer or any of
his properties or assets are bound or affected.
(b) Investment Intent. Buyer is acquiring the Shares for his
own account, for investment purposes only, and not with a
view to the sale or distribution of any part thereof, and
Buyer has no present intention of selling, granting
participation in, or otherwise distributing the same.
Buyer understands the specific risks related to an
investment in the Shares, especially as it relates to the
financial performance of the Company.
III.
COVENANTS
3.1 Covenants of Seller. Seller covenants and agrees that from the
date hereof to the Closing without the prior written consent of
Buyer:
(a) Maintain Books. Seller will use reasonable efforts, as
its Chairman of the Board, to cause the Company to
maintain its books, accounts and records in the usual,
regular ordinary and sound business manner and in
accordance with generally accepted accounting principles
applied on a basis consistent with past practices.
(b) Notice of Change. Seller will promptly advise Buyer in
writing of any material adverse change, or the occurrence
of any event which involves any substantial possibility
of a material adverse change, in the business, financial
condition, results of operations, assets, liabilities or
prospects of the Company, in the event he becomes aware
of any such circumstances.
IV.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER TO CLOSE
The obligation of Buyer to close the transactions contemplated hereby is subject
to the fulfillment by Seller prior to Closing of each of the following
conditions, which may be waived in whole or in part by Buyer:
4
4.1 Compliance with Representations, Warranties and Covenants. The
representations and warranties of Seller contained in this
Agreement shall have been true and correct when made and shall be
true and correct as of the Closing with the same force and effect
as if made at the Closing. Seller shall have performed all
agreements, covenants and conditions required to be performed by
Seller prior to the Closing.
4.2 No Legal Proceedings. No suit, action or other legal or
administrative proceeding before any court or other governmental
agency shall be pending or threatened seeking to enjoin the
consummation of the transactions contemplated hereby.
4.3 Put Option. The Selling Shareholders (as that term is defined in
the Stock Purchase Agreement among the Company and the Investors
named therein dated July 10, 2000 (the "Initial Stock Purchase
Agreement")) shall have entered into an agreement to provide the
Company an option (the "Put Option") to require the Selling
Shareholders to purchase all of the issued and outstanding shares
of the Subsidiaries (as that term is defined in the Initial Stock
Purchase Agreement) for a purchase price of three million dollars
($3,000,000), generally upon the terms and conditions set forth
in Section 4.5 of the Initial Stock Purchase Agreement. Buyer
acknowledges and agrees that the Company's ability to exercise
the Put Option will be conditioned upon (1) compliance with the
Company's Articles of Incorporation and Bylaws; (2) the Company
obtaining all requisite corporate authorization with respect to
the sale of all of the issued and outstanding capital stock of
the Subsidiaries; (3) compliance with applicable laws with
respect to the sale of all of the issued and outstanding capital
stock of the Subsidiaries; (4) the Company's written commitment
to reduce the Company's outstanding obligation under its
revolving credit arrangement with Wachovia Bank, N.A., by three
million dollars ($3,000,000); (5) the Company's written
commitment to amend its Articles of Incorporation to change its
name, to discontinue the use of the name "Network Systems
International" and to transfer all rights to the "Network Systems
International" name to Network Systems International of North
Carolina, Inc. ("NSI-NC"); and (6) the Company's written
commitment to transfer all benefits with respect to the right to
receive future tax refunds to NSI-NC.
4.4 Documents to be Delivered by Seller. Seller shall have delivered
the following documents to the Escrow Agent to be held in escrow
until delivery of the Purchase Price as provided in section 1.3.
(a) Stock certificates representing all of the Shares, duly
endorsed to Buyer in blank or accompanied by duly
executed stock powers.
(b) Such other documents or certificates as shall be
reasonably required by Buyer or its counsel in order to
close and consummate this Agreement.
5
V.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER TO CLOSE
The obligation of Seller to close the transactions is subject to the fulfillment
prior to Closing of each of the following conditions, any of which may be waived
in whole or in part by Seller:
5.1 Compliance with Representations, Warranties and Covenants. The
representations and warranties made by Buyer in this Agreement
shall have been true and correct when made and shall be true and
correct in all material respects at the Closing with the same
force and effect as if made at the Closing, and Buyer shall have
performed all agreements, covenants and conditions required to be
performed by Buyer prior to the Closing.
5.2 No Legal Proceedings. No suit, action or other legal or
administrative proceedings before any court or other governmental
agency shall be pending or threatened seeking to enjoin the
consummation of the transactions contemplated hereby.
5.3 Payments. Escrow Agent shall have received from Buyer the
Purchase Price as provided in section 1.3.
5.4 Closing of Sale of Newly Issued Company Shares. The Company shall
have consummated the sale of 1,666,667 shares of newly issued
common stock pursuant to the terms of the initial Stock Purchase
Agreement.
VI.
MODIFICATION, WAIVERS, TERMINATION AND EXPENSES
6.1 Modification. Buyer and Seller may amend, modify or supplement
this Agreement in any manner as they may mutually agree in
writing.
6.2 Waivers. Buyer and Seller may in writing extend the time for or
waive compliance by the other with any of the covenants or
conditions of the other contained herein.
6.3 Termination and Abandonment. This Agreement may be terminated
and the purchase of the Shares may be abandoned before the
Closing:
(a) By the mutual consent of Seller and Buyer;
(b) By Buyer, if the representations and warranties of Seller
set forth herein shall not be accurate, or the conditions
precedent set forth in Article IV shall have not have
been satisfied by the closing date , in all material
respects; or
6
(c) By Seller, if the representations and warranties of Buyer
set forth herein shall not be accurate, or the conditions
precedent set forth in Article V shall not have been
satisfied by the closing date in all material respects.
Termination shall be effective on the date of receipt of written notice
specifying the reasons therefore.
VII.
MISCELLANEOUS
7.1 Representations and Warranties to Survive. Unless otherwise
provided, all of the representations and warranties contained in
this Agreement and in any certificate, exhibit or other document
delivered pursuant to this Agreement shall survive the Closing
for a period of one (1) year. No investigation made by any party
hereto or their representatives shall constitute a waiver of any
representation or warranty, and no such representation or
warranty shall by merged into the Closing.
7.2 Binding Effect of the Agreement. This Agreement and the
certificates and other instruments delivered by or on behalf of
the parties pursuant thereto, constitute the entire agreement
between the parties. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective
heirs, legal representatives, successor and assigns of the
parties hereto. Nothing in the Agreement, expressed or implied,
confers any rights or remedies upon any party other than the
parties hereto and their respective heirs, legal representatives
and assigns.
7.3 Applicable Law. The Agreement are made pursuant to, and will be
construed under, the laws of the State of North Carolina.
7.4 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and will be deemed to have been
duly given when delivered or mailed, first class postage prepaid:
(a) If to Seller, to:
Xxxxxx X. Xxxxx
000 Xxxxx Xxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telephone (000)-000-0000
Fax (000)-000-0000
7
(b) If to Buyer, to:
G. Xxxxx Xxxxxx, Esquire
0000 Xxxx 00xx Xxxxx, Xxxxx 000
Xxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
These addresses may be changed from time to time by written notice to the
other parties.
7.5 Headings. The headings contained in this Agreement are for
reference only and will not affect in any way the meaning or
interpretation of this Agreement.
7.6 Counterparts. This Agreement may be executed in
counterparts, each of which will be deemed an original and all
of which together will constitute one instrument.
7.7 Severability. If any one or more of the provisions of this
Agreement shall, for any reason, be held to be invalid, illegal
or unenforceable under applicable law this Agreement shall be
construed as if such invalid, illegal or unenforceable provision
had never been contained herein. The remaining provisions of this
Agreement shall be given effect to the maximum extent then
permitted by law.
7.8 Forbearance; Waiver. Failure to pursue any legal or equitable
remedy or right available to a party shall not constitute a
waiver of such right, nor shall any such forbearance, failure or
actual waiver imply or constitute waiver of subsequent default or
breach.
7.9 Attorneys' Fees and Expenses. The prevailing party in any legal
proceeding based upon this Agreement shall be
entitled to reasonable attorneys' fees and expenses and court
costs.
7.10 Expenses. Each party shall pay all fees and expenses incurred by
it incident to this Agreement and in connection
with the consummation of all transactions contemplated by this
Agreement
7.11 Exhibits. All of the following Exhibits to this Agreement are
incorporated herein in the places referenced in this Agreement
as if fully set forth herein.
8
IN WITNESS WHEREOF, the undersigned parties hereto have duly executed this
Agreement on the date first written above.
"BUYER"
/s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
"SELLER"
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
"Escrow Agent"
G. Xxxxx Xxxxxx & Associates, P.C.
/s/ G. Xxxxx Xxxxxx
G. Xxxxx Xxxxxx, President
