STOCK EXCHANGE AGREEMENT
This
Agreement dated as of the 19th day of July, 2006, by and among Jordan 1 Holdings
Co., a Delaware corporation having its offices at 000 Xxxxxxxxx Xxxxxx, Xxxxx
000, Xxxxxxxxxxxx, XX, 00000 (the “Issuer”), and
the
individuals named on Schedule I to this Agreement (collectively, the
“Stockholders” and each, individually, a “Stockholder”).
W
I T
N E S S E T H:
WHEREAS,
the Stockholders are the holders of all of the issued and outstanding capital
stock (the “Acquisition Shares”) of Delaware Fastener Acquisition Corp., a
Delaware corporation (“Acquisition Company”); and
WHEREAS,
the Stockholders, together with Xxxxxx Partners LP (“Xxxxxx”), are acquiring a
controlling interest in the Issuer;
WHEREAS,
pursuant to a separate preferred stock purchase agreement between the Issuer
and
a group of investors, the investors are acquiring the Company’s promissory note,
shares of series A convertible preferred stock and warrants to purchase common
stock, par value $.001 per share (“Common Stock”); and
WHEREAS,
the Company’s board of directors has approved, subject to stockholder approval,
a restated certificate of amendment (the “Restated Certificate”) which (i)
amends the Company’s authorized capital stock to 100,000,000 shares, of which
10,000,000 shares are preferred stock, par value $.001 per share, and 90,000,000
shares of common stock, par value $.001 per share, and (ii) effects a
one-for-150 reverse split of the Corporation’s issued and outstanding common
stock.
WHEREAS,
the Issuer is willing to issue shares of Common Stock and series B convertible
preferred stock (the “Series B Preferred”) to the Stockholders in consideration
for all of the issued and outstanding capital stock of Acquisition
Corp.
NOW,
THEREFORE, for the mutual consideration set out herein, the parties agree as
follows:
1. Exchange
of Shares.
(a) Issuance
of Securities by Issuer.
On and
subject to the conditions set forth in this Agreement, the Issuer will issue
to
Stockholders, in exchange for all of the Acquisition Shares, which represents
all of the issued and outstanding capital stock of Acquisition Company, an
aggregate of 21,000,000 shares (the “Shares”) of Common Stock and 2,611,000
shares of Series B Preferred. Each share of Series B Preferred shall be
convertible into two (2) shares of Common Stock upon the filing with the
Delaware Secretary of State of a certificate of amendment or restated
certificate of incorporation which (i) amends the authorized capital stock
to
100,000,000 shares, of which 10,000,000 shares are preferred stock, par value
$.001 per share, and 90,000,000 shares of common stock, par value $.001 per
share, and (ii) effects a one-for-150 reverse split of the Corporation’s issued
and outstanding common stock. The Series B Preferred shall be in substantially
the form of Exhibit A to this Agreement. The Shares and Series B Preferred
are
referred to as the “Securities.” The Securities will be issued to the
Stockholders in the amounts set forth after their respective names in Schedule
I
to this Agreement.
(b) Transfer
of Acquisition Shares by the Stockholders.
On and
subject to the conditions set forth in this Agreement, the Stockholders will
transfer to the Issuer all of the Acquisition Shares in exchange for the
Securities. Each Stockholder holds the number of Acquisition Shares set forth
after his or her name in Schedule I to this Agreement.
(c) Closing.
The
issuance of the Securities to the Stockholders and the transfer of the
Acquisition Shares to the Issuer will take place at a closing (the “Closing”) to
be held at the office of Sichenzia Xxxx Xxxxxxxx Xxxxxxx, LLP, 1065 Avenue
of
the Xxxxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000 as soon as possible after or contemporaneously with
the
satisfaction or waiver of all of the conditions to closing set forth in Section
4 of this Agreement.
2. Representations
and Warranties of the Issuer.
The
Issuer hereby represents and warrants to the Stockholders as
follows:
(a) General.
(i)
The
Issuer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Issuer does not have any equity
investment or other interest, direct or indirect, in, or any outstanding loans,
advances or guarantees to or on behalf of, any domestic or foreign corporation,
limited liability company, association, partnership, joint venture or other
entity.
(ii)
Complete
and correct copies of the Issuer’s certificate of incorporation and by-laws are
available for review on the XXXXX system maintained by the U.S. Securities
and
Exchange Commission (the “Commission”).
(iii)
The
Issuer has full power and authority to carry out the transactions provided
for
in this Agreement, and this Agreement constitutes the legal, valid and binding
obligations of the Issuer, enforceable in accordance with its terms, except
as
enforceability may be limited by bankruptcy, insolvency and other laws of
general application affecting the enforcement of creditor’s rights and except
that any remedies in the nature of equitable relief are in the discretion of
the
court. All necessary action required to be taken by the Issuer for the
consummation of the transactions contemplated by this Agreement has been
taken.
(iv)
The
Shares, when issued pursuant to this Agreement, will be duly and validly
authorized and issued, fully paid and non-assessable. The issuance of the
Securities to Stockholders is exempt from the registration requirements of
the
Securities Act of 1933, as amended (the “Securities Act”), pursuant to an
exemption provided by Section 4(2) thereunder.
(v)
The
Series B Preferred, when issued pursuant to this Agreement will constitute
the
legal, valid and binding obligations of the Issuer, enforceable in accordance
with their terms, except as enforceability may be limited by bankruptcy,
insolvency and other laws of general application affecting the enforcement
of
creditor’s rights and except that any remedies in the nature of equitable relief
are in the discretion of the court subject to the filing of the Restated
Certificate. The shares of Common Stock issuable upon exercise of the Warrants,
when issued upon payment of the exercise price provided in the Warrants, will
be
duly and validly authorized and issued, fully paid and non-assessable, subject
to the filing of the Restated Certificate
(b) SEC
Documents.
The
Issuer is registered pursuant to Section 12 of the Exchange Act and it current
with its reporting obligations under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). None of the Issuer’s filings made pursuant to the
Exchange Act (collectively, the “Issuer SEC Documents”) contains any untrue
statement of a material fact or omitted to state a material fact required to
be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Issuer SEC
Documents, as of their respective dates, complied in all material respects
with
the requirements of the Exchange Act, and the rules and regulations of the
Commission thereunder, and are available on the Commission’s XXXXX system.
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3. Representations
and Warranties of Stockholders.
Each
Stockholder hereby severally represents, warrants, covenants and agrees as
follows:
(a) Such
Stockholder understands that the offer and sale of the Securities is being
made
only by means of this Agreement and understands that the Company has not
authorized the use of, and the Stockholder confirms that he or she is not
relying upon, any other information, written or oral, other than material
contained in this Agreement. Such
Stockholder is aware that the purchase of the Securities involves a high degree
of risk and that such Stockholder may sustain, and has the financial ability
to
sustain, the loss of his or her entire investment, understands that no assurance
can be given that the Company will be profitable in the future, that there
is no
public market for the Common Stock, and the Issuer can give no assurance that
there will ever be a public market for the Common Stock. Furthermore,
in subscribing for the Securities, such Stockholder acknowledges it is not
relying upon any projections or any statements of any kind relating to future
revenue, earnings, operations or cash flow in making an investment in the
Securities.
(b) Such
Stockholder severally represents to the Company that he or she is an accredited
investor within the meaning of Rule 501 of the Commission under the Securities
Act of 1933, as amended (the “Securities Act”) and it understands the meaning of
the term “accredited investor.” The requirements for an accredited investor as
set forth in Exhibit B. Such Stockholder further represents that he or she
has
such knowledge and experience in financial and business matters as to enable
the
Stockholder to understand the nature and extent of the risks involved in
purchasing the Securities. Such Stockholder is fully aware that such investments
can and sometimes do result in the loss of the entire investment. Such
Stockholder has engaged his or her own counsel and accountants to the extent
that the Stockholder deems it necessary.
(c) All
of
the information provided by such Stockholder in his or her Confidential
Questionnaire is true and correct in all material respects.
(d) Such
Stockholder is acquiring the Securities pursuant to this Agreement for his
or
her own account, for investment and not with a view to the sale or distribution
thereof, for the Stockholder’s own account and not on behalf of others; has not
granted any other person any interest or participation in or right or option
to
purchase all or any portion of the Securities; is aware that the Securities
are
restricted securities within the meaning of Rule 144 of the Commission under
the
Securities Act, and may not be sold or otherwise transferred other than pursuant
to an effective registration statement or an exemption from registration; and
understands and agrees that the certificates for the Securities shall bear
the
Company’s standard investment legend. The Stockholder understands the meaning of
these restrictions.
(e) The
Stockholder will not transfer any Securities except in compliance with all
applicable federal and state securities laws and regulations, and, in such
connection, the Company may request an opinion of counsel reasonably acceptable
to the Company as to the availability of any exemption.
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(f) Such
Stockholder represents and warrants that no broker or finder was involved
directly or indirectly in connection with his or her purchase of the Securities
pursuant to this Agreement. Such Stockholder shall indemnify the Company and
hold it harmless from and against any manner of loss, liability, damage or
expense, including fees and expenses of counsel, resulting from a breach of
the
Stockholder’s warranty contained in this Paragraph 3(f).
(g) Such
Stockholder understands that he or she has no registration rights with respect
to the Securities.
(h) Such
Stockholder represents and warrants that the address set forth on Schedule
I to
this Agreement is its true and correct address, and understands that the Company
will rely on this representation in making filings under state securities or
blue sky laws.
(i) Such
Stockholder approves the filing of the Restated Certificate with the
Secretary
of State of Delaware.
(j) Such
Stockholder may not sell any shares of Common Stock in the public market during
the eighteen (18) month period following the date hereof; provided, however,
that after twelve (12) months from the date hereof, Xxxx Xxxx may sell shares
in
the public market as long as he is not an officer or director. Any shares owned
by a limited liability company which is wholly-owned or controlled by Xxxx
Xxxx
shall be treated as shares owned by Xxxx Xxxx and subject to the same
restrictions as Xxxx Xxxx. The restriction contained in this Section 3(j) shall
apply to any transferee, including any legatee or distribute. The restrictions
in this Section 3(j) shall not apply to shares issued pursuant to a stock option
or long-term incentive plans which may be approved by the Compensation Committee
provided that such committee is comprised of a majority of independent
directors.
4. Conditions
to the Obligation of Stockholders and the Issuer.
The
obligations of Stockholders and the Issuer under this Agreement are subject
to
the completion of the sale of preferred stock and warrants to Xxxxxx Partners
pursuant to an agreement between the Issuer and Xxxxxx Partners prior to or
contemporaneously with the exchange contemplated by this Agreement.
5. Miscellaneous.
(a) This
Agreement constitutes the entire agreement between the parties relating to
the
subject matter hereof, superseding any and all prior or contemporaneous oral
and
prior written agreements, understandings and letters of intent. This Agreement
may not be modified or amended nor may any right be waived except by a writing
which expressly refers to this Agreement, states that it is a modification,
amendment or waiver and is signed by all parties with respect to a modification
or amendment or the party granting the waiver with respect to a waiver. No
course of conduct or dealing and no trade custom or usage shall modify any
provisions of this Agreement.
(b) This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York applicable to contracts made and to be performed entirely
within such State.
(c) This
Agreement shall be binding upon and inure to the benefit of the parties hereto,
and their respective successors and permitted assigns.
(d) This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original but all of which together shall constitute one and the same
document.
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(e) The
various representations, warranties, and covenants set forth in this Agreement
or in any other writing delivered in connection therewith shall survive the
issuance of the Shares.
(f) If
the
Stockholder is a resident of a state set forth in Exhibit C to this Agreement
or
if the Stockholder negotiates the purchase of the Shares from or receives this
Agreement while in Florida, the provisions of such Exhibit C relating to the
Stockholder’s purchase of the Shares are incorporated as if set forth in full in
this Agreement.
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Please
confirm your agreement with the foregoing by signing this Agreement where
indicated.
Very
truly yours,
/s/
Xxxxxxxxx Xxxxxx
Xxxxxxxxx
Xxxxxx
/s/
Xxxx Xxxx
BGRS
2005, LLC
By:
Xxxx
Xxxx, Manager
/s/
Xxxxxxx Xxxxxx
Xxxxxxx
Xxxxxx
/s/
Xxxxx Xxxxxx
Xxxxx
Xxxxxx
Accepted
this 20th day of July, 2006
JORDAN
1
HOLDINGS CO., INC.
By:
/s/
Xxxxxx X. Xxxxx
Xxxxxx
X.
Xxxxx, Chief Executive Officer
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Schedule
I
|
Name
|
Acquisition
Shares
|
Common
Shares
|
Series
B Preferred Shares
|
|
Xxxx
Xxxxxx
|
65.2
|
13,692,000
|
1,702,372
|
|
BGRS
2005, LLC
|
15
|
3,150,000
|
391,650
|
|
Xxxxxxx
Xxxxxx
|
11.6
|
2,436,000
|
302,876
|
|
Xxxxx
Xxxxxx
|
8.2
|
1,722,000
|
214,102
|
|
Total
|
100
|
21,000,000
|
2,611,000
|
