STOCK PURCHASE AGREEMENT
-------------------------
THIS STOCK PURCHASE AGREEMENT ("Agreement") is entered
into this 25th day of January, 1999, by and among DIAMOND
INTERNATIONAL GROUP, INC., a Delaware corporation
(hereinafter referred to as "Buyer"); and XXXXXXX XXXXXXXX,
(hereinafter referred to as "Seller"), being the sole
shareholder of H.Y. APPLIED INTER-DATA SERVICES, INC., a New
York corporation (hereafter referred to as "Company").
WHEREAS, Seller is the owner of record and beneficially
owns Two Hundred (200) shares of the issued and outstanding
shares of Common Stock of the Company (the "Shares"); and
WHEREAS, Seller desires to sell all of 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
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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 from
Seller , the Shares listed in Exhibit " A ", attached
hereto, which together constitute 100% of the issued and
outstanding Shares of Common Stock of the Company.
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 Buyer's counsel on January 29, 1999 ("Closing
Date").
1.3 Purchase Price. The aggregate purchase price
("Purchase Price") for the Shares shall be Eighteen Million
Four Hundred Sixty-Two Thousand Four Hundred Four
(18,462,404) shares of Common Stock of the Buyer ("Buyer's
Shares"). This portion of the Purchase Price shall be paid
at Closing, by issuance and delivery of Buyer's Shares to
Seller against receipt of certificates representing the
Shares, duly endorsed for transfer to Buyer.
1.4 Other Agreements. At the Closing, the indicated
parties shall execute and deliver the following additional
agreements in substantially the form attached hereto:
(a) Employment Agreement between the Company and
Xxxxxxx Xxxxxxxx attached hereto as Exhibit "B".
(b) Stock certificates representing all of the Shares,
duly endorsed to Buyer and in blank or assignments separate
from the certificates, transferring the Shares from Seller
to Buyer.
1.5 Basic Agreements and Transactions Defined. This
Agreement and other agreements listed in paragraph 1.4, are
sometimes referred to as the "Basic Agreement". The
transactions contemplated by the Basic Agreement are
sometimes referred to as the "Transactions".
II.
REPRESENTATIONS AND WARRANTIES
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2.1 Representations and Warranties of Seller. Seller
represents and warrant to Buyer as follows:
(a) Title to the Shares. At Closing, Seller shall own
of record and beneficially the number of the Shares listed
in Exhibit "A", 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 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) Organization. The Company is a corporation duly
incorporated, validly existing and in good standing under
the laws of the state of New York. The Company has all
requisite corporate power and authority to own, lease and
operate its properties and to carry on its business. The
Company is duly qualified and in good standing as a foreign
corporation in each jurisdiction where its ownership of
property or operation of its business requires
qualification.
(c) Authorized Capitalization. The authorized
capitalization of the Company consists of Two Hundred (200)
shares of Common Stock, no par, of which Two Hundred (200)
shares have been issued and are outstanding. The Shares have
been duly authorized, validly issued, are fully paid and
nonassessable with no personal liability attaching to the
ownership thereof and were offered, issued, sold and
delivered by the Company in compliance with all applicable
state and federal laws. The Company does not have any
outstanding rights, options, warrants, calls, commitments,
conversion or any other agreements of any character, whether
oral or written, obligating it to issue any shares of its
capital stock, whether authorized or not. The Company is not
a party to and are not bound by any agreement, contract,
arrangement or understanding, whether oral or written,
giving any person or entity any interest in, or any right to
share, participate in or receive any portion of: the
Company's income, profits or assets, or obligating the
Company to distribute any portion of its income, profits or
assets.
(d) Authority. Seller has full power and lawful
authority to execute and deliver the Basic Agreements and to
consummate and perform the Transactions contemplated
thereby. The Basic Agreements constitute (or shall, upon
execution, constitute) valid and legally binding obligations
upon Seller, enforceable in accordance with their terms.
Neither the execution and delivery of the Basic Agreements
by Seller, nor the consummation and performance of the
Transactions 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 or the Company is
a party or by which Seller: or the Company or any of their
respective properties or assets are bound or affected.
(e) Company Financial Statements. The Company
Financial Statements are complete, were prepared in
accordance with generally accepted accounting principles
applied on a basis consistent with prior periods and fairly
present the financial position of the Company as of June 30,
1998.
(f) No Undisclosed Liabilities. Except as set forth in
the Company Financial Statements previously delivered to
Buyer and as set forth on Exhibit "C", Seller is not aware
of any liabilities for which the Company is liable or will
become liable in the future.
(g) Taxes. The Company has filed all federal, state,
local tax and other returns and reports which were required
to be filed with respect to all taxes, levies, imposts,
duties, licenses and registration fees, charges or
withholdings of every nature whatsoever ("Taxes "), and
their exists a substantial basis in law and fact for all
positions taken in such reports. No waivers of periods of
limitation are in effect with respect to any taxes arising
from and attributable to the ownership of properties or
operations of the business of the Company.
(h) Properties. The Company has good and marketable
title to all its personal property, equipment, processes,
patents, copyrights, trademarks, franchises, licenses and
other properties and assets (except for items leased or
licensed to the Company), including all property reflected
in the Company Financial Statements (except for assets
reflected therein which have been sold in the normal course
of its business where the proceeds from such sale or other
disposition have been properly accounted for in the
financial statements of the Company), in each case free and
clear of all liens, claims and encumbrances of every kind
and character. except as set forth in Exhibit "D". The
Company has no ownership interest in any real property. The
assets and properties owned, operated or leased by the
Company and used in its business are in good operating
condition, reasonable wear and tear excepted, and suitable
for the uses for which intended.
(i) Books and Records. The books and records of the
Company are complete and correct in all material respects,
have been maintained in accordance with good business
practices and accurately reflect in all material respects
the business, financial condition and results of operations
of the Company as set forth in the Company Financial
Statements.
(j) Material Contracts. The Company has no purchase,
sale, commitment, or other contract, the breach or
termination o f which would have a materially adverse effect
on the business, financia1 condition, results of operations,
assets, liabilities, or prospects of the Company.
(k) Employment Matters. Exhibit "E" contains a list of
all officers, their base salaries, accrued vacation pay,
sick pay, and severance pay through December 31,1998. The
Company is not a party to any employment agreement, or any
pension, profit sharing, retirement or other deferred
compensation plan or agreement. The Company has not incurred
any unfunded deficiency or liability within the meaning of
the Employee Retirement Income Security Act of 1974
("ERISA"), has not incurred any liability to the Pension
Benefit Guaranty Corporation established under ERISA in
connection with any employee benefit plan and has no
outstanding obligations or liabilities under any employee
benefit plan. The Company has not been a party to a
"prohibited transaction," which would subject the Company to
any tax or penalty. There is no collective bargaining
agreement or negotiations therefore, labor grievance or
arbitration proceeding against the Company pending or
threatened, and to the knowledge of the Seller, there are no
union organizing activities currently pending or threatened
against or involving the Company.
(m) Compliance with Laws. The Company is not in
violation of any federal, state, local or other law,
ordinance, rule or regulation applicable to its business,
and have not received any actual or threatened complaint,
citation or notice of violation or investigation from any
governmental authority.
(n) No Litigation. There are no actions, suits, claims,
complaints or proceedings pending or threatened against the
Company, at law or in equity, or before or by any
governmental department, commission, court, board, bureau,
agency or instrumentality; and there are no facts which
would provide a valid basis for any such action, suit or
proceeding. There are no orders, judgments or decrees of any
governmental authority outstanding which specifically apply
to the Company or any of its assets.
(o) Validity. All contracts, agreements, leases and
licenses to which the Company is a party or by which it or
any of its properties or assets are bound or affected, are
valid and in full force and effect; and no bread1 or default
exists, or upon the giving of notice or lapse of time, or
both, would exist, on the part of the Company or by any
other party thereto.
(p) No Adverse Changes. Since June 30,1998, there have
been no actual or threatened developments of a nature that
is materially adverse to or involves any materially adverse
effect upon the business, financial condition, results of
operations, assets, liabilities, or prospects of the
Company.
(q) Full Disclosure. All statements of Seller
contained in the Basic Agreements and in any other written
documents delivered by or on behalf of the Company or 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. There are no facts
known to Seller whicl1 could have a materially adversely
affect upon the business, financial condition, results of
operations, assets, liabilities, or prospects of the
Company, which have not been disclosed to Buyer in the Basic
Agreements.
2.2 Representations and Warranties of Buyer. Buyer
represents and warrants to Seller as follows:
(a) Organization. Buyer is a corporation duly
incorporated, validly existing and in good standing under
the laws of the state of Delaware. Buyer has all requisite
corporate power and authority to own, lease and operate its
properties and to carry on its business. Buyer is duly
qualified and in good standing as a foreign corporation in
each jurisdiction where its ownership of property or
operation of its business requires qualification. The
Certificate of Incorporation and the Bylaws of Buyer
presently provide that the number of members of the Board of
Directors shall be five (5).
(b) Authorized Capitalization. The authorized
capitalization of the Buyer consists of One Hundred Million
(100,000,000) shares of Common Stock, par value $.0001 of
which One Million Seven Hundred Thirty-Seven Thousand Five
Hundred Ninety-Six (1,737,596) shares have been issued and
are outstanding. The Shares have been duly authorized,
validly issued, are fully paid and nonassessable with no
personal liability attaching to the ownership thereof and
were offered, issued, sold and delivered by the Buyer in
compliance with all applicable state and federal laws.
Except as set forth on Exhibit "F', the Buyer does not have
any outstanding rights, options, warrants, calls,
commitments, conversion or any other agreements of any
character, whether oral or written, obligating it to issue
any shares of its capital stock, whether authorized or not.
The Buyer is not a party to and are not bound by any
agreement, contract, arrangement or understanding, whether
oral or written, giving any person or entity any interest
in, or any right to share, participate in or receive any
portion of, the Buyer's income, profits or assets, or
obligating the Buyer to distribute any portion of its
income, profits or assets.
(c) Authority. Buyer has full power and lawful
authority to execute and deliver the Basic Agreements and to
consummate and perform the Transactions contemplated
thereby. The Basic Agreements constitute (or sha1l, upon
execution, constitute) valid and legally binding obligations
upon Buyer, enforceable in accordance with their terms.
Neither the execution and delivery of the Basic Agreements
by Buyer, nor the consummation and performance of the
Transactions 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 its properties or assets are bound or
affected.
(d) No Undisclosed Liabilities. Except as set forth in
the Buyer Financial Statements previously delivered to Buyer
and as set forth on Exhibit "G", Seller is not aware of any
liabilities for which the Buyer is liable or will become
liable in the future.
(e) Investment Intent. Buyer is acquiring the Shares
for its 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) Ordinary Course of Business. Seller will operate
the business of the Company only in the ordinary course and
will use their best efforts to preserve the Company's
business, organization, goodwill and relationships with
persons having business dealings with them.
(b) Maintain Properties. Seller will maintain all of
the Company's properties in good working order, repair and
condition (reasonable wear and use excepted) and cause the
Company to take all steps reasonably necessary to maintain
in full force and effect its patents, trademarks,
servicemarks, trade names, brand names, copyrights and other
intangible assets.
(c) Compensation. Seller will not permit the Company
to (1) enter into or alter any employment agreements; (2)
grant any increase in compensation other than normal merit
increases consistent with the Company's general prevailing
practices to any officer or employee; or (3) enter into or
alter any labor or collective bargaining agreement or any
bonus or other employee fringe benefit.
(d) No Indebtedness. Seller will not permit the
Company to create, incur, assume, guarantee or otherwise
become liable with respect to any obligation for borrowed
money, indebtedness, capitalized lease or similar
obligation, except in the ordinary course of business
consistent with past practices where the entire net proceeds
thereof are deposited with and used by and in connection
with the business of the Company.
(e) Maintain Books. Seller will 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.
(f) No Amendments. Seller will not permit the Company
to amend its corporate charter or bylaws (or similar
documents) without prior consent of Buyer and will cause the
Company to maintain their corporate existence, licenses,
permits, powers and rights in full force and effect.
(g) Taxes and Accounting Matters. Seller will cause
the Company to file when due all federal, state and local
tax returns and reports which shall be accurate and
complete, including but not limited to income, franchise,
excise, ad valorem, and other taxes with respect to its
business and properties, and to pay as they become due all
taxes or assessments, except for taxes for which adequate
reserves are established and !, which are being contested in
good faith by appropriate proceedings. Seller will not
permit the Company to change their accounting methods or
practices or any depreciation, amortization or inventory
valuation policies or practices.
(h) No Disposition or Encumbrance. Except in the
ordinary Course of business consistent with 1 past practice,
Seller will not permit the Company to ( 1) dispose of or
encumber any of its properties and J assets, (2) discharge
or satisfy any lien or encumbrance or pay any obligation or
liability ( fixed or contingent) , except for previously
scheduled repayment of debt, (3) cancel or compromise any
debt or claim, (4) transfer or grant any rights under any
concessions, leases, licenses, agreements, patents,
inventions, proprietary technology or process, trademarks,
servicemarks or copyrights, or with respect to any know-how,
or (5) enter into or modify in any material respect or
terminate any existing license, lease, or contract.
(i) Insurance. Seller will cause the Company to
maintain in effect all its current insurance policies.
(j) No Securities Issuances. Seller will not permit
the Company to issue any shares of any class of capital
stock, or enter into any contract, option, warrant or right
calling for the issuance of any such shares of capital
stock, or create or issue any securities convertible into
any securities of the Company except for the transaction
contemplated herein.
(k) No Dividends. Seller will not permit the Company
to declare, set aside or pay any dividends or other
distributions of any nature whatsoever.
(l) Contracts. Seller will not permit the Company to
enter into or assume any contract, agreement, obligation,
lease, license, or commitment except in the ordinary course
of business consistent with past practice or as contemplated
by this Agreement.
(m) No Breach. Seller will not permit the Company to
do any act or omit to do any act which would cause a breach
of any contract, commitment or obligation of the Company.
(n) Due Compliance. Seller will cause the Company to
comply with all laws, regulations, rules and ordinances
applicable to it and to the conduct of its business.
(o) No Waivers of Rights. Seller will not permit the
Company to amend, terminate or waive any material right
whether or not in the ordinary course of business.
(p) Capital Commitments. Seller will not permit the
Company to make or commit to make any capital expenditure,
capital addition or capital improvement.
(q) No Related Party Transactions. Seller will not
permit the Company to make any loans to, or enter into any
transaction, agreement, arrangement or understanding or any
other nature with, any officer, director or employee of the
Company.
(r) 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.
(s) Consents. Seller will use their, and will cause
the Company to use its, best good faith efforts to obtain
the consent or approval of each person or entity whose
consent or approval is required for the consummation of the
Transactions contemplated hereby and to do all things
necessary to consummate the Transactions contemplated by the
Basic Agreements.
IV.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OE 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:
4.1 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 Adverse Change. There shall have been no event which
has had or may have a material adverse effect upon the
business, financial condition, results of operation, assets,
liabilities or prospects of the Company.
4.3 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.
4.4 Documents to be Delivered by Seller. Seller shall have
delivered the following documents:
(a) Stock certificates representing all of the Shares;
duly endorsed to Buyer and in blank or accompanied by duly
executed stock powers, copies of which are attached as
Exhibit "H".
(b) A copy of (i) the Certificate of Incorporation of
the Company, certified as correct by the Company; and (ii)
the Bylaws of the Company certified as correct by the
Company;
(c) All agreements referred to in paragraph 1.4 above,
executed by all parties thereto other than Buyer.
(d) Such other documents or certificates as shall be
reasonably required by Buyer or its counsel in order to
close and consummate this Agreement.
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 Other Agreements. All parties other than Seller and
the Company shall have executed and delivered the Basic
Agreements.
5.4 Payments. Seller shall have received from Buyer all
Common Stock to be issued at the Closing by Buyer pursuant
to all the Basic Agreements.
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, in all material respects; 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 V shall not have
been satisfied 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 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.
7 .2 Binding Effect of the Basic Agreements. The Basic
Agreements 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 the Basic Agreements 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 Basic Agreements, 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 Basic Agreements are made pursuant
to, and will be construed under, the laws of the State of
Delaware.
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: Xxxxxxx Xxxxxxxx
0 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
(b) If to Buyer, to: Xxxxx Xxxxxxx
Diamond International
Group, Inc.
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 Heading. 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 Severabilitv. 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 Attorney Fees and Defenses. 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 Integration. This Agreement and all documents and
instruments executed pursuant hereto merge and integrate all
prior agreements and representations respecting the
Transactions, 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.
IN WITNESS WHEREOF, the undersigned parties hereto have
duly executed this Agreement on the date first written
above.
"BUYER"
DIAMOND INTERNATIONAL GROUP,
INC.
By: /s/ Xxxxx Xxxxxxx
---------------------------
Xxxxx Xxxxxxx,
President
"COMPANY"
H.Y. APPLIED INTER-DATA
SERVICES, INC.
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------
Xxxxxxx Xxxxxxxx,
President
"SELLER"
/s/ Xxxxxxx Xxxxxxxx
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Xxxxxxx Xxxxxxxx
