Exhibit 10.1 Execution Copy
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered into
as of the 5th day of April 2007, by and between Millennium Quest, Inc., a
Delaware corporation (the "Company"), Dimitri Cocorinis and Xxxxx Xxxxxxxxx,
officers, directors and principal shareholders of the Company (the "Individual
Officers"), and Halter Financial Investments, L.P., a Texas limited partnership
("Purchaser"), on the following:
Premises
Purchaser desires to acquire a controlling interest in the Company, and the
Company desires to sell such a controlling interest in the Company to Purchaser,
upon and subject to the terms and conditions of this Agreement.
Agreement
NOW, THEREFORE, on these premises and for and in consideration of the
mutual promises and covenants set forth herein, the Company and Purchaser hereby
agree as follows:
1. Purchase and Sale of Shares. Purchaser agrees to purchase and acquire
from the Company, and the Company agrees to sell and deliver to Purchaser,
100,000 restricted shares of the Company's Series A Voting Convertible Preferred
stock, par value $0.001 (the "Shares"), in consideration of Purchaser's payment
to the Company of $455,000 in immediately available funds at Closing (as defined
herein). Each of the Shares shall have voting rights equivalent to, and shall be
convertible into, 428.56 shares of the Company's common stock. The transactions
contemplated hereby shall be closed by the delivery of the documents and the
completion of the acts more particularly set forth herein. The rights and
preferences associated with the Shares are set forth in their entirety in the
Certificate of Designation of Series A Voting Convertible Preferred Stock (the
"Preferred Stock Designation") attached hereto as Exhibit "A" and incorporated
herein by reference, which shall be filed with the Delaware Secretary of State
on or before Closing. All references to Shares herein include the shares of the
Company's common stock into which the Shares are convertible as though the
Shares had been converted into common stock. The issue and sale of the Shares to
Purchaser hereunder is an isolated private offering of preferred stock being
conducted by the Company in reliance upon the exemption from the registration
requirements of the Securities Act of 1933, as amended (the "Act"), afforded by
Section 4(2) thereunder.
2. Closing. The closing of the transactions contemplated hereby shall take
place at a mutually agreeable location in Salt Lake City, Utah on a mutually
convenient date and time within five business days following the execution of
this Agreement (the "Closing").
(a) At the Closing, the Company shall deliver or cause to be delivered:
(i) stock certificates for the Shares, which shall be registered in
the names and denominations requested by Purchaser;
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(ii) the corporate minute book and all other corporate books and
records of the Company, including agreements, shareholder records,
financial records, and related supporting documents and data under the
care, custody, or control of the Company or its officers and/or
directors. If any additional items are received by such persons
subsequent to the Closing Date, they shall immediately deliver the
same to the Company;
(iii) a duly executed officer's certificate pursuant to Section 6(c);
and
(iv) a duly executed receipt for the payment for the Shares.
(b) At the closing, Purchaser shall deliver or cause to be delivered:
(i) a cashier's check or bank wire payable to the Company in the
aggregate amount of $455,000; and
(ii) a duly executed officer's certificate pursuant to Section 7(c)
3. Representations and Warranties of the Company. The Company and the
Individual Officers jointly and severally represent and warrant to Purchaser
that, at the date of this Agreement and on the date of the Closing:
(a) The Company has the full power and authority to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Company,
enforceable in accordance with its terms. The Company is not required to
give any notice to, make any filings with, or obtain any authorization,
consent, or approval of any government or governmental agency in order to
consummate the transactions contemplated by this Agreement, except any
filings with the U.S. Securities and Exchange Commission ("SEC") and state
securities regulators which may be required in connection with the
transactions contemplated hereby.
(b) The Company and each of its subsidiaries, if any, are corporations duly
organized, validly existing and in good standing under the laws of their
states of incorporation, with all requisite corporate power and authority
to carry on the business in which they are engaged and to own the
properties they own, and the Company has all requisite power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The Company and each of its subsidiaries are duly
qualified and licensed to do business and are in good standing in all
jurisdictions where the nature of their business makes such qualification
necessary, except where the failure to be so qualified or licensed would
not have a material adverse effect on the business of the Company and its
subsidiaries, taken as a whole.
(c) There are no legal actions or administrative proceedings or
investigations instituted, or to the best knowledge of the Company
threatened, against the Company, that could reasonably be expected to have
a material adverse effect on the Company or any subsidiary, any of the
Shares, or the business of the Company and its subsidiaries, if any, or
which concern the transactions contemplated by this Agreement.
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(d) The Company, by appropriate and required corporate action, has duly
authorized the execution of this Agreement and the issuance and delivery of
the Shares, subject to the filing of the Preferred Stock Designation with
the Delaware Secretary of State. The Shares are not subject to preemptive
or other rights of any stockholders of the Company and when issued in
accordance with the terms of this Agreement and the Certificate of
Incorporation of the Company, as amended and currently in effect, the
Shares will be validly issued, fully paid and nonassessable and free and
clear of all pledges, liens and encumbrances. The issuance of the Shares
hereunder will not trigger any outstanding anti-dilution rights.
(e) The Company's performance of this Agreement and compliance with the
provisions hereof will not violate any provision of any applicable law or
of the Certificate of Incorporation or Bylaws of the Company, or of any of
its subsidiaries, and, will not conflict with or result in any breach of
any of the terms, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon, any of the properties or assets of the Company, or of any
of its subsidiaries, pursuant to the terms of any indenture, mortgage, deed
of trust or other agreement or instrument binding upon the Company, or any
of its subsidiaries, other than such breaches, defaults or liens which
would not have a material adverse effect on the Company and its
subsidiaries taken as a whole. The Company is not in default under any
provision of its Certificate of Incorporation or By-laws or other
organizational documents or under any provision of any agreement or other
instrument to which it is a party or by which it is bound or of any law,
governmental order, rule or regulation so as to affect adversely in any
material manner its business or assets or its condition, financial or
otherwise.
(f) The periodic reports filed by the Company with the SEC through and
including its 2006 Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2006 (the "Disclosure Documents"), taken together, do not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein in order to make the statements
contained therein not misleading.
(g) The Company has provided Purchaser with all material public information
in connection with the business of the Company and the transactions
contemplated by this Agreement, and no representation or warranty made, nor
any document, statement, or financial statement prepared or furnished by
the Company in connection herewith contains any untrue statement of
material fact, or omits to state a material fact necessary to make the
statements or facts contained herein or therein not misleading.
(h) This Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
(i) No registration, authorization, approval, qualification or consent of
any court or governmental authority or agency is necessary in connection
with the execution and delivery of this Agreement or the offering, issuance
or sale of the Shares under this Agreement except the filing of the
Preferred Stock Designation and any filings with the SEC and state
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securities regulators required in connection with the transactions
contemplated hereby.
(j) The Company is not now, and after the sale of the Shares under this
Agreement and under all other agreements and the application of the net
proceeds from the sale of the Shares will not be required to register as,
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
(k) The Company has filed or will file prior to Closing all material tax
returns required to be filed, which returns are true and correct in all
material respects, and the Company is not in default in the payment of any
taxes, including penalties and interest, assessments, fees and other
charges, shown thereon as due or otherwise assessed, other than those being
contested in good faith and for which adequate reserves have been provided
or those currently payable without interest which were payable pursuant to
said returns or any assessments with respect thereto.
(l) The Company has not taken any action outside the ordinary course of
business designed to or that might reasonably be expected to cause or
result in stabilization or manipulation of the price of the Company's
common stock to facilitate the sale or resale of the Company's common stock
in any manner in contravention of applicable securities laws;
(m) Subject to the accuracy of the Purchaser's representations and
warranties in Section 4 of this Agreement, the offer, sale, and issuance of
the Shares in conformity with the terms of this Agreement constitute
transactions that meet the requirements for exemption from the registration
requirements of Section 5 of the Securities Act;
(n) Neither the Company, nor any of its affiliates, nor any person acting
on its or their behalf, has directly or indirectly made any offers or sales
of any security or solicited any offers to buy any security under
circumstances that would require registration under the Securities Act of
the issuance of the Shares to the Purchaser. Except as disclosed in the
Disclosure Documents, the Company has not issued or sold any shares of its
capital stock for in excess of five years prior to the date hereof and the
issuance of the Shares to the Purchaser will not be integrated with any
other issuance of the Company's securities (past, current or future) for
purposes of the Securities Act. The Company will not make any offers or
sales of any security (other than the Shares) that would cause the sale of
the Shares hereunder to be integrated with any other offering of securities
by the Company for purposes of any registration requirement under the
Securities Act.
(o) The Company will at the date of Closing be in material compliance with
all applicable securities (or "Blue Sky") laws of the states of the United
States in connection with the issuance and sale of the Shares to Purchaser.
(p) The Company shall use all commercially reasonable efforts to continue
to have its common stock quoted on the OTC Bulletin Board.
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(q) The Company's board of directors has, by unanimous written consent, or
by other action valid under the laws of the jurisdiction in which the
Company is organized, determined that this Agreement and the transactions
contemplated by this Agreement, are advisable and in the best interests of
the Shareholders and has duly authorized this Agreement and the
transactions contemplated by this Agreement.
(r) As of the date hereof, the capitalization of the Company consists of
20,000,000 shares of common stock, par value $0.001, of which 2,261,643
shares are issued and outstanding, and 5,000,000 shares of preferred stock,
par value $0.001, none of which are issued and outstanding. All issued and
outstanding shares of the Company's common stock are legally issued, fully
paid, and nonassessable and not issued in violation of the pre-emptive
rights of any person. There are no subscriptions, options, warrants, calls,
commitments, agreements, conversion rights or other rights of any character
(contingent or otherwise) entitling any person to purchase or otherwise
acquire from the Company at any time, or upon the happening of any stated
event, any shares of capital stock or other equity securities of any of the
Company.
(s) Except as set forth in the Company Schedules (as defined herein), since
December 31, 2006, there has not been:
(i) any material change in the business, operations, or financial
condition or the manner of conducting the business of the Company;
(ii) any declaration, setting aside, or payment of any dividend or other
distribution in respect of the shares of the Company of any class, or
any direct or indirect redemption, purchase, or other acquisition of
any shares of any class of the Company;
(iii) any agreement or arrangement to pay or accrue compensation to any of
the Company's officers, directors, employees, or agents except as
contemplated by this Agreement;
(iv) any option, warrant, or right to purchase, or any other right to
acquire shares of any class of the Company granted to any person;
(v) any employment, bonus, or deferred compensation agreement entered into
between the Company and any of its officers, directors, or any other
employees or consultants;
(vi) any issuance of securities of the Company;
(vii) any indebtedness incurred or guaranteed by the Company for borrowed
money or any commitment to borrow money entered into by the Company or
any indebtedness for accounts payable for materials or goods purchased
by or for services rendered on behalf of the Company, except for items
incurred in the
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ordinary course of business or in connection with this Agreement and
the transactions contemplated hereby; or
(viii) any amendment to the Certificate of Incorporation or Bylaws of the
Company.
(t) The Company has delivered to Purchaser the following schedules, which
are collectively referred to as the "Company Schedules" and which consist
of separate schedules dated as of the date of execution of this Agreement
and instruments and data as of such date, all certified by the chief
executive officer of the Company as complete, true, and correct:
(i) a schedule setting forth a description of any of the events or
information required to be described pursuant to section 3(s) of this
Agreement; and
(ii) a schedule setting forth all liabilities and obligations of the
Company, including liabilities for products acquired or services
performed on or prior to the Closing Date for which invoices have not
been issued, which list shall be updated through and including the
Closing Date (the "Company Liabilities"). In no event shall the
Company Liabilities exceed $60,000.
The Company shall cause the Company Schedules and the instruments and data
delivered to Purchaser hereunder to be updated after the date hereof up to
and including the Closing Date.
4. Representations and Warranties of Purchaser. Purchaser represents and
warrants to the Company that, at the date of this Agreement and on the date of
Closing:
(a) Purchaser has been furnished with and has carefully read the Disclosure
Documents as defined in Section 3(f) hereof. With respect to individual or
partnership tax and other economic considerations involved in this
investment, Purchaser is not relying on the Company (or any agent or
representative of the Company). Purchaser has carefully considered and has,
to the extent Purchaser believes such discussion necessary, discussed with
Purchaser's legal, tax, accounting and financial advisers the suitability
of an investment in the Shares for Purchaser's particular tax and financial
situation.
(b) Purchaser has had an opportunity to inspect relevant documents relating
to the organization and operations of the Company. Purchaser acknowledges
that all documents, records and books pertaining to this investment which
Purchaser has requested have been made available for inspection by
Purchaser and Purchaser's attorney, accountant or other adviser(s).
(c) Purchaser and/or Purchaser's advisor(s) has/have had a reasonable
opportunity to ask questions of, and receive answers and request additional
relevant information from, a person or persons acting on behalf of the
Company concerning the transactions contemplated by this Agreement.
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(d) Purchaser is not purchasing the Shares as a result of or subsequent to
any advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio
or presented at any seminar.
(e) Purchaser, by reason of Purchaser's business or financial experience,
has the capacity to protect Purchaser's own interests in connection with
the transactions contemplated by this Agreement.
(f) Purchaser has adequate means of providing for Purchaser's current
financial needs and contingencies, is able to bear the substantial economic
risks of an investment in the Shares for an indefinite period of time, has
no need for liquidity in such investment and, at the present time, could
afford a complete loss of such investment.
(g) Purchaser has such knowledge and experience in financial, tax and
business matters so as to enable Purchaser to use the information made
available to Purchaser in connection with the transaction to evaluate the
merits and risks of an investment in the Shares and to make an informed
investment decision with respect thereto.
(h) Purchaser acknowledges that the Shares have not been registered under
the Act or under any the securities act of any state. Purchaser understands
further that in absence of an effective registration statement, the Shares
can only be sold pursuant to some exemption from registration, such as Rule
144 of the Act, which requires, among other conditions, that the Shares
must be held for a minimum of one (1) year.
(i) Purchaser recognizes that investment in the Shares involves substantial
risks. Purchaser acknowledges that Purchaser has reviewed the risk factors
identified within the Disclosure Documents. Purchaser further recognizes
that no Federal or state agencies have passed upon this transaction or made
any finding or determination as to the fairness of this investment.
(j) Purchaser acknowledges that each certificate representing the Shares
shall contain a legend substantially in the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE "SECURITIES ACT") OR UNDER APPLICABLE STATE SECURITIES LAWS AND MAY
NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER
THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO
AVAILABLE EXEMPTIONS FROM SUCH REGISTRATION, PROVIDED THAT THE PURCHASER
DELIVERS TO THE COMPANY AN OPINION OF COUNSEL (WHICH OPINION AND COUNSEL
ARE REASONABLY SATISFACTORY TO THE COMPANY) CONFIRMING THE AVAILABILITY OF
SUCH EXEMPTION.
(k) Purchaser has the full legal right and power and all authority and
approval required (i) to execute and deliver, or authorize execution and
delivery of, this Agreement and all other instruments executed and
delivered by or on behalf of Purchaser in connection with the purchase of
the Shares, and (ii) to purchase and hold the Shares. The signature of the
party signing on behalf of Purchaser is binding upon Purchaser. Purchaser
has not been formed for the specific purpose of acquiring the Shares.
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(l) Purchaser understands, acknowledges and agrees with the Company as
follows:
(i) No federal or state agency has made any findings or determination
as to the fairness of the terms of this transaction for investment or
any recommendations or endorsement of the Shares.
(ii) The transaction is intended to be exempt from registration under
the Securities Act by virtue of Section 4(2) of the Securities Act.
(iii) Purchaser acknowledges that the information furnished pursuant
to this Agreement by the Company to Purchaser or its advisers in
connection with the transaction, is confidential and nonpublic and
agrees that all such written information which is material and not yet
publicly disseminated by the Company shall be kept in confidence by
Purchaser and neither used by Purchaser for Purchaser's personal
benefit (other than in connection with this transaction), nor
disclosed to any third party, except Purchaser's legal and other
advisers who shall be advised of the confidential nature of such
information, for any reason; provided, however, that this obligation
shall not apply to any such information that (i) is part of the public
knowledge or literature and readily accessible at the date hereof,
(ii) becomes a part of the public knowledge or literature and readily
accessible by publication (except as a result of a breach of this
provision) or (iii) is received from third parties (except third
parties who disclose such information in violation of any
confidentiality agreements or obligations, including, without
limitation, any subscription agreement entered into with the Company).
(iv) IN MAKING AN INVESTMENT DECISION, PURCHASER MUST RELY ON ITS OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE TRANSACTION, INCLUDING
THE MERITS AND RISKS INVOLVED. THE SHARES HAVE NOT BEEN RECOMMENDED BY
ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
5. Special Covenants. The parties make and agree to the following special
covenants which have served as material inducements for their respective
decisions to enter into this Agreement.
(a) Payment of Obligations / Conversion of Debt. Within seven business days
following the Closing Date, the Company shall cause the Company
Liabilities, other than promissory note to C&C Investment Partnership in
the principal amount of $25,000 (the "C&C Note"), to be paid and satisfied.
Such Company Liabilities shall not exceed $60,000 in total. Prior to
Closing, the Company shall cause the holders of the C&C Note to execute
that certain Settlement Agreement attached hereto as Exhibit "B" and
incorporated herein by reference, pursuant to which said noteholders shall
accept 2,500,000 restricted shares of the Company's common stock in full
payment and satisfaction of the C&C Note; provided, that such transaction
shall be consummated subsequent to the later of (i) the date of Closing or
(ii) the record date for the special cash distribution referred to in
section 5(g) hereof, and the shares issuable in consideration for the C&C
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Note shall not be entitled to participate in such special cash
distribution.
(b) Limitation on Reverse Stock Splits. Following Closing, Purchaser, as
the controlling stockholder of the Company, will not permit the Company to
effect any reverse stock split following Closing other than a one-time
reverse stock split effected by the Company in connection with a business
combination transaction with a corporation or other business entity with
current business operations (a "Going Public Transaction"), on a basis not
greater than 1-for-33, and no shareholder of record of the Company's common
stock on the effective date of such split shall have his, her or its total
share ownership reduced below 100 shares, unless the Individual Officers,
as representatives of the Company's current shareholders, consent to a
larger reverse stock split in writing in advance. This provision shall be
binding upon any permitted successors or assigns of Purchaser and shall
automatically terminate at the time the Company enters into a Going Public
Transaction in accordance with the terms of this Agreement.
(c) Limitation on Future Share Issuances. Following Closing, Purchaser, as
the controlling stockholder of the Company, will not permit the Company to
authorize the issuance of any additional shares of the Company's capital
stock or securities convertible into the Company's capital stock except in
connection with a Going Public Transaction, including any shares issued to
any consultants and finders in contemplation of in connection with a Going
Public Transaction. This provision shall be binding upon any permitted
successors or assigns of Purchaser and shall automatically terminate at the
time the Company enters into a Going Public Transaction in accordance with
the terms of this Agreement. In addition, Purchaser shall not acquire any
additional shares of the Company's capital stock (over and above those
purchased hereunder) in connection with a Going Public Transaction.
(d) Minimum Qualifications for Going Public Transaction. Following Closing,
Purchaser, as the controlling stockholder of the Company, will not allow
the Company to enter into a Going Public Transaction unless the Company, on
a combined basis with the operating entity with which it completes a Going
Public Transaction, satisfies the financial conditions for listing on the
NASDAQ Capital Market immediately following the closing of the Going Public
Transaction. This provision shall be binding upon any permitted successors
or assigns of Purchaser and shall automatically terminate at the time the
Company enters into a Going Public Transaction in accordance with the terms
of this Agreement.
(e) Transfer and Registration Rights.
(i) Mandatory Registration. Upon receipt of written demand by
Purchaser, the Company shall prepare, and, as soon as practicable but
in no event later than 60 calendar days after the date of such notice,
file with the SEC a Registration Statement or Registration Statements
(as is necessary) on Form S-3 (or if such form is unavailable, such
other form as is available for registration) covering the resale of
all of the Shares (or the shares of common stock issuable upon
conversion of the Shares). The Company shall use its best efforts to
have the Registration Statement declared effective by the SEC as soon
as practicable, but in no event later than 120 calendar days after the
date notice is received.
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(ii) Piggy Back Registration Rights.
(aa) If the Company decides, including as required under any
demand registration rights agreement, to register any of its
common stock or securities convertible into or exchangeable for
common stock under the Securities Act on a form which is suitable
for an offering for cash or shares of the Company held by third
parties and which is not a registration solely to implement an
employee benefit plan, a registration statement on Form S-4 (or
successor form) or a transaction to which Rule 145 or any other
similar rule of the SEC is applicable, the Company will promptly
give written notice to the Purchaser of its intention to effect
such a registration. Subject to Section 5(c)(ii)(bb) below, the
Company shall include all of the Shares (or the shares of common
stock issuable upon conversion of the Shares) that the Purchaser
requests to be included in such a registration by a written
notice delivered to the Company within fifteen (15) days after
the notice given by the Company.
(bb) If the registration, as described in Section 5(c)(ii)(aa)
above, involves an underwritten offering, the Company will not be
required to register Shares (or the shares of common stock
issuable upon conversion of the Shares) in excess of the amount
that the principal underwriter reasonably and in good faith
recommends may be included in such offering (a "Cutback"), which
recommendation, and supporting reasoning, shall be delivered to
Purchaser. If such a Cutback occurs, the number of Shares that
are entitled to included in the registration and underwriting
shall be allocated in the following manner: (i) first, to the
Company for any securities it proposes to sell for its own
account, (ii) second, to the Purchaser requiring such
registration, and (iii) third, to other holders of stock of the
Company requesting inclusion in the registration, pro rata among
the respective holders thereof on the basis of the number of
shares for which each such requesting holder has requested
registration.
(cc) All costs and expenses of any such registration statement
shall be paid by the Company, other than sales commissions and
the expenses of any separate legal counsel engaged by Purchaser.
(dd) The Shares issued pursuant to this Agreement and the shares
of common stock issuable upon conversion of the Shares may not be
transferred except in a transaction which is in compliance with
the Act and applicable state laws and regulations.
(f) Directors of Acquiror Company at Closing Date. Promptly following the
execution of this Agreement, the Company shall take the actions required by
Regulation 14f-1 promulgated under the Securities Exchange Act of 1934, as
amended, with respect to the change in the Company's management described
herein. On the Closing Date, the Individual Officers shall resign from
their positions as officers of the Company, Xxxxx Xxxxxxxxx shall resign
from his position as a director of the Company and Xxxxxxx X. Xxxxxx shall
be appointed as President, Secretary and a director of the Company to fill
the vacancies created by such resignations. Following the expiration of the
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waiting period required by Regulation 14f-1, Dimitri Cocorinis shall resign
from his position as a director of the Company.
(g) Special Cash Distribution. On or prior to the Closing Date, the Company
shall declare a special cash distribution to the shareholders of record of
the Company's common stock. Such special cash distribution shall be in the
aggregate amount of approximately $415,000 or $0.18 per share for each of
the 2,261,643 shares of common stock outstanding on the record date for
such distribution; provided, that in no event shall the aggregate amount of
such distribution exceed the amount permitted by the Delaware General
Corporation Law. Purchaser expressly acknowledges that it will not be
entitled to participate in such distribution and waives any right thereto.
Purchaser also expressly acknowledges that all but approximately $5,000 of
the purchase price for the Shares will be used to pay the distribution and
the Company Liabilities, which will have the effect of materially reducing
the book value of the Company immediately following Closing.
(h) Form S-8 Registration of Acquiror Company Common Stock. From and after
the date of Closing and until such time as the Company completes a Going
Public Transaction, the Company shall not issue any shares of the Company's
common stock pursuant to a registration statement on Form S-8.
(i) Resales of Restricted Stock. The Individual Officers of the Company
holding restricted shares of the Company's common stock, and holders of the
C & C Notes to whom shares of the Company's common stock are issued in
accordance with Section 5(a) hereof (the "Subject Shareholders") shall be
entitled to the same demand and piggyback registration rights with respect
to the shares of the Company's common stock held by them (the "Subject
Shares") that are provided to Purchaser pursuant to Section 5(e) hereof
and, in the event of any Cutback, an equal number of the Shares of
Purchaser and the Subject Shareholders shall be included in any
registration statement (unless all of the Subject Shares have been
included, in which event a greater number of the Shares of Purchaser may
also be included) with respect to which Purchaser and the Subject
Shareholders have requested registration. All costs and expenses of
registration shall be paid by the Company, other than sales commissions and
the expenses of any separate legal counsel engaged by the Subject
Shareholders.
6. Conditions to Purchaser's Obligations. The obligations of Purchaser to
close the transactions contemplated by this Agreement are subject, at its
discretion, to the following conditions:
(a) The representations and warranties made by the Company in this
Agreement were true when made and shall be true at the date of Closing with
the same force and effect as if such representations and warranties were
made at and as of the date of Closing (except for changes permitted by this
Agreement), and the Company shall have performed and complied with all
covenants and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing.
(b) Prior to the date of closing, there shall not have occurred any
material adverse change in the financial condition, business, or operations
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of the Company, nor shall any event have occurred which, with the lapse of
time or the giving of notice or both, may cause or create any material
adverse change in the financial condition, business, or operations of the
Company.
(c) Purchaser shall have been furnished with a certificate, signed by the
president of the Company and dated as of the date of closing, certifying as
to the matters set forth in (a) and (b) above.
(d) Purchaser shall have received copies of all documents and information
which it may have reasonably requested in connection with the transactions
contemplated by this Agreement.
(e) No stop order or suspension of trading shall have been imposed by the
SEC, or any other governmental regulatory body with respect to public
trading in the Company's common stock.
(f) The Company shall have timely filed its 2006 federal and state income
tax returns with the applicable taxing authorities.
7. Conditions to the Company's Obligations. The obligations of the Company
to close the transactions contemplated by this Agreement are subject, at its
discretion, to the following conditions:
(a) The representations and warranties made by Purchaser in this Agreement
were true when made and shall be true at the date of closing with the same
force and effect as if such representations and warranties were made at and
as of the date of closing (except for changes permitted by this Agreement),
and Purchaser shall have performed and complied with all covenants and
conditions required by this Agreement to be performed or complied with by
it prior to or at the closing.
(b) Prior to the date of Closing, there shall not have occurred any
material adverse change in the financial condition, business, or operations
of Purchaser, nor shall any event have occurred which, with the lapse of
time or the giving of notice or both, may cause or create any material
adverse change in the financial condition, business, or operations of
Purchaser.
(c) The Company shall have been furnished with a certificate, signed by the
chairman of Purchaser and dated as of the date of closing, certifying as to
the matters set forth in (a) and (b) above.
(d) No stop order or suspension of trading shall have been imposed by the
SEC, or any other governmental regulatory body with respect to public
trading in the Company's common stock.
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8. Termination.
(a) This Agreement may be terminated by the management of either the
Company or Purchaser at any time prior to the Closing if:
(i) there shall be any actual or threatened action or proceeding
before any court or any governmental body which shall seek to
restrain, prohibit, or invalidate the transactions contemplated by
this Agreement and which, in the judgment of such board of directors,
made in good faith and based on the advice of its legal counsel, makes
it inadvisable to proceed with the transactions contemplated by this
Agreement;
(ii) any of the transactions contemplated by this Agreement are
disapproved by any regulatory authority whose approval is required to
consummate such transactions or in the judgment of such board of
directors, made in good faith and based on the advice of counsel,
there is substantial likelihood that any such approval will not be
obtained or will be obtained only on a condition or conditions which
would be unduly burdensome, making it inadvisable to proceed with the
exchange; or
(iii) there shall occur any material adverse change in the assets,
properties, business, or financial condition of the party not seeking
termination pursuant to this provision, which material adverse change
occurs subsequent to the date of the information included in this
Agreement.
In the event of termination pursuant to this Section 8(a), no obligation,
right, or liability shall arise hereunder, and each party shall bear all of
the expenses incurred by it in connection with the negotiation, drafting,
and execution of this Agreement and the transactions herein contemplated.
(b) This Agreement may be terminated at any time prior to the Closing by
action of the board of directors of the Company if Purchaser shall fail to
comply in any material respect with any of its covenants or agreements
contained in this Agreement or if any of the representations or warranties
of Purchaser contained herein shall be inaccurate in any material respect.
If this Agreement is terminated pursuant to this Section 8(b), this
Agreement shall be of no further force or effect, and no obligation, right,
or liability shall arise hereunder, except that Purchaser shall reimburse
the Company for all costs and expenses actually and reasonably incurred by
it in connection with this Agreement, which were incurred from and after
the date hereof; provided, however, such termination shall not relieve
Purchaser from any liability for damages resulting from any willful and
intentional breach of this Agreement.
(c) This Agreement may be terminated at any time prior to the Closing by
action of the General Partner of Purchaser if the Company shall fail to
comply in any material respect with any of its covenants or agreements
contained in this Agreement or if any of the representations or warranties
of the Company contained herein shall be inaccurate in any material
13
respect. If this Agreement is terminated pursuant to this Section 8(c),
this Agreement shall be of no further force or effect and no obligation,
right, or liability shall arise hereunder, except that the Company shall
reimburse Purchaser for all costs and expenses actually and reasonably
incurred in connection with Agreement, which were incurred from and after
the date hereof; provided, however, no such termination shall relieve the
Company from any liability for damages resulting from any willful and
intentional breach of this Agreement.
(d) This Agreement may be terminated by either the board of directors of
the Company or the General Partner of Purchaser, if Closing shall not have
occurred by the close of business on April 30, 2007 (the "Termination Date
"); provided, however, that the right to terminate this Agreement under
this section shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been the cause of, or resulted in,
the failure of the Closing to occur on or before the Termination Date. In
the event of termination pursuant to this Section 8(d), no obligation,
right, or liability shall arise hereunder, and each party shall bear all of
the expenses incurred by it in connection with the negotiation, drafting,
and execution of this Agreement and the transactions herein contemplated.
9. Finders. Each of the respective parties hereto agrees to indemnify and
hold the other party harmless from and against any claims for compensation by
any third party based on or arising from such indemnifying party's agreement to
pay such third party a commission or other compensation for acting as a finder
or broker in connection with the transactions contemplated hereby.
10. Survival. Except as otherwise expressly provided herein, the
representations, warranties and covenants of the respective parties set forth in
Sections 3, 4, 5, 9, 10, 11, 12, 13, 14, 15, 16, 18 and 19 shall survive the
Closing and shall continue in full force and effect for a period of two years.
11. Governing Law. This Agreement shall be governed by and construed under
and in accordance with the laws of the state of Delaware.
12. Expenses of Legal Proceedings. In any action, proceeding or
counterclaim brought to enforce any of the provisions of this Agreement or to
recover damages, costs and expenses in connection with any breach of the
Agreement, the prevailing party shall be entitled to be reimbursed by the
opposing party for all of the prevailing party's reasonable outside attorneys'
fees, costs and other out-of-pocket expenses incurred in connection with such
action, proceeding or counterclaim.
13. Expenses of Transaction. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the transactions contemplated by this Agreement, including all
fees and expenses of agents, representatives, counsel, and accountants.
14
14. Public Announcements. The Company and Purchaser shall consult with one
another in issuing any press releases or otherwise making public statements or
filings and other communications with the Commission or any regulatory agency or
stock market or trading facility with respect to the transactions contemplated
hereby and neither party shall issue any such press release or otherwise make
any such public statement, filings or other communications without the prior
written consent of the other, which consent shall not be unreasonably withheld
or delayed. Notwithstanding the foregoing, however, no prior consent shall be
required if any such disclosure is required by law, in which case the disclosing
party shall use its reasonable best efforts in good faith to provide the other
party with prior notice of such public statement, filing or other communication
and incorporate into such public statement, filing or other communication the
reasonable comments of the other party.
15. Entire Agreement. This Agreement represents the entire agreement
between the parties relating to the subject matter hereof, and there are no
other courses of dealing, understandings, agreements, representations, or
warranties, written or oral, except as set forth herein. No amendment or
modification hereof shall be effective until and unless the same shall have been
set forth in writing and signed by the parties hereto.
16. Severability. If any provision of this Agreement or the application of
such provision to any person or circumstance shall be held invalid or
unenforceable, the remainder of this Agreement or the application of such
provisions to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby and this Agreement shall
be construed as if such invalid or unenforceable provision were not contained
herein.
17. Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if sent by registered mail or certified
mail, postage prepaid, or by a commercially recognized means of overnight
delivery that requires confirmation of receipt, addressed as follows:
If to the Company, to: Millennium Quest, Inc.
0000 Xxxxx Xxxxxxx Xxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Dimitri Cocorinis, President
If to Purchaser, to: Halter Financial Investments, L.P.
00000 Xxxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Chairman
or such other addresses as shall be furnished in writing by either party to the
other in the manner for giving notices hereunder, and any such notice shall be
deemed to have been given as of the date so mailed.
18. Further Assurances. The parties agree (a) to furnish upon request to
each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
15
19. Assignments, Successors, and No Third-Party Rights. No party may assign
any of its rights under this Agreement without the prior consent of the other
party. Nothing expressed or referred to in this Agreement will be construed to
give any Person other than the parties to this Agreement and, for purposes of
Section 5, the Individual Officers as representatives of the Company's current
shareholders, any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provision of this Agreement. This Agreement and
all of its provisions and conditions are for the sole and exclusive benefit of
the parties to this Agreement and their successors and assigns.
20. Execution in Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
The Company: Millennium Quest, Inc.
A Delaware corporation
By /s/ Dimitri Cocorinis
----------------------------------
Dimitri Cocorinis, President
The Individual Officers: /s/ Dimitri Cocorinis
----------------------------------
Dimitri Cocorinis
/s/ Xxxxx Xxxxxxxxx
----------------------------------
Xxxxx Xxxxxxxxx
Purchaser: Halter Financial Investments, L.P.
A Texas Limited Partnership
/s/ Xxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxx X. Xxxxxx, Chairman
