STOCK PURCHASE AGREEMENT
EXHIBIT
99.2
________________________________
________________________________
This
Stock Purchase Agreement (this “Agreement”) is
made as of April 19, 2005 by and between Ariel Way, Inc., a Delaware corporation
(the “Company”), and
Cornell Capital Partners, LP, a Delaware limited partnership
(the “Purchaser”).
RECITAL:
The
Company would like to sell and issue to the Purchaser, and the Purchaser would
like to purchase from the Company, two million (2,000,000) shares (the
“Purchased
Shares”) of the
Series A Redeemable Preferred Stock of the Company (“Series
A Redeemable Preferred Stock”), with
the rights, preference and privileges set forth in a Certificate of Designation
filed by the Company with the Delaware Secretary of State, in the form attached
hereto as Exhibit
A (the
“Certificate
of Designation”), on
the terms and conditions set forth in this Agreement.
AGREEMENT:
In
consideration of the foregoing and the mutual promises contained herein, the
parties hereto agree as follows:
1. Purchase
and Sale. By
execution and delivery of this Agreement, the Company agrees to sell and issue
to the Purchaser, and the Purchaser agrees to purchase from the Company, the
Purchased Shares, for a purchase price of $1.00 per share and an aggregate
purchase price of $2,000,000 (the “Purchase
Price”).
2. The
Closing.
(a) Closing
Date. The
closing of the purchase and sale of the Purchased Shares hereunder (the
“Closing”) shall
take place simultaneously with the execution and delivery of this Agreement
(such date, the “Closing
Date”), at
the offices of the Company located at 0000 Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 0000,
Xxxxxx, XX 00000.
(b) The
Company’s Closing Deliveries. On or
before the Closing, the Company shall have delivered to the Purchaser: (i) a
copy of this Agreement, duly executed by the Company; (ii) evidence reasonably
acceptable to the Purchaser of issuance to the Purchaser of a stock certificate
representing the Purchased Shares (with the original stock certificate to be
provided by the Company to the Purchaser as soon as reasonably practicable after
the Closing); and (iii) a filed copy of the Certificate of Designation,
certified by the Delaware Secretary of State as being in effect.
(c) The
Purchaser’s Closing Deliveries. On or
before the Closing, the Purchaser shall have delivered to the Company: (i) a
copy of this Agreement, duly executed by the Purchaser; and (ii) the Purchase
Price, by wire transfer of immediately available funds to the Company’s account.
3. Representations
and Warranties of the Company. The
Company represents and warrants to the Purchaser as follows.
(a) Power
and Authority; Organization; Enforceability. The
Company has full power and authority under its Certificate of Incorporation and
Bylaws to execute, deliver and perform this Agreement. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and the execution, delivery and performance by the
Company of this Agreement have been duly authorized by all necessary corporate
action on its behalf. This Agreement is enforceable against the Seller in
accordance with its terms, except to the extent that such enforceability may be
limited by laws affecting creditors’ rights and debtors’ obligations generally
and legal limitations relating to remedies of specific performance and
injunctive and other forms of equitable relief.
(b) Non-Contravention. Other
than the filing of the Certificate of Designation as required herein, the
execution, delivery and performance of this Agreement by the Company requires no
action by or with respect to, or filing with, any governmental body, agency or
official that has not been made and does not contravene, or constitute a breach
of or default under: (i) any provision of applicable law or regulation; (ii) the
Company’s Certificate of Incorporation and Bylaws; or (iii) any agreement,
judgment, injunction, order, decree or other instrument binding upon the Company
or any of its assets.
(c) Capitalization. The
Company’s authorized capital stock consists of an aggregate of one hundred fifty
million (150,000,000) shares, consisting of: (i) one hundred forty-five million
(145,000,000) shares of the Company’s Common Stock, par value $.001 per share
(“Common
Stock”); and
(ii) five million (5,000,000) shares of the Company’s Preferred Stock, par value
$.001 per share (“Preferred
Stock), with
such rights, preferences and privileges as are determined by resolution of the
Company’s Board of Directors and set forth in one or more Certificates of
Designation filed by the Company with the Delaware Secretary of State, of which
two million (2,000,000) shares have been designated Series A Redeemable
Preferred Stock pursuant to the Certificate of Designation and the remaining
three million (3,000,000) shares have not been designated. There are: (i) an
aggregate of nineteen million eight hundred sixty (19,860,000)
shares of Common Stock issued and outstanding, all of which are held by Netfran
Development Corp., a Florida corporation; and (ii) giving effect to the issuance
of the Purchased Shares contemplated by this Agreement, an aggregate of two
million (2,000,000) issued and outstanding shares of Series A Redeemable
Preferred Stock, all of which are held by the Purchaser.
(d) Securities
Law Matters. Subject
in part to the truth and accuracy of the Purchaser’s representations and
warranties set forth in Section
4, the
offer, issuance and sale of the Purchased Shares are exempt from the
registration requirements of the Securities Act of 1933, as amended (the
“Securities
Act”), by
virtue of the exemption from such registration provided by Regulation D under
the Securities Act
(e) Solvency. Based
on the Company’s financial plans, it is the Company’s reasonable judgment that,
as of the date of this Agreement: (i) the fair value of the assets of
the Company, at a fair valuation, exceeds its current debts and liabilities;
(ii) the present fair saleable value of the property of the Company is
greater than the amount that will be required to pay the probable liability of
its current debts and other liabilities, as such debts and other liabilities
become absolute and matured; (iii) the Company will be able to pay its debts and
liabilities, as such debts and liabilities become absolute and matured; and
(iv) the Company will not have unreasonably small capital with which to
conduct the business in which it is engaged as such business is now conducted
and is currently proposed to be conducted following the Closing
Date.
4. Representations
and Warranties by the Purchaser. The
Purchaser represents and warrants to the Company as follows.
(a) Power
and Authority; Organization; Enforceability. The
Purchaser has the full power and authority under its organizational and
governing documents to execute, deliver and perform this Agreement. The
Purchaser is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and the execution, delivery and
performance by it of this Agreement have been duly authorized by all necessary
action on its behalf. This Agreement is enforceable against the Purchaser in
accordance with its terms, except to the extent that such enforceability may be
limited by laws affecting creditors’ rights and debtors’ obligations generally
and legal limitations relating to remedies of specific performance and
injunctive and other forms of equitable relief.
(b) Non-Contravention. The
execution, delivery and performance of this Agreement by the Purchaser requires
no action by or with respect to, or filing with, any governmental body, agency
or official that has not been made and does not contravene, or constitute a
breach of or default under: (i) any provision of applicable law or regulation;
(ii) the Purchaser’s organizational and governing documents; or (iii) any
agreement, judgment, injunction, order, decree or other instrument binding upon
the Purchaser or any of its assets.
(c) Accredited
Investor; Restrictions on Transfer; Investment Intent; Investment Experience and
Qualification. The
Purchaser is an “accredited investor”, as that term is defined in Rule 501 of
Regulation D under the Securities Act. The Purchaser has no need for liquidity
in this investment, can afford a complete loss of its investment in the
Purchased Shares and can afford to hold the investment in the Purchased Shares
for an indefinite period of time. The Purchaser understands that the Purchased
Shares are “restricted securities” that have not been registered under the
Securities Act and applicable state securities laws and, therefore, cannot be
resold unless they are subsequently registered under the Securities Act and
applicable state securities laws or unless an exemption from such registration
is available. The Purchaser will acquire the Purchased Shares for the
Purchaser’s own account as principal, not as a nominee or agent, for investment
purposes and not with a view to the sale or distribution thereof in violation of
the Securities Act. The Purchaser has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
its investment in the Purchased Shares and is able to bear such risks, and has
obtained, in its judgment, sufficient information concerning the Company and the
Purchased Shares to evaluate the merits and risks of such investment. The
Purchaser has evaluated the risks of investing in the Purchased Shares,
understands there are substantial risks of loss incidental to the purchase of
the Purchased Shares, and has determined that the Purchased Shares are a
suitable investment for the Purchaser.
(d) Review
of Company Materials. The
Purchaser has received all the information it considers necessary or appropriate
for deciding whether to purchase the Purchased Shares. The Purchaser has had an
opportunity to ask such questions and receive such answers from the Company
regarding the Company and its financial performance and future prospects as the
Purchaser has deemed necessary. The Purchaser agrees and acknowledges, however,
that the Company has not made any representations and warranties to the
Purchaser in connection with the Purchaser’s acquisition of the Purchased Shares
hereunder other than the representations and warranties set forth in this
Agreement.
(e) Legend. The
Purchaser agrees and acknowledges that the certificate(s) evidencing the
Purchased Shares shall bear the following or a substantially similar legend and
such other legends as may be required by applicable state securities
laws.
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAW, AND THESE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE
SALE OR DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE SOLD, OFFERED FOR
SALE, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT THERETO UNDER SUCH ACT AND
SUCH STATE LAWS OR A WRITTEN OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY
SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM REGISTRATION FOR SUCH SALE,
OFFER, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER ASSIGNMENT IS AVAILABLE UNDER
SUCH ACT AND SUCH STATE LAWS.
(f) Stop-Transfer
Notices. The
Purchaser agrees and acknowledges that, in order to ensure compliance with the
restrictions referred to herein, the Company may issue appropriate “stop
transfer” instructions to its transfer agent with respect to the Purchased
Shares. The Purchaser agrees and acknowledges that the Company shall not be
required: (i) to transfer on its books any Purchased Shares that have been
purportedly sold, assigned or otherwise transferred in violation of any of the
provisions of this Agreement; or (ii) to treat as owner of such Purchased
Shares or to accord the right to vote or pay dividends to any purchaser,
assignee or other transferee to whom such Purchased Shares purportedly shall
have been so transferred.
5. Covenants.
(a) Use of
Proceeds. The
Company covenants and agrees that, during the time period starting on the
Closing Date and ending on the one hundred twenty (120) day anniversary of the
Closing Date, the full Purchase Price proceeds received by the Company from the
Purchaser hereunder shall be deposited in a restricted account of the Company,
pursuant to which the Company may not use or transfer any such funds without the
prior written consent of the Purchaser. At the end of such time period, the
Company and the Purchaser shall execute and deliver a joint written instruction
to the bank in which such account is held, pursuant to which the restriction on
such account shall be eliminated and the Company may thereafter use or transfer
all of such funds without restriction.
(b) Solvency. The
Company covenants and agrees that, at all times at which any of the Purchased
Shares remain outstanding, it shall take all necessary actions to ensure that
the Company’s representations and warranties contained in Section
3(e) remain
true and correct.
6. Miscellaneous.
(a) Notice. All
notices and other communications given or made pursuant to this Agreement shall
be in writing, shall be transmitted to the appropriate party by hand delivery,
by registered or certified mail, return receipt requested, postage prepaid or by
overnight delivery by a nationally recognized overnight courier and shall be
addressed to the Company at: 0000 Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxx, XX
00000, Attn: President; and to the Purchaser at: 000 Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxx Xxxx, XX 00000, Attn: President, or at such other address as shall have
been provided by the Company or the Purchaser to the other party in accordance
with this Section
6(a). Each
notice or other communication transmitted in the manner described in this
Section
6(a) shall be
deemed to have been given and received for all purposes: (i) upon personal
delivery to the party to be notified; (ii) five (5) days after having been sent
by registered or certified mail, return receipt requested, postage prepaid;
or (iii) one (1) day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of receipt.
(b) Jurisdiction;
Venue; Waiver of Jury Trial. EACH OF
THE COMPANY AND THE PURCHASER HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS
AND AGREES TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE OR FEDERAL
COURTS IN THE STATE OF NEW JERSEY (THE “NEW
JERSEY COURTS”) FOR
ANY LITIGATION BETWEEN THEM ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY (AND AGREES NOT TO COMMENCE ANY LITIGATION
RELATING THERETO EXCEPT IN THE NEW JERSEY COURTS), WAIVES ANY OBJECTION TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION IN THE NEW JERSEY COURTS AND AGREES NOT
TO PLEAD OR CLAIM IN ANY COURT THAT SUCH LITIGATION BROUGHT IN THE NEW JERSEY
COURTS HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE COMPANY AND THE
PURCHASER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT TO TRIAL BY
JURY IN ANY SUCH LITIGATION.
(c) Governing
Law. THE
RELATIVE RIGHTS OF THE COMPANY AND THE HOLDERS OF ITS SECURITIES SHALL BE
GOVERNED BY THE CORPORATE LAW OF THE STATE OF DELAWARE. ALL OTHER QUESTIONS
CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW JERSEY, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS OR CHOICE OF
LAW RULES OR PRINCIPLES THAT WOULD REQUIRE APPLICATION OF THE LAW OF ANY OTHER
JURISDICTION.
(d) Counterparts;
Facsimile Transmission. This
Agreement may be executed in one or more counterparts. Signature pages to this
Agreement delivered by facsimile transmission shall be considered to have been
duly delivered and shall be valid and binding for all purposes.
(e) Severability. The
determination by a court of competent jurisdiction that any provision of this
Agreement is invalid or unenforceable shall in no way affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect in the same manner and to the same extent as if the
invalid or unenforceable provision had not been contained in this Agreement. If
any such invalidity or unenforceability of a provision of this Agreement becomes
known or apparent to any of the parties, the parties shall negotiate promptly
and in good faith in an attempt to make appropriate changes and adjustments to
such provisions specifically and this Agreement generally to achieve as closely
as possible, consistent with applicable law, the intent and spirit of such
provision specifically and this Agreement generally.
(f) Further
Assurances. The
parties each agree to execute and deliver all such further documents, agreements
and instruments and take such other and further actions as may be necessary or
appropriate to carry out the purposes and intent of this Agreement.
(g) Amendment
and Waiver. Neither
this Agreement nor any provisions hereof shall be waived, modified, amended,
discharged or terminated except by an instrument in writing signed by the party
against whom such waiver, modification, amendment, discharge or termination is
sought. A waiver by either party of a breach of any provision of this Agreement
shall not operate, or be construed, as a waiver of any subsequent breach by that
same party.
(h) Assignability;
Binding Effect. This
Agreement is not transferable or assignable by either party without the written
consent of the other party, not be unreasonably withheld. This Agreement shall
be binding upon and inure to the benefit of the parties and their respective
heirs, executors, administrators, successors, legal representatives and
permitted assigns.
(i) Entire
Agreement. This
Agreement, the exhibits hereto and any other documents expressly referred to
herein contain the entire agreement of the parties with respect to the subject
matter hereof, and supersede any prior communications, understandings or
agreements of the parties with respect to the subject matter
hereof.
(j) Construction. Unless
otherwise stated, references to sections or exhibits refer to the sections of or
exhibits to this Agreement. Terms defined in the singular shall have comparable
meanings when used in the plural, and vice versa. Where specific language is
used to clarify by example a general statement contained herein, such specific
language shall not be deemed to modify, limit or restrict in any manner the
construction of the general statement to which it relates. All exhibits attached
hereto or referred to herein are hereby incorporated in and made a part of this
Agreement as if set forth in full herein. Any capitalized term used in any
exhibit hereto, but not otherwise defined therein, shall have the meaning set
forth in this Agreement. Whenever the words “include”, “includes” or “including”
are used in this Agreement, they shall be deemed to be followed by the words
“without limitation”. When used in this Agreement, the term “hereunder” and/or
“hereto” refer to this entire Agreement, and not to the particular provision of
this Agreement in which such term is contained. Each of the parties hereto
acknowledges and agrees that all parties hereto participated jointly in the
negotiation and drafting of this Agreement. If any ambiguity or question of
intent or interpretation shall arise with respect to this Agreement, then this
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden of proof will arise favoring or disfavoring any party to
this Agreement by virtue of the authorship of any provision of this Agreement,
and no rule of strict construction shall be applied against any
party.
[remainder
of this page intentionally left blank; signature page follows]
IN
WITNESS WHEREOF, the parties hereto have executed this Series A Redeemable
Preferred Stock Purchase Agreement as of the date written above.
THE
COMPANY:
ARIEL
WAY, INC.
By: ____________________________
Name: Xxxx
Xxxxxx
Title: President
and Chief Executive Officer
THE
PURCHASER:
CORNELL
CAPITAL PARTNERS, LP
By: ____________________________
Name:
Title:
Exhibit
A:
Certificate
of Designation
(attached)
