EXHIBIT 2.02
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STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of April 10, 2000, by and among AUGUST PROJECT 1 CORP., a Florida
corporation ("August"), USWEBAUCTIONS, INC., a Florida corporation ("USWA"), and
the persons listed as "Shareholders" on the signature pages hereto (each a
"Shareholder" and collectively the "Shareholders").
RECITALS:
A. The Shareholders own all of the outstanding common stock (the "USWA
Common Stock") of USWA, which constitutes all of the issued and outstanding
capital stock of USWA.
B. The Shareholders desire to exchange all the outstanding shares (the
"USWA Shares") of USWA Common Stock for newly-issued shares of common stock of
August (the "August Common Stock"), on the terms and conditions set forth
herein. This transaction is intended to be tax-free under the Internal Revenue
Code of 1986, as amended (the "Code").
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual agreements, covenants
and premises set forth herein for certain other good and valuable consideration,
the receipt and adequacy which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. STOCK PURCHASE, PURCHASE PRICE AND RELATED TRANSACTIONS.
1.1. PURCHASE PRICE AND SALE. August shall acquire and the
Shareholders shall sell to August one hundred percent (100%) of the capital
stock of USWA in exchange for the issuance of the number of shares of August
Common Stock as set forth in Section 1.2 hereof.
1.2. PURCHASE PRICE. In consideration of the purchase by August of
the USWA Common Stock, August shall issue newly issued shares of August Common
Stock to the Shareholders in the denominations set forth opposite each
Shareholder's name on Schedule 1.2 attached hereto in exchange for all of the
USWA Shares. The total number of shares of August Common Stock issued to all the
Shareholders shall be Nine Million Seven Hundred Thirty-Four Thousand
(9,734,000) shares (the "Purchase Price"). Accordingly, after the Closing (as
defined herein), the Shareholders and Xxxx X. Xxxxxxxxxx will each own Four
Million Eight Hundred Sixty-Seven Thousand (4,867,000) shares, and third parties
will own a total of One Hundred Thirty-Three Thousand (133,000) shares.
1.3. CLOSING AND EFFECTIVE DATE. The closing shall occur as soon as
practicable after the satisfaction of the conditions precedent set forth in
Sections 6, 7 and 8 hereof, but in no event later than April 15, 2000 (the
"Closing"). The date of Closing is referred to herein as the "Closing Date." The
Closing shall take place at the principal offices of August's counsel, or at
such other place as may be mutually agreed upon by August and the Shareholders.
At the Closing, (i) the Shareholders shall deliver to August all original stock
certificates representing USWA Common Stock, together with stock powers duly
executed in blank; and (ii) August shall issue and deliver the Purchase Price to
the Shareholders.
1.4. FRACTIONAL SHARES; LOST CERTIFICATES. Neither certificates nor
scrip for fractional shares of August Common Stock shall be issued. Any
fractional interest in August Common Stock to be issued pursuant this Agreement
shall be rounded up or down to the nearest whole share. August shall deliver the
pro-rata portion of the Purchase Price attributable to any certificate which has
been lost or destroyed upon receipt of evidence satisfactory to August and its
counsel of ownership of the shares of USWA Common Stock represented thereby and
of appropriate indemnification to August.
2. ADDITIONAL AGREEMENTS.
2.1. ACCESS AND INSPECTION. Each party hereto has allowed the other
parties (as applicable) and their authorized representatives full access to all
of the properties, books, contracts, commitments and records of the other party
for the purpose of making such investigations as each party has reasonably
requested in connection with the transactions contemplated hereby.
2.2. CONFIDENTIAL TREATMENT OF INFORMATION. From and after the date
hereof, the parties hereto shall and shall cause their representatives to hold
in confidence this Agreement (including the Schedules hereto), all matters
relating hereto and all data and information obtained with respect to the other
parties or their business, except such data or information as is published or is
a matter of public record, or as compelled by legal process. In the event this
Agreement is terminated pursuant to Section 10 hereof, each party shall promptly
return to the other(s) any statements, documents, schedules, exhibits or other
written information obtained from them in connection with this Agreement, and
shall not retain any copies thereof.
2.3. PUBLIC ANNOUNCEMENTS. The parties will consult with each other
before issuing any press releases or otherwise making any public statement with
respect to this Agreement or any of the transactions contemplated hereby and no
party will issue any such press release or make any such public statement
without the prior written consent of the other parties, except as may be
required by law or by the rules and regulations of any governmental authority or
securities exchange.
2.4. SECURITIES LAW MATTERS.
2.4.1. PRIVATE PLACEMENT. The issuance of the August Shares to
the Shareholders hereunder shall not be registered under the Securities Act of
1933, as amended, (the "Securities Act") by reason of the exemption provided by
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Section 4(2) thereof, and such shares may not be further transferred unless such
transfer is registered under applicable securities laws or, in the opinion of
August's counsel, such transfer complies with an exemption from such
registration. All certificates evidencing the August Shares to be issued to
Shareholders shall be legended to reflect the foregoing restriction.
2.5. FURTHER ASSURANCES. The parties shall deliver any and all other
instruments or documents required to be delivered pursuant to, or necessary or
proper in order to give effect to, the provisions of this Agreement, including
without limitation, all necessary stock powers and such other instruments of
transfer as may be necessary or desirable to transfer ownership of the USWA
Common Stock to August and to consummate the transactions contemplated by this
Agreement.
2.6. EMPLOYMENT AGREEMENTS. At Closing, each of Xxx Xxxxxxxx and
Xxxx Xxxxx shall execute and deliver an employment agreement (each, an
"Employment Agreement") with August in the form attached hereto as Exhibits "A"
and "B."
2.7. Consistent Tax Filing Position. Each of the parties hereto
shall file all Federal income tax returns in a manner consistent with the
intended tax-free nature of this transaction.
3. REPRESENTATIONS, COVENANTS AND WARRANTIES OF THE SHAREHOLDERS AND
USWA.
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To further induce August to enter into this Agreement and to consummate
the transactions contemplated hereby, USWA and the Shareholders each hereby
jointly and severally represent and warrant to and covenant with August as
follows:
3.1. ORGANIZATION AND QUALIFICATION: ABSENCE OF SUBSIDIARIES. USWA
is a corporation duly organized and validly existing and in good standing under
the laws of the State of Florida and has the requisite power and authority to
own, lease and operate its properties and to carry on its business as it is
currently being conducted. USWA is in good standing in the State of Florida.
USWA is duly qualified or licensed and is in good standing, in each jurisdiction
where the character of the properties owned, leased or operated by it or the
nature of its business makes such qualification or licensing necessary, except
for such failures to be so qualified or licensed and in good standing that would
not, individually or in the aggregate, have a material adverse effect on the
business, properties, assets, financial condition, prospects or future business
of USWA (collectively, "USWA Material Adverse Effect"). USWA does not have any
subsidiaries nor an equity interest in any partnerships or joint venture
arrangements or other business entity.
3.2. CAPITALIZATION AND RELATED MATTERS.
3.2.1. Shares; Capitalization. The authorized capital stock of
USWA consists solely of _______ shares of common stock, of which ________ shares
are issued and outstanding and none are held in its treasury. All of the USWA
Shares are owned of record, legally and beneficially by the Shareholders. The
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USWA Shares are free and clear of any and all security interests, encumbrances,
and rights of any kind or nature whatsoever (collectively, "Encumbrances"), and
upon delivery of the USWA Shares hereunder, August will acquire title thereto,
free and clear of any and all Encumbrances. Other than voting rights, redemption
rights and such other rights conferred by USWA's charter documents and by
applicable Florida statutes, there exist no Securities Rights (as defined
herein) with respect to the USWA Shares. All rights and powers to vote the USWA
Shares are held exclusively by the Shareholders. All of the USWA Shares are
validly issued, fully paid and nonassessable, were not issued in violation of
the terms of any agreement or other understanding, and were issued in compliance
with all applicable federal and state securities or "blue sky" laws and
regulations. The certificates representing the USWA Shares to be delivered to
August at the Closing are, and the signatures and endorsements thereof or stock
powers relating thereto will be, valid and genuine. For the purposes of this
section, "Securities Rights" means, with respect to the USWA Shares (whether
issued or unissued) or any other securities convertible into or exchangeable for
USWA Shares, and includes all written or unwritten contractual rights relating
to the issuance, sale, assignment, transfer, purchase, redemption, conversion,
exchange, registration or voting of the USWA Shares and all rights conferred by
USWA's governing documents and by any applicable agreement.
3.2.2. LIABILITIES AND OBLIGATIONS. USWA has no debt,
obligation or liability, absolute, fixed, contingent or otherwise, of any nature
whatsoever, whether due or to become due, including any unasserted claim,
whether incurred directly or by any predecessor thereto, and whether arising out
of any act, omission, transaction, circumstance, sale of goods or services,
state of facts or other condition, which individually or in the aggregate would
have a USWA Material Adverse Effect except: (i) those reflected or reserved
against on the USWA Financial Statements (as defined herein) in the amounts
shown therein; and (ii) those that have arisen in the ordinary course of
business of USWA after the Balance Sheet Date (as defined herein) through the
Closing Date, none of which, individually or in the aggregate, has had or will
have a USWA Material Adverse Effect on the business or financial condition of
USWA.
3.3. CERTIFICATE OF INCORPORATION AND BY-LAWS. USWA has heretofore
made available to August a complete and correct copy of the Certificate of
Incorporation and the By-Laws of USWA. Such Certificate of Incorporation and
By-Laws are in full force and effect.
3.4. AUTHORITY RELATIVE TO THIS AGREEMENT. USWA and each Shareholder
has all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated by this Agreement. Each Shareholder has full right and
capacity to enter into this Agreement and to carry out his obligations
hereunder. The execution and delivery of this Agreement by USWA and each
Shareholder, the performance by each such Shareholder of his obligations
hereunder and the consummation by USWA of the transactions contemplated by this
Agreement have been duly authorized by all necessary action on the part of USWA
or such Shareholders as are necessary to authorize this Agreement or to
consummate the transactions contemplated by this Agreement. This Agreement has
been duly and validly executed and delivered by USWA and each Shareholder and
constitutes the legal, valid and binding obligations of USWA and each
Shareholder, enforceable against USWA and each Shareholder in accordance with
its terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or other similar laws of general application
affecting the enforcement of creditors' rights generally.
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3.5. PERMITS AND LICENSES; COMPLIANCE. USWA is in possession of all
permits and licenses necessary for the conduct of its business and, as of the
date hereof, no suspension or cancellation of any such permits or licenses is
pending or, to the knowledge of each Shareholder and USWA after reasonable
investigation, threatened, except where the failure to possess, or the
suspension or cancellation of, any such permits or licenses would not,
individually or in the aggregate, have a USWA Material Adverse Effect. To the
best knowledge of each Shareholder and USWA, USWA is not in conflict with, or in
default or violation of, (a) any law applicable to USWA or by which any property
or asset of USWA is bound or (b) any permit or license, other than conflicts or
violations which, individually or in the aggregate, would not have a USWA
Material Adverse Effect.
3.6. FINANCIAL STATEMENTS. True and complete copies of (a) the
unaudited balance sheet of USWA for the fiscal period ended as of __________
(the "Balance Sheet Date") and the related unaudited statements of income and
retained earnings for the period from _______ through _______ with all related
notes and schedules thereto, and (b) the unaudited balance sheet of USWA for the
____ month period ending _______________ and the related monthly statements of
income of USWA (collectively referred to herein as the "USWA Financial
Statements") have been delivered by USWA prior to Closing. The USWA Financial
Statements (i) were prepared in accordance with the books of account and other
financial records of USWA, (ii) present fairly the financial condition and
results of operations of USWA as of the dates thereof or for the periods covered
thereby, (iii) have been prepared in accordance with U.S. GAAP (except as may be
indicated in the notes thereto) applied on a basis consistent with the past
practices of USWA, and (iv) include all adjustments (consisting only of normal
recurring accruals) that are necessary for a fair presentation of the financial
condition of USWA and the results of the operations of USWA as of the dates
thereof or for the periods covered thereby (subject, in the case of USWA Interim
Financial Statement, to normal recurring year-end adjustments).
3.7. Absence of Litigation. There is no legal, equitable, or
administrative action or proceeding pending or, to the knowledge of USWA or the
individual Shareholders after reasonable investigation, threatened against USWA
or any property or asset of USWA.
3.8. BENEFIT PLANS. There are no employee benefit plans (as defined
in Section 3(3) of ERISA), bonus, stock option, stock purchase, restricted
stock, incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans, programs or
arrangements to which USWA is a party, with respect to which USWA has any
obligation, or which are maintained, contributed to, or sponsored by USWA for
the benefit of any current or former employee, officer, or director of USWA.
3.9. INTELLECTUAL PROPERTY.
3.9.1. Schedule 3.9.1 sets forth a true and complete list of
all intellectual property owned by USWA (the "USWA Intellectual Property"). The
USWA Intellectual Property constitutes all the intellectual property used or
contemplated to be used by USWA in the conduct of its business, and there are no
other items of intellectual property that are material to USWA or the business
of USWA.
3.9.2. No claim has been asserted to the best knowledge of
each Shareholder and USWA that the use of USWA Intellectual Property or the
conduct of the business of USWA does or may infringe upon such rights of any
third party.
3.9.3. USWA is the owner of the entire, title and interest in
and to the Intellectual Property, free and clear of all Encumbrances, and has
the right to use, all USWA Intellectual Property in the continued operations of
USWA.
3.9.4. The USWA Intellectual Property has not been adjudged
invalid or unenforceable in whole or part by any governmental authority.
3.9.5. To the knowledge of USWA and the individual
Shareholders after reasonable investigation, no person or entity is engaging in
any activity that infringes upon USWA Intellectual Property or upon the rights
of USWA therein. The consummation of the transactions contemplated by this
Agreement will not result in the termination or impairment of any of USWA
Intellectual Property.
3.9.6. USWA has not granted to, nor received from, any third
party any license or sublicense of intellectual property.
3.10. TAXES. USWA has (a) filed all federal, state, local and
foreign tax (as defined herein) returns required to be filed by it prior to the
date of this Agreement, (b) paid or accrued all Taxes which are due. For
purposes of this Agreement, "Tax" or "Taxes" means any and all taxes, fees,
levies, duties, tariffs, imposts and other charges of any kind (together with
any and all interest, penalties, additions to tax and additional amounts imposed
with respect thereto) imposed by any government or taxing authority, including,
without limitation: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the nature or
excise, withholding, ad valorem, stamp, transfer, value added or gains taxes,
license, registration and documentation fees, and custom duties, tariffs and
similar charges.
3.11. ASSETS. USWA owns, leases or has the right to use all the
properties and assets used or contemplated to be used in the conduct of its
business. USWA has good and marketable title to, or, in the case of leased or
subleased assets, valid and subsisting leasehold interests in, all the assets,
free and clear of all Encumbrances.
3.12. EXECUTION; NO INCONSISTENT AGREEMENTS; ETC. The execution and
delivery of this Agreement by the Shareholders and USWA does not, and the
consummation of the transactions contemplated hereby will not, constitute a
breach or violation of the charter or by-laws of USWA, or a default under any of
the terms, conditions or provisions of (or an act or omission that would give
rise to any right of termination, cancellation or acceleration under) any
material note, bond, mortgage, lease, indenture, agreement or obligation to
which USWA or any Shareholder is a party, pursuant to which USWA or any
Shareholder otherwise receives benefits, or to which any of the properties of
USWA or any Shareholder is subject.
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3.13. CORPORATE RECORDS. The statutory records, including the stock
register and minute books of USWA, fully reflect all issuances, transfers and
redemptions of USWA's capital stock, correctly show and will correctly show the
total number of shares of its capital stock issued and outstanding on the date
hereof and on the Closing Date, the charter or other organizational documents
and all amendments thereto, and their by-laws as amended and currently in force.
3.14. ABSENCE OF CHANGES. From the Balance Sheet Date to the date of
this Agreement, there has been no adverse change in the business, assets,
liabilities, results of operations or financial condition of USWA or its
relationships with suppliers, customers, employees, lessors or others, other
than changes in the ordinary course of business, none of which, singularly or in
the aggregate, have had or will have a USWA Material Adverse Effect.
3.15. COMPLIANCE WITH LAW. The business and activities of USWA have
at all times been conducted in accordance with its articles of incorporation and
by-laws and, to the best knowledge of each Shareholder and USWA, any applicable
law, regulation, ordinance, order, license, permit, rule, injunction or other
restriction or ruling of any court or administrative or governmental agency,
ministry, or body, except where the failure to do so would not result in a USWA
Material Adverse Effect.
3.16. CONTINGENCIES. There are no actions, suits, claims or
proceedings pending, or, to the knowledge of USWA and each Shareholder after
reasonable investigation, threatened against, by or affecting USWA in any court
or before any arbitrator or governmental agency that may have a USWA Material
Adverse Effect or which could adversely affect the right or ability of USWA to
consummate the transactions contemplated hereby. To the knowledge of each
Shareholder after reasonable investigation, there is no valid basis upon which
any such action, suit, claim, or proceeding may be commenced or asserted against
USWA. There are no unsatisfied judgments against USWA and no consent decrees or
similar agreements to which USWA is subject and which could have a USWA Material
Adverse Effect.
3.17. MATERIAL CONTRACTS. There are no contracts of USWA which
involve consideration in excess of the equivalent of $2,500.00 or have a term of
one year or more (collectively, the "Material Contracts").
3.18. INSURANCE. All policies of insurance presently maintained by
USWA are in full force and effect, and all premiums due thereon have been paid.
USWA has received no notices of cancellation with respect thereto.
3.19. EMPLOYMENT AND LABOR MATTERS. Schedule 3.19 sets forth the
name, position, employment date, and current compensation (base and bonus) of
each employee or intended employee of USWA.
3.20. ENVIRONMENTAL MATTERS. USWA is not in violation, in any
material respect, of any Environmental Law (as defined herein); USWA has
received all permits and approvals with respect to emissions into the
environment and the proper collection, storage, transport, distribution or
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disposal of Wastes (as defined herein) and other materials required for the
operation of its business at present operating levels; and USWA is not liable or
responsible for any clean up, fines, liability or expense arising under any
Environmental Law, as a result of the disposal of Wastes or other materials in
or on the property of USWA (whether owned or leased), or in or on any other
property, including property no longer owned, leased or used by USWA. As used
herein, (a) "Environmental Laws" means, collectively, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the
Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation
and Recovery Act, the Toxic Substances Control Act, as amended, the Clean Air
Act, as amended, the Clean Water Act, as amended, any other "Superfund" or
"Superlien" law or any other federal, or applicable state or local statute, law,
ordinance, code, rule, regulation, order or decree (foreign or domestic)
regulating, relating to, or imposing liability or standards of conduct
concerning, Wastes, or the environment; and (b) "Wastes" means and includes any
hazardous, toxic or dangerous waste, liquid, substance or material (including
petroleum products and derivatives), the generation, handling, storage,
disposal, treatment or emission of which is subject to any Environmental Law.
3.21. INVENTORIES. The amounts stated as inventories of USWA on the
USWA Financial Statements reflect fairly the products, materials and supplies
and spare parts held by USWA. The inventory shown on the USWA Financial
Statements (i) represents items of a quality and quantity usable and saleable in
the ordinary course of business, and (ii) conforms in all material respects to
customary trade standards for such inventory in USWA's current markets. USWA has
not given any express written warranty with respect to any goods or products
sold.
3.22. RECEIVABLES. All notes receivable and accounts receivable
shown on the USWA Financial Statements and all such receivables now held by USWA
were and are valid and collectible obligations of the respective makers thereof
and were not and are not subject to any offset or counterclaim; except for a
portion of such receivables, not to exceed the amount, if any, shown as the
allowance for bad debt on the USWA Financial Statements, which may prove not to
be collectible.
3.23. AGREEMENTS AND TRANSACTIONS WITH RELATED PARTIES. USWA is not
a party to any contract, agreement, lease or transaction with, or any other
commitment to, (i) a Shareholder, (ii) any person related by blood, adoption or
marriage to Shareholder, (iii) any director or officer of USWA, (iv) any
corporation or other entity in which any of the foregoing parties has, directly
or indirectly, at least five percent (5.0%) beneficial interest in the capital
stock or other type of equity interest in such corporation or other entity, or
(v) any partnership in which any such party is a general partner or a limited
partner having a five percent (5%) or more interest therein (any or all of the
foregoing being herein referred to as a "Related Party" and collectively as the
"Related Parties").
3.24. FULL DISCLOSURE. No representation or warranty of USWA or the
Shareholders contained in this Agreement, and none of the statements or
information concerning USWA contained in this Agreement and the Exhibits and
Schedules hereto, contains or will contain any untrue statement of a material
fact nor will such representations, warranties, covenants or statements taken as
a whole omit a material fact required to be stated therein or necessary in order
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to make the statements therein, in light of the circumstances under which they
were made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF AUGUST.
To induce USWA and the Shareholders to enter into this Agreement and to
consummate the transactions contemplated hereby, August represents and warrants
to and covenants with USWA and the Shareholders as follows:
4.1. ORGANIZATION. August is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida. August is
entitled to own or lease its properties and to carry on its business as and in
the places where such business is now conducted, and August is duly licensed and
qualified in all jurisdictions where the character of the property owned by it
or the nature of the business transacted by it makes such license or
qualification necessary, except where such failure would not result in a
material adverse effect on August.
4.2. CAPITALIZATION AND RELATED MATTERS.
4.2.1. August has authorized capital stock consisting of Fifty
Million (50,000,000) shares of common stock, $0.001 par value per share, of
which Five Million (5,000,000) shares were issued and outstanding as of the date
hereof. The August Shares will be, as of the Closing Date, duly and validly
authorized and issued, and fully paid and non-assessable, and will be issued to
the Shareholders free of all Encumbrances, claims and liens whatsoever.
4.2.2. August does not have outstanding any securities
convertible into capital stock, nor any rights to subscribe for or to purchase,
or any options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, its capital stock or securities convertible into its
capital stock.
4.3. EXECUTION; NO INCONSISTENT AGREEMENTS; ETC.
4.3.1. The execution and delivery of this Agreement and the
performance of the transactions contemplated hereby have been duly and validly
authorized and approved by August and this Agreement is a valid and binding
agreement of August, enforceable against August in accordance with its terms,
except as such enforcement may be limited by bankruptcy or similar laws
affecting the enforcement of creditors' rights generally, and the availability
of equitable remedies.
4.3.2. The execution and delivery of this Agreement by August
does not, and the consummation of the transactions contemplated hereby will not,
constitute a breach or violation of the charter or by-laws of August, or a
default under any of the terms, conditions or provisions of (or an act or
omission that would give rise to any right of termination, cancellation or
acceleration under) any material note, bond, mortgage, lease, indenture,
agreement or obligation to which August is a party, pursuant to which it
otherwise receives benefits, or by which any of its properties may be bound.
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4.4. FINANCIAL STATEMENTS. Prior to Closing, August shall deliver to
USWA the audited balance sheets of August as of December 31, 1999 (the "August
Financial Statement"). The August Financial Statement has been prepared in
accordance with GAAP, applied on a consistent basis (except that the unaudited
statements do not contain all the disclosures required by GAAP). Since December
31, 1999, there has been no material adverse change in the assets or
liabilities, in the business or condition, financial or otherwise, of August, or
in its results of operations.
4.5. LIABILITIES. August has no material debt, liability or
obligation of any kind, whether accrued, absolute, contingent or otherwise,
except those reflected on the August Financial Statements, including the notes
thereto and the liabilities incurred in the ordinary course of business since
December 31, 1999.
4.6. CONTINGENCIES. There are no actions, suits, claims or
proceedings pending or, to August's knowledge, threatened, against, by or
affecting August in any court or before any arbitrator or governmental agency
which could have a material adverse effect on August or which could materially
and adversely affect the right or ability of August to consummate the
transactions contemplated hereby. To the knowledge of August, there is no valid
basis upon which any such action, suit, claim or proceeding may be commenced or
asserted against August. There are no unsatisfied judgments against August and
no consent decrees or similar agreements to which August is subject and which
could have a material adverse effect on August or which could materially and
adversely affect the right or ability of August to consummate the transactions
contemplated hereby. August's operations are contingent upon its ability to
obtain additional financing.
4.7. FULL DISCLOSURE. No representation or warranty of August
contained in this Agreement, and none of the statements or information
concerning August contained in this Agreement and the Schedules, contains or
will contain any untrue statement of a material fact nor will such
representations, warranties, covenants or statements taken as a whole omit a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
5. CONDUCT OF BUSINESS OF USWA PENDING CLOSING.
5.1. Conduct of Business. USWA and the Shareholders covenant and
agree that, between the date hereof and the Closing Date, the business of USWA
shall be conducted only in the ordinary course and consistent with past
practice.
5.2. No Material Changes. USWA shall not materially alter its
organization, capitalization, or financial structure, practices or operations.
Without limiting the generality of the foregoing:
(a) no change shall be made in the articles of incorporation or
by-laws of USWA;
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(b) no change shall be made in the authorized or issued capital
stock of USWA;
(c) USWA shall not issue or grant any right or option to
purchase or otherwise acquire any of its capital stock or other securities; and
(d) no dividend or other distribution or payment shall be
declared or made with respect to any of the capital stock of USWA.
5.3. COMPENSATION. No increase shall be made in the compensation or
employee benefits payable or to become payable to any director, officer,
employee or agent of USWA, and no bonus or profit-share payment or other
arrangement (whether current or deferred) shall be made to or with any such
director, officer, employee or agent, except in the ordinary course of business
and consistent with prior practices.
5.4. NOTIFICATION. Each party to this Agreement shall promptly
notify the other parties in writing of the occurrence, or threatened occurrence,
of any event that would constitute a breach or violation of this Agreement by
any party or that would cause any representation or warranty made by the
notifying party in this Agreement to be false or misleading in any respect. The
Shareholders shall promptly notify August of any event of which any Shareholder
obtains knowledge which could have a Material Adverse Effect.
6. CONDITIONS TO OBLIGATIONS OF ALL PARTIES.
The obligation of the parties hereto to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, on or before the
Closing, of each of the following conditions; any or all of which may be waived
in whole or in part by the joint agreement of the parties hereto:
6.1. ABSENCE OF ACTIONS. No action or proceeding shall have been
brought or threatened before any court or administrative agency to prevent the
consummation or to seek damages in a material amount by reason of the
transactions contemplated hereby, and no governmental authority shall have
asserted that the within transactions (or any other pending transaction
involving August, the Shareholders or USWA when considered in light of the
effect of the within transactions) shall constitute a violation of law or give
rise to material liability on the part of the Shareholders, USWA or August.
6.2. CONSENTS. The parties shall have received from any suppliers,
lessors, lenders, lien holders or governmental authorities, bodies or agencies
having jurisdiction over the transactions contemplated by this Agreement, or any
part hereof, such consents, authorizations and approvals as are necessary for
the consummation hereof.
7. CONDITIONS TO OBLIGATIONS OF AUGUST.
All obligations of August to consummate the transactions contemplated
by this Agreement are subject to the fulfillment and satisfaction of each and
11
every of the following conditions on or prior to the Closing Date, any or all of
which may be waived in whole or in part by August:
7.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Section 3 of this Agreement and in any certificate,
instrument, schedule, agreement or other writing delivered by or on behalf of
USWA or the Shareholders in connection with the transactions contemplated by
this Agreement shall be true, correct and complete in all material respects
(except for representations and warranties which are by their terms qualified by
materiality, which shall be true, correct and complete in all respects) as of
the date when made and shall be deemed to be made again at and as of the Closing
Date and shall be true, correct and complete at and as of such time in all
material respects (except for representations and warranties which are by their
terms qualified by materiality, which shall be true, correct and complete in all
respects).
7.2. COMPLIANCE WITH AGREEMENTS AND CONDITIONS. USWA and the
Shareholders shall have performed and complied with all material agreements and
conditions required by this Agreement to be performed or complied with by them
prior to or on the Closing Date.
7.3. ABSENCE OF MATERIAL ADVERSE CHANGES. No material adverse change
in the business, assets, financial condition, or prospects of USWA shall have
occurred.
7.4. CERTIFICATE OF USWA AND SHAREHOLDERS. USWA and the Shareholders
shall have executed and delivered, or caused to be executed and delivered, to
August one or more certificates, dated the Closing Date, certifying in such
detail as August may reasonably request to the fulfillment and satisfaction of
the conditions specified in Sections 7.1 through 7.3 above.
8. CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS.
All of the obligations of the Shareholders to consummate the
transactions contemplated by this Agreement are subject to the fulfillment and
satisfaction of each and every of the following conditions on or prior to the
Closing, any or all of which may be waived in whole or in part, by the
Shareholders:
8.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Section 4 of this Agreement and in any certificate,
instrument, schedule, agreement or other writing delivered by or on behalf of
August in connection with the transactions contemplated by this Agreement shall
be true, correct and complete in all material respects (except for
representations and warranties which are by their terms qualified by
materiality, which shall be true, correct and complete in all respects) when
made and shall be deemed to be made again at and as of the Closing Date and
shall be true, correct and complete at and as of such time in all material
respects (except for representations and warranties which are by their terms
qualified by materiality, which shall be true, correct and complete in all
respects).
12
8.2. COMPLIANCE WITH AGREEMENTS AND CONDITIONS. August shall have
performed and complied with all material agreements and conditions required by
this Agreement to be performed or complied with by August prior to or on the
Closing Date.
8.3. ABSENCE OF MATERIAL ADVERSE CHANGES. No material adverse change
in the business, assets, financial condition, or prospects of August, taken as a
whole, shall have occurred, and no event shall have occurred which has had, or
will have a material adverse effect on the business, assets, financial condition
or prospects of August and its subsidiaries, taken as a whole.
8.4. CERTIFICATE OF AUGUST. August shall have delivered to the
Shareholders a certificate, executed by an executive officer and dated the
Closing Date, certifying in such detail as counsel for the Shareholder may
reasonably request to the fulfillment and satisfaction of the conditions
specified in Sections 8.1 through 8.3 above.
9. INDEMNIFICATION.
9.1. INDEMNIFICATION BY SHAREHOLDERS AND USWA. Subject to Section
9.5, the Shareholders and USWA (hereinafter collectively called the
"Indemnitor") shall jointly and severally defend, indemnify and hold harmless
August, its direct and indirect parent corporations, subsidiaries (including
USWA after Closing) and affiliates, their officers, directors, employees and
agents (hereinafter collectively called "Indemnitees") against and in respect of
any and all loss, damage, liability, fine, penalty, cost and expense, including
reasonable attorneys' fees and amounts paid in settlement (collectively,
"Indemnified Losses"), suffered or incurred by any Indemnitee by reason of, or
arising out of:
(a) any misrepresentation, breach of warranty or breach or
non-fulfillment of any agreement of any Shareholder or USWA contained in this
13
Agreement or in any certificate, schedule, instrument or document delivered to
August by or on behalf of the Shareholders or USWA pursuant to the provisions of
this Agreement (without regard to materiality thresholds contained therein); and
(b) any liabilities of USWA of any nature whatsoever
(including tax liability, penalties and interest), whether accrued, absolute,
contingent or otherwise arising from or relating to the Shareholders' ownership
or operation of USWA prior to the Closing Date.
9.2. INDEMNIFICATION BY AUGUST. Subject to Section 9.5, August
(hereinafter called the "Indemnitor") shall defend, indemnify and hold harmless
each Shareholder and USWA (hereinafter called "Indemnitee") against and in
respect of any and all loss, damage, liability, cost and expense, including
reasonable attorneys' fees and amounts paid in settlement (collectively,
"Indemnified Losses"), suffered or incurred by Indemnitee by reason of or
arising out of:
(a) any misrepresentation, breach of warranty or breach or
non-fulfillment of any material agreement of August contained in this Agreement
or in any other certificate, schedule, instrument or document delivered to the
Shareholders by or on behalf of August pursuant to the provisions of this
Agreement; and
(b) any liabilities of any nature whatsoever (including tax
liability, penalties and interest), whether accrued, absolute, contingent or
otherwise, arising from August's ownership or operation of USWA after Closing,
but only so long as such liability is not the result of an act or omission, of
USWA, or any Shareholder occurring prior to Closing.
9.3. DEFENSE OF CLAIMS.
9.3.1. Should any claim or action by a third party arise after
the Closing Date for which an Indemnitor is liable under the terms of this
Agreement, the Indemnitee shall notify Indemnitor within ten (10) days after
such claim or action arises and is known to Indemnitee, and shall give the
Indemnitor a reasonable opportunity to participate in any proceedings and to
settle or defend any such claim or action. The expenses of all proceedings,
contests or lawsuits with respect to such claims or actions shall be borne by
the Indemnitor. If the Indemnitor wishes to assume the defense of such claim or
action, the Indemnitor shall give written notice to the Indemnitees within ten
(10) days after notice from the Indemnitees of such claim or action, and the
Indemnitor shall thereafter assume the defense of any such claim or liability,
through counsel reasonably satisfactory to the Indemnitees, provided that
Indemnitees may participate in such defense at their own expense, and the
Indemnitor shall, in any event, have the right to control the defense of the
claim or action.
9.3.2. If the Indemnitor shall not assume the defense of, or
if after so assuming it shall fail to defend, any such claim or action, the
Indemnitees may defend against any such claim or action in such manner as they
may deem appropriate and the Indemnitees may settle such claim or litigation on
such terms as they may deem appropriate but subject to the Indemnitor's
approval, such approval not to be unreasonably withheld; provided, however, that
any such settlement shall be deemed approved by the Indemnitor if the Indemnitor
fails to object thereto, by written notice to the Indemnitees, within fifteen
(15) days after the Indemnitor's receipt of a written summary of such
settlement. The Indemnitor shall promptly reimburse the Indemnitees for the
amount of all expenses, legal and otherwise, incurred by the Indemnitees in
connection with the defense and settlement of such claim or action.
9.3.3. If a non-appealable judgment is rendered against any of
the Indemnitees in any action covered by the indemnification hereunder, or any
lien attaches to any of the assets of any of the Indemnitees, the Indemnitor
shall immediately upon such entry or attachment pay such judgment in full or
discharge such lien unless, at the expense and direction of the Indemnitor, an
appeal is taken under which the execution of the judgment or satisfaction of the
lien is stayed. If and when a final judgment is rendered in any such action, the
Indemnitor shall forthwith pay such judgment or discharge such lien before any
of the Indemnitees is compelled to do so.
9.4. WAIVER. The failure of any Indemnitee to give any notice or to
take any action hereunder shall not be deemed a waiver of any of the rights of
such Indemnitee hereunder, except to the extent that Indemnitor is actually
prejudiced by such failure.
14
9.5. LIMITATIONS ON INDEMNIFICATION. Notwithstanding anything to the
contrary contained in this Agreement:
9.5.1. TIME LIMITATION. No party shall be responsible hereunder
for any Indemnified Loss unless the Indemnitee shall have provided such party
with written notice containing a reasonable description of the claim, action or
circumstances giving rise to such Indemnified Loss within one (1) year after the
Closing Date (the "Indemnity Notice Period"); provided, however, that there
shall be no limit on the Indemnity Notice Period for indemnity claims: (i)
against Shareholders for Indemnified Losses arising or resulting from a breach
of a representation or warranty of Shareholders relating to Environmental Laws,
Taxes or any liability of USWA relating to the handling or disposal of Wastes or
the failure to comply with any Environmental Law; and (ii) against any party
based on fraud, intentional breach or misrepresentation.
9.5.2. CAPS ON LOSSES. The aggregate liability of the
Shareholders after Closing for Indemnified Losses shall not exceed the aggregate
August Common Stock issued to the Shareholders, with each Shareholder's share of
the aggregate liability limited to August Common Stock issued to such
Shareholder. In the event of a claim of liability, the value of such shares
shall be determined by the Board of Directors of August whose determination
shall be final and binding on all parties hereto. The aggregate liability of
August after Closing for Indemnified Losses shall not exceed an amount equal to
the Purchase Price.
10. TERMINATION.
10.1. Termination. This Agreement may be terminated at any time on
or prior to the Closing:
(a) By mutual consent of the parties hereto; or
(b) At the election of August if: (i) a Shareholder or USWA
has breached or failed to perform or comply with any of their representations,
warranties, covenants or obligations under this Agreement; or (ii) any of the
conditions precedent set forth in Section 6 or 7 is not satisfied as and when
required by this Agreement; or (iii) the Closing has not been consummated by
April 15, 2000; or
(c) At the election of the Shareholders if: (i) August has
breached or failed to perform or comply with any of its representations,
warranties, covenants or obligations under this Agreement; or (ii) any of the
conditions precedent set forth in Section 6 or 8 is not satisfied as and when
required by this Agreement; or (iii) if the Closing has not been consummated by
April 15, 2000.
10.2. MANNER AND EFFECT OF TERMINATION. Written notice of any
termination ("Termination Notice") pursuant to this Section 10 shall be given by
the party electing termination of this Agreement ("Terminating Party") to the
other party or parties (collectively, the "Terminated Party"), and such notice
shall state the reason for termination. The party or parties receiving
Termination Notice shall have a period of ten (10) days after receipt of
Termination Notice to cure the matters giving rise to such termination to the
reasonable satisfaction of the Terminating Party. If the matters giving rise to
termination are not cured as required hereby, this Agreement shall be terminated
effective as of the close of business on the tenth (10th) day following the
Terminated Party's receipt of Termination Notice. Upon termination of this
Agreement prior to the consummation of the Closing and in accordance with the
terms hereof, this Agreement shall become void and of no effect, and none of the
parties shall have any liability to the others, except that nothing contained
herein shall relieve any party from: (i) its obligations under Section 2.2; or
(ii) liability for its intentional breach of any representation, warranty or
covenant contained herein, or its intentional failure to comply with the terms
and conditions of this Agreement or to perform its obligations hereunder.
11. MISCELLANEOUS.
11.1. Notices.
11.1.1. All notices, requests, demands, or other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given upon delivery if delivered in person or if sent by Federal Express (or
similar recognized overnight courier service) to the parties at the following
addresses:
If to Shareholders: To the addresses contained on the signatures
page of this Agreement
If to August: August Project 1 Corp.
00 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxxxxx
With a copy to: Xxxxxxx X. Xxxxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx LLP
000 X. Xxxxxxxx Xxxx.
Xxxxx 0000, Xxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
If to USWA: USWebauctions, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 0
Xxxxxxxx, Xxxxxxx 00000
11.1.2. Notices may also be given in any other manner permitted
by law, effective upon actual receipt. Any party may change the address to which
notices, requests, demands or other communications to such party shall be
delivered or mailed by giving notice thereof to the other parties hereto in the
manner provided herein.
11.2. SURVIVAL. The representations, warranties, agreements and
indemnifications of the parties contained in this Agreement or in any writing
16
delivered pursuant to the provisions of this Agreement shall survive any
investigation heretofore or hereafter made by the parties and the consummation
of the transactions contemplated herein and shall continue in full force and
effect and survive after the Closing, subject to the limitations of Section 9.5.
11.3. COUNTERPARTS; INTERPRETATION. This Agreement may be executed
in any number of counterparts, each of which shall be deemed an original, and
all of which shall constitute one instrument. This Agreement supersedes all
prior discussions and agreements between the parties with respect to the subject
matter hereof, and this Agreement contains the sole and entire agreement among
the parties with respect to the matters covered hereby. All Schedules and
Exhibits hereto shall be deemed a part of this Agreement. This Agreement shall
not be altered or amended except by a written instrument signed by or on behalf
of all of the parties hereto. No ambiguity in any provision hereof shall be
construed against a party by reason of the fact it was drafted by such party or
its counsel. For purposes of this Agreement "herein," "hereby," "hereof,"
"hereunder," "herewith," "hereafter" and "hereinafter" and similar words refer
to this Agreement in its entirety, and not to any particular subsection or
paragraph. References to "including" means including without limiting the
generality of any description preceding such term. Nothing expressed or implied
in this Agreement is intended, or shall be construed, to confer upon or give any
person other than the parties hereto any rights or remedies under or by reason
of this Agreement.
11.4. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida. The parties
hereto agree that any claim, suit, action or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby shall be
submitted for adjudication exclusively in any state or federal court sitting in
Miami-Dade County, Florida and each party hereto expressly agrees to be bound by
such selection of jurisdiction and venue for purposes of such adjudication. Each
party (a) waives any objection which it may have that such court is not a
convenient forum for any such adjudication, (b) agrees and consents to the
personal jurisdiction of such court with respect to any claim or dispute arising
out of or relating to this Agreement or the transactions contemplated hereby and
(c) agrees that process issued out of such court or in accordance with the rules
of practice of such court shall be properly served if served personally or
served by certified mail or other form of substituted service, as provided under
the rules of practice of such court.
11.5. PARTIAL INVALIDITY AND SEVERABILITY. All rights and
restrictions contained herein may be exercised and shall be applicable and
binding only to the extent that they do not violate any applicable laws and are
intended to be limited to the extent necessary to render this Agreement legal,
valid and enforceable. If any terms of this Agreement not essential to the
commercial purpose of this Agreement shall be held to be illegal, invalid or
unenforceable by a court of competent jurisdiction, it is the intention of the
parties that the remaining terms hereof shall constitute their agreement with
respect to the subject matter hereof and all such remaining terms shall remain
in full force and effect. To the extent legally permissible, any illegal,
invalid or unenforceable provision of this Agreement shall be replaced by a
valid provision which will implement the commercial purpose of the illegal,
invalid or unenforceable provision.
11.6. Waiver. Any term or condition of this Agreement may be waived
at any time by the party which is entitled to the benefit thereof, but only if
17
such waiver is evidenced by a writing signed by such party. No failure on the
part of a party hereto to exercise, and no delay in exercising, any right, power
or remedy created hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or remedy by any such party
preclude any other future exercise thereof or the exercise of any other right,
power or remedy. No waiver by any party hereto to any breach of or default in
any term or condition of this Agreement shall constitute a waiver of or assent
to any succeeding breach of or default in the same or any other term or
condition hereof.
11.7. HEADINGS. The headings as to contents of particular paragraphs
of this Agreement are inserted for convenience only and shall not be construed
as a part of this Agreement or as a limitation on the scope of any terms or
provisions of this Agreement.
11.8. EXPENSES. Except as otherwise expressly provided herein, all
legal and other costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by August or the
Shareholders as each party incurs such expenses, and none of such expenses shall
be charged to or paid by USWA.
11.9. FINDER'S FEES. August represents to the Shareholders that no
broker, agent, finder or other party has been retained by it in connection with
the transactions contemplated hereby and that no other fee or commission has
been agreed by August to be paid for or on account of the transactions
contemplated hereby. The Shareholders represent to August that no broker, agent,
finder or other party has been retained by Shareholders or USWA in connection
with the transactions contemplated hereby and that no other fee or commission
has been agreed by the Shareholders or USWA to be paid for or on account of the
transactions contemplated hereby.
11.10. GENDER. Where the context requires, the use of the singular
form herein shall include the plural, the use of the plural shall include the
singular, and the use of any gender shall include any and all genders.
11.11. ACCEPTANCE BY FAX. This Agreement shall be accepted,
effective and binding, for all purposes, when the parties shall have signed and
transmitted to each other, by telecopier or otherwise, copies of the signature
pages hereto.
11.12. ATTORNEYS' FEES. In the event of any litigation or other
proceeding arising out of or in connection with this Agreement, the prevailing
party or parties shall be entitled to recover its or their reasonable attorneys'
fees and court costs from the other party or parties.
11.13. INDEPENDENT REPRESENTATION. Each party hereto acknowledges
and agrees that it has received independent legal counsel of its own choice and
that it has been sufficiently apprised of its rights and responsibilities with
regard to the substance of this Agreement. In addition, Shareholders and USWA
acknowledge that Xxxxxxxxxxx & Xxxxxxxx LLP ("K&L") is solely representing
August in connection with this Agreement and all of the other documents
associated with this transaction.
18
IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement or caused this Stock Purchase Agreement to be duly executed by their
duly authorized officers as of the date first above written.
AUGUST PROJECT 1 CORP.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
USWEBAUCTIONS, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
SHAREHOLDERS:
XXXX XXXXX XXX XXXXXXXX
------------------------------------ -----------------------------------
Address: Address:
---------------------------- ---------------------------
------------------------------------ -----------------------------------
------------------------------------ -----------------------------------
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SCHEDULE 1.2
------------------- ---------------------------------------------------- ---------------------------------- ----------------
SHAREHOLDER NUMBER OF SHARES
------------------- ---------------------------------------------------- ---------------------------------- ----------------
Xxxx Xxxxxxxx 4,867,000
Xxxx Xxxxx 4,867,000
20