EXHIBIT 10.4
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT ("Agreement"), dated as of
May 31, 2002 ("Execution Date"), between BWY Holdings LLC, a
limited liability corporation organized under the laws of Delaware (the
"Buyer") and Borough Corporation, a corporation organized under the
laws of the State of Delaware (the "Seller").
RECITALS:
The Seller wishes to sell, and the Buyer wishes to purchase shares of
common stock of the Seller for the Purchase Price and upon the terms and
subject to the conditions described below.
NOW, THEREFORE, in consideration of the premises and of
other good and valuable consideration, receipt of which is acknowledge,
it is hereby agreed as follows:
1. Purchase and Sale of Stock.
Subject to Conditions of Buyer and Seller to closing, Seller shall
sell to Buyer, and Buyer shall purchase from Seller, 1,039,000 shares of
common stock ("Common Stock") and warrants ("Warrants" and
collectively with the Common Stock, the "Stock") to purchase 2,300,000
shares, of common stock of the Seller at $1.09 per share, the
consideration for which Stock shall be an aggregate of $2.6 million (the
"Purchase Price") and payable at Closing.
2. Closing.
The Closing shall take place five (5) business days from the date of
the Notice at in the offices of the Seller, or at such other place that the
Seller indicates in the Notice. For the purposes of this Agreement,
"Business Day" shall mean any day other than a Saturday, Sunday or any
day on which State and Federal banking institutions in the State of Florida
are authorized or obligated by law or executive order to close.
3. Representations of Seller.
The Seller hereby represents and warrants to, and agrees with, the
Buyer as follows:
a. Organization, Good Standing and Qualification. The Seller
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. It has all requisite power and
authority to carry on its business as now conducted and as proposed to be
conducted. Seller has all requisite power and authority to enter into and
perform this Agreement and the transactions contemplated hereby.
b. Capitalization. (a) On the date herein, the authorized
capital stock of Seller consists of 100,000,000 shares of common stock,
$.0001 par value per share, of which 2,190,400 shares are currently issued
and outstanding. All the outstanding shares have been duly and validly
issued, are fully paid and non-assessable. The Stock will be free and clear
from any liens and Seller shall deliver to Buyer, certificates representing
the Stock; and there is not outstanding any security, option, warrant,
right, agreement, understanding or commitment of any kind entitling any
person or entity to acquire any of the Stock.
c. Authority; Execution and Delivery; Requisite Consents,
Nonviolation. Seller has all requisite power and authority to execute,
deliver and perform this Agreement and each other document or
instrument executed by any of them, or any of its officers, in connection
herewith or therewith or pursuant hereto or thereto and to consummate
the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary action on the part of the Seller. This
Agreement is duly executed and delivered by the Seller and the legal, valid
and binding obligation of Seller, enforceable against Seller in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting the
enforceability of creditors' rights in general or by general principles of
equity.
d. No Violation. Neither the execution nor delivery or
performance by the Seller of this Agreement (i) will contravene any
provision of any law, statute, rule or regulation or any order, writ,
injunction or decree of any court or governmental instrumentality binding
on the Seller, (ii) will conflict or be inconsistent with or result in any
breach of any of the terms, covenants, conditions or provisions of, or
constitute a default in respect of the terms of any indenture, mortgage,
deed of trust, credit agreement, loan agreement or any other agreement,
contract or instrument to which the Seller is a party or by which its
respective properties or assets is bound or to which it may be subject.
e. INTENTIONALLY LEFT BLANK.
f. Litigation. There is no claim, counterclaim, action, suit,
order, proceeding or investigation pending or, to the knowledge of the
Seller, threatened against or affecting it with respect to or affecting the
Seller, or its assets, properties or rights, or relating to the transactions
contemplated hereby, before any court, agency, regulatory, administrative
or other governmental body or officer of before any arbitrator.
g. Tax Returns and Payments. The Seller has filed all tax
returns required to be filed by it and has paid all taxes payable by it which
have become due pursuant to such tax returns and all other taxes and
assessments payable by them which have become due, other than those
not yet delinquent and except for those contested in good faith and for
which adequate reserves have been established.
h. INTENTIONALLY LEFT BLANK.
i. Compliance with Laws, etc. The Seller is in compliance in
all material respects with all applicable statutes, regulations and orders of,
and all applicable restrictions imposed by, all governmental bodies in
respect of the conduct of its business and the ownership of its property
(including applicable statutes, regulations, orders and restrictions relating
to environmental standards and controls), except such noncompliance as
would not, in the aggregate, have an adverse effect on the Seller.
j. Properties. The Seller has good and marketable title,
without regard to defects of title, which do not have an adverse effect, to
all properties owned by them, free and clear of all liens. With respect to
any lease or rental agreement to which the Seller is a party, (i) such lease
or rental agreement is in full force and effect, (ii) the Seller has complied
in all material respects with all of the terms of such lease or rental
agreement, (iii) there exists no event of default or an event, act or
condition (other than immaterial defaults or conditions which are not
reasonably likely to adversely affect the interests of the Lenders) which
with notice or lapse of time, or both, would constitute an event of default
thereunder by the Seller, and (iv) the Seller is in possession of the
premises demised under all such leases and rental agreements and is
conducting business an such premises.
k. Assets other than Real Property. Except as previously
disclosed to the Buyer, the Seller has good title to all tangible assets
owned by it reflected in the Seller SEC Reports and financial information,
free and clear of all liens that individually or in the aggregate would not
have an adverse effect on the Seller. All the intangible personal property
owned by the Seller is in all material respects in good operating condition
and repair, ordinary wear and tear excepted, and all personal property
leased by the Seller is in all material respects in the condition required of
such property by the terms of the lease applicable thereto.
2. Representations of Buyer.
Buyer hereby represents and warrants to, and agrees with, the
Seller as follows:
a. Organization, Good Standing and Qualification. The Buyer
is a limited liability company, duly organized, validly existing and in good
standing under the laws of Delaware. It has all requisite power and
authority to carry on its business as now conducted and as proposed to be
conducted. Buyer has all requisite power and authority to enter into and
perform this Agreement and the transactions contemplated hereby.
b. Authority; Execution and Delivery; Requisite Consents,
Nonviolation. Buyer has all requisite power and authority to execute,
deliver and perform this Agreement and each other document or
instrument executed by any of them, or any of its officers, in connection
herewith or therewith or pursuant hereto or thereto and to consummate
the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary action on the part of the Buyer. This
Agreement is duly executed and delivered by the Buyer and the legal, valid
and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting the
enforceability of creditors' rights in general or by general principles of
equity.
c. Investment Intent. The Buyer acknowledges that it is
acquiring the shares for investment purposes for its own account, and not
with the view to, or for resale in connection with, any distribution thereof.
Buyer understands that the Stock has not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or under the
securities laws of various states, by reason of a specified exemption from
the registration provisions thereunder. Buyer further acknowledges that
the Stock must be held indefinitely unless they are subsequently registered
under the Securities Act and under applicable state securities laws or an
exemption from such registration is available.
3. Conditions of Buyer' Obligations at Closing. The Buyer's
obligation to purchase the Stock to be purchased by it at the Closing is
subject to the fulfillment to Buyer's satisfaction, prior to or at the
Closing, of each of the following conditions:
a. Representations and Warranties. Except as otherwise
disclosed to the Buyer, the representations and warranties of Seller
contained in this Agreement shall be true and correct in all material
respects on and as of the date of the Closing as if made on and as of such
date.
b. Performance. Seller shall have performed and complied
with all agreements and conditions required by this Agreement to be
performed or complied with by them prior to or at the Closing.
c. Stock Certificates, etc. At the Closing, Seller shall have
delivered to Buyer certificates evidencing the Stock, all in form and
substance satisfactory to Buyer and sufficient to transfer to and vest in
Buyer good and valid title to the Stock, free and clear of any lien.
d. Warrants. At the Closing, the Buyer (sometimes referred to
herein as "Warrant Recipient") shall receive warrants to purchase 2.3
million shares of Seller's common stock. A form of Warrant is annexed
hereto as Exhibit A. The Purchase Price (as defined in the Warrant) per
share shall be $1.09. The Warrants will be exercisable for 12 months from
the registration of the underlying common stock (as defined in the Warrant).
The Investor is granted the registration rights set forth in a Registration
Rights Agreement with respect to the Warrant Shares. The Warrants must be
delivered to the Buyer at Closing. All the representations, undertakings
and covenants made by the Company to or for the benefit of the Buyer
relating to this Agreement and to or for the benefit of the holder.
e. No Litigation. There shall not be any Action of or before
any Governmental Authority or other Person pending or threatened with
respect to this Agreement or the transactions contemplated hereby.
f. Notice to Close. Within 90 days from the Execution Date, the
Seller shall have given written notice ("Notice") to the Buyer of the
Seller's intention to consummate the transaction contemplated by this
Agreement.
g. Acquisition of Impact Diagnostics. The Seller shall have
acquired at least 80% of the outstanding capital stock, on a fully diluted
basis, of Impact Diagnostics, Inc., a Utah corporation.
h. Amount of Stock. The Common Stock to be acquired by
the Buyer shall represent not less than 11.366% of the common stock of
Seller's issued and outstanding common stock as if 100% of Impact
Diagnostics Inc. had been acquired by the Seller, which percentage shall
exclude the Warrants.
i. Outstanding Warrants. The only warrants outstanding as of
Closing shall be those warrants to purchase up to 1.098 million shares
issued to Prima Capital Growth Fund LLC in connection with its private
equity line of credit facility.
If at the Closing Sellers fails to tender to the Buyer the
documents specified herein which are required to be delivered to the
Buyer at the Closing or if at the Closing any of the conditions specified in
this Section shall not have been fulfilled to Buyer's satisfaction, Buyer
shall, at its election, be relieved of all further obligations under this
Agreement.
4. Conditions of the Sellers' Obligations at Closing. The
obligations of Seller to the Buyer under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions:
a. Representations and Warranties. Except as otherwise
disclosed to the Seller, the representations and warranties of Buyer
contained in this Agreement shall be true and correct in all material
respects on and as of the date of the Closing as if made on and as of such
date.
b. No Litigation. There shall not be any Action of or before
any Governmental Authority or other Person pending or threatened with
respect to this Agreement or the transactions contemplated hereby.
c. Approval of Seller's Board of Directors. The Board of
Directors of Seller shall have approved this Agreement and the
transactions contemplated hereby.
If at the Closing the Buyer shall not have fulfilled to Sellers'
satisfaction the conditions described in this Section, such Buyer shall, at
its election, be relieved of all further obligations under this Agreement.
5. Registration Rights.
At any time following the earlier to occur of (i) eighteen (18)
months from the date hereof, (ii) 180 days following a Qualified Offering
of the Company's common stock, (iii) 90 days following merger into a
publicly traded entity the Buyer will be entitled to demand registration
covering the Stock. The form of Registration Rights Agreement is
attached as Exhibit B of this Agreement.
For the purpose of this Agreement, the term Qualified Offering
shall mean an underwritten public offering of the shares of the Company's
common stock, in which the net proceeds to the Company are not less
than $15,000,000.
6. General.
a. Notices. Any notice required or permitted hereunder shall
be in writing, and shall be delivered personally or sent by certified mail,
return receipt required, or confirmed facsimile transmission as follows:
If to Buyer:
BWY Holdings LLC
000 Xxxxx Xxx Xxxxxx
Xxxxxxxx Xxxxx, XX 00000
Attention: Wentworth Advisors, LLC, managing member
with copy to:
Austin & Xxxxx, P.A.
Heron Bay Corporate Center
00000 Xxxxx Xxx Xxxx.
Xxxxx 000
Xxxxx Xxxxxxx, Xxxxxxx 00000
Attention: C. Xxxxxxx Xxxxxx, Esq.
If to Seller:
Borough Corporation
0000 X Xxxxxx XX
Xxxxxxxxxx, XX 00000
Attention: President
b. Survival. All representations and covenants contained
herein shall survive the date hereof.
c. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
d. No Implied Waiver. No failure or delay on the part of a
party hereto to exercise any right, power or privilege shall be deemed a
waiver of any rights and remedies to which such party may be entitled.
e. Entire Agreement. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior oral or written communications, understandings and
agreements, oral or written and cannot be changed except by an
instrument in writing signed by the parties hereto.
f. Headings. The headings in this Agreement are for convenience
of reference only, are not a part hereto and shall not affect the
interpretation or construction hereof.
g. Governing Law. This agreement shall be governed by and
construed and enforced in accordance with, the laws of the State of
Delaware, without regard to conflicts of law principles. Any disputes with
respect to the interpretation of this Agreement or the rights and
obligations of the parties hereto shall be exclusively brought in the U.S.
District Court for the District of Columbia. Each of the parties waives
any right to object to the jurisdiction or venue of either of such Courts or
to claim that such Courts are an inconvenient forum.
h. Successors. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors and
assigns. None of the parties hereto may assign its rights under this
Agreement.
[Balance of the page intentionally left blank]
IN WITNESS HEREOF, the parties have duly executed this
Agreement as of the date first above written.
BOROUGH CORPORATION
By:
Name:
Title:
BWY HOLDINGS LLC
On behalf of: Wentworth Advisors, LLC,
managing member
By:
Xxxx X. Xxxxxx, Chief Executive
Exhibit A
Form of Warrant
Exhibit B
Form of Registration Rights Agreement
Exhibit C
RESOLUTION
I, ___________, being the duly elected Secretary of Borough
Corporation (herein referred to as the "Company") does attest and affirm
that the following resolution was presented and unanimously approved by
its Board of Directors at a meeting of that board held at the Company's
office on the 3rd day of June, 2002
RESOLVED, that the Stock Purchase Agreement with BWY Holdings
LLC and the terms contained therein are approved.
The Stock Purchase Agreement with BWY Holdings LLC is attached
hereto.
__________________________________
Name:
____________________________
RESOLUTION
I, ___________, being the duly elected Secretary of BWY
Holdings, LLC (herein referred to as the "Company") does attest and
affirm that the following resolution was presented and unanimously
approved by its Board of Directors at a meeting of that board held at the
Company's office on the 3rd day of June, 2002
RESOLVED, that the Stock Purchase Agreement with Borough
Corporation and the terms contained therein are approved.
The Stock Purchase Agreement with BWY Holdings LLC is attached
hereto.
__________________________________
Name:
____________________________
