EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
STOCK
PURCHASE AGREEMENT, dated as of March 10, 2005 (this
"Agreement"),
by and among the Castle and Morgan
Holdings, Inc., a Delaware Corporation (the
"Company"), the persons listed on Schedule
A to this Agreement (each a "Seller"
and collectively, the "Sellers") and the
persons listed on Schedule B to this
Agreement (each a "Purchaser" and
collectively, the "Purchasers"). The Company,
each Seller and each Purchaser are referred
to herein as a "Party" and
collectively, as the "Parties".
BACKGROUND
The
Sellers are collectively the owners of 2,384,584 shares (the
"Seller
Shares") of the common stock of the
Company, each holding the number of shares
set forth opposite his name on Schedule A.
The Seller Shares represent
approximately 62.6% of the issued and
outstanding capital stock of the Company
as of the date hereof calculated on a
fully-diluted basis. In addition, one of
the Sellers, Internet Finance International
Corporation, is the holder of a note
in the face amount of $52,920 payable by
the Company which is convertible into
shares of common stock of the Company (the
"Note"). The Purchasers desire to
purchase the Note and all of the Seller
Shares by purchasing the number of
Seller Shares set forth opposite the
Sellers' names on Schedule B.
NOW,
THEREFORE, in consideration of the foregoing and the mutual
promises
and covenants herein contained, the
Company, the Sellers and the Purchasers
hereby agree as follows:
1.
Purchase
and Sale.
Each
Seller shall sell, transfer, convey and deliver unto the
Purchasers
the face amount of the Note and the number
of Seller Shares set forth opposite
each such Seller's name on Schedule A to
this Agreement, and each Purchaser
shall acquire and purchase from the Sellers
the face value of the Note and
number of Seller Shares set forth opposite
each such Purchaser's name on
Schedule B to this Agreement.
2.
Purchase
Price.
(a) General. The purchase price (the "Purchase Price") for the
Seller
Shares and Note, in the aggregate, is Four Hundred Thousand
Dollars
($400,000)
payable as specified in this Section 2 subject to the other
terms and
conditions of this Agreement. Purchasers shall also pay
Sellers'
legal fees
of Two Thousand Five Hundred Dollars ($2,500) (the "Legal
Fees").
(b) Cash Deposit. Concurrent with the execution of this
Agreement,
Purchasers
shall deliver a non-refundable (subject to the provisions of
par. 8,
below) cash deposit to the Seller Representative in the amount
of
Twenty-Five Thousand Dollars ($25,000) which shall be fully
credited
against
the Purchase Price at the Closing (the "Cash Deposit").
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(c) Payment at Closing. At the Closing, the Purchasers shall pay
to
the
Sellers Three Hundred Seventy Seven Thousand Five Hundred
Dollars
($377,500), representing the balance of the Purchase Price and the
Legal
Fees,
which together with the Cash Deposit, shall be payable in the
amounts
set forth in Schedule A and allocated as set forth in Schedule
B.
(d) Adjustment for Outstanding Liabilities. In the event that
the
Company
shall have any liability (whether known or unknown, whether
asserted
or unasserted, whether absolute or contingent, whether accrued
or
unaccrued,
whether liquidated or unliquidated, and whether due or to
become
due), including any liability for taxes ("Liability"), as of
the
Closing,
the portion of the Purchase Price payable at the Closing shall
be
reduced on
a dollar for dollar basis by the amount of such Liability.
3. The
Closing.
(a) General. The closing of the transactions contemplated by
this
Agreement
(the "Closing") shall take place by exchange of documents among
the
Parties by fax or courier, as appropriate, following the
satisfaction
or waiver
of all conditions to the obligations of the Parties to
consummate
the transactions contemplated hereby (other than conditions
with
respect to actions the respective Parties will take at the
Closing
itself)
not later than March 10, 2005 or such other date as the
Purchasers
and the
Sellers may mutually determine (the "Closing Date").
(b) Delivery of Certificates in Escrow. Concurrent with or
immediately following the execution of this Agreement, each Seller
shall
deliver
certificates evidencing all of the Seller Shares held by such
Seller and
the ownership of the Note (collectively, the "Certificates") to
the Law
Offices of Robert L. B. Diener ("Law Firm") on the date hereof.
The Law
Firm shall hold such certificates in escrow pursuant to the
Escrow
Agreement
(the "Escrow Agreement") in the form of Exhibit A being entered
into on
the date hereof by the Law Firm, the Seller Representative (as
defined
below) and the Purchaser Representative. Pursuant to the Escrow
Agreement,
the Certificates and the Note will be held in escrow until the
Closing at
which time the Law Firm shall deliver the Certificates and the
Note to
the Purchasers against delivery to the Sellers of the portion
of
the
Purchase Price and Legal Fees that are due at Closing.
(c) Deliveries at the Closing. At the Closing: (i) the Sellers
shall
deliver to
the Purchasers the various certificates, instruments, and
documents
referred to in Section 12(a) below, (ii) the Purchasers shall
deliver to
the Sellers the various certificates, instruments, and
documents
referred to in Section 12(b) below, (iii) the Sellers shall
deliver to
the Purchasers the Certificates, endorsed in blank or
accompanied by duly executed assignment documents and including
a
Medallion
Guarantee, including delivery by releasing the Certificates
from
escrow and
the Note, and (iv) the Purchasers shall deliver to the Sellers
the
Purchase Price and Legal Fees.
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<PAGE>
4. Appointment of Seller
and Purchaser Representatives.
(a) Appointment of Seller Representative. The Sellers hereby
irrevocably constitute and appoint, effective as of the date
hereof,
Christopher Kern (together with his permitted successors, the
"Seller
Representative"), as their true and lawful agent and
attorney-in-fact to
enter into
any agreement in connection with the transactions contemplated
by this
Agreement and any transactions contemplated by the Escrow
Agreement,
to perform on behalf of the Sellers any obligations or
undertakings thereunder, to exercise all or any of the powers,
authority
and
discretion conferred on him under any such agreement, to waive
any
terms and
conditions of any such agreement, to give and receive notices
on
their
behalf and to be their exclusive representative with respect to
any
matter,
suit, claim, action or proceeding arising with respect to any
transaction contemplated by any such agreement and the Seller
Representative agrees to act as, and to undertake the duties
and
responsibilities of, such agent and attorney-in-fact. This power
of
attorney
is coupled with an interest and irrevocable. The Seller
Representative shall not be liable for any action taken or not
taken by
him in
connection with his obligations under this Agreement as long as
such actions are taken or omitted
in good faith and in the absence of
willful
misconduct or gross negligence. If the Seller Representative
shall
be unable
or unwilling to serve in such capacity, his successor shall be
named by
those persons holding more than fifty percent (50%) in interest
of the
Seller Shares.
(b) Appointment of the Purchaser Representative. The Purchasers
hereby
irrevocably constitute and appoint, effective as of the date
hereof,
Peter C. Zachariou (together with his permitted successors, the
"Purchaser
Representative"), as their true and lawful agent and
attorney-in-fact to enter into any agreement in connection with
the
transactions contemplated by this Agreement and any
transactions
contemplated by the Escrow Agreement, to perform on behalf of the
Sellers
any
obligations or undertakings thereunder, to exercise all or any of
the
powers,
authority and discretion conferred on him under any such
agreement,
to waive any terms and conditions of any such agreement (other
than the
amount of the Purchase Price), to give and receive notices on
their
behalf and to be their exclusive representative with respect to
any
matter,
suit, claim, action or proceeding arising with respect to any
transaction contemplated by any such agreement and the
Purchaser
Representative agrees to act as, and to undertake the duties
and
responsibilities of, such agent and attorney-in-fact. This power
of
attorney
is coupled with an interest and irrevocable. The Purchaser
Representative shall not be liable for any action taken or not
taken by
him in
connection with his obligations under this Agreement as long as
such
actions are taken or omitted in good faith and in the absence
of
willful
misconduct or gross negligence. If the Purchaser Representative
shall be
unable or unwilling to serve in such capacity, his successor
shall be
named by those persons agreeing to acquire more than fifty
percent
(50%) in interest of the Seller Shares pursuant to this
Agreement.
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<PAGE>
5. Representations and
Warranties of the Sellers.
Each
Seller represents and warrants to the Purchasers that the
statements
contained in this Section 5 are correct and
complete as of the date of this
Agreement and will be correct and complete
as of the Closing Date (as though
made then and as though the Closing Date
were substituted for the date of this
Agreement throughout this Section 5):
(a) Each Seller has the power and authority to execute, deliver
and
perform
such Seller's obligations under this Agreement and to sell,
assign,
transfer and deliver to the Purchasers the Seller Shares and
Note
as
contemplated hereby. No permit, consent, approval or authorization
of,
or
declaration, filing or registration with any governmental or
regulatory
authority
or consent of any third party is required in connection with
the
execution
and delivery any Seller of this Agreement and the consummation
of the
transactions contemplated hereby.
(b) Neither the execution and delivery of this Agreement, nor
the
consummation of the transactions contemplated hereby or compliance
with
the terms
and conditions hereof by the Sellers will violate or result in
a
breach of
any term or provision of any agreement to which any Seller is
bound or
is a party, or be in conflict with or constitute a default
under,
or cause
the acceleration of the maturity of any obligation of any
Seller
under any
existing agreement or violate any order, writ, injunction,
decree,
statute, rule or regulation applicable to any Seller or any
properties
or assets of any Seller.
(c) This Agreement has been duly and validly executed by each
Seller,
and constitutes the valid and binding obligation of each
Seller,
enforceable against each Seller in accordance with its terms,
except as
enforceability may be limited by bankruptcy, insolvency or other
laws
affecting
creditors' rights generally or by limitations, on the
availability of equitable remedies. The Seller Representative has
been
duly
appointed herein by the Sellers and has complete authority to act
on
behalf of
the Sellers in matters relating to this Agreement and the
transactions contemplated hereby
(d) The Seller Shares and Note are owned beneficially and of
record
by each
Seller in the amounts specified on Schedule A and are validly
issued and
outstanding, fully paid for and non-assessable with no personal
liability
attaching to the ownership thereof. Each Seller owns the number
of Seller
Shares and face amount of the Note set forth opposite such
Seller's
name on Schedule A free and clear of all liens, charges,
security
interests,
encumbrances, claims of others, options, warrants, purchase
rights,
contracts, commitments, equities or other claims or demands of
any
kind
(collectively, "Liens"), and upon delivery of the Seller Shares
and
the Note
to the Purchasers, the Purchasers will acquire good, valid and
marketable
title thereto free and clear of all Liens. No Seller is a party
to any
option, warrant, purchase right, or other contract or
commitment
that could
require the Seller to sell, transfer, or otherwise dispose of
any
capital stock of the Company (other than pursuant to this
Agreement).
No Seller
is a party to any voting trust, proxy, or other agreement or
understanding with respect to the voting of any capital stock of
the
Company.
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<PAGE>
(e) Of the Seller Shares, 221,500 of such Seller Shares were
included
in a registration statement which has been previously filed by
the
Company with the U.S. Securities and Exchange Commission and
declared
effective
by the Commission.
6. Representations and
Warranties of the Company.
(a) The Company is a corporation in good standing duly
incorporated
in the
State of Delaware. The Company is duly authorized to conduct
business
and is in good standing under the laws of each jurisdiction
where
such
qualification is required. The Company has full corporate power
and
authority
and all licenses, permits, and authorizations necessary to
carry
on its
business. The Company has no subsidiaries and does not control
any
other subsidiaries, directly
or indirectly, or have any direct or indirect
equity
participation in any other entity.
(b) Neither the execution and delivery of this Agreement, nor
the
consummation of the transactions contemplated hereby or compliance
with
the terms
and conditions hereof by the Company will violate or result in
a
breach of
any term or provision of any agreement to which the Company is
bound or
is a party, or the Company's Certificate of Incorporation or
By-Laws,
or be in conflict with or constitute a default under, or cause
the
acceleration of the maturity of any obligation of the Company
under
any
existing agreement or violate any order, writ, injunction,
decree,
statute,
rule or regulation applicable to the Company or any of its
properties
or assets.
(c) This Agreement has been duly and validly executed by the
Company
and
constitutes the valid and binding obligation of the Company,
enforceable against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency or other
laws
affecting
creditors' rights generally or by limitations, on the
availability of equitable remedies.
(d) The Company's authorized capital stock, as of the date of
this
Agreement
and as of the Closing, consists of 100,000,000 shares of Common
Stock,
$0.0001 par value per share, of which 3,809,570 shares are
issued
and
outstanding. The Company has not reserved any shares of its
Common
Stock for
issuance upon the exercise of options, warrants or any other
securities
that are exercisable or exchangeable for, or convertible into,
Common
Stock. All of the issued and outstanding shares of Common Stock
are
validly
issued, fully paid and non-assessable and have been issued in
compliance
with applicable laws, including, without limitation, applicable
federal
and state securities laws. There are no outstanding options,
warrants
or other rights of any kind to acquire any additional shares of
capital
stock of the Company or securities exercisable or exchangeable
for, or
convertible into, capital stock of the Company, nor is the
Company
committed
to issue any such option, warrant, right or security. There are
no
agreements relating to the voting, purchase or sale of capital
stock
(i)
between or among the Company and any of its stockholders, or (ii)
to
the best
knowledge of the Company between or among any of the Company's
stockholders. The Company is not a party to any agreement granting
any
stockholder of the Company the right to cause the Company to
register
shares of
the capital stock of the Company held by such stockholder under
the
Securities Act. The stockholder list provided to the Purchasers is
a
current
shareholder list generated by its transfer agent, and such list
accurately
reflects all of the issued and outstanding shares of the
Company's
Common Stock.
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<PAGE>
(e) The Company does not have any restrictions in place relative
to
its
ability to implement any reverse split of its common stock, nor
are
there any
restrictions on the Company's ability to enter into a merger
transaction with any other entity.
(f) As of the date hereof the Company has total Liabilities of
approximately $65,000, $52,920 of which will be purchased by
Purchasers as
part of the Note, and
the balance of which Liabilities will be paid off at
or prior
to the Closing and shall in no event become the Liability of
the
Purchasers
or remain the Liabilities of the Company following the Closing.
On or
before Closing, the Company shall deliver to Purchaser a Schedule
of
the
Company's outstanding liabilities, excluding the Note (the
"Closing
Liabilities"). At Closing, an amount equal to the Closing
Liabilities
shall be
delivered to Sellers' attorney, Robert L. Davidson, Esq., who
will then
pay off the Closing Liabilities.
(g) There is no legal, administrative, investigatory, regulatory
or
similar
action, suit, claim or proceeding which is pending or, to any
Seller's
knowledge, threatened against the Company.
(h) During the period from the date of filing of its Form SB-2
through
September 30, 2004, the Company has filed or furnished (i) all
reports,
schedules, forms, statements, prospectuses and other documents
required
to be filed with, or furnished to, the Securities and Exchange
Commission
(the "SEC") by the Company (all such --- documents, as amended
or
supplemented, are referred to collectively as, the "Company SEC
Documents") and (ii)
all certifications and statements required by (x)
Rule
13a-14 or 15d-14 under the Exchange Act, or (y) 18 U.S.C.
ss.1350
(Section
906 of the Sarbanes-Oxley act of 2002) with respect to any
applicable
Company SEC Document (collectively, the "SOX Certifications").
The
Company has made available to the Purchasers all
------------------
SOX
Certifications and comment letters received by the Company from
the
staff of
the SEC and all responses to such comment letters by or on
behalf
of the
Company. Through September 30, 2004, the Company complied in
all
respects
with its SEC filing obligations under the Exchange Act and the
Securities
Act. Each of the audited financial statements and related
schedules
and notes thereto and unaudited interim financial statements of
the
Company (collectively, the "Company Financial Statements")
contained
in the
Company SEC Documents (or incorporated therein by reference)
were
prepared
in accordance with United States generally accepted accounting
principles
applied on a consistent basis ("GAAP") (except in the case of
interim
---- unaudited financial statements) except as noted therein,
and
fairly
present in all respects the consolidated financial position of
the
Company
and its consolidated subsidiaries as of the dates thereof and
the
consolidated results of their operations, cash flows and changes
in
stockholders' equity for the periods then ended, subject (in the
case of
interim
unaudited financial statements) to normal year-end audit
adjustments (the effect of which will not, individually or in
the
aggregate,
be adverse) and, such financial statements complied as to form
as of
their respective dates in all respects with applicable rules
and
regulations of the SEC. The financial statements referred to
herein
reflect
the consistent application of such accounting principles
throughout
the periods involved, except as disclosed in the notes to such
financial
statements. No financial statements of any Person not already
included
in such financial statements are required by GAAP to be
included
in the
consolidated financial statements of the Company. As of their
respective
dates, each the Company SEC Document was prepared in accordance
with and
complied with the requirements of the Securities Act or the
Exchange
Act, as applicable, and the rules and regulations thereunder,
and
the Company SEC Documents
(including all financial statements included
therein
and all exhibits and schedules thereto and all documents
incorporated by reference therein) did not, as of the date of
effectiveness in the case of a registration statement, the date of
mailing
in the
case of a proxy or information statement and the date of filing
in
the case
of other the Company SEC Documents, contain any untrue
statement
of a fact
or omit to state a fact required to be stated therein or
necessary
to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Neither
the
Company
nor, to the Company's knowledge, any of its officers has
received
notice
from the SEC or any other governmental authority questioning or
challenging the accuracy, completeness, content, form or manner of
filing
or
furnishing of the SOX Certifications.
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<PAGE>
(i) The Company has properly and timely filed all federal, state
and
local tax
returns and has paid all taxes, assessments and penalties due
and
payable. The Company's tax returns for 2004 have not been
filed,
however
they will be filed prior to the Closing. All such tax returns
were
complete
and correct in all respects as filed, and no claims have been
assessed
with respect to such returns. There are no present, pending, or
threatened
audit, investigations, assessments or disputes as to taxes of
any nature
payable by the Company or any of its subsidiaries, nor any tax
liens
whether existing or inchoate on any of the assets of the Company
or
any of its
subsidiaries, except for current year taxes not presently due
and
payable. No IRS or foreign, state, county or local tax audit is
currently
in progress. Neither the Company nor any of its subsidiaries
has
waived the
expiration of the statute of limitations with respect to any
taxes.
There are no outstanding requests by the Company or any of its
Subsidiaries for any extension of time within which to file any tax
return
or to pay
taxes shown to be due on any tax return.
(j) The Company does not have any ongoing operations and does
not
employ any
employees and does not maintain any employee benefit or stock
option
plans.
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<PAGE>
(k) Except as set forth in Schedule 6(k), since September 30,
2004,
there has
not been any event or condition of any character which has
adversely
affected, or may be expected to adversely affect, the Company's
business
or prospects, including, but not limited to any adverse change
in
the
condition, assets, liabilities (existing or contingent) or business
of
the
Company from that shown in the financial statements of the
Company
included
in its quarterly report on Form 10-QSB filed for the quarter
ended
September 30, 2004.
(l) The Company has complied in all material respects with all
applicable
laws (including rules, regulations, codes, plans, injunctions,
judgments,
orders, decrees, rulings, and charges thereunder) of all
governmental authorities, and no action, suit, proceeding,
hearing,
investigation, charge, complaint, claim, demand, or notice has been
filed
or
commenced against the Company alleging any failure so to comply. To
the
knowledge
of any Seller, neither the Company, nor any officer, director,
employee,
consultant or agent of the Company has made, directly or
indirectly, any payment or promise to pay, or gift or promise to
give or
authorized
such a promise or gift, of any money or anything of value,
directly
or indirectly, to any governmental official, customer or
supplier
for the
purpose of influencing any official act or decision of such
official,
customer or supplier or inducing him, her or it to use his, her
or its
influence to affect any act or decision of a governmental
authority
or
customer, under circumstances which could subject the Company or
any
officers,
directors, employees or consultants of the Company to
administrative or criminal penalties or sanctions.
(m) No representation or warranty by the Company in this
Agreement,
nor in any
certificate, schedule or exhibit delivered or to be delivered
pursuant
to this Agreement contains or will contain any untrue statement
of
material fact, or omits or will omit to state a material fact
necessary
to make
the statements herein or therein, in light of the circumstances
under
which they were made, not misleading.
7. Representations and
Warranties of the Purchasers.
Each
Purchaser represents and warrants to the Sellers as follows:
(a) Each Purchaser has full power and authority to enter into
this
Agreement
and to carry out the transactions contemplated hereby. This
Agreement
constitutes a valid and binding obligation of each Purchaser
enforceable in accordance with its terms, except as (i) the
enforceability
hereof may
be limited by bankruptcy, insolvency or similar laws affecting
the
enforceability of creditor's rights generally and (ii) the
availability of equitable remedies may be limited by equitable
principles
of general
applicability.
(b) Neither the execution and delivery of this Agreement nor
the
consummation of the transactions contemplated hereby, nor
compliance by
any
Purchaser with any of the provisions hereof will: violate, or
conflict
with, or
result in a breach of any provision of, or constitute a default
(or an
event which, with notice or lapse of time or both, would
constitute
a default)
under, or result in the termination of, or accelerate the
performance required by, or result in the creation of any Lien upon
any of
the
properties or assets of Purchaser under any of the terms,
conditions
or
provisions of any material note, bond, indenture, mortgage, deed
or
trust,
license, lease, agreement or other instrument or obligation to
which he
is a party or by which he or any of his properties or assets
may
be bound
or affected, except for such violations, conflicts, breaches or
defaults
as do not have, in the aggregate, any material adverse effect;
or
violate
any material order, writ, injunction, decree, statute, rule or
regulation
applicable to Purchaser or any of its properties or assets,
except for
such violations which do not have, in the aggregate, any
material
adverse effect.
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<PAGE>
(c) Each Purchaser is acquiring the Seller Shares and Note for
its
own
account for investment and not for the account of any other person
and
not with a
view to or for distribution, assignment or resale in connection
with any
distribution within the meaning of the Securities Act. Each
Purchaser
agrees not to sell or otherwise transfer the Seller Shares or
any shares
issued upon conversion of the Note unless they are registered
under the
Securities Act and any applicable state
