EXHIBIT 2
SECURITIES PURCHASE AGREEMENT
AND PLAN OF REORGANIZATION
THIS SECURITIES PURCHASE AGREEMENT AND PLAN OF REORGANIZATION
("Agreement") is entered into on October 18, 2001 by and among CLUSONE
ACQUISITION CORP., a Delaware corporation ("CLUSONE"), and the stockholders of
LITERARY PLAYPEN, INC., a Nevada corporation (the "Company"), listed on the list
of selling stockholders ("List of Selling Stockholders") attached as Exhibit "A"
hereto and who have executed this Agreement ("Selling Stockholders").
R E C I T A L S
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A. CLUSONE has authorized capital stock consisting of 20,000,000 shares
of common stock ("Common Stock"), $.001 par value, and 10,000,000 shares of
preferred stock ("Preferred Stock"), $.001 par value, of which 500,000 shares of
Common Stock and no shares of Preferred Stock are issued and outstanding.
B. The Selling Shareholders are the sole stockholders of the Company.
The Company has authorized capital stock consisting of 25,000,000 shares of
common stock, of which 5,440,000 shares of common stock are issued and
outstanding and owned by he Selling Shareholders (collectively, the "Company
Shares") .
C. The Selling Stockholders wish to sell, and CLUSONE wishes to
acquire, all of the Company Shares on the Closing Date (as defined below), in
exchange for CLUSONE's transfer to the Selling Stockholders of an aggregate of
2,000,000 shares ("CLUSONE Shares") of Common Stock, subject to and upon the
terms and conditions hereinafter set forth.
A G R E E M E N T
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It is agreed as follows:
1. SECURITIES PURCHASE AND REORGANIZATION.
1.1 AGREEMENT TO EXCHANGE SECURITIES. Subject to the terms and
upon the conditions set forth herein, each Selling Stockholder agrees to sell,
assign, transfer and deliver to CLUSONE, and CLUSONE agrees to purchase from
each Selling Stockholder, at the Closing, the Company Shares owned by the
respective Selling Stockholder as set forth on the List of Selling Stockholders,
in exchange for the transfer, at the Closing, by CLUSONE to each Selling
Stockholder of a pro rata share of the CLUSONE Shares. A Selling Stockholder's
pro rata share of the CLUSONE Shares shall be determined by multiplying the
total number of the CLUSONE Shares (i.e., 2,000,000 shares of Common Stock) by a
fraction, the numerator of which is the total number of Company Shares owned by
the Selling Stockholder at the Closing and the denominator of which is the total
number of Company Shares issued and outstanding at the Closing.
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1.2 INSTRUMENTS OF TRANSFER.
(a) THE COMPANY SHARES. Each Selling Stockholder
shall deliver to CLUSONE at the Closing Date certificates evidencing all of the
Company Shares owned by the Selling Stockholder, along with duly executed stock
powers in form and substance satisfactory to CLUSONE, in order to effectively
vest in CLUSONE all right, title and interest in and to the Company Shares owned
by the Selling Stockholder. From time to time after the Closing Date, and
without further consideration, the Selling Stockholders will execute and deliver
such other instruments of transfer and take such other actions as CLUSONE may
reasonably request in order to more effectively transfer to CLUSONE the
securities intended to be transferred hereunder.
(b) CLUSONE SHARES. CLUSONE shall deliver to the
Selling Stockholders on the Closing Date original certificates evidencing the
CLUSONE Shares, in form and substance satisfactory to the Selling Stockholders,
in order to effectively vest in the Selling Stockholders all right, title and
interest in and to the CLUSONE Shares. From time to time after the Closing Date,
and without further consideration, CLUSONE will execute and deliver such other
instruments and take such other actions as the Selling Stockholders may
reasonably request in order to more effectively issue to them the CLUSONE
Shares.
1.3 CLOSING. The closing ("Closing") of the exchange of the
Company Shares and the CLUSONE Shares shall take place at the offices of the
Company, at Newport Beach, CA, at 10:00 a.m., local time, on or before December
31, 2001, or at such other time and place as may be agreed to by the Selling
Shareholders and CLUSONE, once all conditions have been satisfied and all due
diligence completed ("Closing Date").
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. Each
Selling Stockholder severally represents, warrants and covenants to and with
CLUSONE with respect to himself, as follows:
2.1 POWER AND AUTHORITY. The Selling Stockholder has all
requisite power and authority to enter into and to carry out all of the terms of
this Agreement and all other documents executed and delivered in connection
herewith (collectively, the "Documents"). All individual action on the part of
the Selling Stockholder necessary for the authorization, execution, delivery and
performance of the Documents by the Selling Stockholder has been taken and no
further authorization on the part of the Selling Stockholder is required to
consummate the transactions provided for in the Documents. When executed and
delivered by the Selling Stockholder, the Documents shall constitute the valid
and legally binding obligation of the Selling Stockholder enforceable in
accordance with their respective terms.
2.2 OWNERSHIP OF AND TITLE TO SECURITIES. To his knowledge,
the recitals to this Agreement accurately and completely describe the
authorized, issued and outstanding capital stock of the Company. Exhibit A to
this Agreement accurately and completely sets forth all of the capital stock of
the Company owned by the Selling Stockholder and, to his knowledge, the other
stockholders of the Company. There are no warrants, options, subscriptions,
calls, or other similar rights of any kind for the issuance or purchase of any
securities of the Company held by the Selling Stockholder or, to his knowledge,
any other person. The Selling Stockholder represents that the Selling
Stockholder has and will transfer to CLUSONE good and marketable title to the
Company Shares which he owns, free and clear of all pledges, security interests,
mortgages, liens, claims, charges, restrictions or encumbrances, except for any
restrictions imposed by federal or state securities laws..
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2.3 INVESTMENT AND RELATED REPRESENTATIONS. The Selling
Stockholder is aware that neither the CLUSONE Shares nor the offer or sale
thereof to the Selling Stockholder has been registered under the Securities Act
of 1933, as amended ("Securities Act"), or under any state securities law. The
Selling Stockholder understands that the CLUSONE Shares will be characterized as
"restricted" securities under federal securities laws inasmuch as they are being
acquired in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the Securities Act only in certain limited circumstances. The
Selling Stockholder agrees that the Selling Stockholder will not sell all or any
portion of CLUSONE Shares except pursuant to registration under the Securities
Act or pursuant to an available exemption from registration under the Securities
Act. The Selling Stockholder understands that each certificate for CLUSONE
Shares issued to the Selling Stockholder or to any subsequent transferee shall
be stamped or otherwise imprinted with the legend set forth below summarizing
the restrictions described in this Section 2.3 and that CLUSONE shall refuse to
transfer the CLUSONE Shares except in accordance with such restrictions:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT").
THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF A CURRENT AND EFFECTIVE REGISTRATION STATEMENT
UNDER THE 1933 ACT WITH RESPECT TO SUCH SHARES, OR AN OPINION
OF THE ISSUER"S COUNSEL TO THE EFFECT THAT REGISTRATION IS NOT
REQUIRED UNDER THE 1933 ACT.
The Selling Stockholder acknowledges having received and
reviewed CLUSONE's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2000 and the subsequently Quarterly Reports on Form 10-QSB
(collectively, the "SEC Reports"). The Selling Stockholder further acknowledges
that CLUSONE has given to the Selling Stockholder and his counsel, accountants
and other advisors, agents, consultants and representatives , full access to all
of the properties, books, contracts, commitments and records of CLUSONE, and has
furnished or will furnish all such information concerning it (including its
operations, financial condition and business plan) as the Selling Stockholder
has requested or may request.
3. REPRESENTATIONS AND WARRANTIES OF CLUSONE. CLUSONE represents,
warrants and covenants to and with each of the Selling Stockholders as follows:
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3.1 ORGANIZATION AND GOOD STANDING. CLUSONE is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware and has full corporate power and authority to enter into and
perform its obligations under this Agreement.
3.2 CAPITALIZATION. The recitals to this Agreement accurately
and completely describe the authorized, issued and outstanding capital stock of
CLUSONE. All outstanding shares of Common Stock have been duly authorized and
validly issued, and are fully paid, nonassessable, and free of any preemptive
rights. There are no agreements, options, warrants or other rights to purchase
from CLUSONE any of CLUSONE's authorized and unissued Preferred Stock or Common
Stock, and there are no voting, pooling or voting trust agreements, arrangements
or contracts known to CLUSONE by and among CLUSONE, its shareholders, or any of
them.
3.3 NO GOVERNMENTAL OR OTHER PROCEEDING OR LITIGATION. CLUSONE
represents that, to its knowledge, no order of any court or administrative
agency is in effect which restrains or prohibits CLUSONE from consummating the
transactions contemplated hereby, and no suit, action, investigation, inquiry or
proceeding by any governmental body or other person or legal or administrative
proceeding has been instituted or threatened which questions the validity or
legality of CLUSONE"s consummation of the transactions contemplated hereby.
3.4 VALIDITY OF TRANSACTIONS. This Agreement, and each
document executed and delivered by CLUSONE in connection with the transactions
contemplated by this Agreement, and the performance of the transactions
contemplated therein have been duly authorized, executed and delivered by
CLUSONE and is each the valid and legally binding obligation of CLUSONE,
enforceable in accordance with its terms, except as limited by applicable
bankruptcy, insolvency reorganization and moratorium laws and other laws
affecting enforcement of creditor's rights generally and by general principles
of equity. The CLUSONE Shares issuable hereunder, when issued in accordance with
the terms of this Agreement, will be duly authorized, validly issued, fully paid
and nonassessable. The CLUSONE Shares will be free of any liens or encumbrances,
except for any restrictions imposed by federal or state securities laws.
3.5 APPROVALS AND CONSENTS. CLUSONE represents that, to its
best knowledge, there are no permits, consents, mandates or approvals of public
authorities, either federal, state or local, or of any third party necessary for
the Selling Stockholder's consummation of the transactions contemplated hereby.
3.6 DISCLOSURE; NO ASSETS OR LIABILITIES. CLUSONE represents
and warrants that the SEC Reports are accurate and complete in all material
respects, taken as a whole, and CLUSONE does not have any assets, liabilities,
agreements, commitments or operations except as set forth in the SEC Reports.
4. MISCELLANEOUS.
4.1 CUMULATIVE REMEDIES. Any person having any rights under
any provision of this Agreement will be entitled to enforce such rights
specifically, to recover damages by reason of any breach of any provision of
this Agreement, and to exercise all other rights granted by law, which rights
may be exercised cumulative and not alternatively.
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4.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement by or
on behalf of any of the parties hereto will bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not.
4.3 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement or the other documents.
4.4 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts when taken together will constitute one and
the same agreement.
4.5 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties with respect to the subject matter
thereof, and supersedes all prior and contemporaneous agreements and
understandings.
IN WITNESS WHEREOF, each of the parties to this Agreement has
executed or caused this Agreement to be executed as of the date first above
written.
CLUSONE ACQUISITION CORP.,
a Delaware corporation
By: /S/ XXXXXX XXXXXXXXXXX
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Xxxxxx Xxxxxxxxxxx,
Chief Executive Officer
[Signatures of Selling Stockholders Appear on Exhibit A]
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EXHIBIT A
LIST OF SELLING STOCKHOLDERS
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Number of The Company
Name of Shares Owned by Selling
Selling Stockholder Signature Stockholder
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Xxxxxx Xxxxxxx /s/ Xxxxxx Xxxxxxx 1,440,500
Xxxxx Xxxxxxx /s/ Xxxxx Xxxxxxx 1,439,500
Xxxx Xxxxxxx /s/ Xxxx Xxxxxxx 960,000
Xxxxxxx Xxxxxxxx /s/ Xxxxxxx Xxxxxxxx 960,000
Xxxxxxx X. Xxxxxxxx /s/ Xxxxxxx X. Xxxxxxxx 640,000
A-1
