EXHIBIT 2.1
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PREFERRED BUY BACK AND MUTUAL RELEASE AGREEMENT
This Preferred Buy Back and Mutual Release Agreement (the "AGREEMENT")
is made and entered into as of December 31, 2002 by and among Semotus Solutions,
Inc. (successor-in-interest to Xxxxxxxx.xxx, Inc.) (the "Company" or "Semotus"),
on the one hand, and Xxxxx Xxxxxxx Partners I, Ltd., a Cayman Islands company
("XXXXX XXXXXXX"), on the other hand. The Company and Xxxxx Xxxxxxx are
collectively referred to as the "Parties."
RECITALS:
WHEREAS, the Company and Xxxxx Xxxxxxx are parties to the Securities
Purchase Agreement (the "SECURITIES PURCHASE AGREEMENT"), dated as of February
9, 2000, by and among Xxxxxxxx.xxx, Inc. (now known as Semotus), on the one
hand, and Xxxxx Xxxxxxx Strategic Growth Fund, Ltd. and Xxxxx Xxxxxxx Strategic
Growth Fund, L.P. (now known as Xxxxx Xxxxxxx Partners I, Ltd.), on the other
hand, (ii) the Registration Rights Agreement and Warrants (as defined in, and
entered into in connection with, the Securities Purchase Agreement and (iii) the
Certificate of Designation of Series B Convertible Preferred Stock of the
Company, as adopted by the Company's board of directors and filed with the
Secretary of State of Nevada pursuant to the terms of the Securities Purchase
Agreement. The documents referenced in the preceding sentence shall be
collectively referred to herein as the "TRANSACTION DOCUMENTS." Capitalized
terms used in this Agreement, unless otherwise defined herein, shall have the
same meanings ascribed to such terms in the applicable Transaction Documents.
WHEREAS, Xxxxx Xxxxxxx has asserted certain claims against the Company
arising out of the issuance and sale by the Company, on or about January 18,
2002, to Global Beverage Group, of warrants to purchase shares of the Company's
common stock, (the "GLOBAL BEVERAGE ISSUANCE");
WHEREAS, the Company has denied any wrongdoing or legal liability
arising out of the Global Beverage Issuance; and
WHEREAS, it is the desire of the Company, on the one hand, and Xxxxx
Xxxxxxx, on the other hand, to enter into this Agreement in order to settle,
compromise and resolve, in good faith, all disputes of any kind that exist or
could exist between them which relate or could relate to the Global Beverage
Issuance.
AGREEMENT:
THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter contained, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties agree
as follows:
1. CONSIDERATION.
(A) Semotus hereby purchases and acquires from Xxxxx Xxxxxxx, and Xxxxx
Xxxxxxx xxxxx sells and conveys to Semotus, 469,231 shares of the Company's
Series B Convertible Preferred Stock (the "Shares"), which Shares represent and
constitute all of the
shares of the Company's Series B Convertible Stock owned by Xxxxx Xxxxxxx as of
the date hereof. Within five (5) Business Days of the date hereof Xxxxx Xxxxxxx
will deliver to Semotus a certificate or certificates representing the Shares.
In consideration of the aforesaid sale of the Shares, (i) Semotus is hereby
delivering to Xxxxx Xxxxxxx, via wire transfer of immediately available funds to
an account designated in writing by Xxxxx Xxxxxxx to the Company, the purchase
price of one hundred thousand dollars ($100,000.00) and (ii) within five (5)
Business Days of the date hereof, Semotus will deliver to Xxxxx Xxxxxxx 846,154
warrants (the "New Warrants") to purchase shares of Common Stock of Semotus,
exercisable at $0.01 per share, in the form set forth as Exhibit A to this
Agreement. In addition, in consideration for Xxxxx Xxxxxxx agreeing to enter
into the settlement and mutual release contemplated by Section 2 hereof, the
Company is revising the existing Warrants, pursuant to the terms set forth in
Section 1(b) of this Agreement.
(B) Warrant Amendments.
i. The Company will amend the existing Warrants as follows:
(1) Section 4 of each Warrant shall be deleted in its
entirety and replaced with the following:
"EXERCISE PRICE. The initial per share exercise price of this
Warrant, representing the price per share at which each share
of Common Stock issuable upon exercise of this Warrant may be
purchased, is $0.01, subject to adjustment from time to time
pursuant to the provisions of Section 7 hereof (the "Exercise
Price")."
(2) The first sentence of Section 9 of each Warrant
shall be deleted in its entirety and replaced with the following:
"Notwithstanding anything herein to the contrary, in no event
shall the Registered Owner or the Company have the right or be
required to exercise this Warrant if, as a result of such
exercise, the aggregate number of shares of Common Stock
beneficially owned by such Registered Owner and its Affiliates
would exceed 4.99% of the outstanding shares of Common Stock
following such exercise."
ii. The Company and Xxxxx Xxxxxxx acknowledge and agree that
the Company effected a 2-for-1 stock split of its Common Stock on or about
April 27, 2000. As a result thereof Xxxxx Xxxxxxx is entitled to receive
1,153,846 Warrant Shares, and the number of Warrant Shares set forth on the
first page and in Section 3 of each Warrant shall be adjusted accordingly.
iii. The Company acknowledges and agrees that within five (5)
days of the date hereof it shall xxxx and initial the changes to the
Warrants to reflect the terms set forth herein. The Company further
acknowledges and agrees that Xxxxx Xxxxxxx may request, at any time, and
the Company shall promptly provide, new warrants reflecting the revisions
set forth in this paragraph 1(b), which replacement warrants shall be
registered in the name of Xxxxx Xxxxxxx or its designee. The Company
acknowledges that such replacement warrant is not necessary for the
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exercise of the Warrants incorporating the terms set forth in this
paragraph 1(b), and that any delay by Xxxxx Xxxxxxx in making such request
shall not effect the provisions of this paragraph 1(b).
(c) Post-Effective Amendment of the Registration Statement; Piggy-back
Registration; Demand Registration. The Company acknowledges and agrees that the
Initial Registration Statement covering the resale of the Warrant Shares is
presently effective and covers all existing 1,153,846 Warrant Shares as of the
date hereof (excluding the New Warrants), and shall remain effective in
accordance with the terms of the Registration Rights Agreement.
If (but without any obligation to do so) the Company proposes to
register any of the of its securities on a registration statement (other than a
registration relating solely to the sale of securities to participants in a
Company stock plan, a registration relating to a corporate reorganization or
other transaction under Rule 145 of the Securities Act, [), the Company shall,
at such time, promptly give Xxxxx Xxxxxxx written notice of such registration.
Upon the written request of Xxxxx Xxxxxxx given within twenty (20) days after
mailing of such notice by the Company, the Company shall use all reasonable
efforts to cause to be registered under the Securities Act all of the
Registrable Securities beneficially owned by Xxxxx Xxxxxxx that Xxxxx Xxxxxxx
has requested to be registered provided, however, that the Company shall not be
required to register any Registrable Securities pursuant to this Section 1(c)
that are eligible for sale pursuant to Rule 144(k) of the Securities Act. In the
case of an Underwritten Offering, if the managing underwriter(s) or
underwriter(s) should reasonably object to the inclusion of the Registrable
Securities in such registration statement and if the Company, after consultation
with the underwriter's representative, should reasonably determine that the
inclusion of such Registrable Securities would materially adversely affect the
offering contemplated in such registration statement and based on such
determination recommends inclusion in such registration statement of fewer
Registrable Securities than proposed to be sold by Xxxxx Xxxxxxx, then (x) the
number of Registrable Securities of Xxxxx Xxxxxxx included in such registration
statement shall be reduced to such number of Registrable Securities as
recommended by the underwriter or (y) none of the Registrable Securities of
Xxxxx Xxxxxxx shall be included in such registration statement if the Company,
after consultation with the underwriter(s), recommends the inclusion of none of
such Registrable Securities; provided, however, that if securities are being
offered for the account of other Persons as well as the Company, such reduction
of shall not represent a greater fraction of the number of Registrable
Securities intended to be offered by Xxxxx Xxxxxxx than the fraction of similar
reductions imposed on such other Persons (other than the Company). For the
avoidance of doubt, as used herein the term "Registrable Securities" includes
the shares of Common Stock issuable upon exercise of the existing Warrants and
the shares of Common Stock issuable upon exercise of the New Warrants. All
expenses, other than underwriting discounts and commissions incurred in
connection with a registration hereunder, including, without limitation, all
registration, listing, and qualification fees, printing and accounting fees, and
the fees and disbursements of counsel for the Company, shall be borne by the
Company.
In addition the Company shall, as promptly as practicable after the
date hereof, use all commercially reasonable efforts to file a post-effective
amendment to the Initial Registration Statement, in a form acceptable to Xxxxx
Xxxxxxx, and take all other commercially reasonable
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actions necessary to ensure that the number of shares of Common Stock registered
for resale upon the exercise of the existing Warrants shall be eligible for
resale by Xxxxx Xxxxxxx upon exercise of the Warrants. The Company shall use all
commercially reasonable efforts to cause such post-effective amendment to be
declared effective by the Commission as promptly as practicable after the filing
thereof. The Company further agrees that it shall respond, in a commercially
reasonable manner, to all comments made by the Commission with respect to any
such post-effective amendment within ten (10) Business Days after receipt
thereof and, in the event of the failure of the Company to do so, the Company
shall be obliged to pay Xxxxx Xxxxxxx the applicable Registration Delay Payment
referred to in Section 2(d) of the Registration Rights Agreement. For the
avoidance of doubt, if the SEC declines to declare such amendment effective, the
Company shall not be under any obligation to file a new registration statement.
Notwithstanding anything to the contrary contained herein, if, at any time,
Xxxxx Xxxxxxx owns at least 20,000 Registrable Securities which are neither
registered pursuant to a then-effective Registration Statement nor saleable
pursuant to Rule 144(k) of the Securities Act, the Company shall not file with
the Commission a registration statement relating to the sale of the Company's
equity or debt securities by any third party without the prior written consent
of Xxxxx Xxxxxxx.
Xxxxx Xxxxxxx (or its assignee) shall be eligible, at any time during
the Effective Period (as defined in the Registration Rights Agreement) to cause
the Company to register with the SEC a registration statement covering the
shares of Common Stock underlying the New Warrants, pursuant to the provisions
of Section 2(b) of the Registration Rights Agreement (and the provisions of the
Registration Rights Agreement which relate to an Underwritten Offering);
provided, however, that all expenses, other than underwriting discounts and
commissions incurred by the Company in connection with any such demand
registration, including, without limitation, all registration, listing, and
qualification fees, printing and accounting fees, and the fees and disbursements
of counsel for the Company, shall be borne by Xxxxx Xxxxxxx (or its assignee).
2. MUTUAL RELEASES.
(A) Except for any rights and obligations created by this Agreement,
Xxxxx Xxxxxxx hereby fully and forever releases and discharges the Company, and
each of its present and former officers, directors, shareholders, predecessors,
successors, agents, representatives, employees, heirs, assigns and attorneys,
from any and all claims or causes of action of any kind, arising under federal
or state law, whether or not known, suspected or claimed, which Xxxxx Xxxxxxx
ever had, now has, or hereafter may have or claim to have relating to (i) the
Global Beverage Issuance or (ii) any other sale or issuance of equity or debt
securities by the Company which has been reported by the Company in its SEC
Documents (as defined in the Securities Purchase Agreement) to the extent that
any such claim or cause of action relates to any anti-dilution provision set
forth in the Transaction Documents.
(B) Except for any rights and obligations created by this Agreement,
the Company hereby fully and forever releases and discharges Xxxxx Xxxxxxx and
each of its present and former officers, directors, shareholders, partners,
members, managers, predecessors, successors, agents, representatives, employees,
heirs, assigns and attorneys, from any and all claims or causes of action of any
kind, arising under federal or state law, whether or not known, suspected
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or claimed, which the Company ever had, now has, or hereafter may have or claim
to have, which relate to any act or omission of Xxxxx Xxxxxxx in connection with
the Global Beverage Issuance.
(C) If it has not already done so, Xxxxx Xxxxxxx shall, as promptly as
practicable after the date hereof, dismiss with prejudice, Case No. 60094202
filed against the Company at the Supreme Court of the State of New York.
3. REPRESENTATIONS. Each of the Parties represents and warrants: (a)
that the person executing this Agreement on such Party's behalf has the
authority to do so, (b) that the claims being released by the Party pursuant to
this Agreement have not been assigned or otherwise transferred to any other
person or entity, (c) such Party has all requisite legal and corporate power to
execute and deliver this Agreement and to carry out and perform its obligations
hereunder, (d) all corporate action on the part of such Party necessary for the
authorization, execution, delivery and performance of this Agreement and the
sale and delivery of the Shares has been taken, (e) this Agreement has been duly
and validly executed and delivered by such Party, and constitutes a valid and
binding agreement of such Party, enforceable against such Party in accordance
with its terms and (f) the execution of this Agreement and the performance by
such Party of its obligations hereunder do not conflict with or violate any
agreement to which such Party is a party or any law applicable to such Party.
4. ATTORNEYS' FEES AND COSTS. each of the Parties shall bear its own
expenses, including costs and attorneys' fees, incurred in connection with the
negotiation, drafting and execution of this Agreement and all matters relating
hereto.
5. ADVICE OF COUNSEL. Each Party has received advice of counsel of its
own choosing in the negotiations for and the preparation of this Agreement; each
Party has read this Agreement, or had this Agreement read for it by its counsel;
each Party has had this Agreement fully explained to it by its counsel and is
fully aware of its contents and its legal effects. Further, each Party has made
such investigation of the facts pertaining to this settlement and this
Agreement, and of all matters pertaining thereto, as it deems necessary. Each
Party has read this Agreement and understands the contents hereof, and expressly
acknowledges that it has had an opportunity to consult with as many advisors as
the Party deemed necessary to ensure that it fully and completely understands
this Agreement.
6. APPLICABLE LAW. This Agreement shall be construed and interpreted in
accordance with the laws of New York, without regard to its conflict of laws
principles.
7. BINDING EFFECT. This Agreement and the conditions contained herein
shall be binding upon and inure to the benefit of the Parties and their
respective successors and assigns.
8. ENTIRE AGREEMENT; TRANSACTION DOCUMENTS. This Agreement contains the
entire understanding of the Parties and constitutes the entire agreement,
written and oral, among the Parties with respect to the subject matters hereof,
and supersedes and replaces all prior negotiations, proposed agreements, written
or oral relating to the subject matters hereof, other than the Transaction
Documents. The Parties acknowledge that there are no other warranties,
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promises, assurances or representations of any kind, express or implied, upon
which the Parties have relied in entering into this Agreement,. This Agreement
shall not be modified or waived except by written agreement executed by the
Parties. Except as explicitly set forth herein, the Transaction Documents shall
remain unchanged and in full force and effect, and each reference to the
Transaction Documents (including references to "this Agreement", "hereto" and
the like) in this Agreement shall be a reference to the Transaction Documents as
amended hereby and as the same may be further amended and in effect from time to
time.
9. EXECUTION OF DOCUMENTS. This Agreement may be executed in one or
more counterparts, each of which, when executed and delivered, shall be an
original, and all of which together shall constitute one and the same
instrument. This Agreement may also be executed by facsimile signatures which
signatures shall be deemed as effective as original signatures.
10. SEVERABILITY. Should any part of this Agreement be found to be
illegal or in conflict with any laws of New York or the United States, or
otherwise rendered unenforceable or ineffectual, the remaining parts of this
Agreement shall be deemed severable and shall remain in effect so long as the
remaining parts continue to constitute in substance the agreement that the
Parties intended to enter.
11. NO ADVERSE CONSTRUCTION. Each Party has cooperated in the
negotiating, drafting and preparation of this Agreement. As such, the Parties
agree that this Agreement shall not be construed against any Party.
12. FURTHER ASSURANCES. The Parties agree to execute such other documents and to
take such other action as may be reasonably necessary to further the purposes of
this Agreement.
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IN WITNESS THEREOF, the Parties have executed this Agreement to be
effective as of the date of the last signature herein.
DATED: December 31, 2002 SEMOTUS SOLUTIONS, INC.
By: /s/ Xxxxxxx X. XxXxxx
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Name: Xxxxxxx X. XxXxxx
Title: President and CEO
DATED: December 31, 2002 XXXXX XXXXXXX PARTNERS I, LTD.
By: /s/ Xxxxxxxx X. Xxxx
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Name: Xxxxxxxx X. Xxxx
Title: Chief Investment Officer
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