Exhibit 10.2
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered into
as of February 28, 2002, by and among FreeSoftwareClub.com, Inc., a Delaware
corporation (the "Company") and 3608948 Canada, Inc., a Canadian numbered
corporation, doing business as "Ideas and Associates" ("Buyer").
AGREEMENT
In consideration of the terms hereof, the parties hereto agree as follows:
I. PURCHASE AND SALE OF STOCK
1.1 Transfer of Stock. Upon the terms and subject to the conditions
hereof, on the Closing Date, the Company shall sell, convey, transfer, assign
and deliver to the Buyer, and Buyer shall purchase from the Company, a total of
59,285,714 newly issued shares of common stock of the Company (the "Shares"),
free and clear of all liens, charges, or encumbrances of whatsoever nature.
1.2 Purchase Price. Subject to the terms and conditions of this Agreement,
the total purchase price for the Shares (the "Purchase Price") shall be Three
Hundred Thousand ($300,000.00) Dollars, paid at the Closing, as follows:
a. $50,000.00 in certified funds, official bank check or wired funds.
b. $50,000.00 in the form of a promissory note, payable within 45 days of
the Closing, in the form attached hereto as Schedule "A".
c. $200,000.00 in the form of a promissory note, payable within 90 days of
the Closing, in the form attached hereto as Schedule "B".
The Shares shall be issued to the Buyer, as follows:
a. Upon closing, the Company shall issue 9,880,952 shares to the Buyer;
b. Upon the payment by the Buyer of the $50,000.00 promissory note set
forth in Schedule "A" , the Company shall issue 9,880,952 shares to the Buyer;
and
c. Upon the payment by the Buyer of the $200,000.00 promissory note, set
forth in Schedule "B" the Company shall issue 39,523,809 shares to the Buyer.
1.3 Conditions to Closing. The Closing is subject to the following:
a. The Quebec Securities Commission shall have granted an exemption from
the prospectus and registration requirements set forth in Titles II and V of the
Quebec Securities Act (the "Exemption") for the transaction contemplated herein
and the transaction contemplated under the Stock Purchase Agreement. In the
event that as of the date of closing the Exemption has not yet been granted, any
shares to be issued to any Ideas Shareholder who is a Quebec resident shall be
held in escrow pending receipt of such Exemption.
b. The Company shall have delivered to the Buyer a certified copy of a
resolution of the board of directors of the Company approving and authorizing
the execution, delivery and performance of this Agreement and authorizing all of
the necessary and proper action to enable the Company to comply with the terms
of this Agreement.
c. The Buyer shall have delivered to the Company a certified copy of a
resolution of the board of directors of the Buyer approving and authorizing the
execution, delivery and performance of this Agreement and authorizing all of the
necessary and proper action to enable the Buyer to comply with the terms of this
Agreement.
d. The Company shall simultaneously consummate the transaction
contemplated by a certain Agreement and Plan of Reorganization between the
parties, of even date herewith.
1.4 The Closing. The closing of the transaction contemplated hereunder
(the "Closing") shall occur as soon as possible after the completion of the
conditions to Closing set forth in Section 1.3 (the "Closing Date") at the
offices of the Company, or such other time or location as the parties hereto
shall agree.
1.5 Delivery by the Sellers. At the Closing, the Company will deliver to
the Buyers certificates representing the Shares, free and clear of all liens,
charges, or encumbrances of whatsoever nature and registered in the Buyer's name
(or if requested by the Buyer, its nominees) in the Company's records.
1.6 Delivery by the Buyer. At the Closing, the Buyer will deliver to the
Seller the payment and the promissory notes provided for in Section 1.2.
II. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY.
The Company hereby represents and warrants as follows:
2.1 Good Title. All of the issued and outstanding shares of the Shares
will be free and clear of any claim, lien, pledge, option, charge, easement,
security interest, right-of-way, encumbrance, restriction on sale or transfer,
preemptive right or option or any other right of any third party of any nature
whatsoever ("Encumbrance").
2.2 Validly Issued. The Shares, when issued, shall constitute, duly
authorized, validly and legally issued shares of the Company's common stock,
fully-paid and non-assessable.
2.3 Organization, Good Standing. The Company is a corporation duly
incorporated, validly existing, and in good standing under the laws of Delaware
and has all requisite corporate power and authority to own, operate and lease
its properties and assets and to carry on its business as now conducted.
2.4 Authority; No Violation. The execution and delivery of this Agreement
by the Company and the consummation by it of the transactions contemplated
hereby have been duly authorized by the Company. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will constitute a violation or default under any term or provision of the
Certificate of Incorporation or By-Laws of the Company, or of any contract,
commitment, indenture, other agreement or restriction of any kind or character
to which the Company or by which the Company is bound.
2.5 Capitalization. The authorized capital stock of restriction consists
of 100,000,000 shares of common stock of which 16,947,700 shares are validly
issued and outstanding, fully paid and non-assessable.
2.6 Adjustments. If any change is made to the common stock of the Company
by reason of any stock dividend, stock split, combination of shares, or exchange
of shares or other change affecting the outstanding common stock as a class
without receipt of consideration, then, the number of Shares issuable to Buyer
hereunder shall be increased or decreased in proportion thereto.
III. REPRESENTATIONS AND WARRANTIES BY THE BUYER.
Buyer represents and warrants to the Company, as follows:
a. The Company has provided Buyer with adequate access to financial and
other information concerning the Company as requested and such Buyer has had the
opportunity to ask questions of and receive answers from the Company concerning
the transactions contemplated by this Agreement and to obtain therefrom any
additional information necessary to make an informed decision regarding an
investment in the Company. Each Buyer has had an opportunity to review the
Company's SEC filings.
b. Buyer is acquiring the Shares solely for investment purposes, with no
present intention of distributing or reselling any of the Shares.
c. Buyer is aware that the Shares will not be registered under the
Securities Act, and that the Shares may not be sold, pledged, or otherwise
transferred unless the Shares are registered under the Securities Act or qualify
for an exemption under the Securities Act. The Buyer acknowledges that the
Shares are characterized as "restricted securities" under the federal securities
laws inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Act only in certain
limited circumstances. In this connection, Buyer represents that it is familiar
with SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act.
d. Buyer represents that this Agreement has been duly authorized by all
necessary corporate action on its part. Buyer has full power and authority to
enter into this Agreement and this Agreement constitutes its valid and legally
binding obligation, enforceable against it in accordance with its terms.
IV. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION.
4.1 Survival of Representations. All representations, warranties, and
agreements made by any party in this Agreement or pursuant hereto shall survive
the execution and delivery hereof and any investigation at any time made by or
on behalf of any party.
4.2 Seller's Indemnification. The Company hereby agrees to indemnify the
Buyer and hold it harmless from and in respect of any assessment, loss, damage,
liability, cost, and expense (including, without limitation, interest,
penalties, and reasonable attorneys' fees), imposed upon or incurred by the
Buyer resulting from a breach of any agreement, representation, or warranty of
the Company contained herein.
4.3 Buyer's Indemnification. The Buyer agrees to indemnify the Company and
hold it harmless from and in respect of any assessment, loss, damage, liability,
cost, and expense (including, without limitation, interest, penalties, and
reasonable attorneys' fees), imposed upon or incurred by the Company resulting
from a breach of any agreement, representation, or warranty of the Buyer
contained herein.
V. MISCELLANEOUS
5.1 Restrictive Legends. The certificates representing the Shares shall
bear a restrictive legend in substantially the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), and may be transferred only pursuant to an
effective registration statement under the Securities Act or in
accordance with an applicable exemption from the registration
requirements of the Securities Act."
5.2 Expenses. All fees and expenses incurred by the Company in connection
with the transactions contemplated by this Agreement shall be borne by the
Company and all fees and expenses incurred by the Buyer in connection with the
transactions contemplated by this Agreement shall be borne by the Buyer.
5.3 Further Assurances. From time to time, at the Buyer's request and
without further consideration, the Company, at its own expense, will execute and
transfer such documents and will take such action as the Buyer may reasonably
request in order to effectively consummate the transactions herein contemplated.
5.4 Parties in Interest. All the terms and provisions of this Agreement
shall be binding upon, shall inure to the benefit of, and shall be enforceable
by the prospective heirs, beneficiaries, representatives, successors, and
assigns of the parties hereto.
5.5 Prior Agreements; Amendments. This Agreement supersedes all prior
agreements and understandings between the parties with respect to the subject
matter hereof. This Agreement may be amended only by a written instrument duly
executed by the parties hereto or their respective successors or assigns.
5.6 Headings. The section and paragraph headings contained in this
agreement are for reference purposes only and shall not affect in any way the
meaning or interpretations of this Agreement.
5.7 Confidentiality. Each party hereby agrees that all information
provided by the other party and identified as "confidential" will be treated as
such, and the receiving party shall not make any use of such information other
than with respect to this Agreement. If the Agreement shall be terminated, each
party shall return to the other all such confidential information in their
possession, or will certify to the other party that all of such confidential
information that has not been returned has been destroyed.
5.8 Notices. All notices, requests, demands, and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered or mailed (registered or certified mail, postage prepaid, return
receipt requested) as follows:
If to the Company:
FreeSoftwareClub.com, Inc.
600 Bancroft Way
Berkeley, CA 94710
If to the Buyers:
Ideas and Associates
2050 de Bleury Street
Montreal, QC H3A 2J5
To the addresses set forth next to the Buyers' names on the signature
pages hereto.
5.9 Effect. In the event any portion of this Agreement is deemed to be
null and void under any state or federal law, all other portions and provisions
not deemed void or voidable shall be given full force and effect.
5.10 Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of California.
5.11 Counterparts. This Agreement may be executed simultaneously in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the Sellers and the Buyer, on the date first above written.
FreeSoftwareClub.com, Inc.
By: /s/ Richard Miles
-------------------------
Title: President
Ideas and Associates
By: /s/ Terence C. Byrne
-------------------------
Title: President
SCHEDULE A
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND
NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED
UNLESS (1) A REGISTRATIONSTATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS OR (2) AN EXEMPTION TO SUCH REGISTRATION IS AVAILABLE FOR
SUCH OFFER, VALUE PLEDGE, ASSIGNMENT OR TRANSFER.
PROMISSORY NOTE
$50,000.00 March 7, 2002
EXHIBIT ONLY
FOR VALUE RECEIVED, 3608948 Canada, Inc. d/b/a Ideas and Associates, a
Canadian corporation ("Maker") hereby promises to pay to the order of
FreeSoftwareClub.com, Inc., a Delaware corporation (the "Company") having an
address at 600 Bancroft Way, Berkeley, CA 94710 the outstanding principal amount
of $50,000.00 (the "Principal Sum") on the date and with interest thereon as set
forth below.
The outstanding Principal Sum shall be due and payable in full on April
16, 200s, (the "Due Date"). All outstanding principal amounts not paid on the
Due Date shall bear interest at a rate equal to nine percent (9%) per annum.
In the event of any default by the Company in the repayment of any amount
due under this Note, Lender may forthwith declare that the entire balance of
this Note be deemed due and payable to Lender, provided that such default is not
cured by Company within ten (10) days of receipt of written notice from Lender.
This Note is the promissory note referred to in that certain Stock Pledge
Agreement of even date herewith by and between the Maker and the Lender. All
words capitalized in this Note shall have the meanings assigned to them by the
Stock Pledge Agreement unless the context otherwise requires.
Notwithstanding anything to the contrary contained herein, in the event
that the Company shall be indebted to the Maker pursuant to the Company's
indemnity obligations to the Maker under a certain Agreement and Plan of
Reorganization (the
"Merger Agreement") by and between the Company and Maker, of even date herewith,
Maker shall have a right of offset against any amounts due to the Company under
this Note for any sums due to Maker by the Company under the Merger Agreement.
The Company shall pay to the Lender all reasonable attorney's fees
incurred by the Lender in enforcing this Note.
This Note shall be governed by and construed in accordance with the laws
of the State of California and shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, executors, administrators,
personal representatives, successors and assigns.
In the event any one or more of the provisions contained in this Note for
any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality of unenforceability shall not affect any other provision
of this Note or such other security documents, but this Note and the other
security documents shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein or therein.
This Note may not be changed orally, but only by an agreement in writing
signed by the parties against whom enforcement of any waiver, change,
modification or discharge is sought.
Maker:
3608948 Canada, Inc.
d/b/a Ideas and Associates
By: EXHIBIT ONLY
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Title:
SCHEDULE B
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND
NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED
UNLESS (1) A REGISTRATIONSTATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS OR (2) AN EXEMPTION TO SUCH REGISTRATION IS AVAILABLE
FOR SUCH OFFER, VALUE PLEDGE, ASSIGNMENT OR TRANSFER.
PROMISSORY NOTE
EXHIBIT ONLY
$200,000.00 March 7, 2002
FOR VALUE RECEIVED, 3608948 Canada, Inc. d/b/a Ideas and Associates, a
Canadian corporation ("Maker") hereby promises to pay to the order of
FreeSoftwareClub.com, Inc., a Delaware corporation (the "Company") having an
address at 600 Bancroft Way, Berkeley, CA 94710 the outstanding principal amount
of $200,000.00 (the "Principal Sum") on the date and with interest thereon as
set forth below.
The outstanding Principal Sum shall be due and payable in full on May 28,
2002 (the "Due Date"). All outstanding principal amounts not paid on the Due
Date shall bear interest at a rate equal to nine percent (9%) per annum.
In the event of any default by the Company in the repayment of any amount
due under this Note, Lender may forthwith declare that the entire balance of
this Note be deemed due and payable to Lender, provided that such default is not
cured by Company within ten (10) days of receipt of written notice from Lender.
This Note is the promissory note referred to in that certain Stock Pledge
Agreement of even date herewith by and between the Maker and the Lender. All
words capitalized in this Note shall have the meanings assigned to them by the
Stock Pledge Agreement unless the context otherwise requires.
Notwithstanding anything to the contrary contained herein, in the event
that the Company shall be indebted to the Maker pursuant to the Company's
indemnity
obligations to the Maker under a certain Agreement and Plan of Reorganization
(the "Merger Agreement") by and between the Company and Maker, of even date
herewith, Maker shall have a right of offset against any amounts due to the
Company under this Note for any sums due to Maker by the Company under the
Merger Agreement.
The Company shall pay to the Lender all reasonable attorney's fees
incurred by the Lender in enforcing this Note.
This Note shall be governed by and construed in accordance with the laws
of the State of California and shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, executors, administrators,
personal representatives, successors and assigns.
In the event any one or more of the provisions contained in this Note for
any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality of unenforceability shall not affect any other provision
of this Note or such other security documents, but this Note and the other
security documents shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein or therein.
This Note may not be changed orally, but only by an agreement in writing
signed by the parties against whom enforcement of any waiver, change,
modification or discharge is sought.
Maker:
3608948 Canada, Inc
d/b/a Ideas and Associates
By: EXHIBIT ONLY
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Title: