EXHIBIT 99.1
STOCK PURCHASE AGREEMENT
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AGREEMENT made as of the 12 day of September, 2003 (the "Agreement") by
and between XXXXX XXXXXXXX, an individual, residing in Palm Beach County,
Florida ("Seller" or "Xxxxxxxx"), and NOVANET MEDIA, INC., a California
corporation, with offices located at 000 Xxxxxxx, Xxxxx 000, Xxxxxxxx, XX 00000
("Purchaser" or "Novanet").
W I T N E S S E T H:
WHEREAS, Purchaser desires to acquire from Seller Four million four
hundred eighty-two thousand (4,482,000) Shares of the outstanding and issued
common stock, $.001 par value (the "Shares"), of Cybreads, Inc., a Florida
corporation ("Cyberads"); and
WHEREAS, the Seller proposes to sell the Shares to Purchaser on the
terms and conditions hereinbelow set forth; and
WHEREAS, Purchaser proposes to purchase the Shares on the terms and
conditions hereinbelow set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree, as
follows:
1. The foregoing recitals are true and correct and are incorporated
herein and made a part hereof.
2. SALE
Subject to the terms and conditions hereof, Purchaser shall
purchase from Seller and Seller shall sell the Shares to Purchaser, on September
20, 2003, or on sTuch other date as the parties may mutually agree upon (the
"Closing Date"). With the exception of the Cyberads common stock, which common
stock is the subject of Paragraph 3(e) hereof, and the One million (1,000,000)
shares of common stock which were a portion of Xxxxxxxx'x original holdings in
Cyberads, the Shares shall constitute all shares of Cyberads' common stock owned
directly or beneficially (as such term is defined in Rule 13-d(3) of the rules
adopted under the Securities Act of 1933, as amended (the "Act") by Seller.
3. PURCHASE PRICE AND ADDITIONAL AGREEMENTS
(a) The purchase price for the Shares shall be Five hundred
thousand dollars ($500,000) and such other consideration as provided herein. At
the Closing, Purchaser shall deliver to Seller, by cash or cashier's check, the
amount of Four hundred thousand dollars ($400,000), less such amounts as are, on
the Closing Date, held by Bryn & Associates, P.A., as escrow agent (the "Escrow
Agent") pursuant to that certain Escrow Agreement, dated July 14, 2003, by and
among Xxxxxxxx, Novanet and the Escrow Agent, and less funds previously
disbursed by the Escrow Agent to Xxxxxxxx in accordance with written
instructions given to the Escrow Agent prior to the Closing Date by Novanet and
Xxxxxxxx, together with a Promissory Note, in the amount of One hundred thousand
dollars ($100,000), attached hereto as Exhibit "A", issued by Purchaser to
Seller, which Promissory Note shall be payable twenty-five (25) days from the
Closing Date without interest.
(b) Notwithstanding anything herein to the contrary, the
completion and delivery of the Additional Agreements, as such term is defined
herein and as set forth in Section 4 hereof, on or before the Closing Date shall
be a condition precedent to the completion of purchase of the Shares.
4. ADDITIONAL AGREEMENTS
The completion, execution and approval by Purchaser and Seller of
the following additional agreements and documentation (the "Additional
Agreements") are a material condition to the parties' obligations hereunder:
(a) Prior to the Closing Date, Cyberads shall confirm and
ratify its indebtedness to Xxxxxxxx, through the issuance of a promissory note
issued by Cyberads in favor of Xxxxxxxx (the "Xxxxxxxx Note"), for funds
advanced to Cyberads by Xxxxxxxx or borrowed by Xxxxxxxx on behalf of Cyberads,
together with interest accrued to date, calculated at the rate of 10% per annum
(the "Xxxxxxxx Loan"). The Xxxxxxxx Note shall provide for monthly payments, to
be applied first to all accrued but unpaid interest, of no less than Twenty-five
thousand dollars ($25,000). The Xxxxxxxx Note shall be secured by all of
Cyberads' assets (including future ongoing receivables from existing contracts,
including, but not limited to, that certain agreement by and between Cyberads
and InPhonics, Inc.) existing on the Closing Date.
(b) Documentation that Xxxxxxxx has, as of the Closing Date,
been removed as a personal guarantor of any and all of Cyberads or its
subsidiaries' indebtedness (the "Cyberads Indebtedness"),
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incurred prior to or subsequent to the Closing Date, to Rockland Credit Finance,
LLC and/or WebBank, Brightpoint, NA, and such other Cyberads Indebtedness as may
be agreed on by the parties prior to the Closing Date. Additionally, Cyberads
and its subsidiaries shall execute a document, reasonably acceptable to
Xxxxxxxx, providing for indemnification by Cyberads and its subsidiaries of
Xxxxxxxx with respect to any and all amounts that may be owed by Cyberads and/or
its subsidiaries in connection with any past or current state, local or federal
taxes relating to the conduct of Cyberads or its subsidiaries businesses,
including, but not limited to, all taxes relating to the employment by Cyberads
or its subsidiaries of all employees, including, but not limited to, withholding
and related taxes.
(c) Xxxxxxxx shall have received One million (1,000,000)
shares of Cyberads' common stock (the "New Shares"), previously authorized by
Cyberads' Board of Directors .
(d) A duly executed agreement by and among Xxxxxxxx, Novanet
and Cyberads, providing that, in the event the New Shares do not have a per
share Closing Price, as defined in this sub-section, of $0.50 per share or
greater twelve (12) months from the Closing Date, Cyberads shall issue such
number of additional shares to Xxxxxxxx as necessary, based upon the Closing
Price, to result in Xxxxxxxx having been issued a total number of shares having
a value, calculated on the basis of the Closing Price, of Five hundred thousand
dollars ($500,000). The Closing Price shall be calculated by taking the average
bid and ask price quoted by all market makers in Cyberads' common stock for the
twenty (20) trading days immediately prior to the first anniversary of the
Closing Date.
(e) A duly executed agreement by and between Xxxxxxxx and
Novanet providing that the exercise price payable to Xxxxxxxx pursuant to
options granted by Xxxxxxxx with respect to Eight hundred thousand (800,000)
shares of Cyberads stock, which shares are not part of the Shares or the New
Shares (the "Option Shares"), shall be divided equally, upon exercise, between
Xxxxxxxx and Novanet, and providing further that, in the event some or all of
the Option Shares are not exercised by the option holders prior to the
expiration date of such options, the balance of the Option Shares not purchased
pursuant to exercise of the option shall be delivered to Novanet by Xxxxxxxx
without the payment by Novanet of any
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additional consideration for such shares. The Option Shares shall be deposited
pursuant to a mutually agreed upon escrow agreement (the "Escrow Agreement") by
and among Xxxxxxxx, the option holders, Novanet, and the Escrow Agent. The
Escrow Agreement shall provide that the Option Shares shall be held by the
Escrow Agent and disbursed in accordance with the terms of this sub-paragraph
(e).
(f) Each of the parties hereto shall execute such documents
and other papers and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
hereby, and each of the parties hereto shall use his or its best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
other things necessary, proper or advisable to consummate and make effective, as
promptly as practicable, the transactions contemplated by this Agreement.
5. CONFIDENTIALITY. Each of the parties hereto shall cause his or
its agent and other authorized representatives to hold in strict confidence, and
not disclose to any other person without the prior written consent of the other
parties, all information obtained from the other parties in connection with the
transactions contemplated by this Agreement, except that such information may be
disclosed: (i) where necessary, to any regulatory authorities or governmental
agencies, (ii) if required by court order or decrees or applicable law, (iii) if
it is publicly available as the result of an authorized disclosure, or (iv) to
the public by Purchaser if it deems desirable to do so.
6. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller represents and warrants to Purchaser that:
(a) The Seller has full authority and legal capacity to execute,
deliver and perform this Agreement. This Agreement has been duly and validly
executed and delivered by the Seller and constitutes the valid and binding
obligation thereof, enforceable against the Seller in accordance with the terms,
except to the extent that (i) enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights, and (ii) the remedy of specific
performance and injunctive
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and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding may be brought.
(b) When delivered, the Shares will be legally issued, fully paid
and non-assessable and upon delivery of the certificates representing such
shares to Purchaser, Purchaser shall have full marketable (but for restrictions
imposed by Federal and State securities laws and regulations) and valid title
thereto. No impediment to the sale of the Shares to Purchaser now exists or will
exist on the Closing Date other than those imposed pursuant to Federal and State
securities laws and regulations.
(c) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby do not and will not violate
any provision of any agreement or conflict with any restriction of any kind or
nature to which the Seller is a party or by which it is bound. The Seller has
and shall have, on the Closing Date, in partial reliance upon the
representations and warranties made by Purchaser herein, the unqualified right
to sell, assign and deliver the Shares to Purchaser and to pass thereto good and
valid title thereto.
(e) There are no claims for brokerage commissions or finder's
fees in connection with the transactions contemplated hereby which have arisen
or may arise from any act or failure to act of Seller or any person or entity
authorized to act on Seller's behalf.
(f) The representations and warranties of Seller herein are true
and correct as of the date hereof and shall be true and correct as of the
Closing Date with the same force and effect as made thereon.
7. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller that:
(a) Purchaser has full authority and legal capacity to execute,
deliver and perform this Agreement. This Agreement has been duly and validly
executed and delivered by Purchaser and constitutes the valid and binding
obligation thereof, enforceable against it in accordance with the terms, except
to the extent that: (i) enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights, and (ii) the remedy of specific performance and
injunctive
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and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding may be brought.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby do not and will not violate
any provision of any agreement or conflict with any restriction of any kind or
nature to which the Purchaser is a party or by which it is bound.
(c) The execution and delivery hereof, or the consummation of the
transactions contemplated hereby, do not constitute a violation by Purchaser of
Purchaser's Articles of Incorporation or by-laws, or any law, rule, regulation,
order, judgment or decree of any court or of any local governmental authority.
(d) There are no claims for brokerage commissions or finder's
fees in connection with the transactions contemplated hereby which have arisen
or may arise from any act or failure to act of Purchaser or any person or entity
authorized to act on Purchaser's behalf.
(e) Purchaser acknowledges its obligation to pay, as additional
consideration hereunder, on the Closing Date, all unpaid, reasonable legal fees
and costs incurred by Xxxxxxxx and Cyberads through the Closing Date, in
connection with the preparation of this Agreement and the transactions
contemplated hereby.
8. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS
All of the representations, warranties and agreements of the
parties hereto shall survive the closing of the transactions contemplated
hereby.
9. INDEMNIFICATION
(a) The Seller hereby agrees to indemnify, defend and hold
harmless Purchaser from and against any and all demands, claims, actions or
causes of action, assessments, losses, damages, liabilities, costs and expenses,
including, without limitation, interest, penalties and reasonable attorneys'
fees and expenses ("Purchaser's Claims") asserted against, imposed upon or
incurred by Purchaser resulting from or by reason of a breach of any
representation or warranty of the Seller contained herein.
Notwithstanding anything to the contrary contained herein, the
liability of the Seller shall be limited to the Purchaser's Claims for which
notice shall have been given
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thereto on or before forty-eight (48) months subsequent to the Closing Date,
whether or not the amount of any Purchaser's Claims has then been determined.
Such notice shall set forth, to the extent possible, all details of any such
claim.
(b) Purchaser hereby agrees to indemnify, defend and hold
harmless the Seller from and against any and all demands, claims, actions or
causes of action, assessments, losses, damages, liabilities, costs and expenses,
including, without limitation, interest, penalties and reasonable attorneys'
fees and expenses (collectively hereinafter referred to as the "Seller's
Claims") asserted against, imposed upon or incurred by the Seller resulting from
or by reason of a breach of any representation or warranty of Purchaser
contained herein.
Notwithstanding anything to the contrary contained herein, the
liability of the Purchaser shall be limited to the Seller's Claims for which
notice shall have been given thereto on or before forty-eight (48) months
subsequent to the Closing Date, whether or not the amount of any of Seller's
Claims has then been determined. Such notice shall set forth, to the extent
possible, all details of any such claim.
10. CONDITIONS OF INDEMNIFICATION
The obligations and liabilities of the parties hereunder
regarding claims resulting from the assertion of liability by third parties
shall be subject to the following terms and conditions:
(a) The indemnified party hereby agrees to promptly notify the
indemnifying party in writing of any claims asserted against, imposed upon or
incurred by the indemnified party, and the indemnifying party hereby agrees to
undertake the defense thereof by representatives chosen by the indemnifying
party. The indemnifying party shall have the right to control and handle the
conduct of any litigation, to the extent such proceedings could result in a
claim against the indemnifying party, provided that such conduct does not have a
material adverse effect on the indemnified party. The indemnified party hereby
agrees to cooperate with the indemnifying party in the defense of any such claim
or proceeding. The indemnifying
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party hereby agrees to keep the indemnified party informed as to the progress of
any such claim or proceeding; and
(b) In the event that the indemnifying party, within fifteen days
after notification by the indemnified party of any claim, fails to defend,
control or handle such matter, the indemnified party shall have the right, upon
written notification to the indemnifying party, to defend, compromise or settle
the same on behalf of and for the account and at the risk of the indemnifying
party, to defend, compromise or settle the same on behalf of and for the account
of and at the risk of the indemnifying party. In such event, the indemnifying
party hereby agrees to advance and pay all costs and reasonable attorneys' fees
with respect to such indemnification and to give full cooperation to the
indemnified party; subject, however, to the right to the indemnifying party to
assume such defense at any time prior to final settlement, compromise or
determination thereof.
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11. REMEDIES
Except as specifically provided for elsewhere herein, all
remedies hereunder shall be cumulative and shall not preclude the assertion by
any party of any other rights or the seeking of any other remedies by it against
the other party, including, but not limited to, the right of specific
performance.
12. PURCHASER IS AN ACCREDITED INVESTOR
This Agreement sets forth the terms upon which the Purchaser may
purchase the Shares without registration of the Shares under the Act or
applicable state laws. The Purchaser acknowledges that the Purchaser is an
"accredited investor", as such term is defined under the rules and regulations
of the Act, or is otherwise a qualified purchaser of the Shares without
registration of the Shares under the Act or applicable state laws .
13. ACCESS TO INFORMATION.
Novanet, its accountants, officers and representatives have been
afforded full opportunity to request any and all relevant information and ask
questions concerning the Shares and Cyberads. Novanet, its accountants, officers
and representatives have been provided with full access to all of Cyberads'
information, records, financial statements, and such other documentation as
required by Novanet, and thus have had the opportunity to make copies of
documents requested and have received answers to all questions raised by them to
their full satisfaction. Novanet represents and warrants that it has not relied
upon any information relating to Cyberads other than information supplied by
Cyberads, its officers and representatives, and that such information has been
independently and fully verified by Novanet, its accountants, officers and
representatives. Novanet further represents and warrants that, to the best of
Novanet's knowledge, after due inquiry, the offering of the Shares
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and the purchase of the Shares were, as of the date hereof and on the Closing
Date, made in compliance with applicable federal and state securities and other
laws.
14. NO REGISTRATION
Novanet recognizes that the Shares have not been registered
under the Act or applicable state securities laws and are being sold pursuant to
the exemptions from registration under the Act and by applicable state law
provisions. Novanet recognizes that, as a consequence, the Shares must be held
indefinitely, unless it is subsequently registered under the Act and applicable
state securities laws, or an exemption from such registration is available, so
that Novanet must bear the economic risk of investment in the Shares for an
indefinite period of time.
15. TRANSFER AND SIMILAR TAXES
Purchaser agrees to pay all transfer taxes, documentary stamp
taxes, intangible taxes and other similar taxes (if any) due and payable on
account of the sale and transfer of Seller's Shares to Purchaser.
16. MISCELLANEOUS
(a) This Agreement may not be assigned by any of the parties
hereto, except by operation of law, and, in that case, shall inure to the
benefit of the parties' respective successors or heirs.
(b) This Agreement, including all other instruments or documents
referred to herein or delivered pursuant hereto, contains the entire
understanding of the parties hereto with respect to the subject matter contained
herein. There are no representations, warranties, promises, covenants or
undertakings other than those expressly set forth herein or therein. This
Agreement supersedes all prior agreements, whether written or oral, between the
parties with respect to the subject matter hereof. This Agreement may be amended
only by a written agreement duly executed by the parties hereto. Any condition
to a particular party's obligations hereunder may be waived in writing by such
party.
(c) The headings contained in this Agreement have been inserted
for convenience and reference purposes only and shall not affect the meaning or
interpretation hereof in any manner whatsoever.
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(d) If any of the terms, provisions or conditions contained in
this Agreement shall be declared to be invalid or void in any judicial
proceeding, this Agreement shall be honored and enforced to the extent of its
validity, and those provisions not declared invalid shall remain in full force
and effect.
(e) In the event of a breach or threatened breach by either party
of its obligations hereunder, each party acknowledges that the other party will
not have an adequate remedy at law and shall be entitled to such equitable and
injunctive relief as may be available to restrain the other party from any
violation of such obligations. Nothing herein shall be construed as prohibiting
either party from pursuing any other remedies available for such breach or
threatened breach, including the recovery of damages.
(f) Although previous drafts of this Agreement, substantially
identical to the terms set forth herein, have been reviewed by counsel for
Novanet and by the Board of Directors of Cyberads, the effectiveness of this
Agreement is subject to the condition subsequent that neither counsel for
Novanet nor the Board of Directors of Cyberads object to the terms of this
definitive agreement by written, fax notice to the other parties hereto prior to
5:00 p.m. on Monday, September 15, 2003, Eastern Time.
(g) All notices, requests, demands and other communication
required or permitted to be given hereunder shall be deemed given when sent
postage paid, by Registered or Certified Mail, Return Receipt Requested,
addressed to each of the parties, as follows:
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If to Purchaser, to:
Novanet Media, Inc.
000 Xxxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
If to Seller, to:
Xxxxx Xxxxxxxx
0000 Xxxx xx Xxxxxxxx Xxxx.
Xxxx Xxxxx, XX 00000
or to such other address, or to the attention of such other party, as the
parties shall advise the other by notice given in conformity herewith.
(h) This Agreement shall be governed by, construed and enforced
in accordance with the laws of the State of Florida. Any disputes that may arise
under the terms of this Agreement shall be subject to the determination of a
court of competent jurisdiction located in Palm Beach County, Florida. In the
event that either party must resort to the Court to enforce or interpret this
Agreement, then the prevailing party shall be entitled to an award of reasonable
attorneys' fees and any costs incurred.
(i) In the event that any clause or portion of this agreement
shall be held invalid by any court, the parties intend and agree that such
invalid clause or provision shall have no effect upon the validity of the other
provisions of this Agreement, and that all of the other provisions of this
Agreement shall be valid and enforceable.
(j) This Agreement may be executed in counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement as of the day and year first above written.
PURCHASER:
NOVANET MEDIA, INC.
By: /s/ XXXXXXX XXXX
SELLER:
/s/ XXXXX XXXXXXXX
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