SUBSIDIARY STOCK PURCHASE AGREEMENT
THIS SUBSIDIARY STOCK PURCHASE AGREEMENT ("Agreement") is
entered into this 21st of July, 2000, by and among ▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇. ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, (hereinafter collectively referred to as "Buyer"); and
NETWORK SYSTEMS INTERNATIONAL, INC., a Nevada corporation
(hereinafter referred to as "Seller"), being the sole stockholder
of both Vercom Software, Inc., a Texas corporation ("Vercom") and
Network Systems International of North Carolina, Inc., a North
Carolina corporation ("NSINC").
WHEREAS, Seller is the owner of record and beneficially owns
Seven Hundred Fifty (750) shares of the issued and outstanding
shares of Common Stock of Vercom; and
WHEREAS, Seller is the owner of record and beneficially owns
Fifty Thousand (50,000) shares of the issued and outstanding
shares of common stock of NSINC; and
WHEREAS, Seller desires to sell all of its Shares of Vercom
and NSINC Common Stock (herein collectively referred to as 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, the parties hereto agree as follows:
I.
OPTION, SALE AND PURCHASE OF THE SHARES
I.1 Option. Subject to the terms and conditions of this
Agreement, Seller is hereby granted the option (the "Option") to
require the Buyer to purchase the Shares for Three Million
Dollars ($3,000,000). Seller may exercise this Option by giving
written notice of its desire to exercise the Option on or prior
to forty-five (45) days of the date hereof.
I.2 Sale and Purchase. If the Seller elects to exercise
the Option and subject to the terms and conditions hereof, at the
Closing (as defined in paragraph 1.3 below), Seller agrees to
sell, assign, transfer, convey and deliver to Buyer, and each
individual within Buyer agrees to purchase from Seller, the
number of Shares set forth on Exhibit A, which shares represent
100% of all the issued and outstanding shares of Vercom and
NSINC.
I.3 Closing. The purchase shall be consummated at a
closing ("Closing") to take place at 11:00 o'clock a.m., at
Seller's headquarters in Greensboro, North Carolina, on September
5, 2000, or at such earlier date, if agreed to by the parties
("Closing Date").
I.4 Purchase Price. The purchase price ("Purchase Price")
for the Shares shall be Three Million Dollars ($3,000,000). The
Purchase Price shall be paid at Closing by a wire transfer in the
amount of One Million Five Hundred Thousand Dollars ($1,500,000),
which amount will be delivered on Buyer's behalf from amounts
held in escrow by G. ▇▇▇▇▇ ▇▇▇▇▇▇ & Associates, P.C., and
secured, non-recourse promissory notes in the aggregate amount of
$1,500,000, copies of which are attached hereto as Exhibits "B-1,
B-2, B-3 and B-4".
II.
REPRESENTATIONS AND WARRANTIES
II.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 all of the Shares of Vercom and
NSINC, 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 preemptive rights or
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, and, at the
Closing, Seller will have full power and lawful authority to
consummate and perform the transactions contemplated hereby.
The execution and delivery of this Agreement by Seller has
been, and, at the Closing, the performance of this Agreement
and the consummation by Seller of the transactions
contemplated hereby will be, duly and effectively authorized
by all requisite corporate action and other action of
Seller. This Agreement 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 by
Seller, nor the consummation and performance of the
transactions contemplated hereby, 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, Vercom or NSINC
or any of their respective properties or assets are bound or
affected.
(c) Compliance with Laws. Seller is in compliance in
all material respects with applicable federal, state, local
and foreign laws, ordinances, regulations, orders, judgments
and decrees, including, without limitation, all securities
laws, and Seller has not received notice that violation of
any law, ordinance, regulation, order, judgment or decree is
alleged or threatened.
(d) Authorized Capitalization of Vercom. The
authorized capitalization of Vercom consists of One Hundred
Thousand (100,000) shares of Common Stock, par value $0.01
per share, of which Seven Hundred Fifty (750) shares have
been issued and are outstanding.
(e) Authorized Capitalization of NSINC. The
authorized capitalization of NSINC consists of One Hundred
Thousand (100,000) shares of Common Stock, no par value, of
which Fifty Thousand (50,000) shares have been issued and
are outstanding.
II.2 Representations and Warranties of Buyer. Each
individual within Buyer represents and warrants for himself
to Seller as follows:
(a) Authority. He has full power and lawful authority
to execute and deliver this Agreement and to consummate and
perform the transactions contemplated hereby. This
Agreement constitutes (or shall, upon execution, constitute)
valid and legally binding obligations upon him, enforceable
in accordance with its terms. Neither the execution and
delivery of this Agreement by him, nor the consummation and
performance of the transactions contemplated hereby,
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 material agreement
by which he is a party.
(b) Investment Intent. He 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
he has no present intention of selling, granting
participation in, or otherwise distributing the same. He
understands the specific risks related to an investment in
the Shares, especially as it relates to the financial
performance of Vercom and NSINC.
III.
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:
III.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.
III.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.
III.3 Documents to be Delivered by Seller. Seller shall
have delivered the following documents:
(a) Stock certificates representing all of the Shares
in the amounts set forth in Exhibit A, duly endorsed to
Buyer and 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.
III.4 Contribution Agreement. The Contribution of
Assets, Assignment and Assumption Agreement between the Company
and NSINC dated July 20, 2000 shall remain in full force and
effect and shall not have been modified, amended or changed in
any respect unless such modification, amendment or change was
agreed to in writing and signed by the parties thereto and
consented to in writing and signed by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, the duly
appointed representative of the Buyers.
III.5 Rule 14f-1. Seller shall have complied with
Rule 14f-1 of the Securities Exchange Act of 1934, as amended,
with respect to the appointment of ▇▇▇▇▇▇▇ ▇▇▇▇▇ to Seller's
Board of Directors.
IV.
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:
IV.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.
IV.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.
IV.3 Completion of Due Diligence. ▇▇▇▇▇▇▇ ▇▇▇▇▇, whose
appointment to Seller's Board of Directors will become effective
on the eleventh day after Seller's compliance with Rule 14f-1 of
the Securities Exchange Act of 1934, as amended, will be given
until September 4, 2000 to complete any due diligence he deems
necessary to approve the transactions contemplated by this
Agreement. If ▇▇. ▇▇▇▇▇ fails to approve this transaction by
September 4, 2000, this Agreement shall become null and void.
IV.4 Payments. Seller shall have received from G. ▇▇▇▇▇
▇▇▇▇▇▇ & Associates, P.C. from escrowed funds held on behalf of
Buyer a wire transfer in the amount of $1,500,000 and secured
promissory notes delivered at the Closing by Buyer pursuant to
this Agreement.
V.
MODIFICATION, WAIVERS, TERMINATION
AND EXPENSES
V.1 Modification. Buyer and Seller may amend, modify or
supplement this Agreement in any manner as they may mutually
agree in writing.
V.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.
V.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 III shall have not
have been satisfied, in all material respects by September
5, 2000; or
(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 IV shall not have
been satisfied in all material respects by September 5,
2000.
Termination shall be effective on the date of receipt of
written notice specifying the reasons therefor.
VI.
MISCELLANEOUS
VI.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 two (2) years. 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 be merged into the Closing.
VI.2 Binding Effect. 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 this 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.
VI.3 Applicable Law. This Agreement is made pursuant to,
and will be construed under, the laws of the State of North
Carolina.
VI.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:
G. ▇▇▇▇▇ ▇▇▇▇▇▇ & Associates, P.C.
ATTN: ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Buyer, to:
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
These addresses may be changed from time to time by written
notice to the other parties.
VI.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.
VI.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.
VI.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.
VI.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.
VI.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.
VI.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.
VI.11 Integration. This Agreement and all documents and
instruments executed pursuant hereto merge and integrate all
prior agreements, whether written or oral, and constitute the
sole agreement of the parties in connection therewith. This
Agreement has been negotiated by and submitted to the scrutiny of
both Seller and Buyer and their counsel and shall be given a fair
and reasonable interpretation in accordance with the words
hereof, without consideration or weight being given to its having
been drafted by either party hereto or its counsel.
VI.12 Further Actions. Each of the parties hereto shall
execute such agreements, certificates, documents and other
instruments and take such further action as may be reasonably
necessary or appropriate to carry out the provisions hereof and
the transactions provided for herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the undersigned parties hereto have duly
executed this Agreement on the date first written above.
"BUYER"
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇.▇. ▇▇▇▇▇▇, ▇▇.
▇. ▇. ▇▇▇▇▇▇, ▇▇.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
"SELLER"
NETWORK SYSTEMS INTERNATIONAL, INC.
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ , President
EXHIBIT A
Vercom Shares: NSINC Shares:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 359 23,925
▇. ▇. ▇▇▇▇▇▇, ▇▇. 195 12,975
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 119 7,950
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 77 5,150
750 50,000
EXHIBIT B-1
PROMISSORY NOTE
$406,050.00 Greensboro, North Carolina
___________, 2000
FOR VALUE RECEIVED, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the "Debtor") promises
to pay to the order of NETWORK SYSTEMS INTERNATIONAL, INC. (the
"Noteholder"), at ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇, or at such other place as the holder hereof may
designate, the principal sum of FOUR HUNDRED SIX THOUSAND FIFTY
AND 00/100 DOLLARS ($406,050.00).
The unpaid principal balance of this Note shall not bear
interest. The principal balance of this note shall be due an
payable in full one hundred twenty (120) calendar days from the
date hereof. All or any part of the principal of this Note may
be prepaid at any time without premium or penalty.
This Note is secured by a pledge of 791,991 shares of the
common stock of the Noteholder (the "Pledged Shares"). The
Debtor shall have no personal liability with respect to any of
the provisions of this Note. If the Debtor is in default of his
payment obligations under this Note, the Noteholder's sole remedy
shall be to sell the Pledged Shares in satisfaction of this Note.
It is expressly understood and agreed that the Debtor's liability
under the terms of this Note shall in no event exceed the
Noteholder's realization from any sale of the Pledged Shares.
This Note shall be governed by and construed in accordance
with the laws of the State of North Carolina.
IN WITNESS WHEREOF, the Debtor has executed this Agreement
as of the day first above written.
THE DEBTOR:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
EXHIBIT B-2
PROMISSORY NOTE
$440,700.00 Greensboro, North Carolina
___________, 2000
FOR VALUE RECEIVED, ▇. ▇. ▇▇▇▇▇▇, ▇▇. (the "Debtor")
promises to pay to the order of NETWORK SYSTEMS INTERNATIONAL,
INC. (the "Noteholder"), at ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, or at such other place as the holder
hereof may designate, the principal sum of FOUR HUNDRED FORTY
THOUSAND SEVEN HUNDRED AND 00/100 DOLLARS ($440,700.00).
The unpaid principal balance of this Note shall not bear
interest. The principal balance of this note shall be due an
payable in full one hundred twenty (120) calendar days from the
date hereof. All or any part of the principal of this Note may
be prepaid at any time without premium or penalty.
This Note is secured by a pledge of 859,621 shares of the
common stock of the Noteholder (the "Pledged Shares"). The
Debtor shall have no personal liability with respect to any of
the provisions of this Note. If the Debtor is in default of his
payment obligations under this Note, the Noteholder's sole remedy
shall be to sell the Pledged Shares in satisfaction of this Note.
It is expressly understood and agreed that the Debtor's liability
under the terms of this Note shall in no event exceed the
Noteholder's realization from any sale of the Pledged Shares.
This Note shall be governed by and construed in accordance
with the laws of the State of North Carolina.
IN WITNESS WHEREOF, the Debtor has executed this Agreement
as of the day first above written.
THE DEBTOR:
/s/ ▇. ▇. ▇▇▇▇▇▇, ▇▇.
▇. ▇. ▇▇▇▇▇▇, ▇▇.
EXHIBIT B-3
PROMISSORY NOTE
$407,400.00 Greensboro, North Carolina
___________, 2000
FOR VALUE RECEIVED, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (the "Debtor")
promises to pay to the order of NETWORK SYSTEMS INTERNATIONAL,
INC. (the "Noteholder"), at ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, or at such other place as the holder
hereof may designate, the principal sum of FOUR HUNDRED SEVEN
THOUSAND FOUR HUNDRED AND 00/100 DOLLARS ($407,400.00).
The unpaid principal balance of this Note shall not bear
interest. The principal balance of this note shall be due an
payable in full one hundred twenty (120) calendar days from the
date hereof. All or any part of the principal of this Note may
be prepaid at any time without premium or penalty.
This Note is secured by a pledge of 794,622 shares of the
common stock of the Noteholder (the "Pledged Shares"). The
Debtor shall have no personal liability with respect to any of
the provisions of this Note. If the Debtor is in default of his
payment obligations under this Note, the Noteholder's sole remedy
shall be to sell the Pledged Shares in satisfaction of this Note.
It is expressly understood and agreed that the Debtor's liability
under the terms of this Note shall in no event exceed the
Noteholder's realization from any sale of the Pledged Shares.
This Note shall be governed by and construed in accordance
with the laws of the State of North Carolina.
IN WITNESS WHEREOF, the Debtor has executed this Agreement
as of the day first above written.
THE DEBTOR:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
EXHIBIT B-4
PROMISSORY NOTE
$245,850.00 Greensboro, North Carolina
___________, 2000
FOR VALUE RECEIVED, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "Debtor") promises
to pay to the order of NETWORK SYSTEMS INTERNATIONAL, INC. (the
"Noteholder"), at ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇, or at such other place as the holder hereof may
designate, the principal sum of TWO HUNDRED FORTY FIVE THOUSAND
EIGHT HUNDRED FIFTY AND 00/100 DOLLARS ($245,850.00).
The unpaid principal balance of this Note shall not bear
interest. The principal balance of this note shall be due an
payable in full one hundred twenty (120) calendar days from the
date hereof. All or any part of the principal of this Note may
be prepaid at any time without premium or penalty.
This Note is secured by a pledge of 479,622 shares of the
common stock of the Noteholder (the "Pledged Shares"). The
Debtor shall have no personal liability with respect to any of
the provisions of this Note. If the Debtor is in default of his
payment obligations under this Note, the Noteholder's sole remedy
shall be to sell the Pledged Shares in satisfaction of this Note.
It is expressly understood and agreed that the Debtor's liability
under the terms of this Note shall in no event exceed the
Noteholder's realization from any sale of the Pledged Shares.
This Note shall be governed by and construed in accordance
with the laws of the State of North Carolina.
IN WITNESS WHEREOF, the Debtor has executed this Agreement
as of the day first above written.
THE DEBTOR:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
