EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Purchase Agreement") made as of this 7th
day of September, 2000 between iParty Corp., a Delaware corporation (the
"Company") and Patriot Capital Ltd., a British Virgin Island corporation (the
"Purchaser").
WHEREAS, the Company and the Purchaser are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by Rule 506 under Regulation D as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Securities Act");
WHEREAS, the Company has authorized a new series of preferred stock,
designated as Series F Convertible Preferred Stock (the "Series F Preferred
Stock"), having the rights, preferences and privileges set forth in the
Certificate of Designations, Rights and Preferences attached hereto as Exhibit A
(the "Certificate of Designation");
WHEREAS, the Series F Preferred Stock are convertible into shares of
common stock $.001 par value, per share of the Company (the "Common Stock") upon
the terms and subject to the limitations and conditions set forth in the
Certificate of Designation.
WHEREAS, the Purchaser desires to purchase and the Company desires to
issue and sell, upon the terms and conditions set forth in this Purchase
Agreement an aggregate of One Hundred Fourteen Thousand Two Hundred Eight-Six
(114,286) shares of Series F Preferred Stock of the Company;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:
I. SUBSCRIPTION FOR SHARES AND CLOSING.
1.1 Purchase. At the Closing (as defined below), the Company
shall issue and sell to the Purchaser and the Purchaser agrees to purchase from
the Company, subject to the terms and conditions hereinafter set forth of One
Hundred Fourteen Thousand Two Hundred Eight-Six (114,286) shares of Series F
Preferred Stock at a price equal to $4.375 per share which shares shall convert
into One Million One Hundred Forty-Two Thousand Eight Hundred Sixty (1,142,860)
shares of Common Stock ("Conversion Shares"). The Series F Preferred Stock shall
have the rights and preferences as set forth in the Certificate of Designation
attached hereto as Exhibit A.
1.2 Closing. The Closing of the purchase and sale of the
Series F Preferred Stock (the "Closing") shall take place on or before September
8, 2000 at the offices of Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. The Company shall issue to the Purchaser
certificates representing the Series F Preferred Stock.
II. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
2.1 The Purchaser recognizes that the purchase of Series F
Preferred Stock involves a high degree of risk in that (i) the Company has
incurred substantial losses from operations; (ii) an investment in the Company
is highly speculative and only investors who can afford the loss of their entire
investment should consider investing in the Company; (iii) an investment in the
Series F Preferred Stock is illiquid; and (iv) transferability of the securities
comprising the Series F Preferred Stock is extremely limited, as well as other
risk factors of which the undersigned has been advised.
2.2 The Purchaser represents and warrants that it is an
"accredited investor" as such term in defined in Rule 501 of Regulation D
promulgated under the Securities Act.
2.3 The Purchaser hereby represents that it has been furnished
by the Company during the course of this transaction with all information
regarding the Company which it has requested or desires to know and that it has
been afforded the opportunity to ask questions of and receive answers from duly
authorized officers or other representatives of the Company concerning the terms
and conditions of this offering and the business of the Company.
2.4 The Purchaser acknowledges that this offering of Series F
Preferred Stock has not been reviewed by the SEC because of the Company's
representations that this is intended to be a nonpublic offering pursuant to
Sections 4(2) or 3(b) of the Securities Act. Purchaser represents that the
Series F Preferred Stock are being purchased for its own account, for investment
and not for distribution or resale to others. Purchaser agrees that it will not
sell or otherwise transfer the Series F Preferred Stock unless they are
registered under the Securities Act or unless an exemption from such
registration is available.
2.5 The Purchaser consents to the placement of a legend on any
certificate or other document evidencing the Series F Preferred Stock, and the
shares of Common Stock issuable upon conversion thereof, stating that they have
not been registered under the Securities Act and setting forth or referring to
the restrictions on transferability and sale thereof, and to the issuance of
stop transfer instructions with respect thereto. The legend shall state as
follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"). THE SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT, OR AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE
CUSTOMARY FOR TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER
THE SECURITIES ACT."
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2.6 The Purchaser represents and warrants that: (i) it was not
formed for the purpose of investing in the Company; (ii) it is authorized and
otherwise duly qualified to purchase and hold the Series F Preferred Stock; and
(iii) that this Purchase Agreement has been duly and validly authorized,
executed and delivered and constitutes the legal, binding and enforceable
obligation of the undersigned.
2.7 The Purchaser has not engaged any broker, finder,
commission agent or other such intermediary in connection with the sale of the
Series F Preferred Stock and the transactions contemplated by the Purchase
Agreement.
2.8 The Purchaser agrees that it will not convert its shares
of the Series F Preferred Stock in to Common Stock until the Company files an
amendment to its Certificate of Incorporation increasing the number of
authorized shares of its Common Stock.
III. REPRESENTATIONS BY THE COMPANY
3.1 The Company represents and warrants to the Purchaser that
as of the date hereof and at the Closing:
(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 conducts and proposes to
conduct. The Company is duly qualified to do business as a foreign corporation
in each jurisdiction in which the conduct of its business requires such
qualification, except where the failure to so qualify would not have a material
adverse effect on the Company's business. The Company has furnished the
Purchaser with true, correct and complete copies of the Company's Certificate of
Incorporation and the Company's Bylaws, as then in effect.
(b) All corporate action on the part of the Company
necessary for the authorization, execution, delivery and performance by the
Company of this Purchase Agreement and the consummation of the transactions
contemplated herein, and for the authorization, issuance and delivery of the
Series F Preferred Stock has been taken or will be taken prior to the Closing
except as set forth below.
(c) This Purchase Agreement is a valid and binding
obligation of the Company, enforceable in accordance with its terms, subject to
laws of general application relating to bankruptcy, insolvency, and the relief
of debtors and other laws of general application affecting enforcement of
creditors' rights generally, rules of law governing specific performance,
injunctive relief or other equitable remedies, and limitations of public policy.
(d) The execution, delivery and performance by the
Company of this Purchase Agreement and compliance herewith and the sale and
issuance of the Series F Preferred Stock will not result in any violation of and
will not conflict with, or result in a breach of any of the terms of, or
constitute a default under the Company's Certificate of Incorporation or Bylaws,
or any material provision of any material mortgage, indenture, agreement,
instrument, judgment, decree, order, law, rule or regulation or other
restriction to which the Company is a party or by
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which it is bound, or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the Company.
(e) The Series F Preferred Stock Shares have been duly
and validly authorized and when issued and paid for in accordance with the terms
hereof, will be duly and validly issued and fully paid and non-assessable;
provided, however, that the Series F Preferred Stock may be subject to
restrictions on transfer under state and/or federal securities laws. Upon proper
conversion of the Series F Preferred Stock, the Conversion Shares will be duly
and validly issued and fully paid and non-assessable; provided, however, that
the Conversion Shares may be subject to restrictions on transfer under state
and/or federal securities laws.
(f) The Company shall amend its Certificate of
Incorporation to increase the number of authorized Common Stock and shall
reserve a sufficient number of Conversion Shares (the "Reserved Shares") to
provide for conversion of the Series F Preferred Stock.
(g) The Company has, to the best of its knowledge,
obtained, or is in the process of obtaining, all licenses, permits and other
governmental authorizations necessary to the conduct of its business; such
licenses, permits and other governmental authorizations obtained are in full
force and effect; and the Company is in all material respects complying
therewith; except where such failure to obtain such licenses, permits and other
governmental authorizations necessary to the conduct of its business would not
have a material adverse effect on the Company's business or financial condition.
(h) The Company knows of no pending or threatened legal
or governmental proceedings to which the Company is a party which could
materially adversely affect the business, property, financial condition or
operations of the Company. There is no action, suit, proceeding or investigation
pending or currently threatened against the Company that questions the validity
of this Agreement, or the right of the Company to enter into this agreement, or
to consummate the transactions contemplated hereby, or that might result, either
individually or in the aggregate, in any material adverse changes in the assets,
condition, affairs or prospects of the Company.
(i) Except as set forth in the Company's public
documents, there has not been:
(i) any change in the assets, liabilities,
financial condition or operating results of the Company from that reflected in
the public documents, except changes in the ordinary course of business that
have not been, in the aggregate, materially adverse;
(ii) any damage, destruction or loss, whether or
not covered by insurance, materially and adversely affecting the assets,
properties, financial condition, operating results, prospects or business of the
Company (as such business is presently conducted and as it is presently proposed
to be conducted);
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(iii) any waiver by the Company of a valuable right
or of a material debt owed to it;
(iv) any satisfaction or discharge of any lien,
claim or encumbrance or payment of any obligation by the Company, except in the
ordinary course of business and that is not material to the assets, properties,
financial condition, operating results or business of the Company (as such
business is presently conducted and as it is presently proposed to be
conducted);
(v) any material change or amendment to a material
contract or arrangement by which the Company or any of its assets or properties
is bound or subject;
(vi) receipt of notice that there has been a loss
of, or material order cancellation by, any major customer of the Company;
(vii) any mortgage, pledge, transfer of a security
interest in, or lien, created by the Company, with respect to any of its
material properties or assets, except liens for taxes not yet due or payable;
(viii) any declaration, setting aside or payment or
other distribution in respect of any of the Company's capital stock, or any
direct or indirect redemption, purchase or other acquisition of any of such
stock by the Company; or
(ix) to the Company's knowledge, any other event
or condition of any character that might materially and adversely affect the
assets, properties, financial condition, operating results or business of the
Company (as such business is presently conducted and as it is presently proposed
to be conducted).
(j) The Company, to its knowledge, has sufficient title
and ownership of all trademarks, service marks, trade names, copyrights, trade
secrets, information, proprietary rights and processes necessary for its
business as now conducted and as presently proposed to be conducted without any
conflict with or infringement of the rights of others. Other than an agreement
with the Company's fulfillment agent, Taymark, a division of Xxxxxx corporation,
which has a license to use the Company's trademark in connection with the
fulfillment of orders placed on the Company's web site, there are no outstanding
options, licenses, or agreements of any kind relating to the foregoing, nor is
the Company bound by or a party to any options, licenses or agreements of any
kind with respect to these trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, proprietary rights and processes of any
other person or entity. The Company has not received any communications alleging
that the Company has violated or, by conducting its business as now conducted
and as presently proposed to be conducted, would violate any of the trademarks,
service marks, trade names, copyrights or trade secrets or other proprietary
rights of any other person or entity. To the Company's knowledge, none of its
employees is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
the use of his or her best efforts to promote the interests of the Company or
that would conflict with the Company's business as
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presently proposed to be conducted. Neither the execution nor delivery of this
Agreement, nor the carrying on of the Company's business by the employees of the
Company, nor the conduct of the Company's business as now conducted and as
presently proposed to be conducted, will, to the Company's knowledge, conflict
with or result in a breach of the terms, conditions or provisions of, or
constitute a default under, any contract, covenant or instrument under which any
of such employees is now obligated.
(k) The Company has filed all tax returns and reports
(including information returns and reports) as required by law. These returns
and reports are true and correct in all material respects. The Company has paid
all taxes and other assessments due. The Company has never had any tax
deficiency proposed or assessed against it and has not executed any waiver of
any statute of limitations on the assessment or collection of any tax or
governmental charge. None of the Company's federal income tax returns and none
of its state income or sales or use tax returns has ever been audited by
governmental authorities. Since the date of the public documents, the Company
has not incurred any taxes, assessments or governmental charges other than in
the ordinary course of business. The Company has withheld or collected from each
payment made to each of its employees, the amount of all taxes (including, but
not limited to, federal income taxes, Federal Insurance Contribution Act taxes
and Federal Unemployment Tax Act taxes) required to be withheld or collected
therefrom, and has paid the same to the proper tax receiving officers or
authorized depositories.
(l) The Company is not bound by or subject to (and none
of its assets or properties is bound by or subject to) any written or oral,
express or implied, contract, commitment or arrangement with any labor union,
and no labor union has requested or, to the Company's knowledge, has sought to
represent any of the employees, representatives or agents of the Company. There
is no strike or other labor dispute involving the Company pending, or to the
Company's knowledge, threatened, that could have a material adverse effect on
the assets, properties, financial condition, operating results, or business of
the Company (as such business is presently conducted and as it is presently
proposed to be conducted), nor is the Company aware of any labor organization
activity involving its employees. The Company is not aware that any officer or
key employee, or that any group of key employees, intends to terminate their
employment with the Company, nor does the Company have a present intention to
terminate the employment of any of the foregoing. To its knowledge, the Company
has complied in all material respects with all applicable state and federal
equal employment opportunity and other laws related to employment.
(m) The Company has no contract, arrangement or
understanding with any broker, finder or similar agent with respect to the
transactions contemplated by this Agreement.
(n) The Company has all permits, licenses, and any
similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects, or financial condition of the Company, and the
Company believes it can obtain, without undue burden or expense, any similar
authority for the conduct of its business as planned to be conducted. The
Company is not in default in any material respect under any of such permits,
licenses or other similar authority.
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(o) Assuming the correctness of the representations and
warranties set forth in Sections 3.1(d) and 3.1(e) hereof, the offer and sale of
the Series F Preferred Stock and the issuance of the Common Stock, if any, to
the Purchaser hereunder is exempt from the registration and prospectus delivery
requirements of the Securities Act. In the case of each offer or sale of the
Series F Preferred Stock, no form of general solicitation or general advertising
was used by the Company and its representatives, including, but not limited to,
advertisements, articles, notices or other communications published in any
newspaper, magazine or similar medium or broadcast over television, radio or any
seminar or meeting whose attendees have been invited by any general solicitation
or general advertising.
IV. CONDITIONS TO CLOSING
The obligation of the Purchaser to purchase and pay for the
Series F Preferred Stock to be purchased hereunder at the Closing is subject to
the satisfaction of the following conditions precedent (unless waived by the
Purchaser). The Company shall use its best efforts to ensure that all conditions
to the Closing set forth in this Article IV are satisfied on or prior to the
Closing Date, including executing and delivering all documents required to be
delivered by the Company at the Closing.
4.1 Certificate of Designation. The Certificate of Designation
shall have been filed with and accepted by the Secretary of the State of
Delaware and evidence of such filing shall have been received.
4.2 Issuance of Purchased Securities. The Company shall have
duly issued and delivered to the Purchaser of the Series F Preferred Stock at
the Closing the certificate(s) for the number of the Series F Preferred Stock
purchased by the Purchaser.
4.3 Registration Rights Agreement. The Company shall have
executed and delivered that certain Registration Rights Agreement by and among
the Company and the Purchaser.
4.4 Officer's Certificate. The Company shall deliver a
certificate, executed by an officer of the Company hereof stating, among other
things, that (a) the representations and warranties contained in Article III are
true, correct and complete in all material respects on and as of the Closing
Date and (b) the Company has performed and complied in all material respects
with all agreements and conditions contained in the documents required to be
performed or complied with by it prior to or at the Closing.
4.5 All Proceedings to Be Satisfactory. All corporate and
other proceedings to be taken and all waivers, consents, approvals,
qualifications and registrations required to be obtained or effected in
connection with the execution, delivery and performance of this Purchase
Agreement and the other documents and the transactions shall have been taken,
obtained or effected (except for the filing of any notice subsequent to the
Closing that may be required under applicable Federal or state securities laws,
which notice shall be filed on a timely basis following the Closing as so
required), and all documents incident thereto shall be reasonably satisfactory
in
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form and substance to such Purchaser. The Purchaser shall have received all
such originals or certified or other copies of such documents as have been
reasonably requested by them.
4.6 No Litigation or Legislation. No legislation shall have
been enacted after the date hereof and no proceeding shall be pending which
prohibits or seeks to prohibit, or materially restricts or delays the
consummation of the transactions contemplated by the documents or materially
restricts or impairs the ability of the Purchaser to own Series F Preferred
Stock of the Company.
V. MISCELLANEOUS
5.1 Notices. All notices and other communications delivered
hereunder (whether or not required to be delivered hereunder) shall be deemed to
be sufficient and duly given if contained in a written instrument (a) personally
delivered, (b) sent by telecopier, (c) sent by nationally recognized overnight
courier guaranteeing next Business Day delivery or (d) sent by first class
registered or certified mail, postage prepaid, return receipt requested, in each
case addressed as follows:
(a) if to the Company:
iParty Corp.
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Chief Executive Officer
Telecopy: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx X. Xxxxxx, Esq.
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
(b) If to the Purchaser, to the address of the
Purchaser set forth on the signature page of this Purchase Agreement.
(c) Any such notice or communication shall be deemed
to have been received (i) when delivered, if personally delivered, (ii) when
sent, if sent by telecopy on a business day (or, if not sent on a business day,
on the next business day after the date sent by telecopy), (iii) on the next
business day after dispatch, if sent by nationally recognized, overnight courier
guaranteeing next business day delivery, and (iv) on the fifth (5th) business
day following the date on which the piece of mail containing such communication
is posted, if sent by mail.
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5.2 Amendments. This Purchase Agreement shall not be changed,
modified or amended except by a writing signed by the parties to be charged, and
this Purchase Agreement may not be discharged except by performance in
accordance with its terms or by a writing signed by the party to be charged.
5.3 Successor and Assigns. This Purchase Agreement shall be
binding upon and inure to the benefit of the parties hereto and to their
respective heirs, legal representatives, successors and assigns. This Purchase
Agreement and the documents referenced herein set 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.
5.4 Governing Law. Notwithstanding the place where this
Purchase Agreement may be executed by any of the parties hereto, the parties
expressly agree that all the terms and provisions hereof shall be construed in
accordance with and governed by the laws of the State of New York without regard
to such states laws regarding conflicts of laws. The parties hereby agree that
any dispute which may arise between them arising out of or in connection with
this Purchase Agreement shall be adjudicated before a court located in New York
City and they hereby submit to the exclusive jurisdiction of the courts of the
State of New York located in New York, New York and of the federal courts in the
Southern District of New York with respect to any action or legal proceeding
commenced by any party, and irrevocably waive any objection they now or
hereafter may have respecting the venue of any such action or proceeding brought
in such a court or respecting the fact that such court is an inconvenient forum,
relating to or arising out of this Purchase Agreement or any acts or omissions
relating to the sale of the securities hereunder, and consent to the service of
process in any such action or legal proceeding by means of registered or
certified mail, return receipt requested, in care of the address set forth below
or such other address as the undersigned shall furnish in writing to the other.
5.5 Counterparts. This Purchase Agreement may be executed in
counterparts. Upon the execution and delivery of this Purchase Agreement by the
Purchaser, this Purchase Agreement shall become a binding obligation of the
Purchaser with respect to the purchase of Series F Preferred Stock as herein
provided; subject, however, to the right hereby reserved to the Company to enter
into the same agreements with other Purchasers and to add and/or to delete other
persons as Purchasers.
5.6 Severability. The holding of any provision of this
Purchase Agreement to be invalid or unenforceable by a court of competent
jurisdiction shall not affect any other provision of this Purchase Agreement,
which shall remain in full force and effect.
5.7 Waiver. It is agreed that a waiver by either party of a
breach of any provision of this Purchase Agreement shall not operate, or be
construed, as a waiver of any subsequent breach by that same party.
5.8 Further Assurances. The parties agree to execute and
deliver all such further documents, agreements and instruments and take such
other and further action as may be necessary or appropriate to carry out the
purposes and intent of this Purchase Agreement.
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IN WITNESS WHEREOF, the parties have executed this Purchase Agreement
as of the day and year first written above.
iPARTY CORP.
By: /s/ Xxx Xxxxxxxx
-----------------------
Xxx Xxxxxxxx
Chief Executive Officer
PURCHASER
Patriot Capital Ltd.
By: /s/ Xxxxxxxx Xxxx
-----------------------
Xxxxxxxx Xxxx
Director
X.X. Xxx 000
Xxxx Xxxx
Xxxxxxx
Xxxxxxx Xxxxxx Xxxxxx
00
