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STOCK PURCHASE AGREEMENT

Stock Purchase Agreement

STOCK PURCHASE AGREEMENT
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Castle and Morgan Holdings, Inc

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Title: STOCK PURCHASE AGREEMENT
Governing Law: New York     Date: 3/16/2005

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                                                                    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").

 

<PAGE>

 

            (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.

 

 

                                       2

<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.

 

 

                                       3

<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.

 

 

                                       4

<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.

 

 

 

                                       5

<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.

 

 

                                       6

<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.

 

 

 

                                       7

<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.

 

 

 

                                       8

<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


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