STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and entered
into as of October 20, 2000, by and between AUCTION-SALES.COM,
INC., a Delaware Corporation and Zahid Rafiq, an individual
(collectively "Seller"), and INTERNET BUSINESS'S INTERNATIONAL,
INC., a Nevada Corporation ("Buyer").
RECITALS
A. WHEREAS, Seller owns or controls 96.62% of outstanding
and treasury shares ("The Shares") of AUCTION-SALES.COM, INC.,
("THE COMPANY").
B. WHEREAS, Seller desires to sell and transfer to Buyer and
Buyers desires to purchase and acquire from Seller, 96.62% of the
Shares of THE COMPANY, upon the terms and subject to the
conditions set forth in this Agreement. Seller shall have the
obligation for assembling the Exhibits and Addenda, identified
below.
TERMS AND CONDITIONS
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Purchase and Sale. Seller hereby sells, assigns,
transfers and delivers to Buyer, and Buyer hereby purchases and
acquires from Seller, the Shares upon the terms and subject to
the conditions set forth in this Agreement.
2. Purchase Price; Payment Terms.
(a) The purchase price for the Shares is that Buyer
shall transfer 11,000,000 shares of Buyer's Rule 144 Stock to
Seller for all of Seller's stock, as follows:
(i) 5,500,000 restricted shares will be issued to
current shareholders, identified on the list at Addendum "1".
(ii) 2,500,000 restricted shares will be paid to
certain creditors of THE COMPANY identified at Addendum "2."
Seller represents that all of the creditors at Addendum "2," are
unsecured. Seller shall procure signed consents from each
creditor identified at Addendum"2," confirming agreement to
accept restricted shares in proportion to their claims within 60
days of closing. Failure to procure signed consents will justify
rescission of this Agreement at the option of Buyer, such that
each party shall restore to the other the consideration which
each placed into this Agreement.
(iii) 3,000,000 restricted shares of the
purchase price will be paid to outside consultants for work
performed for facilitating the transaction.
(b) Earn out for the "Seller": The Seller shall be paid up
to an additional $3,000,000 (Three Million Dollars) based upon
earnings over the next 3 years through additional rule 144 stock.
The earn out will be based on a 10% growth per year over the
previous years revenue. The $3,000,000 will be distributed
equally over the subsequent 3 year i.e. $1,000,000 per year, and
can be cumulative. This earn out is further defined as follows:
(i) The initial base Year ends on 9-30-00. The subsequent year base
will be the previous revenue
(ii) The stock will be issued per quarter upon reaching the Goal per
quarter for that portion of the annualized growth of 10% over the previous
year.
(c) Buyer may invest up to $2,000,000 to THE COMPANY, at a
Rate not to exceed $500,000 per quarter, based on performance on
THE COMPANY as a function of gross revenues and based on a
budget, which is pre-approved by Buyer.
3. Representations and Warranties of Seller. Seller
hereby represents and warrants to Buyer as follows:
3.1 Authority. Seller has the right; power and authority
to enter into this Agreement and to perform all obligations'
required to be performed by it hereunder. THE COMPANY has the
full power to transfer the Shares to Buyer without obtaining the
consent or approval of any other person or governmental
authority.
3.2 Title to Shares. Seller is the owner, beneficially and
of record, of all the Shares free and clear of all liens,
encumbrances, security agreements, equities, options, claims,
charges, and restrictions.
3.3 Organization. AUCTION-SALES.COM.,INC., is a corporation dully
organized, validly existing, and in good standing under the laws of the State
of Delaware and has all necessary corporate powers to own its properties and
operate its business as now owned and operated by it. Exhibit "A" contains
the Articles of Incorporation, Bylaws, Minutes and Stock Book of THE COMPANY.
3.4 Authorization. This Agreement and all other agreements
and documents executed and delivered by Seller constitute valid
and legally binding obligations of Seller enforceable in
accordance with their respective terms, subject to laws of
general application relation to bankruptcy, insolvency and the
relief of debtors and subject to availability of equitable
remedies.
3.5 Capitalization. The authorized capital stock of THE
COMPANY consists of shares of Common Stock, of which 100% of said
shares are held in THE COMPANY'S treasury or are issued to and in
possession of Zahid Rafiq, or to the persons identified in
Addendum "1." All of the outstanding shares are validly issued,
and paid, and nonassessable, and such shares have been so issued
in full compliance with all federal and state securities laws.
There are no outstanding subscriptions, options, rights,
warrants, convertible securities, or other agreement or
commitments obligating THE COMPANY to issue or to transfer from
treasury any additional shares of its capital stock of any class.
3.6 Financials. Exhibit "B," to this Agreement contains
the federal tax returns for THE COMPANY for the years 1997
through 1999. To the best of Seller's knowledge, there are not
outstanding taxes owed. Exhibit "C," to this Agreement sets
forth the financial statements of THE COMPANY, including the
balance sheets and statements of earnings as of September 30,
2000. The financial statements attached hereto as Exhibit "C,"
have been prepared in accordance with generally accepted
accounting principles consistently followed by THE COMPANY
throughout all periods indicated, and fairly present the
financial position of THE COMPANY on the respective dates of the
balance sheets included in the financial statements, and the
results of its operations for the respective periods indicated.
Since September 30, 2000, there has not been any change in the
financial condition or operations of THE COMPANY or its business,
assets, properties or prospects, except as set forth on Exhibit
"D," which also contains all of the debts and liabilities of THE
COMPANY.
3.7 Absence of Undisclosed Liabilities. THE COMPANY is not
aware of any debt, liability or obligation of any nature, whether
accrued, absolute, contingent or otherwise, and whether due or to
become due, that is not reflected in the financial statements,
except as set forth on Exhibit "D."
3.8 Tax Returns. Within the times and in the manner
prescribed by law, THE COMPANY has filed all federal, state and
local tax returns required by law and has paid all taxes,
assessments, including but not limited to income and payroll
taxes, and penalties. The provisions for taxes reflected in the
financial statements are adequate for all federal, state, county
and local taxes for the period that ended September 30, 2000, and
for all prior periods, whether disputed or undisputed. There are
no present disputes about taxes of any nature payable or owed by
THE COMPANY.
3.9 Personal Property. The books and records of THE
COMPANY contain a complete and accurate description and specify
the location of all equipment, furniture, supplies and all other
tangible personal property owned by, in the possession of, or
used by THE COMPANY in connection with its business. No Personal
property is held under any lease, security agreement, conditional
sales contract or other title retention or security arrangement,
or is located other than in the possession and under the control
of THE COMPANY. The tangible personal property reflected those
books and records constitutes all such tangible personal property
necessary for the conduct by THE COMPANY of its business as now
conducted. All of the tangible personal property of THE COMPANY
is in good operating condition and repair, reasonable wear and
tear excepted.
3.10 Title. THE COMPANY has good and marketable title to
all of its assets and interest in assets, whether real, personal,
mixed, tangible or intangible, which constitute all of the assets
and interest in assets that are used in the business of THE
COMPANY. All of these assets are free and clear of restrictions
or conditions to transfer or assignment and are free and clear of
mortgages, liens, pledges, charges, encumbrances, equities and
claims of third parties, except for (a) those disclosed on
Exhibit "D;" and (b) the lien for current taxes not yet due and
payable. Exhibit "E," to this Agreement is a schedule of all
personal assets owned by THE COMPANY which are in its possession.
3.11 Accounts Receivable. All accounts receivable of THE
COMPANY shown on the financial statements, and all accounts
receivable of THE COMPANY created after September 30, 2000, arose
from valid sales in the ordinary course of business. These
amounts have been collected in full since that date as reflected
in the books and records of THE COMPANY, or are collectible at
their full amounts and are not subject to valid defenses, setoffs
or counterclaims. THE COMPANY agrees that as of September 30,
2000, all receivables shall be the property of Buyer. Exhibit
"F" contains accounts receivable.
3.12 Accounts Payable. Exhibit "G," to this Agreement is a
complete and accurate list, with an accurate aging, of all trade
and other accounts, notes and contract payables of THE COMPANY as
of the date hereof, all which arose in the ordinary course of
business and are usual and normal in amount.
3.13 Deleted
3.14 Contracts. Except as otherwise disclosed in any of the
exhibits to this Agreement, THE COMPANY is not a party to, nor is
its properties or assets bound by, and contract, agreement,
understanding (whether written or verbal) of any nature
whatsoever. There is no default or event that, with notice,
lapse of time, or both, would constitute a default by any party
to any agreement to which THE COMPANY is a party or by which it
or its properties or assets are bound.
3.15 Employees and Employee Benefit Plans. Exhibit "h" to
this Agreement is a correct and complete list of all full-time
and part-time employees of THE COMPANY, together with their
address, social security numbers and all current and promised
salary, wage and bonus information. All of the employees of THE
COMPANY are at will employees and may be terminated by THE
COMPANY at any time without liability and without any obligation
to pay any severance or similar benefit. There are no employment
contracts, collective bargaining agreement, pension, bonus,
profit-sharing, stock option or other agreement or arrangement
providing for employee remuneration or benefits to which THE
COMPANY is party or by which it is bound. THE COMPANY has
delivered to Buyer a copy of its most current employee manual and
description of all company policies and practices, including no
discrimination, overtime, vacation, holiday and sick leave, if
any. THE COMPANY's relationship with all of its employees is
good. All unused vacation, holiday and sick leave, and any other
paid time off, for all of the employees has been properly and
accurately recorded in the books and records of THE COMPANY and
are reflected on Exhibit "I," attached hereto. All records of
THE COMPANY for each of its employees are complete and accurate.
There are no arrearages nor obligations outstanding or owed to
any employee, including but not limited to Zahid Rafiq.
3.16 Litigation. There is no pending, or, to Seller's
knowledge, threatened suit, action, arbitration or legal
administrative or other proceeding, or governmental investigation
against or affecting THE COMPANY or its business, assets or
financial condition. THE COMPANY is not presently engaged in any
legal action to recover money due to it or damages sustained by
it.
3.17 Compliance with Laws. Seller has not received notice
of any violation of any applicable federal, state or local
statute, law or regulation of any kind or nature whatsoever,
including, without limitation, any applicable building, zoning,
environmental protection, health and safety, handicap access, or
other law, ordinance or regulation, affecting its properties or
the operation of its business and there are not such violations.
Seller has all proper and valid licenses, permits and other
governmental authorities necessary to conduct business as now
being conducted.
3.18 Agreement will not Cause a Breach or Violation. The
consummation of the transactions contemplated by this Agreement
will not result in or constitute any of the following: (a) a
breach of any term or provision of this Agreement (b) a default
or an event that, with notice, lapse of time, or both, would be a
default, breach, or violation of the Articles of Incorporation or
Bylaws of THE COMPANY or any lease, license, promissory note,
conditional sales contract, commitment, indenture, mortgage, deed
of trust, or other agreement, instrument, or arrangement to which
it is bound (c) an event that would permit any party to terminate
any agreement or to accelerate the maturity of any indebtedness
or other obligation of THE COMPANY; or (d) the creation or
imposition of any lien, charge, or encumbrance on any of the
properties of THE COMPANY.
3.19 Corporate Records. All corporate records are in the
possession of Seller and are complete and accurate in all
material respects. The minute book of THE COMPANY contains
complete, accurate and current copies of the Articles of
Incorporation, Bylaws and all amendments thereto, and all records
required to be set forth of all proceedings, consents actions and
meetings of the shareholders and board of directors of THE
COMPANY.
3.20 Persons with Authority. Exhibit "J," to this Agreement
contains a complete and accurate list of (a) all bank accounts of
THE COMPANY and all other accounts at any financial institutions,
including the names and addresses thereof and the account
numbers, and the signatory or signatories thereon; (b) the names
and addresses of all persons holding a power of attorney on
behalf of THE COMPANY; all safe deposit boxes and the names of
all persons authorized to have access thereto; and (d) the names
and addresses of all persons and entities which have guaranteed
any debts or obligation of THE COMPANY or with respect to whom
THE COMPANY has guaranteed any debts or obligation.
3.21 Full Disclosure. None of the warranties made by
Seller, whether in this Agreement of in the Exhibits or Addenda
hereto, will contain any untrue statement of material fact, or
omit to state any material fact necessary to make the statements
made true and accurate in all material respects. The existence
of any untrue statement of a material fact, shall be grounds for
rescission of this Agreement.
4. Buyer hereby represents and warrants to Seller as follows:
4.1 Authority. Buyer has the right, power and authority to
enter into this Agreement and to perform all obligations required
to be performed by it hereunder.
4.2 Authorization. This Agreement and all other agreements
and documents executed and delivered by Buyer constitute valid
and legally binding obligations of Buyer enforceable in
accordance with their respective terms, subject to laws of
general application relating to bankruptcy, insolvency and the
relief of debtors and subject to availability of equitable
remedies.
5. Resignation of Officers and Directors. Concurrently
with the execution of this Agreement, Seller shall obtain and
deliver to Buyer resignations from all THE COMPANY's directors
and officers, together with general releases by such persons of
all claims that they may have, or claim to have against THE
COMPANY.
6. Survival of All Warranties and Representations. All
representations, warranties, covenants and agreements of the
parties contained in this Agreement will survive the closing.
7.1 Indemnification by Zahid Rafiq. Zahid Rafiq
individually, hereby agrees to indemnify, defend, protect and
hold Buyer, and/or its assigns, and AUCTION-SALES.COM,INC.,
harmless against and in respect of all claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries
and deficiencies, including interest, penalties and reasonable
attorneys' fees, that THE COMPANY or Buyer may incur or suffer,
which arise, result from or relate to any fraudulent, intentional
or grossly negligent breach or failure by Zahid Rafiq or Seller
to perform any of the representations, warranties, covenants or
agreements in this Agreement. Zahid Rafiq further agrees to
indemnify and hold Buyer and/or its assigns harmless from all
liabilities not disclosed to Buyer and accepted by Buyer, and
specifically, Buyer will not be responsible for any back taxes
owed by Zahid Rafiq or Seller to any taxing authority, federal or
state.
7.2 Indemnification by Buyer. Buyer hereby agrees to
indemnify, defend, protect and hold Zahid Rafiq harmless against
and in respect of all claims, demands, losses, costs, expenses,
obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties and reasonable attorneys' fees,
that he may incur or suffer, which arise after the date of
closing of this Agreement, that are not related to any fraudulent
or intentional breach or failure by Zahid Rafiq or Seller to
perform any of the representations, warranties, covenants or
agreements in this Agreement.
8. Attorneys' Fees and Costs. Each party shall be solely
responsible for the costs and fees of its own attorneys in
connection with the negotiation of this Agreement. If any suit,
legal proceeding, arbitration or other action is brought for the
enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any of
the provisions of this Agreement, the successful or prevailing
party shall be entitled to recover its reasonable attorneys' fees
and other cost incurred in such proceeding or action, in addition
to any other relief to which it may be entitled.
9. Governing Law. This Agreement will be construed in
accordance with, and governed by, the laws of the State of
California as applied to contracts that are executed and
performed entirely in California.
10. Disputes; Arbitration over Price. Any dispute arising
between the parties, their agents or employees shall be submitted
to arbitration before JAMS/ENDISPUTE of Orange County,
California.
11. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns.
12. Counterparts and Facsimile Transmission. This Agreement
may be executed in two or more counterparts, each of which shall
be deemed an original, and all of which when taken together shall
constitute one and the same document. The signature of any party
to any counterpart shall be deemed a signature to, and may be
appended to, any other counterpart. Any party may deliver its
signed counterpart of this Agreement to the other party by
facsimile transmission, and such delivery shall be deemed made
and completed upon receipt of such facsimile transmission by the
other party. Any party delivering a signed counterpart by
facsimile transmission agrees to promptly send the counterpart
bearing its original signature to the other party; provided that
a delay or failure to do so shall not negate the effectiveness of
the delivery made by the facsimile transmission.
13. Entire Agreement. This Agreement contains the entire
understanding between the parties hereto with respect to the
subject matter hereof and supersedes any and all prior or
contemporaneous written or oral negotiations or agreements
between them regarding the subject matter hereof. No additions,
modification or amendment of or to any term or provision of this
Agreement, or to this Agreement as a whole, shall be effective
unless set forth in writing and signed by all the parties hereto.
14. No Interpretation Against Draftsman. Both parties have
had an equal role in the preparation of this Agreement, such that
there shall be no interpretation or construction of terms against
the draftsman.
15. Attorneys. Seller and Buyer each acknowledge that the
other is represented by counsel and neither is relying in any
respect on any statements or representations of the other party's
counsel.
16. Broker's Fees. Each side shall pay its own broker's
and accountant's fees, if any.
WHEREFORE, the parties agree:
SELLER
AUCTION-SALES.COM,INC.
By: /s/ Zahid Rafiq
Zahid Rafiq, CEO
/s/ Zahid Rafiq
Zahid Rafiq, Shareholder
BUYER
INTERNET BUSINESS'S
INTERNATIONAL, INC.
By: /s/ Albert Reda
Albert Reda, CEO
