STOCK PURCHASE AGREEMENT
Exhibit
10.5
This
Stock Purchase Agreement (the “Agreement”)
is
entered into as of the 9th
day of
May, 2008, by and among I.C. Xxxxxx & Company, Inc., a Delaware company (the
“Company”),
and
Xxxxxx X. Xxxx (the “Purchaser”
or
“Management
Investor”,
as the
context requires).
WITNESSETH:
WHEREAS,
the Company desires to issue and sell and certain investors (the “Non-Management
Investors”)
desire
to purchase from the Company, in the aggregate Two Million Dollars ($2,000,000)
of newly issues shares of common stock of the Company (the “Common
Stock”)
for
the purpose of raising capital for the day-to-day operational needs of the
Company (the “Non-Management
Transaction”);
WHEREAS,
the consummation of the Non-Management Transaction is conditional upon, among
other things, a concurrent purchase by the Purchaser in the aggregate of One
Hundred Thousand Dollars ($100,000) of newly issued shares of Common Stock;
WHEREAS,
the Purchaser is a member of the Company’s executive and management team; and
WHEREAS,
the parties hereto desire to set forth certain agreements and certain terms
and
conditions regarding the sale and purchase of the shares of Common
Stock;
NOW,
THEREFORE, the parties hereto hereby agree as follows:
ARTICLE
I
Sale
and
Purchase of Shares; Closing
Section
1.1. Sale
and Purchase of Shares; Purchase Price.
(a) Upon
the
terms and subject to the conditions of this Agreement, the Purchaser agrees
to
purchase from the Company, and the Company agrees to issue and sell to the
Purchaser, on the “Closing
Date”
(as
defined herein), 500,000 shares of Common Stock (the “Management
Company Shares”)
for an
aggregate purchase price of One Hundred Thousand Dollars ($100,000) (the
“Purchase
Price”).
Section
1.2. Closing.
(a) The
closing of the transactions under this Agreement (the “Closing”)
shall
take place at the offices of Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP, 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m. (NY time) on
the
date hereof.
Section
1.3.
Deliveries
at Closing.
At the
Closing:
(a) The
Company shall deliver to the Purchaser a certificate representing the Management
Company Shares.
(b) The
Purchaser shall deliver to the Company the Purchase Price for the Management
Company Shares by certified check or wire transfer.
ARTICLE
II
Representations
and Warranties of the Company
The
Company, represents and warrants to, and covenants and agrees with the Purchaser
as follows:
Section
2.1. Organization
and Good Standing.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company has no subsidiaries other
than I.C. Xxxxxx & Company L.P. and Xxxxxx Design, Inc. of which both are
operating subsidiaries. The Company and each of its subsidiaries have all
requisite corporate power or limited partnership power, as the case may be,
and
authority to own their properties and assets and carry on their businesses
as
now conducted, and are duly qualified and in good standing as foreign
corporations in each jurisdiction in which the location or nature of their
property or the character of their businesses make such qualification necessary,
except where the failure to be so qualified would not have a material adverse
affect, financial or otherwise, on the business, condition, assets, properties,
liabilities or results of operations of the Company or its subsidiaries.
Section
2.2. Corporate
Power; Authorization; Binding Agreements.
The
Company has the corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution, delivery
and
performance of this Agreement, the issuance and sale by the Company of the
Management Company Shares hereunder and the consummation by the Company of
the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of the Company, corporate or otherwise. This Agreement and
the other agreements of the Company required to consummate the transactions
contemplated hereunder have been duly executed and delivered by, and constitute
valid and binding obligations of, the Company and are enforceable in accordance
with their terms subject to the qualifications that enforcement of the rights
and remedies created hereby is subject to (i) bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
rights and remedies of creditors, and (ii) general principals of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).
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Section
2.3. Capitalization;
Valid Issuance.
The
authorized capital stock of the Company consists of 50,000,000 shares of Common
Stock, of which 13,740,127 shares are issued and 12,563,418 shares are
outstanding on the date hereof, and 5,000,000 shares of Preferred Stock, of
which no shares are issued and outstanding on the date hereof. Except as
disclosed in the Form 10-K (as defined herein), there are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
the Company or any subsidiary to issue, sell, or otherwise cause to become
outstanding any of its capital stock. The aggregate number of shares of common
stock of the Company reserved or required to be reserved by the Company for
all
such derivative securities, contracts and commitments is 3,250,000. There are
no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Company. There are no
preemptive rights with respect to the issuance or sale of the Management Company
Shares or registration rights. All of the presently outstanding shares of Common
Stock have been duly and validly authorized and issued and are fully paid and
non-assessable. The Management Company Shares to be issued hereunder have been
duly and validly authorized and, when delivered and paid for pursuant to this
Agreement, will be validly issued, fully paid and non-assessable. Assuming
the
accuracy of the Purchaser’s representations and warranties in Article
III,
the
Management Company Shares are being offered and sold pursuant to an exemption
from the registration requirements of the Securities Act of 1933, as amended
(the “Act”).
In
connection with the offer and sale of the Management Company Shares, neither
the
Company, any affiliate of the Company nor any person acting on the Company’s or
such affiliates’ behalf has engaged in any form of general solicitation or
general advertising, as those terms are used in Rule 502(c) of the
Act.
Section
2.4. Compliance
with Other Instruments.
The
execution, delivery and performance of this Agreement will not conflict with
or,
with or without notice or the lapse of time, result in any default or in any
modification of (i) any provision of the articles of incorporation or
by-laws or comparable organizational instruments of the Company or any
subsidiary thereof or (ii) the terms of any contract, agreement, obligation,
commitment, license, indenture, mortgage, deed of trust, loan or credit
agreement or any other agreement or instrument to which the Company or any
subsidiary thereof is a party or any of their assets are bound, or the creation
of any lien, charge or encumbrance of any nature upon any of the properties
or
assets of the Company or any subsidiary thereof. The execution, delivery and
performance of this Agreement by the Company will not violate any judgment,
decree, statute, rule or regulation of any federal, state or local government
or
agency having jurisdiction over the Company or any subsidiary thereof or any
of
their assets.
Section
2.5. Brokerage.
No
broker, finder, agent or similar intermediary has acted on the Company’s behalf
in connection with the transactions contemplated by this Agreement and there
are
no brokerage commissions, finder’s fees or similar items of compensation payable
in connection therewith based on any agreement made by or on behalf of the
Company. The Company will indemnify and hold the Purchaser harmless from and
against any liability or any expense arising out of any such claim.
Section
2.6. Consents,
etc.
No
consent, approval, waiver or authorization of or designation, declaration or
filing with any governmental or regulatory authority or any other person is
required in connection with the valid execution and delivery of this Agreement,
the offer, sale and issuance of the Management Company Shares or the
consummation of the transactions contemplated by this Agreement, except for
filings that may be required to comply with applicable federal and state
securities laws.
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Section
2.7. No
Governmental Proceeding or Litigation.
No
suit, action, investigation, inquiry or other proceeding by any governmental
body or other person or legal or administrative proceeding has been instituted
or, to the Company’s knowledge, threatened which questions the validity or
legality of the transactions contemplated hereby or would reasonably be expected
to have a material adverse effect on the Company.
ARTICLE
III
Representations
and Warranties of the Purchaser
The
Purchaser represents and warrants to, and covenants and agrees with the Company
as follows:
Section
3.1. Authorization;
Power; Binding Agreements.
The
execution, delivery and performance of this Agreement have been duly authorized
by all necessary action of the Purchaser. The Purchaser has the full right,
power and authority to enter into this Agreement. This Agreement constitutes
the
valid and binding obligation of the Purchaser, enforceable in accordance with
its terms subject to the qualifications that enforcement of the rights and
remedies hereby is subject to (i) bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting rights and remedies
of creditors, and (ii) general principles of equity (regardless of whether
such
enforcement is considered in a proceeding in equity or at law).
Section
3.2. Purchase
for Investment.
The
Purchaser is purchasing the Management Company Shares for his own account,
for
investment purposes and not with a view to, or for resale in connection with,
any distribution or public offering thereof within the meaning of the Securities
Act of 1933, as amended (the “Act”).
Section
3.3. Unregistered
Securities; Legend.
The
Purchaser understands that the securities to be acquired by him pursuant to
this
Agreement have not been registered under the Act, and will be issued in reliance
upon an exemption from the registration requirements thereof. The Purchaser
acknowledge that the certificate issued representing the Management Company
Shares shall bear a restrictive legend substantially as follows:
“The
securities represented by this certificate have not been registered under the
Securities Act of 1933, as amended, or any applicable state securities laws
and
may not be offered for sale, sold, transferred or conveyed without registration
or an opinion of counsel in form and substance satisfactory to the Company
to
the effect that such registration is not required.”
Section
3.4. Accredited
Investor.
The
Purchaser has had an opportunity to make an independent assessment of his
investment in the Management Company Shares. The Purchaser has substantial
experience in evaluating and investing in a nonliquid investment such as the
Management Company Shares and is capable of evaluating the merits and risks
of
his investment in the Company. The Purchaser is an accredited investor as that
term is defined in Rule 501 of Regulation D under the Act, and understand that
the offer and sale of the Management Company Shares has been and is being made
in reliance upon an exemption from registration under the Act. The Purchaser
is
able to withstand the loss of his entire investment.
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Section
3.5. Brokerage.
No
broker, finder, agent or similar intermediary has acted on the Purchaser’s
behalf in connection with the transactions contemplated by this Agreement and
there are no brokerage commissions, finder’s fees or similar items of
compensation in connection therewith based on any arrangement or agreement
made
by or on behalf of the Purchaser. The Purchaser will indemnify and hold the
Company harmless against any liability or expense arising out of any such
claim.
ARTICLE
IV
Restrictions
On Transfer and Sale; Repurchase
Section
4.1. Restriction
Period.
The
Purchaser shall not (i) sell or offer or contract to sell or offer, grant any
option or warrant for the sale of, assign, transfer, pledge, hypothecate, or
otherwise encumber or dispose of (all being referred to as a “Transfer”)
any
legal or beneficial interest in any shares of Common Stock, or (ii) enter into
any swap, or any other agreement or any transaction that transfers, in whole
or
in part, directly or indirectly, the economic consequence of ownership of any
of
the shares of Common Stock, whether such swap transaction is to be settled
by
delivery of any shares of Common Stock or other securities of any person, in
cash or otherwise, during the “Restricted Period” (as hereinafter defined). As
used herein and subject to the provisions set out in this Article
IV
below,
“Restricted
Period”
means
the period commencing on the Closing and ending on December 31,
2011.
Section
4.2 . Permitted
Sales.
Notwithstanding the restrictions set forth in Section
4.1,
in the
event that any Non-Management Investor or Wurzburg Holding S.A. (collectively,
“Selling
Stockholders”)
sells
any legal or beneficial interest in any shares of Common Stock held by them,
except to each other or to affiliates thereof, then the Management Investor
shall be permitted to thereafter sell (in transactions unrelated to those of
the
Selling Stockholders; it being understood that the Management Investor has
no
“tag-along” or similar rights) a percentage of his shares of Common Stock in the
same proportion that any shares sold by the Selling Stockholders shall bear
to
the total number of shares of Common Stock the Selling Stockholders own prior
such sale.
Section
4.3. Permitted
Transfers.
Notwithstanding the foregoing limitations this Agreement will not prevent any
Transfer of any or all of the shares of Common Stock owned by the Purchaser,
either during his lifetime or on his death, by gift, will or intestate
succession, to the his family members or to trusts, family limited partnerships
and similar entities primarily for the benefit of the Management Investor or
his
family members; provided,
however,
that in
each and any such event the Company shall be entitled to condition any Transfer
on receipt of an opinion of counsel reasonably acceptable to the Company that
such Transfer is exempt from the registration requirements under the Act and
it
shall be a condition to the Transfer that the transferee execute an agreement
stating that the transferee is receiving and holding the shares of Common Stock
subject to the provisions of this Agreement and there shall be no further
Transfer of the shares of Common Stock except in accordance with this Agreement.
For purposes of this Section
4.3,
the
term family member shall mean spouse, lineal descendants, stepchildren, father,
mother, brother or sister of the transferor or of the transferor's spouse.
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Section
4.4. Repurchase.
In the
event that the Management Investor shall voluntarily terminate his employment
with the Company, or is terminated by the Company ‘for cause’ (as such term is
defined in his employment agreement), prior to the end of the Restricted Period,
then the Company shall have the right (but not the obligation) to repurchase
the
Management Company Shares from the Management Investor at a purchase price
equal
to the lower of (x) the closing market price for such shares on the termination
date or (y) $0.20 per share.
Section
4.5. Restrictive
Legend.
The
Purchaser acknowledges that all shares of Common Stock held by him shall be
required to bear a legend reflecting the restrictions placed on his ownership
of
Common Stock pursuant to the terms of this Agreement.
ARTICLE
V
Miscellaneous
Section
5.1. Survival
of Representations.
The
representations and warranties made herein or in any certificates or documents
executed in connection herewith shall survive the execution and delivery hereof
and thereof and the acquisition by the Purchaser of the Management Company
Shares for a period of one year following the Closing.
Section
5.2. Parties
in Interest.
All
agreements, representations and warranties contained in this Agreement by and
on
behalf of any of the parties hereto shall bind and inure to the benefit of
the
respective successors and assigns of the parties hereto, whether so expressed
or
not.
Section
5.3. Entire
Agreement; Amendments and Waivers.
This
Agreement (including Schedule 1) contains the entire agreement among the parties
with respect to the transactions contemplated hereby, and supersede all prior
agreements, written or oral, with respect thereto. Changes in or additions
to
this Agreement may be made only upon written consent of the Company and the
Purchaser.
Section
5.4. Governing
Law.
This
Agreement and the rights and obligations of the parties hereunder are to be
governed and construed in accordance with the laws of the State of New York,
without regard to conflicts of law principles.
Section
5.5. Notices.
Any
notice or other communication required or permitted hereunder shall be in
writing and shall be delivered personally or sent by facsimile transmission,
overnight courier, or certified, registered or express mail, postage prepaid.
Any such notice shall be deemed given when so delivered personally or sent
by
facsimile transmission (provided that a confirmation copy is sent by overnight
courier), one day after deposit with an overnight courier, or if mailed, three
(3) days after the date of deposit in the United States mails, as
follows:
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if
to the
Purchaser, to:
I.C.
Xxxxxx & Company, Inc.
000
00xx
Xxxxxx,
0xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Fax:
____________________
Attention:
Xxxxxx X. Xxxx
if
to the
Company, to:
I.C.
Xxxxxx & Company, Inc.
000
00xx
Xxxxxx,
0xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Fax:
____________________
Attention:
Xxxx Xxx
with
a
copy to:
Xxxxxx
Xxxxx Xxxxxxxx & Xxxxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Fax:
(000) 000-0000
Attention:
Xxxxxxxx X. Xxxx, Esq.
Any
party
may by notice given in accordance with this section to the other parties
designate another address or person for receipt of notices
hereunder.
Section
5.6. Counterparts.
This
Agreement may be executed in multiple counterparts, each of which when so
executed and delivered shall be an original, but all of such counterparts shall
together constitute one and the same instrument.
Section
5.7. Effect
of Headings.
The
section and paragraph headings herein are for convenience only and shall not
affect the construction hereof.
Section
5.8. Severability.
This
Agreement shall be deemed severable, and the invalidity or unenforceability
of
any term or provision hereof shall not affect the validity or enforceability
of
this Agreement or of any other term or provisions hereof. Furthermore, in lieu
of any such invalid or unenforceable term or provision, the parties hereto
intend that there shall be added as a part of this Agreement a provision as
similar in terms to such invalid or unenforceable provisions as may be possible
and be valid and enforceable.
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IN
WITNESS WHEREOF,
this
Agreement has been executed by the parties hereto as of the date first set
forth
above.
|
I.C.
Xxxxxx & Company, Inc.
|
||
|
By:
|
/s/ Xxxxxx X. Xxxx | |
|
|
Name: Xxxxxx
X. Xxxx
|
|
|
|
Title:
Chief Executive Officer
|
|
|
Xxxxxx
X. Xxxx
|
||
| /s/ Xxxxxx X. Xxxx | ||
[Signature
Page to Management Stock Purchase Agreement]
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