STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made as of April 8, 2002
by and between GolfGear International, Inc., a Nevada corporation (the
"Company") and Wyngate Limited, a Jersey Limited Company ("Purchaser"). The
Company and Purchaser are sometimes hereinafter referred to individually as
"party" and collectively as "parties".
Recitals
A. The Company designs, develops and markets innovative premium golf
clubs.
B. Purchaser is an "accredited" investor as that term is defined under
Rule 501 of Regulation D of the Securities Act of 1933.
C. Purchaser executed that certain Binding Subscription Letter
Agreement dated March 7, 2002 and executed by the Company on March 23, 2002
setting forth the terms and conditions under which Purchaser would purchase
common stock of the Company and assist the Company with future funding
("Subscription Agreement"). The Subscription Agreement is attached hereto as
Exhibit "A" and by this reference made a part hereof.
D. The Company has approved the sale and issuance of common stock of
the Company to Purchaser.
E. The Purchaser has had an opportunity to analyze an investment in the
Company and the purchase of the Company's common stock.
F. Based on Purchaser's review of the Company, Purchaser desires to
purchase fifteen million (15,000,000) shares of common stock ("Stock") in the
Company and the Company desires to sell and issue fifteen million (15,000,000)
shares of Stock to Purchaser on the terms and conditions set forth in this
Agreement.
Operative Provisions
The parties hereby agree as follows:
1. Purchase and Sale of Stock.
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1.1 Sale and Issuance of Stock. Subject to the terms and
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conditions of this Agreement, Purchaser agrees to purchase at the Closing,
defined below, and the Company agrees to sell and issue to Purchaser at the
Closing fifteen million (15,000,000) shares of Stock at a price of Seven and
One-Half Cents ($0.075) per share for the aggregate purchase price of One
Million One Hundred Twenty-Five Thousand Dollars ($1,125,000.00) ("Purchase
Price") payable at the Closing as follows:
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(a) Two Hundred Thousand Twenty-Five Dollars ($200,025.00) in
immediately available funds; and
(b) A promissory note in the principal sum of Nine Hundred
Twenty-Four Thousand Nine Hundred Seventy-Five Dollars ($924,975.00)
("Promissory Note") in substantially the form attached hereto as Exhibit "B" and
by this reference made a part hereof. The Promissory Note shall bear interest
per annum at the Federal Short Term Rate under Section 1274(d) of the Internal
Revenue Code and shall be secured by twelve million three hundred thirty-three
thousand (12,333,000) shares of the Stock pursuant to a Stock Pledge Agreement
in substantially the form attached hereto as Exhibit "C" and by this reference
made a part hereto ("Pledge Agreement"). Principal and interest accrued thereon
under the Promissory Note shall be due and payable eighteen (18) months from the
date of the Promissory Note.
1.2 Closing; Delivery.
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(a) The purchase and sale of the Stock shall take place at
the offices of Xxxxxx, Saleson & Xxxxxx LLP, 0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxx, Xxxxxxxxxx, concurrently with the execution of this Agreement (the
"Closing").
(b) Purchaser shall deliver the Purchase Price, the
Promissory Note and the Pledge Agreement at the Closing.
(c) At the Closing, the Company shall deliver to Purchaser
two (2) certificates representing the Stock; one (1) certificate representing
two million six hundred seventy-seven thousand (2,677,000) shares and one (1)
certificate representing twelve million three hundred thirty-three thousand
(12,333,000) shares.
2. Representations, Warranties and Covenants of the Company. The
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Company hereby represents, warrants and covenants to Purchaser that:
2.1 Organization, Good Standing and Qualification. The Company is
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a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada, is duly qualified to do business in the State of
California and has all requisite corporate power and authority to carry on its
business as now conducted and as proposed to be conducted.
2.2 Capitalization. The authorized capital of the Company at the
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Closing will be as follows:
(a) Three million (3,000,000) shares of Series A Preferred
Stock with rights, privileges and preferences as stated in the Certificate of
Determination of the Company dated October 20, 1999 of which two hundred
forty-five thousand thirty (245,030) are issued and outstanding, which are in
the process of being converted into shares of common stock. The Company shall
not issue any additional Series A Preferred Stock.
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(b) Fifty million (50,000,000) shares of Common Stock, of
which fifteen million five hundred thirty-nine thousand one hundred fifty-four
(15,539,154) shares are issued and outstanding as of March 31, 2002 excluding
shares of common stock issuable to the holders of the Company's preferred
shares.
2.3 Authorization. All corporate action on the part of the
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Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement, the performance of all
obligations of the Company hereunder and thereunder and the authorization,
issuance and delivery of the Stock has been taken or will be taken prior to the
Closing, and the Agreement, when executed and delivered by the Company, shall
constitute valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms.
2.4 Valid Issuance of Securities. The Stock, when issued, sold
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and delivered in accordance with the terms hereof for the consideration
expressed herein, will be duly and validly issued, fully paid and nonassessable
and free of restrictions on transfer other than restrictions on transfer under
this Agreement and applicable state and federal securities laws.
2.5 Governmental Consents. No consent, approval, order or
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authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except for filings pursuant to the California
Corporations Code and the Securities Act of 1933.
2.6 Litigation. There is no action, suit, proceeding or
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investigation pending or, to the Company's knowledge, currently threatened
against the Company that questions the validity of the Agreement or the right of
the Company to enter into it, or to consummate the transactions contemplated
hereby. The Company has disclosed to Purchaser that it is in litigation with
M.C. Corporation concerning a claim by M.C. Corporation that it is entitled to
additional shares of the Company's common stock. The Company is not presently
defending and is not aware of any other threatened, material litigation
involving the Company.
2.7 Intellectual Property. The Company has received valid and
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active registration statements in its name for all trademarks, service marks,
patents and other intellectual property and has good and marketable title to its
intellectual property listed on Exhibit "D" attached hereto and by this
reference made a part hereof, free and clear of restrictions, liens, pledges,
charges, encumbrances, equities and claims of any nature whatsoever.
2.8 No Default. The Company is not in default under any material
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agreement entered into by the Company and is not aware of any default or
potential or threatened default by any third parties under any such agreements.
2.9 Payment of Taxes. The Company has paid current all
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outstanding taxes owed to any governmental authority including but not limited
to state and federal income taxes, payroll taxes, property taxes, sales tax, and
has not received any notices declaring any delinquency in the payment of taxes.
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2.10 Environmental Laws. The Company has complied with all
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environmental laws with respect to it and its operations and has not received
nor does it have any reason to believe that it will receive any notices of
violation regarding any environmental laws relating to the Company or its
operations.
2.11 Disclosure. The Company has provided Purchaser all the
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information which Purchaser has requested for deciding whether to acquire the
Stock and all information which the Company believes is reasonably necessary to
enable Purchaser to make such a decision including, but not limited to all
intellectual property information, including patents and trademarks, all
litigation, all material agreements, all charter documents and books and records
of the Company. No representation or warranty of the Company contained in this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made. To the
extent any such information was prepared by management of the Company, any
financial and other projections contained therein were prepared in good faith
using reasonable assumptions; however, the Company does not warrant that it will
achieve such projections.
3. Representations and Warranties of Purchaser. Purchaser hereby
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represents and warrants to the Company that:
3.1 Purchase Entirely for Own Account. This Agreement is made with
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Purchaser in reliance upon Purchaser's representation to the Company that the
Stock to be acquired by Purchaser will be acquired for investment for
Purchaser's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that Purchaser has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Agreement, Purchaser further represents that
Purchaser does not presently have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the Stock. Purchaser
represents that it has full power and authority to enter into this Agreement.
3.2 Investment Representation.
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(a) Purchaser is aware of and familiar with the Company's
business affairs and financial condition and has acquired sufficient information
about the Company to reach a knowledgeable and informed decision to acquire the
Stock.
(b) Purchaser has consulted with such professional advisors,
if any, as Purchaser has seen fit in connection with this investment.
(c) Purchaser, and Purchaser's advisors, if any, have such
knowledgeable and experience in financial and business matters that Purchaser is
capable of evaluating the merits and risks of an investment in the Stock.
(d) Purchaser understands that an investment in the Company
is speculative, that any possible profits therefrom are uncertain, and that
Purchaser must bear the economic risks of
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the investment in the Company for an indefinite period of time. Purchaser is
able to bear these economic risks and to hold the Stock for an indefinite
period.
(e) Purchaser and Purchaser's advisors, if any, have received
all information and data with respect to the Company that Purchaser or
Purchaser's advisors have requested and have deemed relevant in connection with
an evaluation of the merits and risks of this investment in the Company, and do
not desire any further information or data with respect to the Company that
Purchaser or Purchaser's advisors have requested and have deemed relevant in
connection with an evaluation of the merits and risks of this investment or data
with respect to the Company prior to the purchase of the Stock.
(f) Purchaser is a bona fide resident and domiciliary, not a
temporary transient resident, of the State of California, Purchaser's principal
place of residence is in California, and Purchaser does not have any present
intention of moving Purchaser's principal residence from California.
(g) Purchaser understands and agrees that (i) the stock
records of the Company will be noted with respect to such restrictions, and (ii)
the Company will not be under any obligation to register the Stock or to comply
with any exemption available for sale of the Stock without registration.
(h) Purchaser is an "accredited investor" as defined under
Rule 501 of Regulation D of the Securities Act of 1933.
(i) Purchaser understands that the Stock will be issued under
Rule 144 of the Securities Act of 1933 which provided certain limitations on
resale of the Stock. Purchaser understands that in the event the Company
registers its restricted common stock, Purchaser shall have piggyback
registration rights at no cost to Purchaser.
4. Conditions of Purchaser's Obligations at Closing. The obligations
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of Purchaser to the Company under this Agreement are subject to the fulfillment,
on or before the Closing, of each of the following conditions, unless otherwise
waived:
4.1 Representations and Warranties. The representations and
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warranties of the Company contained in Section 2 shall be true and correct on
and as of the Closing with the same effect as though such representations and
warranties had been made on and as of the date of the Closing.
4.2 Performance. The Company shall have performed and complied
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with all covenants, agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing.
4.3 Qualifications. All authorizations, approvals or permits, if
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any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Stock pursuant to this Agreement shall be obtained and effective as of the
Closing.
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5. Conditions of the Company's Obligations at Closing. The obligations
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of the Company to Purchaser under this Agreement are subject to the fulfillment,
on or before the Closing, of each of the following conditions, unless otherwise
waived:
5.1 Representations and Warranties. The representations and
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warranties of Purchaser contained in Section 3 shall be true and correct on and
as of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.
5.2 Performance. All covenants, agreements and conditions
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contained in this Agreement to be performed by Purchaser on or prior to the
Closing shall have been performed or complied with in all material respects.
5.3 Qualifications. All authorizations, approvals or permits, if
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any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Stock pursuant to this Agreement shall be obtained and effective as of the
Closing.
6. Miscellaneous.
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6.1 Survival of Warranties. Unless otherwise set forth in this
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Agreement, the warranties, representations and covenants of the Company and
Purchaser contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing.
6.2 Transfer; Successors and Assigns. The terms and conditions of
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this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
6.3 Governing Law. This Agreement and all acts and transactions
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pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.
6.4 Counterparts. This Agreement and any modifications,
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amendments or supplements thereto may be executed in several counterparts, and
all so executed shall constitute one agreement binding on all parties hereto,
notwithstanding that all parties are not signatories to the original or the same
counterpart. The parties may also deliver executed copies of this Agreement to
each other by facsimile, which facsimile signatures shall be binding. Any
facsimile delivery of signatures shall be followed by the delivery of executed
originals.
6.5 Titles and Subtitles. The titles and subtitles used in this
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Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.6 Notices. Any notice required or permitted by this Agreement
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shall be in writing and shall be deemed sufficient upon delivery, when delivered
personally or by overnight courier or
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sent by telegram or fax, or forty-eight (48) hours after being deposited in the
U. S. mail as certified or registered mail, with postage prepaid, addressed to
the party to be notified at such party's address as set forth below, or as
subsequently modified by written notice.
6.7 Finder's Fee. Each party represents that it neither is nor
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will be obligated for any finder's fee or commission in connection with this
transaction. Purchaser agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which Purchaser or any of its officers, employees, or
representatives is responsible. The Company agrees to indemnify and hold
harmless Purchaser from any liability for any commission or compensation in the
nature of a finder's fee (and the costs and expenses of defending against such
liability or asserted liability) for which the Company or any of its officers,
employees or representatives is responsible.
6.8 Expenses. Except as indicated in the Subscription Agreement
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each party to this Agreement shall pay its own expenses incurred with respect to
this Agreement, the documents referred to herein and the transactions
contemplated hereby and thereby, irrespective of whether such transactions are
consummated.
6.9 Attorneys' Fees. If any action at law or in equity (including
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arbitration) is necessary to enforce or interpret the terms of any of the
Agreements, the prevailing party shall be entitled to reasonable attorneys'
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
6.10 Severability. If one or more provisions of this Agreement
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are held to be unenforceable under applicable law, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot
reach a mutually agreeable and enforceable replacement for such provision, then
(a) such provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
6.11 Delays or Omissions. No delay or omission to exercise any
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right, power or remedy accruing to any holder of any of the Stock, upon any
breach or default of the Company under this Agreement, shall impair any such
right, power or remedy of such holder nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any holder of any breach or default under
this Agreement, or any waiver on the part of any holder of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
6.12 Entire Agreement. This Agreement, the Subscription
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Agreement, the Promissory Note and the Pledge Agreement constitute the entire
agreement between the parties hereto
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pertaining to the subject matter hereof, and any and all other written or oral
agreements existing between the parties hereto are expressly canceled.
6.13 Confidentiality. Each party (the "receiving party") hereto
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agrees that, except with the prior written permission of the other party (the
"disclosing party"), the receiving party shall at all times keep confidential
and not divulge, furnish or make accessible to anyone (other than its attorneys,
accountants and advisors) any confidential information, knowledge or data
concerning or relating to the business or financial affairs of the disclosing
party to which such receiving party has been or shall become privy by reason of
this Agreement, discussions or negotiations relating to this Agreement, the
performance of its obligations hereunder or the ownership of Stock purchased
hereunder. The provisions of this Section 6.13 shall be in addition to, and not
in substitution for, the provisions of any separate nondisclosure agreement
executed by the parties hereto with respect to the transactions contemplated
hereby. This obligation shall not apply to any information, knowledge or data:
(a) which is generally known to the public or in the relevant trade or industry,
or (b) which becomes generally known to the public or in the relevant trade or
industry through no fault of the receiving party, or (c) which is known to the
receiving party prior to disclosure from the disclosing party, or (d) which is
lawfully disclosed by a third party to the receiving party without any
obligation of confidentiality on the receiving party, or (e) which is
independently created by the receiving party, or (f) which is required by order
of a court, agency or governmental entity or by law or regulation to be
disclosed.
6.14 Incorporation of Recitals and Exhibits. The Recitals set
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forth above and the Exhibits attached hereto are incorporated as though fully
set forth herein.
The parties have executed this Agreement as of the date first written
above.
COMPANY:
GolfGear International, Inc.,
a Nevada corporation
By:
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Xxxxxx X. Xxxxxxxx
Its: President/Chairman
PURCHASER:
Wyngate Limited,
a Jersey Limited Company
By:
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Xxxxx X. Xxxxxxxxxxx
Its: President
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