Exhibit 10.1
BESTNET COMMUNICATIONS CORP.
STOCK PURCHASE AGREEMENT
FEBRUARY 21, 2002
TABLE OF CONTENTS
PAGE
ARTICLE I SALE AND PURCHASE OF SHARES.................................. 1
1.1. Sale and Purchase of Shares.................................. 1
ARTICLE II CLOSING, DELIVERY AND PAYMENT................................ 1
2.1. Closing...................................................... 1
2.2. Deliveries by the Company.................................... 2
2.3. Deliveries by Buyer.......................................... 2
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY................ 2
3.1. Organization, Good Standing and Qualification................ 2
3.2. Subsidiaries................................................. 2
3.3. Capitalization; Voting Rights................................ 2
3.4. Authorization; Binding Obligations........................... 3
3.5. Liabilities.................................................. 3
3.6. Agreements; Action........................................... 3
3.7. Obligations to Related Parties............................... 4
3.8. Changes...................................................... 5
3.9. Title to Properties and Assets; Liens, Etc. ................. 6
3.10. Intellectual Property........................................ 6
3.11. Compliance with Other Instruments............................ 6
3.12. Litigation................................................... 7
3.13. Tax Returns and Payments..................................... 7
3.14. Employees.................................................... 7
3.15. Registration Rights and Voting Rights........................ 8
3.16. Compliance with Laws; Permits................................ 8
3.17. Environmental and Safety Laws................................ 8
3.18. Full Disclosure.............................................. 8
3.19. Insurance.................................................... 9
3.20. SEC Reports.................................................. 9
3.21. No Market Manipulation....................................... 9
3.22. Listing...................................................... 9
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TABLE OF CONTENTS
(continued)
PAGE
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.............. 9
4.1. Requisite Power and Authority................................ 9
4.2. Investment Representations................................... 10
4.3. Purchaser Bears Economic Risk................................ 10
4.4. Purchaser Can Protect Its Interest........................... 10
4.5. Accredited Investor.......................................... 10
4.6. Legends...................................................... 10
ARTICLE V CONDITIONS TO THE COMPANY'S AND PURCHASER'S OBLIGATIONS...... 10
5.1. Conditions to Obligations of the Company..................... 10
5.2. Conditions to Obligations of the Purchaser................... 11
ARTICLE VI MISCELLANEOUS................................................ 11
6.1. Governing Law................................................ 11
6.2. Survival..................................................... 12
6.3. Assignment................................................... 12
6.4. Entire Agreement............................................. 12
6.5. Severability................................................. 12
6.6. Amendment and Waiver......................................... 12
6.7. Delays or Omissions.......................................... 12
6.8. Notices...................................................... 12
6.9. Costs and Expenses........................................... 13
6.10. Titles and Subtitles......................................... 13
6.11. Counterparts/Fax Signatures.................................. 13
6.12. Broker's Fees................................................ 14
6.13. Construction................................................. 14
6.14. Further Assurances........................................... 14
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into as
of February 21, 2002, by and among BestNet Communications Corp., a Nevada
corporation (the "Company"), and Jay Greig, Ph.D. (the "Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale of shares of its common stock,
par value $0.001 per share ("Common Stock");
WHEREAS, Purchaser desires to purchase Common Stock on the terms and
conditions set forth herein; and
WHEREAS, the Company desires to issue and sell Common Stock to Purchaser on
the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises, representations, warranties and covenants hereinafter set forth and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF SHARES
1.1. SALE AND PURCHASE OF SHARES. Pursuant to the terms and conditions set
forth in this Agreement, on the Closing Date (as defined in Section 2.1), the
Company agrees to sell to the Purchaser, and the Purchaser hereby agrees to
purchase from the Company $250,000 (the "Purchase Price") of Common Stock priced
at a 35% discount from the average of the lowest bid price of the Common Stock
at closing as reported by Bloomberg Financial for the NASD OTC Bulletin Board,
for the ten (10) trading days preceding but not including the Closing Date (the
"Purchased Securities").
ARTICLE II
CLOSING, DELIVERY AND PAYMENT.
2.1. CLOSING. Subject to the conditions stated in Article 5 of this
Agreement, the closing of the transactions contemplated hereby (the "Closing")
shall be held on such date and at such time as the parties may agree, provided
however, that such Closing shall not occur later than the fifth (5th) business
day after the condition set forth in Section 5.2(a) has been satisfied, at the
offices of Squire, Sanders & Dempsey L.L.P. Two Renaissance Square, Suite 2700,
40 North Central Avenue, Phoenix, Arizona 85004-4498. The date upon which the
Closing occurs is hereinafter referred to as the "Closing Date." The Closing
shall be deemed completed as of 12:01 a.m. New York time on the morning of the
Closing Date.
2.2. DELIVERIES BY THE COMPANY. At the Closing, the Company shall deliver
to Purchaser:
(a) certificates representing the Purchased Securities;
(b) a certificate executed by the Company to the effect that the
conditions set forth in Section 5.2(a) have been satisfied; and
(c) the Company's Officer's Certificate.
2.3. DELIVERIES BY BUYER. At the Closing, Buyer shall deliver to Seller:
(a) the Purchase Price in the form of certified funds or by wire
transfer;
(b) a certificate executed by an authorized officer of the Buyer, on
behalf of the Buyer, to the effect that the conditions set forth in SECTION
6.1(b) have been satisfied; and
(c) the Purchaser's Officer's Certificate.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Purchaser as of the date
of this Agreement as set forth below.
3.1. ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada. The Company has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement, to issue and sell the Purchased Securities to carry out the
provisions of this Agreement and to carry on its business as presently conducted
and as presently proposed to be conducted. The Company is duly qualified and is
authorized to do business and is in good standing as a foreign corporation in
all jurisdictions in which the nature of its activities and of its properties
(both owned and leased) makes such qualification necessary, except for those
jurisdictions in which failure to do so would not have a material adverse effect
on the Company or its business.
3.2. SUBSIDIARIES. Except as disclosed on Schedule 3.2, the Company does
not own or control any equity security or other interest of any other
corporation, limited partnership or other business entity. If any entity is
listed on Schedule 3.2 and the Company owns a controlling interest in such
entity, each of the representations and warranties set forth in this Article 3
are being hereby restated with respect to such entity (modified as appropriate
to the nature of such entity.)
3.3. CAPITALIZATION; VOTING RIGHTS.
(a) As of February 15, 2002, the authorized capital stock of the
Company consists of (i) 50,000,000 shares of Common Stock, par value $0.001 per
share, 15,325,755 shares of which are issued and outstanding, and (ii)
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10,000,000 shares of Preferred Stock, par value $0.001 per share, 3,202.14
shares of which are issued and outstanding.
(b) Except as disclosed on Schedule 3.3 hereto, there are no
outstanding options, warrants, rights (including conversion or preemptive rights
and rights of first refusal), proxy or stockholder agreements, or arrangements
or agreements of any kind for the purchase or acquisition from the Company of
any of its securities. Neither the offer, issuance or sale of any of the
Purchased Securities, nor the consummation of any transaction contemplated
hereby will result in a change in the price or number of any securities of the
Company outstanding, under anti-dilution or other similar provisions contained
in or affecting any such securities.
(c) All issued and outstanding shares of the Company's Common Stock
(i) have been duly authorized and validly issued and are fully paid and
nonassessable and (ii) were, to the Company's knowledge, issued in compliance
with all applicable state and federal laws concerning the issuance of
securities.
(d) The Purchased Securities have been duly and validly reserved for
issuance. When issued and paid for in compliance with the provisions of this
Agreement, the Purchased Securities will be validly issued, fully paid and
nonassessable, and will be free of any liens or encumbrances, except for liens
or encumbrances placed on such securities by the Purchaser; PROVIDED, HOWEVER,
that the Purchased Securities may be subject to restrictions on transfer under
state and/or federal securities laws as set forth herein or as otherwise
required by such laws at the time a transfer is proposed.
3.4. AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the part
of the Company, its officers, directors and stockholders necessary for the
authorization of this Agreement, the performance of all obligations of the
Company hereunder at the Closing and the authorization, sale, issuance and
delivery of the Purchased Securities pursuant hereto has been taken or will be
taken prior to the Closing. The Agreement, when executed and delivered, will be
a valid and binding obligation of the Company enforceable in accordance with its
terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights, and (b) general principles of equity that
restrict the availability of equitable remedies. The sale of the Purchased
Securities are not and will not be subject to any preemptive rights or rights of
first refusal that have not been properly waived or complied with.
3.5. LIABILITIES. Except as set forth in the SEC Reports (as defined in
Section 3.20), the Company has no material liabilities and, to its knowledge,
knows of no material contingent liabilities, except current liabilities incurred
in the ordinary course of business which have not been, either in any individual
case or in the aggregate, materially adverse.
3.6. AGREEMENTS; ACTION.
(a) Except as set forth in the SEC Reports, there are no agreements,
understandings, instruments, contracts, proposed transactions, judgments,
orders, writs or decrees to which the Company is a party, or to its knowledge,
by which it is bound which may involve (i) obligations (contingent or otherwise)
of, or payments to, the Company in excess of $50,000 (other than obligations of,
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or payments to, the Company arising from purchase or sale agreements entered
into in the ordinary course of business), or (ii) the transfer or license of any
patent, copyright, trade secret or other proprietary right to or from the
Company (other than licenses arising from the purchase of "off the shelf" or
other standard products), or (iii) provisions restricting the development,
manufacture or distribution of the Company's products or services, other than
those with respect to the Softalk license, or (iv) indemnification by the
Company with respect to infringements of proprietary rights.
(b) Except as set forth on SCHEDULE 3.6(b) hereto, since the date of
the Company's most recent Form 10-QSB the Company has not (i) declared or paid
any dividends, or authorized or made any distribution upon or with respect to
any class or series of its capital stock, (ii) incurred any indebtedness for
money borrowed or any other liabilities individually in excess of $50,000 or, in
the case of indebtedness and/or liabilities individually less than $50,000, in
excess of $100,000 in the aggregate, (iii) made any loans or advances to any
person, other than ordinary advances for travel expenses, or (iv) sold,
exchanged or otherwise disposed of any of its assets or rights, other than the
sale of its inventory in the ordinary course of business.
(c) For the purposes of subsections (a) and (b) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
(d) The Company has not engaged in the past two years in any
discussion (i) with any representative of any corporation or corporations
regarding the consolidation or merger of the Company with or into any such
corporation or corporations, (ii) with any corporation, partnership, association
or other business entity or any individual regarding the sale, conveyance or
disposition of all or substantially all of the assets of the Company, or a
transaction or series of related transactions in which more than 50% of the
voting power of the Company is disposed of or (iii) regarding any other form of
acquisition, liquidation, dissolution or winding up of the Company.
3.7. OBLIGATIONS TO RELATED PARTIES. There are no obligations of the
Company to officers, directors, stockholders or employees of the Company other
than (a) for payment of salary for services rendered, (b) reimbursement for
reasonable expenses incurred on behalf of the Company and (c) for other standard
employee benefits made generally available to all employees (including stock
option agreements outstanding under any stock option plan approved by the Board
of Directors of the Company). None of the officers, directors or stockholders of
the Company, or any members of their immediate families, are indebted to the
Company. None of the officers, directors or, to the Company's knowledge, key
employees or stockholders of the Company or any members of their immediate
families, are indebted to the Company or have any direct or indirect ownership
interest in any firm or corporation with which the Company is affiliated or with
which the Company has a business relationship, other than with respect to
Softalk, or any firm or corporation which competes with the Company, other than
passive investments in publicly traded companies (representing less than 1% of
such company) which may compete with the Company. No officer, director or
stockholder, or any member of their immediate families, is, directly or
indirectly, interested in any material contract with the Company and no
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agreements, understandings or proposed transactions are contemplated between the
Company and any such person. The Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.
3.8. CHANGES. Since November 30, 2001, there has not been:
(a) Any change in the assets, liabilities, financial condition, or
operations of the Company, other than changes in the ordinary course of
business, none of which individually or in the aggregate has had or is
reasonably expected to have a material adverse effect on such assets,
liabilities, financial condition, or operations of the Company;
(b) Any resignation or termination of any officer, key employee or
group of employees of the Company;
(c) Any material change, except in the ordinary course of business, in
the contingent obligations of the Company by way of guaranty, endorsement,
indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, business or
prospects or financial condition of the Company;
(e) Any waiver by the Company of a valuable right or of a material
debt owed to it;
(f) Any direct or indirect loans made by the Company to any
stockholder, employee, officer or director of the Company, other than advances
made in the ordinary course of business;
(g) Any material change in any compensation arrangement or agreement
with any employee, officer, director or stockholder;
(h) Any declaration or payment of any dividend or other distribution
of the assets of the Company;
(i) Any labor organization activity related to the Company;
(j) Any debt, obligation or liability incurred, assumed or guaranteed
by the Company, except those for immaterial amounts and for current liabilities
incurred in the ordinary course of business;
(k) Any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(l) Any change in any material agreement to which the Company is a
party or by which it is bound which may materially and adversely affect the
business, assets, liabilities, financial condition, or operations of the
Company;
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(m) Any other event or condition of any character that, either
individually or cumulatively, has or may materially and adversely affect the
business, assets, liabilities, financial condition, prospects or operations of
the Company; or
(n) Any arrangement or commitment by the Company to do any of the acts
described in subsection (a) through (m) above.
3.9. TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has good and
marketable title to its properties and assets, and good title to its leasehold
estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance
or charge, other than (a) those resulting from taxes which have not yet become
delinquent, (b) minor liens and encumbrances which do not materially detract
from the value of the property subject thereto or materially impair the
operations of the Company, and (c) those that have otherwise arisen in the
ordinary course of business. All facilities, machinery, equipment, fixtures,
vehicles and other properties owned, leased or used by the Company are in good
operating condition and repair, ordinary wear and tear excepted, and are
reasonably fit and usable for the purposes for which they are being used. The
Company is in compliance with all material terms of each lease to which it is a
party or is otherwise bound.
3.10. INTELLECTUAL PROPERTY.
(a) The Company owns or possesses sufficient legal rights to all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information and other proprietary rights and processes necessary for
its business as now conducted and to the Company's knowledge as presently
proposed to be conducted (the "Intellectual Property"), without any known
infringement of the rights of others. Other than with respect to Softalk, there
are no outstanding options, licenses or agreements of any kind relating to the
foregoing proprietary rights, nor is the Company bound by or a party to any
options, licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information and other proprietary rights and processes of any other person or
entity other than such licenses or agreements arising from the purchase of "off
the shelf" or standard products.
(b) The Company has not received any communications alleging that the
Company has violated any of the patents, trademarks, service marks, trade names,
copyrights or trade secrets or other proprietary rights of any other person or
entity, nor is the Company aware of any basis therefor.
(c) The Company does not believe it is or will be necessary to utilize
any inventions, trade secrets or proprietary information of any of its employees
made prior to their employment by the Company, except for inventions, trade
secrets or proprietary information that have been rightfully assigned to the
Company.
3.11. COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in material
violation or default of any term of its Charter or Bylaws, or of any provision
of any material mortgage, indenture, contract, agreement, instrument or contract
to which it is party or by which it is bound or of any judgment, decree, order
or writ. The execution, delivery and performance of and compliance with this
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Agreement, and the issuance and sale of the Purchased Securities pursuant
hereto, will not, with or without the passage of time or giving of notice,
result in any material violation, or be in conflict with or constitute a default
under any term or provision, or result in the creation of any mortgage, pledge,
lien, encumbrance or charge upon any of the properties or assets of the Company
or the suspension, revocation, impairment, forfeiture or nonrenewal of any
permit, license, authorization or approval applicable to the Company, its
business or operations or any of its assets or properties.
3.12. LITIGATION. There is no action, suit, proceeding or investigation
pending or, to the Company's knowledge, currently threatened against the Company
that questions the validity of this Agreement or the right of the Company to
enter into any of such agreements, or to consummate the transactions
contemplated hereby or thereby, or which might result, either individually or in
the aggregate, in any material adverse change in the assets, condition, or
affairs of the Company, financially or otherwise, or any change in the current
equity ownership of the Company, nor is the Company aware that there is any
basis for any of the foregoing. The Company is not a party or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality. Other than an action filed by the Company
against Joseph Vasquez III, and entities affiliated with Mr. Vasquez, there is
no action, suit, proceeding or investigation by the Company currently pending or
which the Company intends to initiate.
3.13. TAX RETURNS AND PAYMENTS. The Company has timely filed all tax
returns (federal, state and local) required to be filed by it. All taxes shown
to be due and payable on such returns, any assessments imposed, and to the
Company's knowledge all other taxes due and payable by the Company on or before
the Closing, have been paid or will be paid prior to the time they become
delinquent. The Company has not been advised (a) that any of its returns,
federal, state or other, have been or are being audited as of the date hereof,
or (b) of any deficiency in assessment or proposed judgment to its federal,
state or other taxes. The Company has no knowledge of any liability of any tax
to be imposed upon its properties or assets as of the date of this Agreement
that is not adequately provided for.
3.14. EMPLOYEES. The Company has no collective bargaining agreements with
any of its employees. There is no labor union organizing activity pending or, to
the Company's knowledge, threatened with respect to the Company. Except as
disclosed on Schedule 3.14 hereto, the Company is not a party to or bound by any
currently effective employment contract, deferred compensation arrangement,
bonus plan, incentive plan, profit sharing plan, retirement agreement or other
employee compensation plan or agreement. To the Company's knowledge, no employee
of the Company, nor any consultant with whom the Company has contracted, is in
violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be employed by, or to contract with, the Company because of the nature of the
business to be conducted by the Company; and to the Company's knowledge the
continued employment by the Company of its present employees, and the
performance of the Company's contracts with its independent contractors, will
not result in any such violation. The Company is not aware that any of its
employees is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
their duties to the Company. The Company has not received any notice alleging
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that any such violation has occurred. No employee of the Company has been
granted the right to continued employment by the Company or to any material
compensation following termination of employment with the Company. The Company
is not aware that any officer, key employee or group of employees intends to
terminate his, her or their employment with the Company, nor does the Company
have a present intention to terminate the employment of any officer, key
employee or group of employees.
3.15. REGISTRATION RIGHTS AND VOTING RIGHTS. Except as set forth on
Schedule 3.15 hereto, the Company is presently not under any obligation, and has
not granted any rights, to register any of the Company's presently outstanding
securities or any of its securities that may hereafter be issued. To the
Company's knowledge, no stockholder of the Company has entered into any
agreement with respect to the voting of equity securities of the Company.
3.16. COMPLIANCE WITH LAWS; PERMITS. To its knowledge, the Company is not
in violation of any applicable statute, rule, regulation, order or restriction
of any domestic or foreign government or any instrumentality or agency thereof
in respect of the conduct of its business or the ownership of its properties
which violation would materially and adversely affect the business, assets,
liabilities, financial condition, or operations of the Company. No governmental
orders, permissions, consents, approvals or authorizations are required to be
obtained and no registrations or declarations are required to be filed in
connection with the execution and delivery of this Agreement and the issuance of
any of the Purchased Securities, except such as has been duly and validly
obtained or filed, or with respect to any filings that must be made after the
Closing, as will be filed in a timely manner. The Company has all franchises,
permits, licenses and any similar authority necessary for the conduct of its
business as now being conducted by it, the lack of which could materially and
adversely affect the business, properties, prospects or financial condition of
the Company.
3.17. ENVIRONMENTAL AND SAFETY LAWS. The Company is not in violation of any
applicable statute, law or regulation relating to the environment or
occupational health and safety, and to its knowledge, no material expenditures
are or will be required in order to comply with any such existing statute, law
or regulation. No Hazardous Materials (as defined below) are used or have been
used, stored, or disposed of by the Company or, to the Company's knowledge, by
any other person or entity on any property owned, leased or used by the Company.
For the purposes of the preceding sentence, "Hazardous Materials" shall mean (a)
materials which are listed or otherwise defined as "hazardous" or "toxic" under
any applicable local, state, federal and/or foreign laws and regulations that
govern the existence and/or remedy of contamination on property, the protection
of the environment from contamination, the control of hazardous wastes, or other
activities involving hazardous substances, including building materials, or (b)
any petroleum products or nuclear materials.
3.18. FULL DISCLOSURE. The Company has provided the Purchaser with all
information requested by the Purchaser in connection with its decision to
purchase the Purchased Securities. Neither this Agreement, the exhibits and
schedules hereto, nor any other document delivered by the Company to Purchaser
or its attorneys or agents in connection herewith or therewith or with the
transactions contemplated hereby or thereby, contain any untrue statement of a
material fact nor omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading. To the Company's
knowledge, there are no facts which (individually or in the aggregate)
8
materially adversely affect the business, assets, liabilities, financial
condition, or operations of the Company that have not been set forth in the
Agreement, the exhibits and schedules hereto, or in other documents delivered to
Purchaser or its attorneys or agents in connection herewith.
3.19. INSURANCE. The Company has general commercial, product liability,
fire and casualty insurance policies with coverage customary for companies
similarly situated to the Company.
3.20. SEC REPORTS. To the best of the Company's knowledge, the Company has
filed all proxy statements, reports and other documents required to be filed by
it under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
The Company has furnished the Purchaser with copies of (i) its Annual Report on
Form 10-KSB for the fiscal year ended August 31, 2001, (ii) its Quarterly Report
on Form 10-QSB for the fiscal quarter ended November 30, 2001 and (iii) its
Proxy Statement dated August 8, 2000 (collectively, the "SEC Reports"). Each SEC
Report was in substantial compliance with the requirements of its respective
form and none of the SEC Reports, nor the financial statements (and the notes
thereto) included in the SEC Reports, as of their respective dates, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
3.21. NO MARKET MANIPULATION. The Company has not taken, and will not take,
directly or indirectly, any action designed to, or that might reasonably be
expected to, cause or result in stabilization or manipulation of the price of
the Common Stock of the Company to facilitate the sale or resale of any of the
Purchased Securities being offered hereby or affect the price at which any of
the Purchased Securities being offered hereby may be issued.
3.22. LISTING. The Company's Common Stock is listed for trading on the NASD
OTC Bulletin Board and satisfies all requirements for the continuation of such
listing. The Company has not received any notice that its Common Stock will be
delisted from the NASD OTC Bulletin Board or that the Common Stock does not meet
all requirements for the continuation of such listing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby represents and warrants to the Company with respect to
itself or himself as follows:
4.1. REQUISITE POWER AND AUTHORITY. Purchaser has all necessary power and
authority under all applicable provisions of law to execute and deliver this
Agreement and to carry out their provisions. All action on Purchaser's part
required for the lawful execution and delivery of this Agreement have been or
will be effectively taken prior to the Closing. Upon its execution and delivery,
this Agreement will be valid and binding obligations of Purchaser, enforceable
in accordance with its terms, except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
9
affecting enforcement of creditors' rights, and (b) as limited by general
principles of equity that restrict the availability of equitable remedies.
4.2. INVESTMENT REPRESENTATIONS. Purchaser understands that the Purchased
Securities are being offered and sold pursuant to an exemption from registration
contained in the Securities Act based in part upon Purchaser's representations
contained in the Agreement.
4.3. PURCHASER BEARS ECONOMIC RISK. Purchaser has substantial experience in
evaluating and investing in private placement transactions of securities in
companies similar to the Company so that it is capable of evaluating the merits
and risks of its investment in the Company and has the capacity to protect its
own interests. Purchaser must bear the economic risk of this investment until
the Purchased Securities are registered pursuant to the Securities Act, or an
exemption from registration is available.
4.4. PURCHASER CAN PROTECT ITS INTEREST. Purchaser represents that by
reason of its, or of its management's, business or financial experience,
Purchaser has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement. Further, Purchaser is aware of no
publication of any advertisement in connection with the transactions
contemplated in the Agreement.
4.5. ACCREDITED INVESTOR. Purchaser represents that it is an accredited
investor within the meaning of Regulation D under the Securities Act.
4.6. LEGENDS. The Purchased Securities shall bear the following legend
until the Purchased Securities are covered by an effective registration
statement filed with the SEC:
"THESE SHARES OF COMMON STOCK HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR, IF APPLICABLE, STATE SECURITIES LAWS. THESE SHARES
OF COMMON STOCK MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
BESTNET COMMUNICATIONS CORP. THAT SUCH REGISTRATION IS NOT REQUIRED."
ARTICLE V
CONDITIONS TO THE COMPANY'S AND PURCHASER'S OBLIGATIONS
5.1. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the
Company to carry out the transactions contemplated by this Agreement are
subject, at the option of the Company, to the satisfaction or waiver of the
following conditions:
(a) The Purchaser shall have furnished the Company with a certified
copy of all necessary corporate action on its behalf approving its execution,
delivery and performance of this Agreement (the "Purchaser's Officer's
Certificate").
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(b) All representations and warranties of the Purchaser contained in
this Agreement shall be true and correct in all material respects at and as of
the Closing, and the Purchaser shall have performed and satisfied in all
material respects all covenants and agreements required by this Agreement to be
performed and satisfied by the Purchaser at or prior to the Closing.
(c) As of the Closing Date, no suit, action or other proceeding
(excluding any such matter initiated by or on behalf of the Company) shall be
pending or threatened before any Governmental Authority seeking to restrain the
Company or prohibit the Closing or seeking damages against the Company as a
result of the consummation of this Agreement.
5.2. CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The obligations of the
Purchaser to carry out the transactions contemplated by this Agreement are
subject, at the option of the Purchaser, to the satisfaction, or waiver by the
Purchaser, of the following conditions:
(a) The Company shall have prepared and filed with the SEC a
registration statement under the Securities Act covering the Purchased
Securities and such registration statement shall be effective (the "Registration
Requirement").
(b) All representations and warranties of the Company contained in
this Agreement shall be true and correct in all material respects at and as of
the Closing, and the Company shall have performed and satisfied in all material
respects all agreements and covenants required by this Agreement to be performed
and satisfied by them at or prior to the Closing.
(c) As of the Closing Date, no suit, action or other proceeding
(excluding any such matter initiated by or on behalf of the Purchaser) shall be
pending or threatened before any court or governmental agency seeking to
restrain the Purchaser or prohibit the Closing or seeking damages against the
Purchaser or the Company as a result of the consummation of this Agreement.
(d) The Company shall have furnished the Purchaser with a certified
copy of all necessary corporate action on its behalf approving the Company's
execution, delivery and performance of this Agreement (the "Company's Officer's
Certificate").
ARTICLE VI
MISCELLANEOUS.
6.1. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada, 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 Nevada or in the federal courts located in the state of
Nevada. 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
11
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.
6.2. SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by the Purchaser and the
Closing. All statements as to factual matters contained in any certificate or
other instrument delivered by or on behalf of the Company pursuant hereto in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company hereunder solely as of the date of
such certificate or instrument.
6.3. ASSIGNMENT. This Agreement is not assignable by either party.
6.4. ENTIRE AGREEMENT. This Agreement, the exhibits and schedules hereto,
and the other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.
6.5. SEVERABILITY. In case any provision of the Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
6.6. AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon the written
consent of the Company and the Purchaser.
(b) The obligations of the Company and the rights of the holders of
the Purchased Securities under the Agreement may be waived only with the written
consent of such holders of Purchased Securities.
6.7. DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement, shall impair any
such right, power or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of or in
any similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent or approval of any kind or character on
the Purchaser's part of any breach, default or noncompliance under this
Agreement, or any waiver on such party's part of any provisions or conditions of
the Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies under this Agreement by law
or otherwise afforded to any party, shall be cumulative and not alternative.
6.8. NOTICES. Any notice, request, instruction, correspondence or other
document to be given hereunder by any party hereto to another (herein
collectively called "Notice") shall be in writing and delivered personally or
mailed by registered or certified mail, postage prepaid and return receipt
requested, or by telecopier, as follows:
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IF TO PURCHASER: Jay Greig, Ph.D.
814 Lakeway Drive #262
Bellingham, WA 98226
Telecopy No. (360) 647-7590
IF TO THE COMPANY: BestNet Communications Corp.
5075 E. Cascade Road
Suite K
Grand Rapids, Michigan 49546
Telecopy No. (616) 977-9955
With a copy to:
Squire, Sanders & Dempsey
Two Renaissance Square
40 North Central Avenue
Suite 2700
Attention: Gregory Hall
Telecopy No. (602) 253-8129
Each of the above addresses for notice purposes may be changed by providing
appropriate notice hereunder. Notice given by personal delivery or registered
mail shall be effective upon actual receipt. Notice given by telecopier shall be
effective upon actual receipt if received during the recipient's normal business
hours, or at the beginning of the recipient's next normal business day after
receipt if not received during the recipient's normal business hours. All
Notices by telecopier shall be confirmed by the sender thereof promptly after
transmission in writing by registered mail or personal delivery. Anything to the
contrary contained herein notwithstanding, notices to any party hereto shall not
be deemed effective with respect to such party until such Notice would, but for
this sentence, be effective both as to such party and as to all other persons to
whom copies are provided above to be given.
6.9. COSTS AND EXPENSES. Each of the parties to this Agreement shall bear
his or its own expenses incurred in connection with the negotiation,
preparation, execution and closing of this Agreement and the transactions
contemplated hereby.
6.10. TITLES AND SUBTITLES. The titles of the sections and subsections of
the Agreement are for convenience of reference only and are not to be considered
in construing this Agreement.
6.11. COUNTERPARTS/FAX SIGNATURES. This Agreement and any other document or
instrument relating hereto may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement and any
other document or instrument relating hereto may be executed by a party's
signature transmitted by facsimile ("fax"), and copies of this Agreement and any
such document or instrument executed and delivered by means of faxed signatures
shall have the same force and effect as copies hereof executed and delivered
13
with original signatures. All parties hereto may rely upon faxed signatures as
if such signatures were originals. Any party executing and delivering this
Agreement and any such document or instrument by fax shall promptly thereafter
deliver a counterpart signature page of this Agreement and the fully executed
original or counterpart original of any such document or instrument containing
said party's original signature. All parties hereto agree that a faxed signature
may be introduced into evidence in any proceeding arising out of or related to
this Agreement or any such document or instrument as if it were an original
signature.
6.12. BROKER'S FEES. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein, except as specified herein with respect to
the Purchaser. Each party hereto further agrees to indemnify each other party
for any claims, losses or expenses incurred by such other party as a result of
the representation in this Section 6.12 being untrue.
6.13. CONSTRUCTION. Each party acknowledges that its legal counsel
participated in the preparation of this Agreement and, therefore, stipulates
that the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Agreement to
favor any party against the other.
6.14. FURTHER ASSURANCES. Following the Closing, the Company and the
Purchaser shall execute and deliver such documents, and take such other action,
as shall be reasonably requested by any other party hereto to carryout the
transaction contemplated by this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this STOCK PURCHASE
AGREEMENT as of the date set forth in the first paragraph hereof.
COMPANY: PURCHASER:
BESTNET COMMUNICATIONS CORP. JAY GREIG, PH.D.
By: By:
----------------------------------- ---------------------------------
Name: Name:
-------------------------------- -------------------------------
Title: Title:
------------------------------- ------------------------------
Address: 5075 E. Cascade Road, Suite K Address: 814 Lakeway Drive #262
Grand Rapids, Michigan 49546 Bellingham, WA 98226
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SCHEDULE 3.2
SUBSIDIARIES
1. Interpretel, Inc.
2. Interpretel (Canada), Inc.
3. Teleplex International Communications, Inc.
4. Bestnet Travel, Inc.
SCHEDULE 3.3
CAPITALIZATION
5,000,000 shares of common stock are reserved for issuance under the
Company's Stock Option Plan.
There are currently options and warrants outstanding to purchase an
aggregate of 9,559,543 shares of Company common stock.
SCHEDULE 3.6(B)
AGREEMENTS, ACTION
The Company paid Laurus Master Fund, Ltd. a dividend on its preferred
shares of 6,241 shares of Common Stock.
SCHEDULE 3.14
EMPLOYEES
The Company has employment agreements with the following:
1. Robert Blanchard - President and Chief Executive Officer.
2. Paul Jachim - Chief Operating Officer and Chief Financial Officer.
SCHEDULE 3.15
REGISTRATION RIGHTS AND VOTING RIGHTS
Demand and Piggy-Back registration rights were granted to Laurus Master
Fund, Ltd. pursuant to that certain Securities Purchase Agreement, by and
between the Company and Laurus Master Fund, Ltd., dated January 31, 2002.
Piggy-back registration rights were granted to Network Twentyone
International, Inc. pursuant to a warrant to purchase common stock in April,
2001.