Exhibit 10.6
WORLDWIDE DATA, INC.
STOCK PURCHASE AGREEMENT
PURCHASE AGREEMENT made as of this 17th day of November, 1998,
between Worldwide Data, Inc. (the "Company"), a Delaware corporation, and CBC
Holdings, Inc. a corporation with its principal place of business in Nassau, the
Bahamas (the "Purchaser").
WHEREAS, the Company, through its wholly-owned subsidiary, Worldwide
Online Corp. ("Worldwide Canada"), is engaged in the business of providing
Internet-based services, including Internet-access services and the creation of
intranets and web-sites for corporations (the "Offered Services") and the
Company is presently developing an on-line trading service, an on-line auction
service, a service which enables users to send faxes via the Internet and a
service which allows users to make voice calls via the Internet (the "Developing
Services," together with the Offered Services, the "Services");
WHEREAS, in order to partially finance the purchase of the common
stock of 761395 Alberta Ltd. ("Alberta Ltd."), an Alberta Corporation which is
wholly-owned by Xxxxxxx Xxxxxx, the President of the Company, and which has as
its sole asset an aircraft, the Company wishes to issue and sell to the
Purchaser, and the Purchaser wishes to purchase from the Company, on the Closing
Date (as herein defined), 240,000 shares of the Company's common stock (the
"Shares") on the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereby agree as follows:
I. ISSUANCE AND SALE OF THE SHARES; REPRESENTATIONS, WARRANTIES AND COVENANTS
OF PURCHASER
a. Subject to the terms and conditions set forth herein, on the Closing
Date, the Company shall issue and sell and the Purchaser hereby agrees to
purchase from the Company, the Shares at a purchase price of one dollar ($1.00)
per Share and the Company agrees to issue and sell such Shares to the Purchaser
for said price.
Subject to the terms and conditions set forth herein, within
thirty-one (31) days after the Closing Date, the Company shall issue and deliver
to Purchaser a certificate in definitive form, registered in the name of the
Purchaser or such Purchaser's nominee, evidencing the Shares so issued and sold
to such Purchaser hereunder. The Purchaser further agrees that payment for the
Shares shall be made to the Company, in accordance with any instructions from
the Company regarding such payment, in good funds on or before November 18,
1998, unless such date is extended by the Company (the "Closing Date").
b. The Purchaser acknowledges that it (a) is acquiring the Shares for its
own account for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof in violation of the Securities Act of
1933, as amended (the "Act"); (b) either alone or together with its advisors,
has sufficient knowledge and experience in business, investment and financial
matters to evaluate the merits and risks of this investment; and (c) is able to
bear the substantial economic risks of this investment and, at the present time,
could afford a complete loss of such investment.
c. The Purchaser represents that it has been furnished by the Company,
during the course of this transaction, with all information regarding the
Company and its principals which it had requested or desired to know; that all
documents which could be reasonably provided have been made available for the
Purchaser's inspection and review; and that the Purchaser has been afforded the
opportunity to ask questions of and receive answers from duly authorized
officers and/or other representatives of the Company concerning the terms and
conditions of the sale of Shares, along with any additional information which it
had requested.
d. The Purchaser acknowledges that it is aware that this sale of Shares
has not been reviewed by the Securities and Exchange Commission ("SEC") because
of the Company's representations that it is intended to be a nonpublic sale
pursuant to Section 4(2) of the Act and the provisions of Rule 504 of Regulation
D thereunder, or otherwise exempt from registration under the Act.
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e. The Purchaser represents that it is an "Accredited Investor" as that
term is defined in Rule 501 of Regulation D promulgated under the Act.
f. The Purchaser is not taking, and will not take or cause to be taken,
any action that would cause the Purchaser to be deemed an underwriter, as
defined in Section 2(11) of the Act, with respect to the Shares.
g. The Purchaser understands that the Shares are being offered and sold in
reliance on specific exemptions from the registration requirements of Federal
and state securities laws and that the Company is relying upon the truth and
accuracy of the representations, warranties, agreements, acknowledgements and
understandings set forth herein and in the Investor Questionnaire attached
hereto as Schedule I in order to determine the applicability of such exemptions
and the suitability of the Purchaser to acquire the Shares.
h. The Purchaser has the full right, power and authority to enter into
this agreement. The execution, delivery and performance of this agreement by the
Purchaser has been duly and validly authorized and approved by all necessary
corporate action, if any. This agreement is a valid and binding agreement of the
Purchaser enforceable in accordance with its terms, except as such
enforceability may be limited by (a) bankruptcy, insolvency, reorganization or
other similar laws and legal and equitable principles limiting or affecting the
rights of creditors generally and/or (b) general principles of equity,
regardless of whether considered in a proceeding in equity or at law.
i. The Purchaser maintains a domicile or business at the address shown on
the signature page of this Agreement, at which address the Purchaser has
subscribed for the Shares hereunder in compliance with the local laws thereof.
j. The Purchaser recognizes that an investment in the Company involves a
high degree of risk, acknowledges that it may lose its entire investment and has
full cognizance of and understands the risk factors related to an investment in
the Company, which include, but are not limited to:
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(i) Losses; Uncertainty of Profitability. Since its inception in 1995
through the date hereof, the Company, through Worldwide Canada, has incurred
accumulated losses of $1.2 million. The Company continues to incur net losses on
a monthly basis and there can be no assurance that the Company will achieve
profitable operations or that Worldwide Canada will generate meaningful revenues
in the future.
(ii) Uncertainty of Business Plan. The Company's plan of operation and
future prospects are largely dependant upon the Company's continuing ability to
offer its Intranet-access services, to create intranets and web sites for
corporations and to offer and develop and market its Internet fax and voice call
services, WorldFAX and WorldVOICE, as well as its on-line trading and auction
services, on a timely and cost effective basis. There can be no assurance of
continued market acceptance of the Company's Offered Services or that
unanticipated problems, expenses or technical difficulties will not occur which
would result in discontinuation or material delays in the Offered Services. In
addition, there can be no assurance that the Company's Developing Services will
be successfully developed and implemented or that the Company will be able to
continue to develop and market WorldFAX and WorldVOICE successfully. The
likelihood of achievement of the Company's business plan must be considered in
light of the fact that the Company operates in a rapidly evolving industry
characterized by intense competition and an increasing and substantial number of
new market entrants and new Internet products and services. See "Risk Factors -
Increasing Competition; Minimal Barriers to Entry." No assurance can be given
that the Company will achieve its business plan or generate sufficient revenues
to sustain its operations or become profitable.
(iii) Uncertainty of Future Capital Needs. The capital requirements
required to fund the Company's losses, as well as to continue developing
WorldFAX and WorldVOICE, and to develop the Developing Services and any other
new services are significant. The Company may need to raise additional funds
through public or private offerings or equity financings in order to fund its
losses, continue to develop WorldFAX and WorldVOICE and develop the Developing
Services and
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any other new services. If additional funds are raised through the issuance of
equity securities, the percentage ownership of the then current stockholders
will be reduced and such equity securities may possess rights senior to the
holders of the Company's common stock. There can be no assurance that additional
financing will be available on terms favorable to the Company, or that the
Company will be successful in raising such financing.
(iv) Proceeds to be Used for Payment to Affiliate of Xxxxxxx Xxxxxx. The
net proceeds of the offering will be used to partially finance the acquisition
of the common stock of Alberta Ltd., which is wholly-owned by Xxxxxxx Xxxxxx,
the President of the Company, and which has an aircraft as its only asset. The
price to be paid by the Company for the shares of Alberta Ltd. will be
determined by Xx. Xxxxxx based on an appraisal of the value of the airplane
owned by Alberta Ltd. Because of Xx. Xxxxxx'x involvement with both parties to
the transaction, the price to be paid by the Company and the other terms of such
purchase will not be the result of an arms-length negotiation and no independent
party determined the Company's need for the aircraft. The Company will not
obtain a fairness opinion regarding the value of Alberta Ltd.'s common stock. As
the sole shareholder of Alberta Ltd., Xx. Xxxxxx will be the direct beneficiary
of the proceeds of the sale of the Xxxxxx Ltd. shares.
(v) Increasing Competition; Minimal Barriers to Entry. The market for
Internet-based services is extremely competitive and can be significantly
influenced by the marketing and pricing decisions of the larger industry
participants. The barriers to entry are minimal and the Company expects that
competition will intensify in the near future. The Company believes that success
will depend upon a number of factors, including market presence, capacity,
reliability and security of its network infrastructure. Furthermore, the Company
will have to compete with the pricing policies of competitors and suppliers, the
timing and introduction of new products and general economic trends.
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The Company's current and prospective competitors in the Internet
industry include many large companies that have substantially greater market
presence and financial, technical, operational, marketing and other resources
and experience than the Company. The Company's Services compete or expect to
compete directly or indirectly with the following categories of companies: (i)
other national and regional commercial Internet service providers ("IPSs"); (ii)
established on-line service companies that currently offer Internet access, such
as America Online, Inc., CompuServe Corp. and Prodigy Services Company; (iii)
computer hardware and software and other technology companies, such as Microsoft
Corporation ("Microsoft"); (iv) national long distance telecommunications
carriers, such as AT&T (with AT&T WorldNet), MCI (MCI Internet), and Sprint
(SprintNet); (v) regional telephone operating companies; (vi) cable television
system operators, such as Comcast Corporation, Tele-Communications, Inc. ("TCI")
, and Time Warner Inc.; (vii) nonprofit or educational ISPs; (viii)
newly-licensed providers of spectrum-based wireless data services; (ix) national
and regional web site and intranet developers; (x) national and regional on-line
trading companies and (xi) on-line auction companies. In addition, TCI recently
announced it had reached separate agreements with Sun Microsystems, Inc. and
Microsoft to produce the software necessary to permit persons to access the
Internet through television set-top boxes beginning in 1999.
The Company anticipates that it will encounter significant pricing pressure,
which in turn could result in reductions in the average selling price of the
Company's services. Large telecommunications corporations may be able to reduce
the communications costs involved in providing Internet-based services. There
can be no assurance that the Company will be able to offset the effects of any
such price reductions.
(vi) Dependence on the Internet; New Industry; Uncertain Adoption of
Internet as a Medium of Commerce and Communications. The Company's existing and
proposed products and services are targeted at users of the Internet, which has
experienced rapid growth.
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As is typical in the case of a new and rapidly evolving industry characterized
by rapidly changing technology, evolving industry standards and frequent new
product and service introductions, demand and market acceptance for recently
introduced products and services are subject to a high level of uncertainty. The
Internet services industry is characterized by a limited operating history and a
high rate of business failures. Because the market is relatively new and current
and future competitors are likely to introduce competing Internet-based
services, it is difficult to predict the rate at which the market will grow or
at which new or increased competition will result in market saturation. See
"Risk Factors - Increasing Competition; Minimal Barriers to Entry." In addition,
critical issues concerning the commercial use of the Internet remain unresolved
and may impact the growth of Internet use, especially in the business market
targeted by the Company. Despite growing interest in the many commercial uses of
the Internet, many businesses have been deterred from purchasing Internet access
services for a number of reasons, including, among others, inconsistent quality
of service, lack of availability of cost-effective, high-speed options, a
limited number of local access points for corporate users, inability to
integrate business applications on the Internet, the need to deal with multiple
and frequently incompatible vendors, inadequate protection of the
confidentiality of stored data and information moving across the Internet and a
lack of tools to simplify Internet access and use.
(vii) Possible Service Interruptions. The Company's operations require
that its telecommunications networks operate on a continuous basis. It is
possible that the Company's telecommunications networks may from time to time
experience service interruptions or equipment failures. Service interruptions or
equipment failures resulting in material delays would adversely effect the
confidence of users of the Services as well as the Company's business operations
and reputation.
(viii) Capacity Constraints; System Failure and Security Risks. The
Company's operations will depend upon the capacity, reliability and security of
its network infrastructure. The Company currently has
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limited network capacity and will be required to continually expand its network
infrastructure. Expansion of the Company's infrastructure will require
significant financial, operational and management resources. There can be no
assurance that the Company will be able to expand its infrastructure on a timely
basis, at a commercially reasonable price, or at all. The Company's operations
will also be dependent on the Company's ability to protect its computer
equipment against damage from fire, power loss, telecommunications failures and
similar events. The Company's network infrastructure will be vulnerable to
computer viruses, break-ins and similar disruptions from unauthorized tampering
with the Company's computer systems. Computer viruses or problems caused by
third parties could lead to material interruptions, delays or cessation in
services. Inappropriate use of the Internet by third parties could also
potentially jeopardize the security of confidential information stored in the
computer systems of users. Security and privacy concerns of users may limit the
Company's ability to successfully market its Services.
(ix) Limited Sales Force. The Company has a limited sales force and does
not have established distribution channels for its Services. No assurance can be
given as to the ability of the Company to establish or generate sufficient
demand for its Services, and the inability of the Company to do so would have a
material adverse effect on the Company's business, financial condition and
operating results.
(x) Dependence on Suppliers. The Company relies on other companies to
supply certain key components of its network infrastructure, including
telecommunications and networking equipment. There can be no assurance that the
Company will be able to obtain such services on the scale and within the time
frame required at a reasonable cost, or at all. The inability to do so would
have a material adverse effect on the Company's ability to furnish its Services,
financial condition and results of operations.
(xi) Dependence Upon Key Personnel; Xxxxxxx Xxxxxx. The Company depends
upon the services of Xxxxxxx Xxxxxx, its President and Chief Executive
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Officer. The loss of Xx. Xxxxxx'x services would be detrimental to the Company's
prospects. The Company does not contemplate obtaining "key-man" life insurance
with respect to Xx. Xxxxxx and the Company does not have an employment agreement
with Xx. Xxxxxx.
(xii) Limited Intellectual Property Protection. The Company relies on a
combination of copyright and trademark laws, trade secrets and software security
measures to protect its proprietary information. The Company currently has no
registered copyrights, trademarks or patents or patent applications pending. It
may be possible for unauthorized third parties to copy aspects of, or otherwise
obtain and use, the Company's proprietary information without authorization.
(xiii) NASDAO's OTC Bulletin Board Service; Risks Relating to Low Priced
Stocks. The Company's Common Stock currently trades on NASDAQ's OTC Bulletin
Board Service. Such market is characterized by limited and episodic trading and
limited liquidity. Investors could find it difficult to dispose of, or to obtain
accurate quotations as to the market value of, the Company's Common Stock.
(xiv) Control By Xxxxxxx Xxxxxx. Following completion of the offering,
Xxxxxxx Xxxxxx will beneficially own approximately 10.5% of the voting stock of
the Company. As a result, Xx. Xxxxxx has the ability to influence or control the
election of a majority of directors and other actions by stockholders with
respect to the business and affairs of the Company.
(xv) Year 2000 Compliance. The Company is aware of the issues associated
with the programming code in existing computer systems as the year 2000
approaches. The "Year 2000 Problem" is pervasive and complex as virtually every
computer operation will be affected in some way by the rollover of the two digit
year value to 00. The issue is whether computer systems will properly recognize
date-sensitive information when the year changes to 2000. Systems that do not
properly recognize such information could generate erroneous data or fail. The
Company is in the process of working with its software that the Company has
licensed from
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third parties will operate properly in the year 2000 and beyond. In
addition, the Company is working with its external suppliers and service
providers to ensure that they and their systems will be able to support
the Company's needs and, where necessary, interoperate with the Company's
server and networking hardware and software infrastructure in preparation
for the year 2000. Management does not anticipate that the Company will
incur significant operating expenses or be required to invest heavily in
computer systems improvements to be year 2000 compliant. However,
significant uncertainty exists concerning the potential costs and effects
associated with any year 2000 compliance. Any year 2000 compliance
problems of either the Company, its customers or vendors could have a
material adverse effect on the Company's business, results of operations
and financial condition.
k. The Purchaser represents that the foregoing representations, warranties
and covenants are true and correct as of the date hereof. The foregoing
representations, warranties and agreements shall survive the date hereof.
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants and, where applicable, covenants
to the Purchaser as follows:
(a) The Company is a corporation duly organized, existing and in
good standing under the laws of the State of Delaware and has the
corporate power to conduct the business which it proposes to conduct.
(b) The execution, delivery and performance of this Agreement by the
Company has been duly approved by the Board of Directors of the Company.
(c) The Shares to be sold and delivered to the Purchaser hereunder
will be duly authorized and validly issued and, upon payment, fully paid
and non-assessable.
(d) Financial Statements - The Company has furnished to the
Purchaser the balance sheet of the Company as of June 30, 1998 and the
related Statement
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of Income dated as of June 30, 1998 which were prepared by management of
the Company and are unaudited, copies of which are attached hereto as
Exhibit A. Such financial statements have been prepared from and are in
accordance with the books and records of the Company, have been prepared
in accordance with generally accepted accounting principles consistently
applied, are true and correct and fairly present in all material respects
the financial position of the Company as of such date and the results of
its operations for the six-month period then ended in accordance with
generally accepted accounting principles, except for the absence of notes
and subject to year-end adjustments. Except as reflected in such balance
sheet and for obligations and liabilities incurred in the ordinary course
of business, the Company has no material (individually or in the
aggregate) obligations or liabilities, absolute, accrued or contingent, as
of the date of such balance sheet. There has been no material adverse
change in the business, assets, properties, operations, condition
(financial or other) or prospects of the Company since June 30, 1998.
III. MISCELLANEOUS
a. Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt required, addressed to the Company, at:
Worldwide Data, Inc.
00 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx, Xxxxxx X0X0X0
Attn: President
With a Copy to:
Xxxxxx & Carnelutti
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
and to the Purchaser at his address indicated on the last page of this
Agreement. Notices shall be deemed to have been given on the date of mailing,
except notices of change
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of address, which shall be deemed to have been given when received.
b. This Agreement shall not be changed, modified or amended except by a
writing signed by the parties to be charged.
c. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and to their respective heirs, legal representatives, successors
and assigns.
d. This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter thereof and merges and supersedes
all prior discussions, agreements and understandings of any and every nature
among them.
e. This Agreement and its validity, construction and performance shall be
governed in all respects by the laws of the State of New York.
f. This Agreement may be executed in counterparts. Upon the execution and
delivery of this Agreement by the Purchaser, this Agreement shall become a
biding obligation of the Purchaser with respect to the purchase of Shares as
herein provided.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first written above.
[FOR] CBC Holdings, Inc.
/s/ Xxxxxx X. Xxxxxx
---------------------------
Authorized Signature
Address of Purchaser
Nassau, Bahamas
---------------------------
Social Security or Taxpayer
Identification No. of
Purchaser
N/A
---------------------------
Signature of Purchaser
/s/ [ILLEGIBLE]
---------------------------
Accepted by:
WORLDWIDE DATA, INC.
By: /s/ Xxxxxxx Xxxxxx
-------------------------
Xxxxxxx Xxxxxx, President
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Exhibit A
Balance Sheet and Statement of Income
WORLD WIDE DATA, INC.
CONSOLIDATED BALANCE SHEET
STATED IN CANADIAN DOLLARS
AS AT JUNE 30, 1998
(UNAUDITED - AS PREPARED BY MANAGEMENT)
ASSETS
CURRENT ASSETS
Cash and Bank 431,442
Accounts Receivable 54,563
Deposits and Prepaid Expenses 26,929
Loan Receivable 52,458
----------
565,392
----------
CAPITAL ASSETS
Computer 237,042
Office Furniture and Equipment 40,403
Leasehold Improvements 10,381
Less Accumulated Depreciation (129,614)
----------
158,212
----------
723,604
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Bank Loan 50,004
Accounts Payable and Accrued Liabilities 75,509
Loans & Debenture Payable 320,656
----------
446,169
----------
LONG TERM LIABILITIES
Bank Loan 75,006
----------
75,006
----------
SHAREHOLDERS' EQUITY
Capital Stock - Issued - 2,442,800 shares 1,412,686
Deficit (1,210,259)
----------
202,429
----------
723,604
==========
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WORLDWIDE DATA. INC
CONSOLIDATED STATEMENT OF INCOME
STATED IN CANADIAN DOLLARS
FOR THE 5 MONTHS ENDED JUNE 30, 1998
(UNAUDITED - AS PREPARED BY MANAGEMENT)
SALES 244,064
COST OF SALES 69,777
----------
GROSS PROFIT 174,287
----------
EXPENSES
Advertsing and Promotion 2,436
Bad Debts 718
Bank Charges and Interest 24,615
Consulting 52,039
Depreciation 24,343
Insurance 1,426
Office and General 3,070
Printing and Postage 5,393
Professional Fees 4,580
Rent 26,984
Repairs and Maintenance 1,648
Software Licence Fees 1,000
Salaries and Benefits 148,834
Telephone 3,888
Travel 33,891
----------
NET LOSS FOR THE PERIOD 334,870
----------
(160,583)
DEFICIT, beginning (1,049,676)
----------
DEFICIT, ending (1,210,259)
==========
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