SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8 - K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event report) January 26, 2000
RELOCATE 411.COM, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-25591 11-3462369
(Commission File Number) (IRS Employer Identification No.)
142 Mineola Avenue, Suite 2-D, Roslyn Heights, NY 11557
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 626-6691
STATESIDE FUNDINGS, INC.
(Former name or former address, if changed since last report)
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RELOCATE 411.COM, INC.
FORM 8 - K
JANUARY 26, 2000
Item 1. Changes in Control of Registrant.
On January 26, 2000 (the "Effective Date"), Relocate 411.com, Inc., a New
York corporation ("Relocate") merged into Stateside Fundings, Inc., a Delaware
corporation ("Stateside") (the "Merger"). On January 27, 2000, Stateside, the
surviving entity, filed a Certificate of Amendment to its Articles of
Incorporation changing its name to Relocate 411.com, Inc.
Under the terms of the Merger Agreement, each share of Relocate common
stock converted into one hundred thousand shares of Stateside common stock
representing approximately 54.32% of the shares outstanding upon completion of
the Merger.
As of the Effective Date, Stateside had an aggregate of 12,150,000 shares
issued and outstanding. As a result of the Merger, Stateside's largest
shareholders are Darrell Lerner, Stateside's President, Chief Executive Officer,
and Treasurer, Byron R. Lerner, Stateside's Vice-President and Secretary, and
Barry Manko, Stateside's Vice-President of Business Development, each owning
20.16% of the issued and outstanding common stock.
In addition, on the Effective Date, Nachum Blumenfrucht, the sole officer
and director of Stateside resigned from the Board of Directors and a new Board
of Directors was appointed. The new Board of Directors consists of Darrell
Lerner, President, Chief Executive Officer and Treasurer and Byron R. Lerner,
Vice-President and Secretary.
The Merger was approved by the Board of Directors of Stateside and Relocate
and by written consent of all of the shareholders of Stateside and Relocate
entitled to vote
Item 2. Acquisition or Disposition of Assets.
On January 26, 2000, there was a closing under the Plan and Agreement of
Merger between Stateside and Relocate 411.com, Inc., a New York corporation.
Stateside acquired all of the issued and outstanding stock of Relocate in
exchange for 6,600,000 shares of the 12,150,000 shares issued and outstanding of
Stateside. Stateside acquired all of the assets and liabilities of Relocate.
Stateside redeemed 4,100,000 shares of common stock from Nachum
Blumenfrucht, Stateside's sole officer, director and principal shareholder for
$150,000.
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Mr. Blumenfrucht resigned and a new Board of Directors was appointed. The
new Board of Directors consists of Darrell Lerner, President, Chief Executive
Officer and Treasurer and Byron R. Lerner, Vice-President and Secretary.
Item 4. Changes in Stateside's Certifying Public Accountant.
(a) Prior to the Merger on January 26, 2000, Stateside's independent
auditor was Don Fuchs, CPA. Don Fuchs reported on financial statements for the
year ended November 30, 1999. Mr. Fuchs' accountant's report in the financial
statements for the past two years did not contain an adverse opinion or
disclaimer of opinion, or was qualified or modified as to uncertainty, audit
scope or accounting principles.
There were no disagreements with the former accountant on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreement, if not resolved to the satisfaction of
the former accountant, would have caused it to make a reference to the subject
matter of the disagreement in connection with its report.
(b) On January 26, 2000, the Effective Date of the Merger, Liebman,
Goldberg & Drogin, LLP, became Stateside's independent auditors. Prior to such
engagement, Liebman, Goldberg & Drogin, LLP was the independent auditor of
Relocate, retained by Relocate in January, 2000 in anticipation of the Merger.
Item 5 - Other Events.
Contemporaneously with the closing of the Merger, Stateside completed a
private placement of $1,550,000 gross offering proceeds for a total of 5,115,000
shares of Common Stock and 5,115,000 common stock purchase warrants issued to
subscribers and placement agents. The common stock purchase warrants are
exercisable at $0.75 per share with a final exercise date of three years after
January 26, 2000.
Item 7 - Financial Statements and Exhibits.
(1) Plan and Agreement of Merger
(2) Letter dated January 26, 2000 from Don Fuchs, CPA.
(3) Subscription Agreement for Private Placement.
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FORM 8 -K
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Stateside has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RELOCATE 411.COM, INC.
(Registrant)
By:________________________________
Darrell Lerner
President and Director
Dated: February 2, 2000
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AGREEMENT AND PLAN OF MERGER
By and Among
STATESIDE FUNDINGS, INC.
and
RELOCATE 411.COM, INC.
January 26, 2000
================================================================================
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as of
this 26th day of January, 2000, by and among Stateside Fundings, Inc., a
Delaware corporation ("Stateside"), Relocate 411.com, Inc., a New York
corporation (the "Company"), and the stockholders of the Company listed on
Schedule A hereto (each individually referred to as a "Stockholder" and
collectively referred to as the "Stockholders").
WITNESSETH:
WHEREAS, the authorized capital stock of the Company consists of 200 shares
of common stock, no par value (the "Company Stock"), of which 66 shares of
Company Stock are issued and outstanding as of the date hereof;
WHEREAS, the Stockholders collectively own 66 shares of Company Stock in
the amounts set forth on Schedule A hereto, representing one hundred percent
(100%) of the issued and outstanding shares of the Company Stock;
WHEREAS, the authorized capital stock of Stateside consists of 50,000,000
shares of common stock, par value $.0001 per share (the "Stateside Stock"), and
10,000,000 shares of preferred stock, par value $.0001 per share, of which
5,000,000 common shares of Stateside Stock are issued and outstanding as of the
date hereof, which amount will be increased upon the closing of a private
placement ("Private Placement") of Stateside securities, the terms of which have
been disclosed to the Company, and the documents relating thereto including
subscription agreements have been delivered to the Company; and
WHEREAS, the respective boards of directors of Stateside and the Company
deem it advisable and in the best interests of Stateside and the Company that
the Company merge with and into Stateside (the "Merger") pursuant to the terms
of this Agreement and the applicable provisions of the laws of the State of
Delaware;
WHEREAS, the Stockholders are the only stockholders of the Company entitled
to vote on the Merger and have voted in favor of the Merger; and
WHEREAS, for United States federal income tax purposes, it is intended but
not a condition of the Merger that the Merger will qualify as a tax-free
reorganization within the meaning of Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and mutual covenants,
conditions and agreements contained herein and for such other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, each intending to be legally bound hereby, agree as follows:
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ARTICLE I
TERMS OF THE MERGER
1.1 Merger. Upon the terms and subject to the conditions set forth in this
Agreement, the Company shall be merged with and into Stateside and the
Stockholders shall transfer and convey to Stateside all of each Stockholder's
right, title and interest in and to all of the issued and outstanding shares of
Company Stock. The Stockholders hereby agree, upon the terms and subject to the
conditions set forth herein, to transfer and deliver to Stateside (for
cancellation) certificates, properly endorsed in blank or accompanied by a
properly executed stock power, representing all of the issued and outstanding
shares of Company Stock.
1.2 Merger Consideration. In consideration of and in exchange for all of
the issued and outstanding shares of Company Stock as set forth in Section 1.1
above, Stateside shall issue to the Stockholders shares of Stateside Stock, in
the amounts set forth on Schedule A hereto (the "Purchase Shares").
1.3 Effective Time of Merger. Subject to the terms and conditions of this
Agreement, the certificate of merger, in substantially the form of Exhibit 1.3
(the "Certificate of Merger"), required by Section 252 of the Delaware General
Corporation Law (the "DGCL") shall be duly executed and acknowledged by
Stateside and the Company and thereafter delivered to the Secretary of the State
of Delaware for filing pursuant to the DGCL, on the day immediately following
the Closing Date (as hereinafter defined). The Merger shall become effective
(the "Effective Time") upon the filing of the Certificate of Merger with the
Secretary of the State of Delaware.
1.4 Effects of the Merger.
(a) At the Effective Time: (i) the separate existence of the Company shall
cease and the Company shall be merged with and into Stateside (the Company and
Stateside are sometimes referred to herein as the "Constituent Corporations" and
Stateside is sometimes referred to herein as the "Surviving corporation"); (ii)
the certificate of incorporation of Stateside as in effect immediately prior to
the Effective Time shall continue to be the certificate of incorporation of the
Surviving Corporation; and (iii) the bylaws of Stateside as in effect
immediately prior to the Effective Time shall continue to be the bylaws of the
Surviving Corporation.
(b) At and after the Effective Time, the Merger shall have the effects set
forth in Section 259 of the DGCL. Without limiting the foregoing, at the
Effective Time, Stateside as the Surviving Corporation shall possess all the
rights, privileges, powers and franchises of a public as well as a private
nature, and be subject to all the restrictions, disabilities and duties of each
of the Constituent Corporations, and all singular rights, privileges, powers and
franchises of each of the Constituent Corporations, and all property, real,
personal and mixed, and all debts due to either of the Constituent Corporations
on whatever account, as well as for stock subscriptions and all other things in
action or belonging to each of the Constituent Corporations, shall be vested in
Stateside as the Surviving Corporation and all property, rights, privileges,
powers and franchises, and all and every other interest shall be thereafter as
effectual the property of the Surviving Corporation as they were of the
Constituent Corporations, and the title to any
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real estate vested by deed or otherwise, in either of the Constituent
Corporations, shall not revert or be in any way impaired; but all rights of
creditors and all liens upon any property of either of the Constituent
Corporation shall thenceforth attach to Stateside as the Surviving Corporation,
and may be enforced against it to the same extent as if said debts and
liabilities had been incurred by it.
1.5 Directors and Officers of the Surviving Corporation. The directors and
officers of Stateside immediately prior to the Effective Time shall resign as of
the Effective Time and be replaced by the directors and officers designated on
Schedule 1.5 hereto, who shall serve until their successors shall have been duly
elected, appointed and/or qualified or until their earlier death, resignation or
removal in accordance with the certificate of incorporation and bylaws of
Stateside.
1.6 Conversion of Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of any holder of shares of Company
Stock or shares of Stateside Stock:
(a) Stateside Stock. Each issued and outstanding share of Stateside Stock
shall continue to be issued and outstanding and shall not be affected by the
Merger.
(b) Conversion of Company Stock. Each of the shares of Company Stock issued
and outstanding as of the Effective Time shall be converted into 100,000 shares
of Stateside Stock as set forth in Section 1.2 hereof. All such shares of
Company Stock, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such shares shall cease to have any rights
with respect thereto, except the right to receive the shares of Stateside Stock
to be issued or paid in consideration therefor upon the surrender of such
certificate for exchange to Stateside at the Closing (as hereinafter defined).
1.7 Restrictions on Resale of Stateside Stock. The shares of Stateside
Stock received by the Stockholders pursuant to this Agreement shall be issued by
Stateside in reliance upon exemptions from the registration requirements of the
Securities Act and may not be sold, assigned, pledged, hypothecated or
transferred, or any interest therein conveyed to any other person, except in
accordance with the registration provisions of the federal and state securities
laws or applicable exemption therefrom, and the certificates representing such
shares shall contain an appropriate legend to that effect.
1.8 Tax-Free Reorganization. The parties intend that the Merger qualify as
a tax-free reorganization under Section 368(a)(1)(A) of the Code. Unless
required by a final determination of the Internal Revenue Service (or other
governing body having jurisdiction over these matters) or a court of competent
jurisdiction, the parties shall not take any position on any subsequently filed
tax return inconsistent with this section. Each party hereto represents to each
other that there exists no indebtedness between Stateside and the Company and
that such party is not an investment company as defined in Subsections
368(a)(2)(F)(iii) and (iv) of the Code. The parties hereby agree to comply with
the reporting requirements of Treasury Regulation Section 1.368.3.
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In furtherance of the foregoing, Stateside hereby represents, warrants and
covenants that:
(a) it has no plan or intention to reacquire any Stateside Stock issued to
the Stockholders;
(b) it has no plan or intention to sell or otherwise dispose of any of the
assets of the Company, except for transfers described in Section
368(a)(2)(C) of the Code;
(c) there is no plan or intention by Stateside to acquire, directly or
through parties related to Stateside (within the meaning of Section
1.368-1(c)(1) and (2) of the Treasury Regulations) shares of Stateside
Stock issued to the Stockholders hereunder such that the continuity of
interest requirement set forth in Section 1.368-1(e) of the Treasury
Regulations (the "Continuity of Interest Requirement") would be
violated;
(d) following the Closing, Stateside will continue the business of the
Company in accordance with Section 1.368-1 of the Treasury
Regulations;
(e) prior to the Closing, the liabilities of the Company were incurred by
the Company in the ordinary course of business;
(f) the Company is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code;
(g) as of the date hereof, the fair market value of the assets of the
Company equal or exceed the sum of the liabilities of the Company; and
(h) there is no plan or intention by the Stockholders to sell, exchange or
otherwise dispose of shares of Stateside Stock received by them
hereunder to Stateside or persons or parties related to Stateside such
that the Continuity of Interest Requirement would be violated.
ARTICLE II
CLOSING
2.1 Date and Time of Closing. Subject to satisfaction of the conditions set
forth in this Agreement and compliance with the other provisions hereof, the
closing of the Merger (the "Closing") shall take place on January 10, 2000, at
10:00 a.m. (eastern daylight savings time), at the offices of Grushko & Mittman,
277 Broadway, Suite 801, New York, New York 10007, or at such other place and
time thereafter as shall be mutually agreeable to the parties hereto, but in no
event later than January 31, 2000, unless otherwise extended by mutual agreement
of the parties hereto (the "Closing Date").
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company and Shareholders. The
Company and Shareholders represent and warrant to Stateside as follows:
(a) Authorization. The execution, delivery and performance of this
Agreement and consummation of the Merger have been duly authorized, adopted and
approved by the board of directors of the Company. The Company has taken all
necessary corporate action and have all of the necessary corporate power to
enter into this Agreement and to consummate the Merger. This Agreement has been
duly and validly executed and delivered by an officer of the Company on its
behalf, and assuming that this Agreement is the valid and binding obligation of
Stateside, is the valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect, or by legal or equitable
principles, relating to or limiting creditors' rights generally and except that
the remedy of specific performance and injunctive and other forms of equitable
relief are subject to certain equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought. The Company has the
ability to consummate the Merger.
(b) Organization; Subsidiaries. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York. The Company has the corporate power and authority to own and lease its
assets and to carry on its business as it is now being conducted and is duly
qualified to do business as a foreign corporation in each jurisdiction where it
conducts business, except where the failure to be so qualified would not have a
material adverse effect on the business, operations, earnings, prospects, assets
or condition (financial or otherwise) of the Company. As of the date hereof, the
Company is only qualified to do business in New York, and is not currently
conducting substantive business in any jurisdiction. The Company does not own
any shares of capital stock or other interest in any corporation, partnership,
association or other entity.
(c) Capitalization. The number of authorized, issued and outstanding shares
of Company Stock as of the date hereof is as set forth above in the recitals to
this Agreement. The outstanding shares of Company Stock have been duly
authorized, validly issued and are fully paid and non-assessable. The Company
has not issued any shares of capital stock which could give rise to claims for
violation of any federal or state securities laws (including any rules or
regulations promulgated thereunder) or the securities laws of any other
jurisdiction (including any rules or regulations promulgated thereunder). As of
the date hereof, there are no options, warrants, calls, convertible securities
or commitments of any kind whatsoever relating to the shares of the Company
Stock subject hereto or any of the unissued shares of capital stock of the
Company, and there are no voting trusts, voting agreements, stockholder
agreements or other agreements or understandings of any kind whatsoever which
relate to the voting of the capital stock of the Company except for the stock
option plan relating to 5,100,000 shares of Stateside Stock.
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(d) Financial Statements. The Company has heretofore delivered to Stateside
unaudited financial statements of the Company as at December 31, 1999 (the
"Financial Statements"). The Financial Statements present fairly, in all
material respects, the financial position of the Company at December 31, 1999
and the results of operations and cash flows of the Company for the period
indicated in conformity with generally accepted accounting principles applied on
a consistent basis.
(e) Owned Real Property. The Company does not own (of record or
beneficially), nor does it have any interest in, any real property.
(f) Leased Property; Tenancies. The Company does not lease any property,
real or otherwise. Accordingly, the Company is not a party to any leases or
subleases with respect to any property.
(g) Title. The Company's only assets are those reflected on the balance
sheet of the Financial Statements. The Company has good and marketable title to
all of such assets and those assets purchased by the Company after the date
thereof. The assets reflected on the balance sheet of the Financial Statements
and those purchased by the Company after the date thereof, are owned free and
clear of all adverse claims, liens, mortgages, charges, security interests,
encumbrances and other restrictions or limitations of any kind whatsoever,
except: (A) as stated in the Financial Statements (including the notes thereto);
(B) for liens for taxes or assessments not yet due and payable or which are
being contested by the Company in good faith, a complete list of which are set
forth on Schedule 3.1(g); (C) for minor liens imposed by law for sums not yet
due or which are being contested by the Company in good faith; and (D) for
imperfections of title, adverse claims, charges, restrictions, limitations,
encumbrances, liens or security interests that are minor and which do not
detract in any material respect from the value of any of the assets subject
thereto or which do not impair the operations of the Company in any material
respect or affect the present use of the assets in any material respect. The
Company has not made any commitments or received any notice, oral or written,
from any public authority or other entity with respect to the taking or use of
any of the Company's assets, whether temporarily or permanently, for any purpose
whatsoever, nor is there any proceeding pending or, to the knowledge of the
Company, threatened which could adversely affect any asset owned or used by the
Company as of the date hereof.
(h) Condition of Assets. All documents and agreements pursuant to which the
Company has obtained the assets or the right to use any assets are valid and
enforceable in all respects in accordance with their respective terms, except as
such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect, or
by legal or equitable principles, relating to or limiting creditors' rights
generally and except that the remedy of specific performance and injunctive and
other forms of equitable relief are subject to certain equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
All licenses, permits and authorizations related to the location or operation of
the business of the Company are in good standing and are valid and enforceable
in all respects in accordance with their respective terms. There is not, under
any of the foregoing instruments, documents or agreements, any existing default,
nor is there any event which, with notice or lapse of time or both, would
constitute a default arising through the
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Company or any third party which could: (i) have a material adverse effect on
the business, assets, operations, earnings, prospects or condition (financial or
otherwise) of the Company; or (ii) materially adversely affect its use of any
assets. The Company is not in violation of and has complied with all applicable
codes, statutes, regulations, ordinances, notices and orders of any governmental
authority with respect to the use, maintenance, condition, operation and
improvement of any assets, except where the failure to comply with which would
not have a material adverse effect on the business, assets, operations,
earnings, prospects or condition (financial or otherwise) of the Company. The
Company's use of any improvements for the purposes for which any of the assets
are being used as of the date hereof does not violate any such code, statute,
regulation, ordinance, notice or order. The Company possesses all licenses,
permits and authorizations required to be obtained by the Company with respect
to the Company's ownership, operation and maintenance of the assets for all uses
for which such assets are operated or used by the Company as of the date hereof,
except where the failure to do so would not have a material adverse effect on
the business, assets, operations, earnings, prospects or condition (financial or
otherwise) of the Company. All of the assets are in good operating condition and
repair, subject to normal wear and use and each such item is usable in a manner
consistent with current use by the Company.
(i) Intellectual Property. The Company does not own, license or use any
registered and unregistered trademarks, service marks or trade names, trade
secrets, registered or unregistered copyrights, or computer programs or software
(the "Intellectual Property") except as set forth on Schedule 3.1(i).
(j) Accounts Receivable. As of the date hereof, the Company has no accounts
receivable.
(k) Accounts Payable. As of the date hereof, the Company has no accounts
payable except as set forth in the Financial Statements.
(l) Absence of Undisclosed Liabilities. Other than as set forth in the
Financial Statements, the Company has not had nor does it have any indebtedness,
loss or liability of any nature whatsoever, whether accrued, absolute,
contingent or otherwise and whether due or become due, which is material to the
Company's business, assets, operations, prospects, earnings or condition
(financial or otherwise) of the Company.
(m) Absence of Certain Changes or Events. Except as set forth on Schedule
3.1(m) and except as expressly set forth in this Agreement, the Company has not,
since December 31, 1999:
(i) issued, sold, granted or contracted to issue, sell or grant any of
its stock, notes, bonds, other securities or any option to purchase any of
the same;
(ii) amended its articles of organization or bylaws;
(iii) made any capital expenditures or commitments for the acquisition
or construction of any property, plant or equipment;
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(iv) entered into any transaction, which could be deemed to be
material to the Company or its business;
(v) incurred any damage, destruction or any other loss to any of its
assets in an aggregate amount exceeding Twenty Thousand Dollars ($20,000)
whether or not covered by insurance;
(vi) suffered any loss in an aggregate amount exceeding Twenty
Thousand Dollars ($20,000) and, the Company is not aware of any intention
on the part of any client, dealer or supplier to discontinue its current
relationship with the Company, the loss or discontinuance of which, alone
or in the aggregate, could have a material adverse effect on the Company's
business, assets, operations, earnings, prospects or condition (financial
or otherwise) of the Company;
(vii) entered into, modified, amended or altered any contractual
arrangement with any client, dealer or supplier, the execution,
performance, modification, amendment or alteration of which, alone or in
the aggregate, could have a material adverse effect on the Company's
business, assets, operations, earnings, prospects or condition (financial
or otherwise) of the Company;
(viii) incurred any material liability or obligation (absolute or
contingent) or made any material expenditure;
(ix) experienced any material adverse change in the Company's
business, assets, operations, earnings, prospects or condition (financial
or otherwise) of the Company or experienced or have knowledge of any event
which could have a material adverse effect on the Company's business,
assets, operations, earnings, prospects or condition (financial or
otherwise) of the Company;
(x) declared, set aside or paid any dividend or other distribution in
respect of the capital stock of the Company;
(xi) redeemed, repurchased, or otherwise acquired any of its capital
stock or securities convertible into or exchangeable for its capital stock
or entered into any agreement with respect to any of the foregoing;
(xii) purchased, disposed of or contracted to purchase or dispose of,
or granted or received an option or any other right to purchase or sell,
any of its assets;
(xiii) increased the rate of compensation payable or to become payable
to the officers or employees of the Company, or increased the amounts paid
or payable to such officers or employees under any bonus, insurance,
pension or other benefit plan, or made any arrangements therefor with or
for any of said officers or employees;
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(xiv) adopted or amended any collective bargaining, bonus,
profit-sharing, compensation, stock option, pension, retirement, deferred
compensation or other plan, agreement, trust, fund or arrangement for the
benefit of its employees; or
(xv) changed any material accounting principle, procedure or practice
followed by the Company or changed the method of applying such principle,
procedure or practice.
(n) Agreements. Set forth on Schedule 3.1(n) hereto is a true, correct and
complete list of all contracts, agreements and other instruments material to the
business or operation of the Company, including without limitation, those to
which the Company is a party and those by which any of its assets are bound (the
"Material Agreements"). Copies of all such agreements have heretofore been
delivered or made available by the Company to Stateside. Other than as set forth
on Schedule 3.1(n), there is no contract, agreement or other instrument to which
the Company or any Stockholder is a party or which affects the assets,
liabilities or outstanding securities of the Company. None of the Material
Agreements limits the freedom of the Company to compete in any line of business
or with any person or other entity in any geographic region within or outside of
the United States of America.
Neither the Company, the Stockholders, nor any third party is in default
and no event has occurred which, with notice or lapse of time or both, could
cause or become a default by the Company, the Stockholders or any third party,
under any Material Agreement. Each Material Agreement is enforceable in
accordance with its terms, against all other parties thereto, except as such
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect, or by legal or
equitable principles, relating to or limiting creditors' rights generally and
except that the remedy of specific performance and injunctive and other forms of
equitable relief are subject to certain equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
(o) Non-Contravention; Consents. Neither the execution and delivery of this
Agreement by the Company, nor consummation of the Merger, does or will: (i)
violate or conflict with any provision of the articles of incorporation or
bylaws of the Company; (ii) violate or, with the passage of time, result in the
violation of any provision of, or result in the acceleration of or entitle any
party to accelerate any obligation under, or result in the creation an
imposition of any lien, charge, pledge, security interest or other encumbrance
upon any of the assets, which are material to the business or operation of the
Company, pursuant to any provision of any mortgage, lien, lease, agreement,
permit, indenture, license, instrument, law, order, arbitration award, judgment
or decree to which the Company is a party or by which it or any of such assets
are bound, the effect of which violation, acceleration, creation or imposition
could have a material adverse effect on the business, assets, operations,
earnings, prospects or (financial or otherwise) of the Company; (iii) violate or
conflict with any other restriction of any kind whatsoever to which the Company
is subject or by which any of their respective assets may be bound, the effect
of any of which violation or conflict could have a material adverse effect on
the business, assets, operations, earnings, prospects or (financial or
otherwise) of the Company; or (iv) constitute an event permitting termination by
a third party of any agreement, including the Material Agreements, to which the
Company is a party or is subject, which termination could
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have a material adverse effect on the business, assets, operations, earnings,
prospects or condition (financial or otherwise) of the Company. No consent,
authorization, order or approval of, or filing or registration with, any
governmental commission, board or other regulatory body is required in
connection with the execution, delivery and performance of the terms of this
Agreement and consummation of the Merger.
(p) Employee Benefit Plans. Except as provided for in any employment
agreements described on Schedule 3.1(n), the Company does not have any "employee
benefit plans" as such term is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") (the "Benefit
Plans") covering the employees of the Company.
(q) Labor Relations. There are no agreements with or pending petitions for
recognition of any labor union or association as the exclusive bargaining agent
for any or all of the employees of the Company and no such petition has been
pending at any time since the Company's inception. There has not been any
organizing effort by any union or other group seeking to represent any employees
of the Company as its exclusive bargaining agent at any time since the Company's
inception. There are no labor strikes, work stoppages or other labor disputes
now pending or threatened against the Company, nor has there been any such labor
strike, work stoppage or other labor dispute or grievance at any time since the
Company's inception. Neither the Company nor New Sol has any knowledge that any
executive, key employee or any group of employees of the Company has any plans
to terminate his/her employment with the Company.
(r) Insurance. The Company has no insurance policies or binders of
insurance or programs of self-insurance.
(s) Tax Matters. The Company has timely filed with the appropriate taxing
authorities all returns (including, without limitation, information returns and
other material information) in respect of Taxes required to be filed through the
date hereof. The information contained in such returns is complete and accurate
in all material respects. The Company has not requested any extension of time
within which to file returns (including, without limitation, information
returns) in respect of any Taxes. The Company has accurately computed and timely
paid all Taxes for periods beginning before the date hereof, or an adequate
reserve has been established therefor. No liens for Taxes exist against any
assets to be acquired by Stateside in the Merger. Stateside shall have no
obligation or liability for or with respect to (a) any Taxes or other
assessments as a consequence of the transactions contemplated by this Agreement
all of which Taxes shall be paid by the Company, or each Stockholder, as the
case may be, or (b) any other Taxes or assessments of the Company, or each
Stockholder of any kind whatsoever or any penalties or interest with respect to
such Tax liabilities. The Company has withheld or collected from each payment
made to each of its employees, consultants, contractors and other payees the
amount of Taxes required to be withheld and collected therefrom for all periods
through the date hereof. Any liability for Taxes due and payable through the
date of this Agreement for which no returns are due or have been filed
(including, without limitation, property, payroll and withholding taxes) have
been properly accrued or provided for on the books of the Company and will be
paid by each entity. No material deficiencies for Taxes have been claimed,
proposed, or assessed by any taxing or other governmental authority against the
Company. There are no pending or, to the best knowledge of the Company,
threatened audits, investigations or claims for
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or relating to any material liability in respect of Taxes, and there are no
matters under discussion with any governmental authorities with respect to Taxes
that, in the reasonable judgment of the Company, is likely to result in a
material amount of Taxes. The federal, state and local returns of the Company
has never been audited, and the Company has not been notified that any taxing
authority intends to audit a return for any other period. No extension of a
statute of limitations relating to Taxes is in effect with respect to the
Company. The Company: (i) has not been an includible corporation in an
affiliated group that files consolidated income tax returns; (ii) is not a party
to any tax-sharing agreements or similar arrangements; (iii) is not a "foreign
person" as defined in section 1445(f)(3) of the Code; or (iv) has made or become
obligated to make, and will not, as a result of the Merger, make or become
obligated to make, an "excess parachute payment" as defined in section 280G of
the Code.
The term "taxes" or "tax" as used in this section or referred to elsewhere
in this Agreement shall mean all taxes, charges, fees, levies, penalties, or
other assessments, including without limitation, income, capital gain, profit,
gross receipts, ad valorem, excise, property, payroll, withholding, employment,
severance, social security, workers' compensation, occupation, premium, customs
duties, windfall profits, sales, use, and franchise taxes, imposed by the United
States, or any state, county, local or foreign government or any subdivision or
agency thereof, and including any interest, penalties or additions attributable
thereto.
(t) Compliance with Applicable Law. The Company has been and is in
compliance with all foreign, federal, state and local laws, statutes,
ordinances, rules and regulations applicable to the business, except where the
failure to comply with which would not materially adversely affect the business,
assets, operations, earnings, prospects or condition (financial or otherwise) of
the Company or which would subject any officer or director of the Company to
civil or criminal penalties or imprisonment. The Company has complied with the
rules and regulations of all governmental agencies having authority over its
business and its operations, including without limitation, agencies concerned
with intra-state and interstate commerce, occupational safety and employment
practices, except where the failure to comply would not have a material adverse
effect on the business, operations, earnings, prospects, assets or condition
(financial or otherwise) of the Company. The Company has no knowledge of or
received any notice of violation of any such rule or regulation since the
Company's inception which could result in any liability of the Company for
penalties or damages or which could subject the Company to any injunction or
government writ, order or decree. To the knowledge of Company, there are no
facts, events or conditions that could interfere with, prevent continued
compliance with or give rise to any liability under any foreign, federal, state
or local governmental laws, statutes, ordinances or regulations applicable to
the business, assets, operations, earnings, prospects or condition (financial or
otherwise) of the Company, except where the failure to do so would not have a
material adverse effect on the business, operations, earnings, prospects, assets
or condition (financial or otherwise) of the Company.
(u) Litigation. There is no action, suit, proceeding or investigation
pending or, to the knowledge of the Company, threatened, which could restrict
the ability of the Company to perform its obligations hereunder or could have a
material adverse effect on the business, assets, operations, earnings, prospects
or condition (financial or otherwise) of the Company. The Company is not in
default in respect of any judgment, order, writ, injunction or decree of any
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court or any federal, state, local or other governmental agency, authority,
body, board, bureau, commission, department or instrumentality which could have
a material adverse effect on the business, assets, operations, earnings,
prospects or condition (financial or otherwise) of the Company.
(v) Permits. The Company holds all permits, licenses, orders and approvals
of all federal, state or local governmental or regulatory authorities, agencies
or bodies required for the conduct and operation of the Company's business as
currently conducted, except where the failure to do so would not have a material
adverse effect on the business, operations, earnings, prospects, assets or
condition (financial or otherwise) of the Company. All such permits, licenses,
orders, and approvals are in full force and effect and no suspension,
termination or revocation of any of the foregoing is threatened. None of such
permits, licenses, orders or approvals will be materially adversely affected by
consummation of the Merger. The Company has no knowledge of nor has received any
notice of violation of any of such rules or regulations since the Company's
inception which would result in any liability of the Company for penalties or
damages or which would subject the Company to any injunction or governmental
writ, order or decree.
(w) Unlawful Payments. None of the Company, officer, director, employee,
agent or representative of the Company has made, directly or indirectly, any
bribe or kickback, illegal political contribution, payment from corporate funds
which was incorrectly recorded on the books and records of the Company, unlawful
payment from corporate funds to governmental or municipal officials in their
individual capacities for the purpose of affecting their action or the actions
of the jurisdiction which they represent to obtain favorable treatment in
securing business or licenses or to obtain special concessions of any kind
whatsoever, or illegal payment from corporate funds to obtain or retain any
business.
(x) Warranties. The Company has not made, extended or otherwise represented
that it would provide any express warranty with respect to the products or
services sold, distributed or leased to its clients or customers.
(y) Officers, Directors and Employees. Schedule 3.1(y) hereto sets forth a
true, correct and complete list of all of the officers, directors and employees
of the Company as of the date hereof, including their respective names, titles,
salaries and bonuses since the Company's inception. The Company has also
provided true, correct and complete copies of any employment agreements between
the Company and any of the foregoing officers, directors and employees of the
Company in effect as of the date hereof.
(z) Loans to or from Affiliates. There exist no outstanding loans by the
Company to any current or former officer, director, employee, consultant or
stockholder of the Company or any affiliate of any of the foregoing. There are
no outstanding loans to the Company by any current or former officer, director,
employee, consultant or stockholder of the Company.
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(aa) Books and Records.
(i) The books of account and other financial records of the
Company are complete and correct and have been maintained in
accordance with good business practices.
(ii) All material corporate action of the boards of directors of
the Company (including any committees) since the date of the Company's
incorporation has been authorized, approved and/or ratified in the
minute books of the Company.
(bb) Bank Accounts. Set forth on Schedule 3.1(bb) is a true,
correct and complete list of the names of each bank, savings and loan,
or other financial institution, at which the Company maintains any
account (including any cash contribution or similar accounts) and the
names of all persons authorized to draw thereon or who have access
thereto. As of the date hereof, the Company has no credit or loan
facility or guaranty established and/or maintained by or on behalf of
the Company.
(cc) Solvency of the Company. Since its inception and through the
Closing Date, the Company has been and will be solvent. "Solvent"
shall mean, for purposes of application of this provision, that: (i)
the fair saleable value of the Company's property is in excess of the
total amount of its debts; and (ii) the Company is able to pay its
debts as they mature.
(dd) Agreements with Affiliates. The Company is not a party to
any instrument, license, lease or other agreement, written or oral,
with any officer or director of the Company.
(ee) Accuracy of Information Furnished. The Company represents
that no statement made by the Company set forth herein or in the
exhibits or the schedules hereto, and no statement set forth in any
certificate or other instrument or document required to be delivered
by or on behalf of the Company pursuant hereto or in connection with
the consummation of the Merger, contained, contains or will contain
any untrue statement of a material fact, or omits, omitted or will
omit to state any material fact which is necessary to make the
statements contained herein or therein, in light of the circumstances
under which they were made, not misleading.
3.2 Representations and Warranties of the Stockholders. Each Stockholder
represents and warrants to Stateside as follows:
(a) Authorization. The execution, delivery and performance of this
Agreement and consummation of the Merger have been duly authorized, adopted and
approved by the Stockholders. Each Stockholder represents and warrants that he
or she has the ability to consummate the Merger, that this Agreement has been
duly executed and validly delivered by him or her and that this Agreement is the
valid and binding obligation of such Stockholder, enforceable against such
Stockholder in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect, or by legal or equitable
principles, relating to or limiting creditors' rights generally and except that
the remedy of specific performance and injunctive and
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other forms of equitable relief are subject to certain equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
(b) Title to Shares. Each Stockholder hereby represents and warrants that
he or she is legal and beneficial owner of the number of shares of Company Stock
as set forth in Schedule A hereto. Each Stockholder hereby represents and
warrants that the issued and outstanding shares of Company Stock owned by such
Stockholder are owned free of preemptive rights and free and clear of any and
all adverse claims, liens, mortgages, charges, security interests, encumbrances
and other restrictions or limitations of any kind whatsoever.
(c) Non-Contravention; Consents. Neither the execution and delivery of this
Agreement by such Stockholder, nor consummation of the Merger, does or will: (i)
violate or conflict with any restriction of any kind whatsoever to which such
Stockholder is subject or by which any of his or her properties or assets may be
bound, the effect of any of which violation of conflict could have a material
adverse effect on the Company; (ii) constitute an event permitting termination
by a third party of any agreement to which any of the Stockholders is a party or
is subject, which termination could have a material adverse effect on the
Company, (iii) or violate or conflict with any agreement or contract to which
any Stockholder is a party. No consent, authorization, order, or approval of, or
filing or registration with, any governmental commission, board, or other
regulatory body is required in connection with the execution, delivery and
performance by any Stockholder of the terms of this Agreement and the
consummation by any Stockholder of the Merger.
(d) Litigation. There is no action, suit, proceeding or investigation
pending or, to the knowledge of each Stockholder, threatened, which could
restrict such Stockholder's ability to perform his or her respective obligations
hereunder or could have a material adverse effect on the business, assets,
operations, earnings, prospects or condition (financial or otherwise) of the
Company.
(e) Investment Purpose. Each Stockholder represents that such Stockholder
is acquiring the shares of Stateside Stock issuable to such Stockholder pursuant
hereto solely for his or her own account, for investment purposes only and not
with a view toward resale or distribution thereof other than pursuant to an
effective registration statement or applicable exemption from the registration
requirements of the Securities Act. Each Stockholder understands that such
shares of Stateside Stock will be issued in reliance upon an exemption from the
registration requirements of the Securities Act and that subsequent sale or
transfer of such securities is prohibited absent registration or exemption from
the provisions of the Securities Act. Each Stockholder hereby agrees that such
Stockholder will not sell, assign, transfer, pledge or otherwise convey any of
the shares of the Stateside Stock issuable to him or it, as the case may be,
pursuant hereto, except in compliance with the provisions of the Securities Act
and in accordance with any transfer restrictions or similar terms set forth on
the certificates representing such securities or otherwise set forth herein.
3.3 Representations and Warranties of Stateside. Stateside represents and
warrants to the Company and the Stockholders as follows:
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<PAGE>
(a) Authorization. The execution, delivery and performance of this
Agreement and consummation of the Merger have been duly authorized, adopted and
approved by the board of directors of Stateside. Stateside has taken all
necessary corporate action and has all of the necessary corporate power to enter
into this Agreement and to consummate the Merger. This Agreement has been duly
and validly executed and delivered by the officers of Stateside on behalf of
Stateside and, assuming that this Agreement is the valid and binding obligation
of the Company and the Stockholders, is the valid and binding obligation of
Stateside, enforceable against it in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect, or by legal or
equitable principles, relating to or limiting creditors' rights generally and
except that the remedy of specific performance and injunctive and other forms of
equitable relief are subject to certain equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
(b) Organization. Stateside is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Stateside
has the corporate power and authority to own and lease its properties and
assets, and to carry on its business as it is now being conducted. Stateside is
duly qualified to do business as a foreign corporation in each jurisdiction
where it owns or leases real property or conducts business, except where the
failure to be so qualified would not have a material adverse effect on the
business, operations, earnings, prospects, assets or condition (financial or
otherwise) of Stateside.
(c) Capitalization. The number of authorized, issued and outstanding shares
of capital stock of Stateside as of the date hereof is as set forth above in the
recitals to this Agreement. The outstanding shares of Stateside Stock have been
duly authorized and validly issued and are fully paid and nonassessable. As of
the date hereof, the number of shares of capital stock that Stateside is
currently authorized to issue is adequate to permit Stateside to fulfill its
obligations hereunder with respect to issuance of the shares of Stateside Stock
to the Stockholders pursuant hereto. On the Closing Date, the shares of
Stateside Stock issuable to the Stockholders pursuant to Section 1.2 will be
duly authorized, validly issued, fully paid and nonassessable. Stateside has not
issued any shares of capital stock which would give rise to claims for violation
of any federal or state securities laws (including any rules or regulations
promulgated thereunder) or the securities laws of any other jurisdiction
(including any rules or regulations promulgated thereunder). As of the date
hereof, there are no options, warrants, calls, convertible securities or
commitments of any kind whatsoever relating to the shares of Stateside Stock
issuable pursuant hereto.
(d) Non-Contravention; Consents. Neither the execution and delivery of this
Agreement, nor consummation of the Merger, does or will: (i) violate or conflict
with any provision of the certificate of incorporation or bylaws of Stateside;
(ii) violate or conflict with any material provision of any mortgage, lien,
lease, agreement, permit, indenture, license, instrument, law, order,
arbitration award, judgment or decree to which Stateside is a party or by which
it or the property or assets which are material to its business or operation are
bound, the effect of any of which violation would have a material adverse effect
on the business, assets, operations, earnings, prospects (financial or
otherwise) of the Company; (iii) violate or conflict with any other restriction
to which Stateside is subject or by which any of the property or assets
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<PAGE>
which are material to the business or operation of Stateside may be bound, the
effect of any of which violation or conflict would have a material adverse
effect on the business, assets, operations, earnings, prospects (financial or
otherwise) of the Company; or (iv) constitute an event permitting termination of
any agreement to which Stateside is subject by any other party thereto, if in
any such circumstance such termination could have a materially adverse on the
ability of Stateside to fulfill its respective obligations hereunder. Other than
as provided herein, no consent, authorization, order or approval of, or filing
or registration with, any governmental commission, board or other regulatory
body is required in connection with the execution, delivery and performance of
the terms of this Agreement by Stateside and consummation by Stateside of the
Merger.
(e) Litigation. There is no action, suit, proceeding or investigation
pending against or related to Stateside, nor, to the best knowledge of
Stateside, has Stateside been threatened with any such action, suit, proceeding
or investigation, which would restrict the ability of Stateside to perform its
obligations hereunder or which would have a material adverse effect on the
business, assets, operations, earnings, prospects or condition (financial or
otherwise) of Stateside. Stateside is not in default in respect of any judgment,
order, writ, injunction or decree of any court or any federal, state, local or
other governmental agency, authority, body, board, bureau, commission,
department or instrumentality which could have a material adverse effect on the
business, assets, operations, earnings, prospects or condition (financial or
otherwise) of Stateside.
(f) Accuracy of Information Furnished. No statement by Stateside set forth
herein or in the exhibits or the schedules hereto, and no statement set forth in
any certificate or other instrument or document required to be delivered by or
on behalf of Stateside pursuant hereto or in connection with consummation of the
Merger, contained, contains or will contain any untrue statement of a material
fact, or omitted, omits or will omit to state any material fact which is
necessary to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
(g) Compliance with Applicable Law. Stateside has been and is in compliance
with all foreign, federal, state and local laws, statutes, ordinances, rules and
regulations (including without limitation the Securities Act and the Securities
Exchange Act of 1934, as amended) as of the date hereof, the failure to comply
with which would materially adversely affect the business, assets, operations,
earnings, prospects or condition (financial or otherwise) of Stateside or which
would subject any officer or director of Stateside to civil or criminal
penalties or imprisonment. Stateside has complied with the rules and regulations
of all governmental agencies having authority over its business or its
operations, including without limitation, agencies concerned with intra-state
and interstate commerce, occupational safety, environmental protection and
employment practices, except where the failure to comply would not have a
material adverse effect on the business, operations, earnings, prospects, assets
or condition (financial or otherwise) of Stateside. Stateside has no knowledge
of and has not received any notice of violation of any such rule or regulation
during the two (2) years prior to the date hereof which would result in any
liability of Stateside for penalties or damages or which would subject it to any
injunction or government writ, order or decree. To the best knowledge of
Stateside, there are no facts, events or conditions that could interfere with,
prevent continued compliance
17
<PAGE>
with or give rise to any liability under any foreign, federal, state or local
governmental laws, statutes, ordinances or regulations applicable to the
business, assets, operations, earnings, prospects or condition (financial or
otherwise) of Stateside, except where the failure to do so would not have a
material adverse effect on the business, operations, earnings, prospects, assets
or condition (financial or otherwise) of Stateside.
(h) No Material Adverse Change. Except as set forth on Schedule 3.2(h), or
otherwise disclosed to the Company, no material adverse change in the business,
operations, affairs, prospects, properties, assets, existing and potential
liabilities, obligations, profits or condition (financial or otherwise) of
Stateside has occurred since November 30, 1999.
(i) Employee Benefit Plans. Schedule 3.3(i) hereto sets forth a true,
correct and complete list of all Benefit Plans covering the employees of the
Stateside (the "Stateside Benefit Plans"). Each Stateside Benefit Plan is in
compliance in all material respects with all applicable provisions of law,
including ERISA and the Code. There are no pending or, to Stateside's knowledge,
threatened claims against any Stateside Benefit Plan (except for claims for
benefits payable in the normal operation of the Stateside Benefit Plans) that
could give rise to any material liability to the Stateside. All material
reports, notices and returns required to be filed with any governmental agency
or provided to any person or entity with respect to the Stateside Benefit Plans
have been timely filed. Stateside has never had and does not now have any
Stateside Benefit Plan that is an employee pension plan (as defined in Section
3(2) of ERISA) nor does Stateside contribute to any multiemployer pension or
multiemployer welfare benefit plan (within the meaning of Section 3(37) of
ERISA).
(j) Financial Statements. Stateside has heretofore delivered to the Company
unaudited financial statements of Stateside as at November 30, 1999 (the
"Financial Statements"). The Financial Statements present fairly, in all
material respects, the financial position of Stateside at November 30, 1999 and
the results of operations and cash flows of Stateside for the period indicated
in conformity with generally accepted accounting principles applied on a
consistent basis.
(k) Accounts Payable. As of the date hereof, Stateside has no accounts
payable except as set forth in the Financial Statements.
(l) Absence of Undisclosed Liabilities. Other than as set forth in the
Financial Statements, Stateside has not had nor does it have any indebtedness,
loss or liability of any nature whatsoever, whether accrued, absolute,
contingent or otherwise and whether due or become due, which is material to
Stateside's business, assets, operations, prospects, earnings or condition
(financial or otherwise) of Stateside.
(m) Employee Benefit Plans. Stateside does not have any "employee benefit
plans" as such term is defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (the "Benefit Plans") covering the
employees of Stateside.
(n) Tax Matters. Stateside has timely filed with the appropriate taxing
authorities all returns (including, without limitation, information returns and
other material
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information) in respect of Taxes required to be filed through the date hereof.
The information contained in such returns is complete and accurate in all
material respects. Stateside has not requested any extension of time within
which to file returns (including, without limitation, information returns) in
respect of any Taxes. Stateside has accurately computed and timely paid all
Taxes for periods beginning before the date hereof, or an adequate reserve has
been established therefor. No liens for Taxes exist against any assets to be
acquired by the Company in the Merger. The Company shall have no obligation or
liability for or with respect to (a) any Taxes or other assessments as a
consequence of the transactions contemplated by this Agreement all of which
Taxes shall be paid by Stateside, or (b) any other Taxes or assessments of
Stateside, of any kind whatsoever or any penalties or interest with respect to
such Tax liabilities. Stateside has withheld or collected from each payment made
to each of its employees, consultants, contractors and other payees the amount
of Taxes required to be withheld and collected therefrom for all periods through
the date hereof. Any liability for Taxes due and payable through the date of
this Agreement for which no returns are due or have been filed (including,
without limitation, property, payroll and withholding taxes) have been properly
accrued or provided for on the books of Stateside and will be paid by each
entity. No material deficiencies for Taxes have been claimed, proposed, or
assessed by any taxing or other governmental authority against Stateside. There
are no pending or, to the best knowledge of Stateside, threatened audits,
investigations or claims for or relating to any material liability in respect of
Taxes, and there are no matters under discussion with any governmental
authorities with respect to Taxes that, in the reasonable judgment of Stateside,
is likely to result in a material amount of Taxes. The federal, state and local
returns of Stateside has never been audited, and Stateside has not been notified
that any taxing authority intends to audit a return for any other period. No
extension of a statute of limitations relating to Taxes is in effect with
respect to Stateside. Stateside: (i) has not been an includible corporation in
an affiliated group that files consolidated income tax returns; (ii) is not a
party to any tax-sharing agreements or similar arrangements; (iii) is not a
"foreign person" as defined in section 1445(f)(3) of the Code; or (iv) has made
or become obligated to make, and will not, as a result of the Merger, make or
become obligated to make, an "excess parachute payment" as defined in section
280G of the Code.
The term "taxes" or "tax" as used in this section or referred to elsewhere
in this Agreement shall mean all taxes, charges, fees, levies, penalties, or
other assessments, including without limitation, income, capital gain, profit,
gross receipts, ad valorem, excise, property, payroll, withholding, employment,
severance, social security, workers' compensation, occupation, premium, customs
duties, windfall profits, sales, use, and franchise taxes, imposed by the United
States, or any state, county, local or foreign government or any subdivision or
agency thereof, and including any interest, penalties or additions attributable
thereto.
(o) Bank Accounts. Set forth on Schedule 3.3(o) is a true, correct and
complete list of the names of each bank, savings and loan, or other financial
institution, at which Stateside maintains any account (including any cash
contribution or similar accounts) and the names of all persons authorized to
draw thereon or who have access thereto. As of the date hereof, Stateside has no
credit or loan facility or guaranty established and/or maintained by or on
behalf of Stateside.
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3.4 Survival of Representations and Warranties. The representations and
warranties set forth in Sections 3.1, 3.2 and 3.3 hereof shall survive until the
close of business on the first anniversary of the Closing Date, provided that,
notice or demand with respect to any alleged breach thereof is given as required
pursuant to Article V hereof; and further provided that, with respect to claims
for damages arising out of any misrepresentation or breach of warranty made by
the Company relating to taxes, notice shall have been given on or before the
close of business on the sixtieth (60) day following the later to occur of: (i)
the expiration date of the statute of limitations applicable to any indemnified
federal, state or local tax liability; and (ii) the final determination of any
such tax liability, including the final administrative and/or judicial
determination thereof.
ARTICLE IV
CONDITIONS
4.1 Conditions to Obligations of Stateside. The obligation of Stateside to
consummate the Merger is subject to the fulfillment of each of the following
conditions, which may be waived in whole or in part by Stateside to the extent
permitted by applicable law:
(a) No Material Adverse Change. No material adverse change in the business,
assets, operations, earnings, prospects or condition (financial or otherwise) of
the Company, and no event which would materially and adversely affect the
business, assets, operations, earnings, prospects or condition (financial or
otherwise) of the Company shall have occurred since the date of the Financial
Statements provided by the Company pursuant to Section 3.1(d).
(b) Copies of Resolutions. The Company shall have furnished Stateside with
certified copies of resolutions duly adopted by the board of directors of the
Company authorizing the execution, delivery and performance of the terms of this
Agreement and all other necessary or proper corporate action to enable the
Company to comply with the terms of this Agreement.
(c) Certificates of Good Standing. At the Closing, the Company shall have
furnished Stateside with certified copies of certificates of good standing of
the Company dated not more than ten (10) business days prior to the Closing
Date.
(d) Accuracy of Representations and Warranties. Each of the representations
and warranties of the Company and the Stockholders set forth in this Agreement
shall have been true, correct and complete in all material respects when made
and shall also be true, correct and complete in all material respects at and as
of the Closing Date, with the same force and effect as if made at and as of the
Closing Date. The Company and the Stockholders shall have performed and complied
in all material respects with all agreements and covenants required by this
Agreement to be performed by the Company and the Stockholders at or prior to the
Closing Date.
(e) Delivery of Officers' Certificates. The Company shall have delivered to
Stateside certificates, dated as of the Closing Date, and signed by the
President of the Company representing and affirming on behalf of each that: (i)
the representations and warranties made by
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the Company as set forth in Section 3.1 of this Agreement and referred to in
Subsection 4.1(e) above were and are true, correct and complete as required by
Subsection 4.1(e) above and the conditions set forth in this Section 4.1 have
been satisfied. The Company shall also have delivered certificates signed by its
Secretary with respect to the authority and incumbency of the officer of the
Company executing this Agreement and any documents required to be executed or
delivered in connection therewith.
(f) Delivery of Stock Certificates. At the Closing, the Stockholders shall
have delivered to Stateside certificates representing all of the issued and
outstanding capital stock of the Company, which certificates shall be properly
endorsed in blank or shall be accompanied by a properly executed stock power.
(g) Consents and Waivers. Any and all necessary consents, authorizations,
orders or approvals described in Subsection 3.1(o) above shall have been
obtained, except as the same shall have been waived by Stateside.
(i) Litigation. There shall be no effective injunction, writ or preliminary
restraining order or any order of any kind whatsoever with respect to the
Company or the Stockholders issued by a court or governmental agency (or other
governmental or regulatory authority) of competent jurisdiction restraining or
prohibiting the consummation of the Merger or making consummation thereof unduly
burdensome to the Company or the Stockholders. No proceeding or lawsuit shall
have been commenced, be pending or have been threatened by any governmental or
regulatory agency or authority or any other person with respect to the Merger.
(j) Delivery of Documents and Other Information. The Company shall have
delivered to Stateside all of the agreements, contracts, documents and other
instruments required to be delivered pursuant to the provisions of this
Agreement.
(k) Private Placement. Stateside shall have closed on a private placement
on $1,550,000 of gross offering proceeds on the terms and conditions set forth
in a Subscription Agreement, and related documents, copies of which have been
provided to the Company and Shareholders.
(l) Transfers. The Shareholders of Stateside identified on Schedule 4.1(k)
shall have sold the number of shares of Stateside Stock designated on Schedule
4.1(k) to the purchaser identified on Schedule 4.1(k) for the designated
consideration.
(m) Redemption. Stateside shall have redeemed the number of shares of
Stateside Stock owned by Stateside's current president for the amount designated
on Schedule 4.1(k) hereto. The source of the redemption payment shall be the
private placement funds referred to in Paragraph 4.1(k) above.
4.2 Conditions to Obligations of the Company and the Stockholders. The
obligations of the Company and the Stockholders to consummate the Merger are
subject to the fulfillment of each of the following conditions, which may be
waived in whole or in part by the Company and/or the Stockholders to the extent
permitted by law:
21
<PAGE>
(a) Copies of Resolutions. Stateside shall have furnished the Company with
certified copies of resolutions duly adopted by the respective boards of
directors of Stateside authorizing the execution, delivery and performance of
the terms of this Agreement and all other necessary or proper corporate action
to enable Stateside to comply with the terms of this Agreement.
(b) Certificates of Good Standing. Stateside shall have furnished the
Company with certified copies of certificates of good standing of Stateside
dated not more than five (5) business day prior to the Closing Date.
(c) Accuracy of Representations and Warranties. Each of the representations
and warranties of Stateside set forth in this Agreement shall have been true,
correct and complete in all material respects when made and shall also be true,
correct and complete in all material respects at and as of the Closing Date,
with the same force and effect as if made at and as of the Closing Date.
Stateside shall have performed and complied with in all material respects all
agreements and covenants required by this Agreement to be performed by Stateside
at or prior to the Closing Date.
(d) Delivery of Officers' Certificates. Stateside shall have delivered to
the Company certificates, dated the Closing Date and signed by the Chief
Executive Officer of Stateside, affirming that: (i) the representations and
warranties of Stateside as set forth in Section 3.3 of this Agreement and
referred to in Subsection 4.2(d) above were and are true, correct and complete
as required by Subsection 4.2(d) above; and (ii) the conditions set forth in
this Section 4.2 have been satisfied. Stateside shall also have delivered a
certificate signed by the Secretary of Stateside with respect to the authority
and incumbency of the officers of Stateside executing this Agreement and any
documents required to be executed or delivered in connection therewith
(e) Stock Certificates. At the Closing, Stateside shall have issued and
delivered to the Stockholders certificates representing the shares of Stateside
Stock issuable pursuant hereto, which certificates shall be in the name of the
respective Stockholders, as set forth on Schedule A hereto.
(f) Consents and Waivers. Any and all necessary consents, authorizations,
orders or approvals described in Subsection 3.3(c) above shall have been
obtained, except as the same shall have been waived by the Company and the
Stockholders.
(g) Litigation. There shall be no effective injunction, writ or preliminary
restraining order or any order of any kind whatsoever with respect to Stateside
issued by a court or governmental agency (or other governmental or regulatory
authority) of competent jurisdiction restraining or prohibiting the consummation
of the Merger or making the consummation thereof unduly burdensome to Stateside.
On the Closing Date and immediately prior to consummation of the Merger, no
proceeding or lawsuit shall have been commenced, be pending or have been
threatened or by any governmental or regulatory agency or authority or any other
person with respect to the Merger.
22
<PAGE>
(h) Private Placement. Stateside shall have closed on a private placement
on $1,550,000 of gross offering proceeds on the terms and conditions set forth
in a Subscription Agreement, a copy of which has been provided to the Company
and Shareholders.
(i) Transfers. The Shareholders of Stateside identified on Schedule 4.1(k)
shall have sold the number of shares of Stateside Stock designated on Schedule
4.1(k) to the purchasers identified on Schedule 4.1(k) for the designated
consideration.
ARTICLE V
INDEMNIFICATION AND CLAIMS
5.1 Indemnification by the Company.
(a) Subject to Section 5.1(b) hereof, the Company hereby agrees to
indemnify and hold harmless Stateside against and in respect of all damages,
taxes, claims, losses and expenses (including, without limitation, reasonable
attorneys' fees and disbursements) reasonably incurred by Stateside (all such
amounts may hereinafter be referred to as the "Damages") arising out of: (i) any
misrepresentation or breach of any warranty made by the Company or the
Stockholders pursuant to the provisions of this Agreement or in any statement,
certificate or other document furnished by the Company or the Stockholders
pursuant to this Agreement; and (ii) the nonperformance or breach of any
covenant, agreement or obligation of the Company or the Stockholders contained
in this Agreement which has not been waived by Stateside in writing.
(b) The Company shall be obligated to indemnify Stateside pursuant to this
Section 5.1 with respect to claims for Damages as to which Stateside shall have
given written notice to the Company on or before the close of business on the
sixtieth (60) day following the first anniversary of the Closing Date. The
Company shall be obligated to indemnify Stateside with respect to claims for
Damages arising out of any misrepresentation or breach of warranty made by the
Company relating to Subsection 3.1(s) as to which Stateside shall have given
notice on or before the close of business on the sixtieth (60) day following the
later of: (i) the expiration date of the statute of limitations applicable to
any indemnified federal, state, foreign or local tax liability; or (ii) the
final determination of any such tax liability, including the final
administrative and/or judicial determination thereof.
(c) Notwithstanding the indemnification provided pursuant to Subsection
5.1(a) and 5.1(b) above, no amount shall be payable in indemnification hereunder
or under any other provision of this Agreement unless the aggregate amount of
such Damages in respect of which the Company would be liable, but for operation
and application of the provisions of this Section 5.1, exceeds on a cumulative
basis Twenty Five Thousand Dollars ($25,000).
(d) In any case where the Company has indemnified Stateside for any Damages
and Stateside recovers from a third party all or any part of the amount so
indemnified by the Company, Stateside shall promptly reimburse to the Company
the amount so recovered.
23
<PAGE>
5.2 Claims Against Stateside. With respect to claims or demands by third
parties, whenever Stateside shall have received notice that such a claim or
demand has been asserted or threatened which, if valid, would be subject to
indemnification under Section 5.1 hereof, Stateside shall as soon as reasonably
possible and in any event within thirty (30) days of receipt of such notice,
notify the Company of such claim or demand and of all relevant facts within its
knowledge which relate thereto. The Company shall then have the right at their
own expense to undertake the defense of any such claims or demands utilizing
counsel selected by the Company or New Sol, as the case may be, and approved by
Stateside, which approval shall not be unreasonably withheld. In the event that
the Company should fail to give notice of the intention to undertake the defense
of any such claim or demand within sixty (60) days after receiving notice that
it has been asserted or threatened, Stateside shall have the right to defend,
satisfy and discharge the same by payment, compromise or otherwise and shall
give written notice of any such payment, compromise or settlement to the
Company.
5.3 Right of Offset. In the event that the Company may be required to pay
monies in indemnification to Stateside pursuant to any indemnification provision
of this Agreement, Stateside shall have the right to offset any amounts which
are owed to it in indemnification by the Company against any amounts which are
payable by Stateside to the Company, provided, however, that nothing set forth
in this section shall relieve Stateside of its obligations hereunder.
5.4 Indemnification by Stateside.
(a) Subject to Section 5.4(b) hereof, Stateside hereby agrees to indemnify
and hold harmless the Company against and in respect of all damages, claims,
losses and expenses (including without limitation, reasonable attorneys' fees
and disbursements) reasonably incurred by the Company with respect thereto (all
such amounts may hereinafter be referred to as "Sellers Damages") arising out
of: (i) any misrepresentation or breach of any warranty made by Stateside
pursuant to the provisions of this Agreement or in any statement, certificate or
other document furnished by Stateside pursuant to this Agreement; and (ii) the
nonperformance or breach of any covenant, agreement or obligation of Stateside
which has not been waived by the Company.
(b) Subject to Section 3.3 hereof, Stateside shall be obligated to
indemnify the Company, pursuant to this Section 5.4 only with respect to claims
for Sellers Damages as to which the Company shall have given written notice to
Stateside on or before the close of business on the sixtieth (60) day following
the first anniversary of the Closing Date.
(c) Notwithstanding the indemnification provided pursuant to Subsection
5.4(a) above, no amount shall be payable in indemnification hereunder or under
any other provision of this Agreement unless the aggregate amount of Sellers
Damages in respect of which Stateside would be liable, but for operation and
application of the provisions of this subsection, exceeds on a cumulative basis
Twenty Five Thousand Dollars ($25,000).
(d) In any case where Stateside has indemnified the Company for any Sellers
Damages and the Company recovers from a third party all or any part of the
amount so indemnified by Stateside, the Company shall promptly reimburse to
Stateside the amount so recovered.
24
<PAGE>
5.5 Right of Offset. In the event that Stateside may be required to pay
monies in indemnification to the Company pursuant to any indemnification
provision of this Agreement, the Company shall have the right to offset any
amounts which are owed to either party in indemnification by Stateside against
any amounts which are payable by the Company to Stateside, provided, however,
that nothing set forth in this section shall relieve the Company of its
obligations hereunder.
ARTICLE VI
TERMINATION AND REMEDIES FOR BREACH OF THIS AGREEMENT
6.1 Termination by Mutual Agreement. This Agreement may be terminated at
any time prior to the Closing by unanimous consent of the parties hereto,
provided that such consent to terminate is manifested in writing and is signed
by each of the parties hereto.
6.2 Termination for Failure to Close. This Agreement may be terminated by
any of the parties hereto if the Closing shall not have occurred by February 8,
2000, provided that, the right to terminate this Agreement pursuant to this
section shall not be available to any party whose failure to fulfill any of its
obligations hereunder has been the cause of or resulted in the failure to
consummate the Merger by the foregoing date.
6.3 Termination by Operation of Law. This Agreement may be terminated by
any of the parties hereto if, in the reasonable opinion of counsel to the
respective parties hereto, there shall be any statute, rule or regulation that
renders consummation of the Merger illegal or otherwise prohibited, or a court
of competent jurisdiction or any government (or governmental authority) shall
have issued an order, decree or ruling, or has taken any other action
restraining, enjoining or otherwise prohibiting the consummation of such
transactions and such order, decree, ruling or other action shall have become
final and nonappealable.
6.4 Effect of Termination or Default; Remedies. In the event of termination
of this Agreement as set forth above, this Agreement shall forthwith become void
and there shall be no liability on the part of any Non-Defaulting Party (as
defined below). The foregoing shall not relieve any Defaulting Party from
liability for damages actually incurred as a result of such party's breach of
any term or provision of this Agreement.
6.5 Remedies; Specific Performance. In the event that any party shall fail
or refuse to consummate the Merger (except pursuant to Sections 6.1, 6.2 or 6.3
above) or if any default under or breach of any representation, warranty,
covenant or condition of this Agreement on the part of any party (the
"Defaulting Party") shall have occurred that results in the failure to
consummate the Merger, then in addition to the other remedies provided herein,
the non-defaulting party (the "Non-Defaulting Party") shall be entitled to seek
and obtain money damages from the Defaulting Party and/or may seek to obtain an
order of temporary or permanent injunctive relief or specific performance
thereof against the Defaulting Party from a court of competent jurisdiction,
provided that, the Non-Defaulting party seeking any injunctive relief or
specific performance such protection must file its request with such court
within
25
<PAGE>
forty-five (45) days after it becomes aware of the Defaulting Party's failure,
refusal, default or breach and further provided, that in no event shall a
Defaulting Party be liable for special, incidental or consequential damages. In
addition, the Non-Defaulting Party shall be entitled to obtain from the
Defaulting Party court costs and attorneys' fees incurred in connection with or
in pursuit of enforcing the rights and remedies provided hereunder.
ARTICLE VII
MISCELLANEOUS
7.1 Fees and Expenses. Except as otherwise described herein, each party
hereto shall pay its own expenses incident to negotiation, execution, delivery
and performance of the terms of this Agreement and the consummation of the
Merger.
7.2 Modification, Amendments and Waiver. The parties hereto may amend,
modify or otherwise waive any provision of this Agreement by unanimous consent,
provided that such consent and any amendment, modification or waiver is in
writing and is signed by each of the parties hereto.
7.3 Assignment. Neither the Company, the Stockholders nor Stateside shall
have the authority to assign its rights or obligations under this Agreement
without the prior written consent of the other parties hereto.
7.4 Burden and Benefit. This Agreement shall be binding upon and, to the
extent permitted in this Agreement, shall inure to the benefit of the parties
and their respective successors and assigns. In the event of a default by the
Company or the Stockholders of any of their respective obligations hereunder,
the sole and exclusive recourse and remedy of Stateside shall be against the
Company, as the case may be, and any of the Company's or the Stockholders'
assets; under no circumstances shall any officer or director of the Company be
liable in law or equity for any obligations of the Company hereunder. In the
event of a default by Stateside of any of its respective obligations hereunder,
the sole and exclusive recourse and remedy of the Stockholders and the Company
shall respectively be against Stateside and its assets; under no circumstances
shall any officer, director, Stockholder or affiliate of Stateside be liable in
law or equity for any obligations of Stateside hereunder.
7.5 Brokers. The Company and each Stockholder represents and warrants to
Stateside that there are no brokers or finders entitled to any brokerage or
finder's fee or other commission or fee based upon arrangements made by or on
behalf of the Company or any Stockholder or any other person in connection with
this Agreement or any of the Merger. Stateside represents and warrants to the
Company and the Stockholders that no broker or finder is entitled to any
brokerage or finder's fee or other commission or fee from Stateside or the
Company based upon arrangements made by or on behalf of Stateside in connection
with this Agreement or any of the Merger.
26
<PAGE>
7.6 Entire Agreement. This Agreement and the exhibits, lists and other
documents referred to herein contain the entire agreement among the parties
hereto with respect to the Merger and supersede all prior agreements with
respect thereto, whether written or oral.
7.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard, however, to
such jurisdiction's principles of conflicts of laws.
7.8 Notices. Any notice, request, instruction or other document to be given
hereunder by any party hereto shall be in writing and delivered personally, by
facsimile transmission or telex, or sent by commercial overnight delivery
service or registered or certified mail (return receipt requested), postage
prepaid, addressed as follows:
If to the Company: Relocate 411.com, Inc.
142 Mineola Avenue, Suite 2-D
Roslyn Heights, New York 11577
Attn: Darrell Lerner, President
Facsimile: (212) 643-1997
If to the
Stockholders: c/o Darrell Lerner
142 Mineola Avenue, Suite 2-D
Roslyn Heights, New York 11577
Facsimile: (212) 643-1997
with a copy to: Gina M. Angelillo, Esq.
305 Broadway, Suite 500
New York, New York 10013
Facsimile: (212) 227-9692
If to the Stateside: Stateside Fundings, Inc.
1040 East 22nd Street
Brooklyn, New York 11219
Attn: Nachum Blumenfrucht, President
Facsimile: (718) 692-2203
With a copy to: Grushko & Mittman
277 Broadway, Suite 801
New York, New York 10007
Facsimile: (212) 227-5865
or to such other persons or addresses as may be designated in writing by the
party to receive such notice. If sent as aforesaid, the date any such notice
shall be deemed to have been delivered on the date of transmission of a
facsimile or telex, the day after delivery to a commercial overnight delivery
service, or five (5) days after delivery into a United States Postal facility.
27
<PAGE>
7.9 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be an original or a facsimile copy, but all of
which shall constitute but one agreement.
7.10 Rights Cumulative. All rights, powers and privileges conferred
hereunder upon the parties, unless otherwise provided, shall be cumulative and
shall not be restricted to those given by law. Failure to exercise any power
given any party hereunder or to insist upon strict compliance by any other party
shall not constitute a waiver of any party's right to demand exact compliance
with any of the terms or provisions hereof.
7.11 Severability of Provisions. The provisions of this Agreement shall be
considered severable in the event that any of such provisions are held by a
court of competent jurisdiction to be invalid, void or otherwise unenforceable.
Such invalid, void or otherwise unenforceable provisions shall be automatically
replaced by other provisions which are valid and enforceable and which are as
similar as possible in term and intent to those provisions deemed to be invalid,
void or otherwise unenforceable. Notwithstanding the foregoing, the remaining
provisions hereof shall remain enforceable to the fullest extent permitted by
law.
7.12 Headings. The headings set forth in the articles and sections of this
Agreement and in the exhibits and the schedules to this Agreement are inserted
for convenience of reference only and shall not be deemed to constitute a part
hereof.
7.13 Knowledge Standard. When used in this Agreement, the phrase "to the
best knowledge of, " "knowledge of, " "known to" or similar phrases shall mean
the actual knowledge of: (i) with respect to Stateside, the officers and
directors of Stateside; (ii) with respect to the Company, the officers and
directors of the Company; and (iii) each Stockholder.
7.14 Joint Preparation. This Agreement was jointly prepared by Stateside,
the Company and the Stockholders and is not to be construed against any party
hereto. Should any provision of this Agreement be found to be illegal or
unenforceable by any court of competent jurisdiction and cannot be modified to
be enforceable, such provision shall immediately become null and void leaving
the remainder of this Agreement in effect.
* * * * *
28
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered on the date and year first above written.
ATTEST: STATESIDE FUNDINGS, INC.
By:
- ------------------------------- -------------------------------
Nachum Blumenfrucht, President and
Director
ATTEST: RELOCATE 411.COM, INC.
By:
- ------------------------------- -------------------------------
Darrell Lerner, President
STOCKHOLDERS:
-----------------------------------------
Darrell Lerner
-----------------------------------------
Byron R. Lerner
-----------------------------------------
Barry Manko
29
Exhibit 2
DON FUCHS
Certified Public Accountant
370 Brook Avenue
Passaic, New Jersey 07055
(973) 777-9895
January 26, 2000
SECURITIES & EXCHANGE COMMISSION
450 FIFTH ST. NW
WASHINGTON D.C. 20549
To Whom It May Concern,
I am the former accountant for Stateside Fundings, Inc. for the period December
19, 1997 (Inception) through November 30, 1999, there have been no disagreements
between management and myself, in regard to any accounting principles,
practices, auditing scope, procedure or financial statement disclosure during
the course of my audit. In addition, prior to, and during the course of my
engagement, nothing came to my attention to question the integrity of
management.
Sincerely,
Don Fuchs, CPA
SUBSCRIPTION AGREEMENT
Dear Subscriber:
You (the "Subscriber") hereby agree to purchase, and Stateside Fundings,
Inc., a Delaware corporation (the "Company") hereby agrees to issue and to sell
to the Subscriber, the number of shares of Common Stock, $.0001 par value (the
"Company Shares") and Common Stock Purchase Warrants ("Warrants") as set forth
on the signature page hereof for the aggregate consideration as set forth on the
signature page hereof ("Purchase Price"). The Company shall also issue Placement
Shares and Placement Warrants set forth on Schedule A hereto to the Placement
Agents identified on Schedule A hereto. The Warrants and Placement Warrants
shall contain the same terms and conditions. (The Company Shares are sometimes
referred to herein as the "Shares" or "Common Stock"). The Company Shares,
Warrants, Placement Shares, Placement Warrants, and the Common Stock issuable
upon exercise of the Warrants and Placement Warrants are collectively referred
to herein as, the "Securities"). Upon acceptance of this Agreement by the
Subscriber, the Company shall issue and deliver to the Subscriber the Company
Shares and Warrants against payment, by federal funds (U.S.) wire transfer of
the Purchase Price.
The following terms and conditions shall apply to this subscription.
1. Subscriber's Representations and Warranties. The Subscriber hereby
represents and warrants to and agrees with the Company that:
(a) Information on Company. The Subscriber has been furnished with and has
read the Company's Form 10-SB and the amendments thereto, filed with the
Securities and Exchange Commission, the Company's Form 10-QSB for the quarter
ended August 31, 1999, and the Business Plan including the section "Risk
Factors" (hereinafter referred to as the "Reports") of Relocate 411.com, Inc. In
addition, the Subscriber has received from the Company such other information
concerning its operations, financial condition and other matters as the
Subscriber has requested, including the Agreement and Plan of Merger with
Relocate 411.com, Inc., a New York corporation ("Relocate"), and considered all
factors the Subscriber deems material in deciding on the advisability of
investing in the Securities (such information in writing is collectively, the
"Other Written Information").
(b) Information on Subscriber. The Subscriber is an "accredited investor",
as such term is defined in Regulation D promulgated by the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, is experienced in investments and business matters, has made
investments of a speculative nature and has purchased securities of United
States privately-owned companies in private placements in the past and, with its
representatives, has such knowledge and experience in financial, tax and other
business matters as to enable the Subscriber to utilize the information made
available by the Company to evaluate the merits and risks of and to make an
informed investment decision with respect to the proposed purchase, which
represents a speculative investment. The Subscriber has the authority and is
duly and legally qualified to purchase and own the Securities. The Subscriber is
able to bear the risk of such investment for an indefinite period and to afford
a complete loss thereof. The Subscriber is not
<PAGE>
a United States citizen or resident. No offer to purchase the Securities has
been made to the Subscriber in the United States.
(c) Purchase of Company Shares and Warrants. On the Closing Date, the
Subscriber will purchase the Company Shares and Warrants for its own account and
not with a view to any distribution thereof.
(d) Compliance with Securities Act. The Subscriber understands and agrees
that the Securities have not been registered under the Securities Act of 1933,
as amended (the "1933 Act") by reason of their issuance in a transaction that
does not require registration under the 1933 Act, and that such Securities must
be held unless a subsequent disposition is registered under the 1933 Act or is
exempt from such registration.
(e) Company Shares Legend. The Company Shares, and the shares of Common
Stock issuable upon the exercise of the Warrants and Placement Warrants shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO STATESIDE FUNDINGS, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED."
(f) Warrants Legend. The Warrants and Placement Warrants shall bear the
following legend:
"THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THIS WARRANT AND THE COMMON SHARES ISSUABLE
UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO STATESIDE FUNDINGS, INC. THAT
SUCH REGISTRATION IS NOT REQUIRED."
(g) Communication of Offer. The offer to sell the Securities was directly
communicated to the Subscriber. At no time was the Subscriber presented with or
solicited by any leaflet, newspaper or magazine article, radio or television
advertisement, or any other form of
<PAGE>
general advertising or solicited or invited to attend a promotional meeting
otherwise than in connection and concurrently with such communicated offer.
(h) Correctness of Representations. The Subscriber represents that the
foregoing representations and warranties are true and correct as of the date
hereof and, unless the Subscriber otherwise notifies the Company prior to the
Closing Date (as hereinafter defined), shall be true and correct as of such
Closing Date. The foregoing representations and warranties shall survive the
Closing Date.
2. Company Representations and Warranties. The Company represents and
warrants to and agrees with the Subscriber that:
(a) Due Incorporation. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite corporate power to own its properties and to carry on its business
as now being conducted. The Company is duly qualified as a foreign corporation
to do business and is in good standing in each jurisdiction where the nature of
the business conducted or property owned by it makes such qualification
necessary, other than those jurisdictions in which the failure to so qualify
would not have a material adverse effect on the business, operations or
prospects or condition (financial or otherwise) of the Company.
(b) Outstanding Stock. All issued and outstanding shares of capital stock
of the Company has been duly authorized and validly issued and are fully paid
and non-assessable.
(c) Authority; Enforceability. This Agreement and each other agreement
entered into in connection herewith has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general principles
of equity; and the Company has full corporate power and authority necessary to
enter into this Agreement and such other agreements, and to perform its
obligations hereunder and all other agreements entered into by the Company
relating hereto.
(d) Additional Issuances. There are no outstanding agreements or preemptive
or similar rights affecting the Company's common stock or equity and no
outstanding rights, warrants or options to acquire, or instruments convertible
into or exchangeable for, or agreements or understandings with respect to the
sale or issuance of any shares of common stock or equity of the Company or other
equity interest in any of the subsidiaries of the Company, except as described
in the Reports or Other Written Information.
(e) Consents. No consent, approval, authorization or order of any court,
governmental agency or body or arbitrator having jurisdiction over the Company,
or any of its affiliates, the NASD, NASDAQ or the Company's Shareholders is
required for execution of this Agreement, and all other agreements entered into
by the Company relating thereto, including, without limitation issuance and sale
of the Securities, and the performance of the Company's obligations hereunder,
which consent will have been obtained at or before Closing, if required.
3
<PAGE>
(f) No Violation or Conflict. Assuming the representations and warranties
of the Subscriber in Paragraph 1 are true and correct and the Subscriber
complies with its obligations under this Agreement, neither the issuance and
sale of the Securities nor the performance of its obligations under this
Agreement and all other agreements entered into by the Company relating thereto
by the Company will:
(i) violate, conflict with, result in a breach of, or constitute a
default (or an event which with the giving of notice or the lapse of time
or both would be reasonably likely to constitute a default) under (A) the
articles of incorporation, charter or bylaws of the Company, or any of its
affiliates, (B) to the Company's knowledge, any decree, judgment, order,
law, treaty, rule, regulation or determination applicable to the Company,
or any of its affiliates of any court, governmental agency or body, or
arbitrator having jurisdiction over the Company, or any of its affiliates
or over the properties or assets of the Company, or any of its affiliates,
(C) the terms of any bond, debenture, note or any other evidence of
indebtedness, or any agreement, stock option or other similar plan,
indenture, lease, mortgage, deed of trust or other instrument to which the
Company, or any of its affiliates is a party, by which the Company, or any
of its affiliates is bound, or to which any of the properties of the
Company, or any of its affiliates is subject, or (D) the terms of any
"lock-up" or similar provision of any underwriting or similar agreement to
which the Company, or any of its affiliates is a party; or
(ii) result in the creation or imposition of any lien, charge or
encumbrance upon the Securities or any of the assets of the Company, or any
of its affiliates.
(g) The Securities. The Securities upon issuance:
(i) are, or will be, free and clear of any security interests, liens,
claims or other encumbrances, subject to restrictions upon transfer under
the 1933 Act and State laws;
(ii) have been, or will be, duly and validly authorized and on the
date of issuance and on the Closing Date, the Securities (not including the
common stock issuable upon exercise of the Warrants and Placement Warrants)
will be duly and validly issued, fully paid and nonassessable;
(iii) will not have been issued or sold in violation of any preemptive
or other similar rights of the holders of any securities of the Company;
(iv) will not subject the holders thereof to personal liability by
reason of being such holders; and
(h) Litigation. There is no pending or, to the best knowledge of the
Company, threatened action, suit, proceeding or investigation before
any court, governmental agency or body, or arbitrator having jurisdiction over
the Company, or any of its affiliates that would affect the execution by the
Company or the performance by the Company of its obligations under this
Agreement, and all other agreements entered into by the Company relating hereto.
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(i) Information Concerning Company. The Reports and Other Written
Information do not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
(j) Defaults. Neither the Company nor any of its subsidiaries is in
violation of its Articles of Incorporation or ByLaws. Neither the Company nor
any of its subsidiaries is (i) in default under or in violation of any other
material agreement or instrument to which it is a party or by which it or any of
its properties are bound or affected, which default or violation would have a
material adverse effect on the Company, (ii) in default with respect to any
order of any court, arbitrator or governmental body or subject to or party to
any order of any court or governmental authority arising out of any action, suit
or proceeding under any statute or other law respecting antitrust, monopoly,
restraint of trade, unfair competition or similar matters, or (iii) to its
knowledge in violation of any statute, rule or regulation of any governmental
authority material to its business.
(k) Use of Proceeds. The proceeds of the Subscriber funds to be released to
the Company will be used for working capital for Relocate, a redemption payment
of approximately $150,000 to the principal shareholders of the Company, and for
expenses of this offering and as described in the Reports.
(l) No General Solicitation. Neither the Company, nor any of its
affiliates, nor to its knowledge, any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the Act) in connection with the offer or sale of
the Securities.
(m) Reporting Company. The Company's common stock is registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934 (the "1934 Act").
(n) Correctness of Representations. The Company represents that the
foregoing representations and warranties are true and correct as of the date
hereof in all material respects and, unless the Company otherwise notifies the
Subscriber prior to the Closing Date, shall be true and correct in all material
respects as of such Closing Date. The foregoing representations and warranties
shall survive the Closing Date.
3. Regulation D Offering. This Offering is being made pursuant to the
exemption from the registration provisions of the Securities Act of 1933, as
amended, afforded by Rule 505 and/or 506 of Regulation D promulgated thereunder.
4. Reissuance of Securities. The Company agrees to reissue certificates
representing the Securities without the legend set forth in Section 1(e) above
upon resale subject to an effective registration statement after the Securities
are registered under the Act.
5. No Regulatory Review. The Subscriber is aware that this Subscription
Agreement relates to a limited private offering and that no federal, state or
other agency has made any finding or determination as to the fairness of the
investment described in this Subscription Agreement nor made any recommendation
or endorsement of the investment.
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6. Legal Fees/Commissions. The Company shall pay to its counsel its fee of
$18,250 for services rendered in reviewing this Agreement and other subscription
agreements for the aggregate subscription amounts of up to $1,550,000 and acting
as escrow agent and pay to Gina M. Angelillo, attorney for the Subscribers her
fee of $5,000.
7.1. Covenants of the Company. The Company covenants and agrees with the
Subscriber as follows:
(a) The Company shall promptly secure the listing of the Company Shares
upon each national securities exchange, or automated quotation system, if any,
upon which shares of Common Stock are then listed (subject to official notice of
issuance) and shall maintain such listing so long as any other shares of common
stock shall be so listed.
(b) The Company shall take all necessary action and proceedings as may be
required and permitted by applicable law, rule and regulation, for the legal and
valid issuance of the Securities to the Subscriber and Placement Agents.
(c) The Company undertakes to use the proceeds of the Subscriber's funds
for working capital for Relocate, a redemption payment of approximately $150,000
to the principal shareholder of the Company, and expenses of this offering and
as further described in the Reports.
8. Covenants of the Company and Subscriber Regarding Idemnifications.
(a) The Company agrees to indemnify, hold harmless, reimburse and defend
Subscriber against any claim, cost, expense, liability, obligation, loss or
damage (including reasonable legal fees) of any nature, incurred by or imposed
upon Subscriber which results, arises out of or is based upon (i) any
misrepresentation by Company or breach of any warranty by Company in this
Agreement or in any Exhibits or Schedules attached hereto, or Reports or other
Written Information; or (ii) any breach or default in performance by Company of
any covenant or undertaking to be performed by Company hereunder, or any other
agreement entered into by the Company and Subscribers relating hereto.
(b) Subscriber agrees to indemnify, hold harmless, reimburse and defend the
Company at all times against any claim, cost, expense, liability, obligation,
loss or damage (including reasonable legal fees) of any nature, incurred by or
imposed upon the Company which results, arises out of or is based upon (a) any
misrepresentation by Subscriber in this Agreement or in any Exhibits or
Schedules attached hereto; or (b) any breach or default in performance by
Subscriber of any covenant or undertaking to be performed by Subscriber
hereunder, or any other agreement entered into by the Company and Subscribers
relating hereto.
(c) The procedures set forth in Section 9.6 shall apply to the
indemnifications set forth in Section 8(a) and 8(b) above.
9.1. Registration Rights. The Company hereby grants the following
registration rights to holders of the Securities.
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(i) On one occasion, for a period commencing 180 days after the Closing
Date, but not later than three years after the Closing Date, the Company, upon a
written request therefor from any record holder or holders of more than 50% of
the aggregate of the Company's Shares issued at or about the same time in the
Company's offering of 4,650,000 Company Shares and 4,650,000 Warrants (the
Securities and securities issued or issuable by virtue of ownership or exercise
of the Securities, being, the "Registrable Securities"), shall prepare and file
with the SEC a registration statement under the Act covering the Registrable
Securities which are the subject of such request, unless such Registrable
Securities are the subject of a pending or effective registration statement. In
addition, upon the receipt of such request, the Company shall promptly give
written notice to all other record holders of the Registrable Securities that
such registration statement is to be filed and shall include in such
registration statement Registrable Securities for which it has received written
requests within 10 days after the Company gives such written notice. Such other
requesting record holders shall be deemed to have exercised their demand
registration right under this Section 9.1(i). As a condition precedent to the
inclusion of Registrable Securities, the holder thereof shall provide the
Company with such information as the Company reasonably requests. The obligation
of the Company under this Section 9.1(i) shall be limited to one registration
statement.
(ii) If the Company at any time proposes to register any of its securities
under the Act for sale to the public, whether for its own account or for the
account of other security holders or both, except with respect to registration
statements on Forms S-4, S-8 or another form not available for registering the
Registrable Securities for sale to the public, provided the Registrable
Securities are not otherwise registered for resale by the Subscriber or Holder
pursuant to an effective registration statement, each such time it will give at
least 30 days' prior written notice to the record holder of the Registrable
Securities of its intention so to do. Upon the written request of the holder,
received by the Company within 30 days after the giving of any such notice by
the Company, to register any of the Registrable Securities, the Company will
cause such Registrable Securities as to which registration shall have been so
requested to be included with the securities to be covered by the registration
statement proposed to be filed by the Company, all to the extent required to
permit the sale or other disposition of the Registrable Securities so registered
by the holder of such Registrable Securities (the "Seller"). In the event that
any registration pursuant to this Section 9.1(ii) shall be, in whole or in part,
an underwritten public offering of common stock of the Company, the number of
shares of Registrable Securities to be included in such an underwriting may be
reduced by the managing underwriter if and to the extent that the Company and
the underwriter shall reasonably be of the opinion that such inclusion would
adversely affect the marketing of the securities to be sold by the Company
therein; provided, however, that the Company shall notify the Seller in writing
of any such reduction. Notwithstanding the forgoing provisions, the Company may
withdraw any registration statement referred to in this Section 9.1(ii) without
thereby incurring any liability to the Seller.
(iii) If, at the time any written request for registration is received by
the Company pursuant to Section 9.1(i), the Company has determined to proceed
with the actual preparation and filing of a registration statement under the
1933 Act in connection with the proposed offer and sale for cash of any of its
securities for the Company's own account, such written request shall be deemed
to have been given pursuant to Section 9.1(ii) rather than Section 9.1(i), and
the rights of the holders of Registrable Securities covered by such written
request shall be governed by
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Section 9.1(ii) except that the Company or underwriter, if any, may not withdraw
such registration or limit the amount of Registrable Securities included in such
registration.
(iv) The Company shall file with the Commission within 90 days of the
Closing Date (the "Filing Date"), and use its reasonable commercial efforts to
cause to be declared effective a Form SB-2 registration statement (or such other
form that it is eligible to use) within two hundred and ten (210) days of the
Closing Date in order to register the Registrable Securities for resale and
distribution under the Act. The registration statement described in this
paragraph must be declared effective by the Commission within 210 days of the
Closing Date (as defined herein) ("Effective Date"). The Company will register
not less than one (1) share of common stock in the aforedescribed registration
statement for each Company Share subscribed for, and each Placement Share, and
one share of common stock for each common share issuable upon exercise of the
Warrants and Placement Warrants. The Registrable Securities shall be reserved
and set aside exclusively for the benefit of the Subscriber and Placement Agents
and not issued, employed or reserved for anyone other than the Subscriber and
Placement Agents. Except as disclosed to the Subscriber in writing, no equity of
the Company other than the Registrable Securities may be included for
registration in such registration statement.
9.2. Registration Procedures. If and whenever the Company is required by
the provisions hereof to effect the registration of any shares of Registrable
Securities under the Act, the Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement with
respect to such securities and use its best efforts to cause such registration
statement to become and remain effective for the period of the distribution
contemplated thereby which shall be up to eighteen months after the Effective
Date, and promptly provide to the holders of Registrable Securities copies of
all filings;
(b) prepare and file with the Commission such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective for the period
specified in paragraph (a) above and comply with the provisions of the Act with
respect to the disposition of all of the Registrable Securities covered by such
registration statement in accordance with the Seller's intended method of
disposition set forth in such registration statement for such period;
(c) furnish to the Seller, and to each underwriter if any, such number of
copies of the registration statement and the prospectus included therein
(including each preliminary prospectus) as such persons reasonably may request
in order to facilitate the public sale or their disposition of the securities
covered by such registration statement;
(d) use its best efforts to register or qualify the Seller's Registrable
Securities covered by such registration statement under the securities or "blue
sky" laws of such jurisdictions as the Seller and in the case of an underwritten
public offering, the managing underwriter shall reasonably request, provided,
however, that the Company shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any
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jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction;
(e) list the Registrable Securities covered by such registration statement
with any securities exchange on which the Common Stock of the Company is then
listed;
(f) immediately notify the Seller and each underwriter under such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act, of the happening of any event of which
the Company has knowledge as a result of which the prospectus contained in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;
(g) make available for inspection by the Seller, any underwriter
participating in any distribution pursuant to such registration statement, and
any attorney, accountant or other agent retained by the Seller or underwriter,
all publicly available, non-confidential financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all publicly available,
non-confidential information reasonably requested by the seller, underwriter,
attorney, accountant or agent in connection with such registration statement.
9.3. Provision of Documents.
(a) At the request of the Seller, provided a demand for registration has
been made pursuant to Section 9.1(i) or a request for registration has been made
pursuant to Section 9.1(ii), the Registrable Securities will be included in a
registration statement filed pursuant to this Section 9. In the event of a firm
commitment underwritten public offering in which the Registrable Securities are
so included, the lockup, if any, requested by the managing underwriter may not
exceed one hundred and eighty (180) days after the effective date thereof.
(b) In connection with each registration hereunder, the Seller will furnish
to the Company in writing such information with respect to itself and the
proposed distribution by it as reasonably shall be necessary in order to assure
compliance with federal and applicable state securities laws. In connection with
each registration pursuant to Section 9.1(i) or 9.1(ii) covering an underwritten
public offering, the Company and the Seller agree to enter into a written
agreement with the managing underwriter in such form and containing such
provisions as are customary in the securities business for such an arrangement
between such underwriter and companies of the Company's size and investment
stature.
9.4. Non-Registration Events. The Company and the Subscriber agree that the
Seller will suffer damages if any registration statement required under Section
9.1(i) or 9.1(ii) above is not filed within 60 days after request by the Holder
and not declared effective by the Commission within 120 days after such request
[or the Filing Date and Effective Date, respectively, in reference to the
Registration Statement on Form SB-2 or such other form described in Section
9.1(iv)], and maintained in the manner and within the time periods contemplated
by Section 9 hereof, and it would not be feasible to ascertain the extent of
such damages with precision. Accordingly, if (i) the
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Registration Statement described in Sections 9.1(i) or 9.1(ii) is not filed
within 60 days of such request, or is not declared effective by the Commission
on or prior to the date that is 120 days after such request, or (ii) the
registration statement on Form SB-2 or such other form described in Section
9.1(iv) is not filed on or before the Filing Date or not declared effective on
or before the sooner of the Effective Date, or within ten days of receipt by the
Company of a communication from the Commission that the registration statement
described in Section 9.1(iv) will not be reviewed, or (iii) any registration
statement described in Sections 9.1(i), 9.1(ii) or 9.1(iv) is filed and declared
effective but shall thereafter cease to be effective (without being succeeded
immediately by an additional registration statement filed and declared
effective) for a period of time which shall exceed 30 days in the aggregate per
year but not more than 20 consecutive calendar days (defined as a period of 365
days commencing on the date the Registration Statement is declared effective)
(each such event referred to in clauses (i), (ii) and (iii) of this Section 9.4
is referred to herein as a "Non-Registration Event"), then, for so long as such
Non-Registration Event shall continue, the Company shall pay in cash as
Liquidated Damages to each holder of any Registrable Securities an amount equal
to two (2%) percent for each thirty (30) days or part thereof, of the Purchase
Price of the Company Shares and one-half (1/2) percent of the aggregate exercise
prices of the Warrants as set forth on the signature page hereto, or Placement
Warrants as set forth on Schedule A hereto, then owned of record by such holder
as of the occurrence of such Non-Registration Event. Payments to be made
pursuant to this Section 9.4 shall be due and payable immediately upon demand in
immediately available funds.
9.5. Expenses. All expenses incurred by the Company in complying with
Section 9, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel and independent public
accountants for the Company, fees and expenses (including counsel fees) incurred
in connection with complying with state securities or "blue sky" laws, fees of
the National Association of Securities Dealers, Inc., transfer taxes, fees of
transfer agents and registrars, fee of one counsel, if any, to represent all the
Sellers, and costs of insurance are called "Registration Expenses". All
underwriting discounts and selling commissions applicable to the sale of
Registrable Securities, including any fees and disbursements of any special
counsel to the Seller, are called "Selling Expenses". The Seller shall pay the
fees of its own additional counsel, if any.
The Company will pay all Registration Expenses in connection with the
registration statement under Section 9. All Selling Expenses in connection with
each registration statement under Section 9 shall be borne by the Seller and may
be apportioned among the Sellers in proportion to the number of shares sold by
the Seller relative to the number of shares sold under such registration
statement or as all Sellers thereunder may agree.
9.6. Indemnification and Contribution.
(a) In the event of a registration of any Registrable Securities under the
Act pursuant to Section 9, the Company will indemnify and hold harmless the
Seller, each officer of the Seller, each director of the Seller, each
underwriter of such Registrable Securities thereunder and each other person, if
any, who controls such Seller or underwriter within the meaning of the 1933 Act,
against any losses, claims, damages or liabilities, joint or several, to which
the Seller, or such underwriter or controlling person may become subject under
the Act or otherwise, insofar as such
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losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
Registrable Securities was registered under the Act pursuant to Section 9, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Seller, each such underwriter and each such controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case if and to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by any such Seller, the
underwriter or any such controlling person in writing specifically for use in
such registration statement or prospectus.
(b) In the event of a registration of any of the Registrable Securities
under the Act pursuant to Section 9, the Seller will indemnify and hold harmless
the Company, and each person, if any, who controls the Company within the
meaning of the Act, each officer of the Company who signs the registration
statement, each director of the Company, each underwriter and each person who
controls any underwriter within the meaning of the Act, against all losses,
claims, damages or liabilities, joint or several, to which the Company or such
officer, director, underwriter or controlling person may become subject under
the Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the registration
statement under which such Registrable Securities were registered under the Act
pursuant to Section 9, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that the Seller will be liable hereunder
in any such case if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with information pertaining to such Seller, as such, furnished in
writing to the Company by such Seller specifically for use in such registration
statement or prospectus, and provided, further, however, that the liability of
the Seller hereunder shall be limited to the proportion of any such loss, claim,
damage, liability or expense which is equal to the proportion that the public
offering price of the Registrable Securities sold by the Seller under such
registration statement bears to the total public offering price of all
securities sold thereunder, but not in any event to exceed the gross proceeds
received by the Seller from the sale of Registrable Securities covered by such
registration statement.
(c) Promptly after receipt by an indemnified party hereunder of notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may
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have to such indemnified party other than under this Section 9.6(c) and shall
only relieve it from any liability which it may have to such indemnified party
under this Section 9.6(c) if and to the extent the indemnifying party is
prejudiced by such omission. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent it shall wish, to assume and undertake the defense thereof
with counsel satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 9.6(c) for any legal expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with counsel
so selected, provided, however, that, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to the indemnifying party or if the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the indemnifying
party, the indemnified parties shall have the right to select one separate
counsel and to assume such legal defenses and otherwise to participate in the
defense of such action, with the reasonable expenses and fees of such separate
counsel and other expenses related to such participation to be reimbursed by the
indemnifying party as incurred.
(d) In order to provide for just and equitable contribution in the event of
joint liability under the Act in any case in which either (i) the Seller, or any
controlling person of the Seller, makes a claim for indemnification pursuant to
this Section 9.6 but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 9.6 provides for indemnification in such case, or (ii) contribution
under the Act may be required on the part of the Seller or controlling person of
the Seller in circumstances for which indemnification is provided under this
Section 9.6; then, and in each such case, the Company and the Seller will
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion so that the
Seller is responsible only for the portion represented by the percentage that
the public offering price of its securities offered by the registration
statement bears to the public offering price of all securities offered by such
registration statement, provided, however, that, in any such case, (A) the
Seller will not be required to contribute any amount in excess of the public
offering price of all such securities offered by it pursuant to such
registration statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 10(f) of the Act) will be
entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.
10. Conditions to Closing. The following condition must be satisfied at or
before the Closing Date.
(a) A Closing under the Plan of Merger shall have occurred and the
Certificate of Merger described in the Plan of Merger shall have been filed with
and accepted by the Delaware Secretary of State.
11. (a) Right of First Refusal. Unitl 180 days after the Effective Date of
the Registration Statement described in Section 9.1(iv) hereof, the Subscriber
shall be given not less than
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ten (10) business days prior written notice of any proposed sale by the Company
of its common stock or other securities or debt obligations. The Subscriber
shall have the right during the ten (10) business days following the notice to
agree to purchase an amount of Company Shares in the same proportion as being
purchased in the aggregate offering to which this Subscription Agreement relates
(i.e. $1,550,000 in the aggregate), of those securities proposed to be issued
and sold, in accordance with the terms and conditions set forth in the notice of
sale. In the event such terms and conditions are modified during the notice
period, the Subscriber shall be given prompt notice of such modification and
shall have the right during the original notice period or for a period of ten
(10) business days following the notice of modification, whichever is longer, to
exercise such right. In the event the right of first refusal described in this
Section is exercised by the Subscriber and the Company thereby receives net
proceeds from such exercise, then commissions and fees will be paid by the
Company to the Placement Agents in the same amounts as specified in the notice
of sale.
(b) Offering Restrictions. Until 180 days after the Effective Date, the
Company agrees not to issue any equity, convertible debt or other securities
without the consent of the Subscribers owning the majority of the Company Shares
purchased in the $1,550,000 offering described herein.
12. Miscellaneous.
(a) Notices. All notices or other communications given or made hereunder
shall be in writing and shall be personally delivered or deemed delivered the
first business day after being telecopied (provided that a copy is delivered by
first class mail) to the party to receive the same at its address set forth
below or to such other address as either party shall hereafter give to the other
by notice duly made under this Section: (i) if to the Company, to Stateside
Fundings, Inc., 1040 East 22nd Street, Brooklyn, New York 11210, telecopier
number: (718) 692-2203, and (ii) if to the Subscriber, to the name, address and
telecopy number set forth on the signature page hereto. Any notice that may be
given pursuant to this Agreement, or any document delivered in connection with
the foregoing may be given by the Subscriber on the first business day after the
observance dates in the United States of America by Orthodox Jewry of Rosh
Hashanah, Yom Kippur, the first two days of the Feast of Tabernacles, Shemini
Atzeret Simchat Torah, the first two and final two days of Passover and
Pentecost, with such notice to be deemed given and effective, at the election of
the Subscriber on a holiday date that precedes such notice. Any notice received
by the Subscriber on any of the aforedescribed holidays may be deemed by the
Subscriber to be received and effective as if such notice had been received on
the first business day after the holiday.
(b) Closing. The consummation of the transactions contemplated herein shall
take place at the offices of Grushko & Mittman, 277 Broadway, Suite 801, New
York, New York 10007, upon the satisfaction of all conditions to Closing set
forth in this Agreement. The closing date shall be the date that subscriber
funds representing the net amount due the Company from the Purchase Price are
transmitted by wire transfer to the Company (the "Closing Date").
(c) Entire Agreement; Assignment. This Agreement represents the entire
agreement between the parties hereto with respect to the subject matter hereof
and may be amended only by a writing executed by both parties. No right or
obligation of either party shall be assigned by that party without prior notice
to and the written consent of the other party.
13
<PAGE>
(d) Conflict. The parties hereto have been advised of a possible conflict
of interest arising from the past and future representation by Grushko & Mittman
of the Subscriber in other transactions and the current representation by
Grushko & Mittman of the Company in connection with the Merger, this
Subscription Agreement, related matters and the registration statement described
in Section 9.1(iv) hereof. The Company and Subscriber acknowledge that they have
been advised by Grushko & Mittman to investigate and consider the potential
impact of this conflict prior to executing this Subscription Agreement and in
connection with the registration statement described in Section 9.1(iv) of this
Subscription Agreement. The parties hereto consent to the representation by
Grushko & Mittman of the Company in this and other matters and the
representation by Grushko & Mittman of the Subscribers in other matters, and
waive any conflict.
(e) Execution. This Agreement may be executed by facsimile transmission,
and in counterparts, each of which will be deemed an original.
(f) Law Governing this Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
principles of conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Agreement shall be
brought only in the state courts of New York or in the federal courts located in
the state of New York. Both parties and the individuals executing this Agreement
and other agreements on behalf of the Company agree to submit to the
jurisdiction of such courts and waive trial by jury. The prevailing party shall
be entitled to recover from the other party its reasonable attorney's fees and
costs. In the event that any provision of this Agreement or any other agreement
delivered in connection herewith is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of any agreement.
(g) Specific Enforcement, Consent to Jurisdiction. The Company and
Subscriber acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injuction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof or thereof, this being
in addition to any other remedy to which any of them may be entitled by law or
equity. Subject to Section 13(e) hereof, each of the Company and Subscriber
hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient forum or that
the venue of the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve process in any other manner permitted
by law.
14
<PAGE>
(h) Automatic Termination. This Agreement shall automatically terminate
without any further action of either party hereto if the Closing shall not have
occurred by the tenth (10th) business day following the date this Agreement is
accepted by the Subscriber.
[THIS SPACE INTENTIONALLY LEFT BLANK]
15
<PAGE>
Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
STATESIDE FUNDINGS, INC.
By:________________________________
Name: Nachum Blumenfrucht
Title: President
Dated: January ____, 2000
Aggregate Purchase Price: $500,000.00
Common Shares Purchased: 1,500,000 (at $.333 per share)
Common Stock Purchase Warrants: 1,500,000
ACCEPTED: Dated as of January ____, 2000
AUSTOST ANSTALT SCHAAN - Subscriber
(a Lichenstein corporation)
7440 Fuerstentum
Lichenstein, Landstrasse 163
Fax: 011-431-534532895
By:____________________________
<PAGE>
Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
STATESIDE FUNDINGS, INC.
By:________________________________
Name: Nachum Blumenfrucht
Title: President
Dated: January ____, 2000
Aggregate Purchase Price: $500,000.00
Common Shares Purchased: 1,500,000 (at $.333 per share)
Common Stock Purchase Warrants: 1,500,000
ACCEPTED: Dated as of January ____, 2000
BALMORE FUNDS, S.A. - Subscriber
(a B.V.I. corporation)
P.O. Box 4603
Zurich, Switzerland
Fax: 011-411-201-6262
By:____________________________
<PAGE>
Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
STATESIDE FUNDINGS, INC.
By:________________________________
Name: Nachum Blumenfrucht
Title: President
Dated: January ____, 2000
Aggregate Purchase Price: $250,000.00
Common Shares Purchased: 750,000 (at $.333 per share)
Common Stock Purchase Warrants: 750,000
ACCEPTED: Dated as of January ____, 2000
AMRO INTERNATIONAL, S.A. - Subscriber
c/o Ultra Finanz
Grossmuenster Platz 26
P.O. Box 4401
Zurich, Switzerland CH 8022
Fax: 011-411-262-5512
By:____________________________
<PAGE>
Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
STATESIDE FUNDINGS, INC.
By:________________________________
Name: Nachum Blumenfrucht
Title: President
Dated: January ____, 2000
Aggregate Purchase Price: $50,000.00
Common Shares Purchased: 150,000 (at $.333 per share)
Common Stock Purchase Warrants: 150,000
ACCEPTED: Dated as of January ____, 2000
ICT N.V. - Subscriber
Antwerp Tower
De Keyserlei 5 Box 59
2018 Antwerp, Belgium
Fax: 011-32-3-233-2680
By:____________________________
<PAGE>
Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
STATESIDE FUNDINGS, INC.
By:________________________________
Name: Nachum Blumenfrucht
Title: President
Dated: January ____, 2000
Aggregate Purchase Price: $150,000.00
Common Shares Purchased: 450,000 (at $.333 per share)
Common Stock Purchase Warrants: 450,000
ACCEPTED: Dated as of January ____, 2000
LEVAL TRADING, INC. - Subscriber
(a B.V.I. corporation)
c/o Thierry Ulmann
14 rue du Conseil-General
CH-1205, Geneva
Switzerland
Fax: 011-41-22-321-0807
By:____________________________
<PAGE>
Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
STATESIDE FUNDINGS, INC.
By:________________________________
Name: Nachum Blumenfrucht
Title: President
Dated: January ____, 2000
Aggregate Purchase Price: $50,000.00
Common Shares Purchased: 150,000 (at $.333 per share)
Common Stock Purchase Warrants: 150,000
ACCEPTED: Dated as of January ____, 2000
NESHER, INC. - Subscriber
(an Isle of Man corporation)
Ragnall House
18 Peel Road
Douglas, Isle of Man
1M1, 4L2, United Kingdom
Fax: 011-972-36120639
By:____________________________
<PAGE>
Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
STATESIDE FUNDINGS, INC.
By:________________________________
Name: Nachum Blumenfrucht
Title: President
Dated: January ____, 2000
Aggregate Purchase Price: $50,000.00
Common Shares Purchased: 150,000 (at $.333 per share)
Common Stock Purchase Warrants: 150,000
ACCEPTED: Dated as of January ____, 2000
TALBIYA B. INVESTMENTS LTD. - Subscriber
(an Isle of Man corporation)
Ragnall House
18 Peel Road
Douglas, Isle of Man
1M1, 4L2, United Kingdom
Fax: 011-972-36120639
By:____________________________
<PAGE>
SCHEDULE A
PLACEMENT AGENT PLACEMENT PLACEMENT
SHARES WARRANTS
- --------------------------------------------------------------------------------
LIBRA FINANCE, S.A 198,000 198,000
P.O. Box 4603
Zurich, Switzerland
Fax: 011-411-201-6262
- --------------------------------------------------------------------------------
AMRO INTERNATIONAL, S.A 41,250 41,250
c/o Ultra Finanz
Grossmuenster Platz 26
P.O. Box 4401
Zurich, Switzerland CH 8022
Fax: 011-411-262-5512
- --------------------------------------------------------------------------------
J. HAYUT 139,500 139,500
1116 Potomac Road
Atlanta, GA 30338
Fax: 404-636-0501
- --------------------------------------------------------------------------------
HYETT CAPITAL LTD 69,750 69,750
1510 51st Street
Brooklyn, New York 11219
Fax: 718-972-6196
- --------------------------------------------------------------------------------
TALBIYA B. INVESTMENTS LTD 16,500 16,500
c/o Ragnall House
18 Peel Road
Douglas, Isle of Man
1M1, 4L2, United Kingdom
Fax: 011-972-36120639
- --------------------------------------------------------------------------------
TOTAL 465,000 465,000
- --------------------------------------------------------------------------------
