STOCK PURCHASE AGREEMENT
Exhibit
10.1
THIS
STOCK PURCHASE AGREEMENT ("Agreement") is made as of the 23rd
day of
February, 2006, by and between Island Residences Club, Inc (“IRCI”), a Delaware
Corporation, Xxxxxxx Xxxxx, individual and/or their assignees (“Purchaser”) on
the one hand and RotateBlack, LLC, (“RBL”) a Michigan limited liability company
(“Seller”), on the other hand.
For
and
in consideration of the mutual premises and covenants herein contained, the
parties hereto agree as follows:
1. Purchase
and Sale of Securities.
1.1 Sale
and Issuance of Securities.
Subject
to the terms and conditions of this Agreement, Purchaser agrees to purchase
at
the Closing (defined in Section 1.3), and the Company agrees to cause RBL to,
and RBL agrees to, sell, transfer and assign to Purchaser at the Closing, Nine
Million Four Hundred Thousand (9,400,000) shares (the “Shares”) of the common
stock, $.01 par value per share (“Common Stock”), of DTLL, Inc., a Minnesota
corporation (“DTLL”).
1.2 Purchase
Price.
The
purchase price for the Shares to be paid at the Closing (the “Purchase Price”)
shall be One Million Five Hundred Thousand ($1,500,000) Dollars. The purchase
price shall be paid at a closing in the form of Five Hundred Fifty Thousand
($500,000) and a Secured Note payable in the amount of One Million ($1,000,000)
Dollars due on or before the closing of the Xxxx Xxxxxx but no later than April
10th,
2006.
The Note shall be secured by the shares on terms to be agreed between the
parties.
1.3 Closing.
(a) The
purchase and sale of the Shares shall take place on or before February
28th,
2006,
at such time and place as shall be mutually agreed upon between Purchaser and
the Company (the " Closing").
(b) At
the
Closing, Purchaser shall deliver to RBL, the cash requirement of the Purchase
Price of then immediately available funds by certified check or wire transfer
to
an account designated by the RBL.
(c) At
the
Closing, RBL shall deliver to Purchaser an endorsed certificate, signature
guaranteed, for the Shares along with instruments satisfactory to Purchaser
to
ensure the effective and efficient transfer of the Shares to Purchaser, such
as
a legal opinion of the Company’s or RBL’s counsel and a letter of instruction to
the transfer agent of DTLL.
(d) Purchaser,
the Company and RBL shall deliver to the other party any other documents and
instruments that the other party or its counsel reasonably
requests.
(e) Notwithstanding
anything to the contrary contained in this Agreement, Purchaser’s obligations
under this Agreement are conditioned upon Purchaser’s satisfaction of its legal
due diligence investigation of DTLL. Seller’s obligations under this agreement
are conditioned upon Seller’s satisfaction of its legal due diligence
investigation of the transaction on or before closing on February 28, 2006.
2. Representations
and Warranties of the Company.
Except
as noted in the financial statements identified in Section 2.6, DTLL’s
filings with the Securities and Exchange Commission, or the Schedule of
Exceptions attached hereto, each of the Company and RBL, jointly and severally,
hereby represents and warrants to Purchaser that:
2.1 Organization;
Good Standing; Qualification and Corporate Power.
(a) The
Company, RBL and DTLL are corporations duly organized, validly existing and
in
good standing under the laws of the State of Minnesota and each has all
requisite corporate power and authority to carry on its business as now
conducted and as proposed to be conducted. The Company, RBL and DTLL are each
duly qualified to transact business and each is in good standing in each
jurisdiction in which the failure so to qualify would have a material adverse
effect on its business or properties.
(b) Each
of
the Company and RBL has all requisite legal and corporate power and authority
to
execute and deliver this Agreement, to sell the Shares and to carry out and
perform its obligations under the terms of this Agreement and to consummate
the
transactions contemplated hereby. All necessary corporate action has been taken
by the Company and RBL with respect to the execution, delivery and performance
by the Company and RBL of this Agreement and the consummation of the
transactions contemplated hereby.
2.2 Capitalization
and Voting Rights.
(a) Common
Stock.
The
authorized capital of DTLL, immediately prior to the Closing, consists of One
Hundred Million (100,000,000) shares of capital stock, of which Fifty Million
(50,000,000) shares are designated as Common Stock, $0.01 par value per share.
Thirteen Million Five Hundred Twenty Five Thousand Six Hundred Ninety Three
(13,525,693) shares of Common Stock will be issued and outstanding immediately
prior to the Closing. Other than the Common Stock, no other shares of capital
stock are issued or outstanding. The Shares sold, transferred and assigned
to
Purchaser hereunder shall represent approximately 70%
of
DTLL’s issued and outstanding Common Stock.
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(b) Derivative
Securities; Voting Agreements.
Except
as set forth in Schedule
2.2(b),
immediately
prior to the Closing, there will be no outstanding options, warrants, rights
(including conversion or preemptive rights) or agreements for the purchase
or
acquisition from DTLL of any shares of its capital stock. DTLL is not a party
nor subject to any agreement or understanding of any kind, and, to the Company's
and RBL’s knowledge, there is no agreement or understanding of any kind between
any individual, corporation, partnership, limited liability company,
association, trust or other entity or organization, including a government
or
political subdivision or an agency or instrumentality thereof (a “Person”),
which affects or relates to the acquisition, disposition or voting or giving
of
written consents with respect to any security of DTLL.
2.3 Subsidiaries;
Interests of the Company.
DTLL
has no subsidiaries and does not currently own or control, directly or
indirectly, any interest in any other Person. DTLL, on or before closing, shall
form a new wholly owned subsidiary, the be named “RotateBlack Real Estate
Ventures”.
2.4 Authorization.
This
Agreement has been duly authorized, executed and delivered by the Company and
RBL and constitutes the legal, valid and binding obligations of the Company
and
RBL, enforceable in accordance with its terms, subject to (i) applicable
bankruptcy, insolvency, reorganization and moratorium laws, (ii) other laws
of
general application affecting the enforcement of creditors' rights generally
and
general principles of equity, (iii) the discretion of the court before which
any
proceeding therefor may be brought and (iv) the limitation by federal or state
securities laws or by public policy of rights to indemnification.
2.5 Valid
Issuance of Common Stock.
The
Shares, when issued, sold and delivered in accordance with the terms of this
Agreement for the consideration expressed herein, will be duly and validly
issued, fully paid, and nonassessable, will not have been issued in violation
of
any preemptive right of stockholders or rights of first refusal, and Purchaser
will have good title to the Shares, free and clear of all liens, security
interests, pledges, charges, encumbrances and stockholder
agreements.
2.6 Financial
Statements; Contracts.
Each of
the Company and RBL has made available to Purchaser the audited balance sheet
of
DTLL as of December 31, 2004, and the related statements of operations and
cash
flows for the year ended December 31, 2004, its unaudited balance sheet dated
September 30, 2005 and the related unaudited Statements of Operation and Cash
Flows for the nine months ended September 30, 2005 (the "Financial Statements").
The Financial Statements are complete and correct and (i) fairly present the
financial condition and results of operations of DTLL as of the dates and during
the periods indicated therein, subject to adjustments necessary in accordance
with generally accepted accounting principles (“GAAP”) and, in the case of
interim financial statements, year-end adjustments, (ii) except as noted
therein, have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved and (iii) are in accordance with the
books
and records of DTLL.
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2.7 Governmental
Consents.
No
consent, approval, order, or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state, local or provincial
governmental authority on the part of DTLL, the Company or RBL is required
in
connection with the consummation of the transactions contemplated by this
Agreement. DTLL has complied (and in carrying out its business DTLL will be
in
compliance) with all laws, ordinances and regulations applicable to it and
its
business, which the failure to comply with would, either individually or in
the
aggregate, have a material adverse effect upon DTLL. DTLL has obtained all
material federal, state, local and foreign governmental licenses and permits
material to and necessary in the conduct of its business, such licenses and
permits are in full force and effect, no material violations are or have been
recorded in respect of any such licenses or permits, and no proceeding is
pending or, to the best of the Company’s or RBL’s knowledge, threatened to
revoke or limit any thereof. There are no consents or waivers from such
governmental authorities necessary for the consummation of the transactions
contemplated by this Agreement.
2.8 Litigation.
Except
as set forth in Schedule
2.8,
(i) there is no action, suit, proceeding or investigation pending or, to
the Company's or RBL’s knowledge, threatened against DTLL or, to the knowledge
of the Company or RBL after due inquiry, its officers (nor, to the Company's
or
RBL’s knowledge, is there any reasonable basis therefor); (ii) DTLL (or, to the
knowledge of the Company or RBL, any of its officers after due inquiry) is
not a
party or subject to the provisions of any order, writ, injunction, judgment,
or
decree of any court or government agency or instrumentality (other than those
of
general applicability); and (iii) there is no action, suit, proceeding or
investigation involving DTLL or, to the knowledge of the Company or RBL after
due inquiry, its officers which such parties intend to initiate.
2.9 Compliance
with Other Instruments.
Neither
DTLL, the Company nor RBL is in violation or default of any provisions of its
Certificate of Incorporation or Bylaws, as amended, or of any instrument,
judgment, order, writ, decree, or contract to which it is a party or by which
it
is bound or of any provision of Federal or state statute, rule or regulation,
license, or permit applicable to it, the violation or default of which would
have a material adverse effect on DTLL, the Company or RBL. The execution,
delivery, and performance of this Agreement and the consummation of the
transactions contemplated hereby will not result in any such violation or be
in
conflict with or constitute, with or without the passage of time and giving
of
notice, either a default under any such provision, instrument, judgment, order,
writ, decree, or material contract or an event which results in the creation
of
any lien, charge, or encumbrance upon any assets of DTL, the Company or RBL.
Neither the Company nor RBL has any knowledge of any termination or material
breach or anticipated termination or material breach by the other parties to
any
material contract or commitment to which DTLL is a party or to which any of
its
assets is subject. To the Company's and RBL’s knowledge, there are no warranty
claims or other uninsured claims against DTLL under completed contracts which
might involve a material monetary liability which is not reserved against in
the
Financial Statements.
2.10 Title
to Property and Assets.
DTLL
has good and marketable title to its property and assets free and clear of
all
mortgages, liens, loans and encumbrances, except (i) such encumbrances and
liens
which arise in the ordinary course of business and do not materially impair
DTLL’s use of such property or assets, (ii) liens for taxes, assessments and
governmental charges not yet due and payable, (iii) liens in connection with
workers’ compensation, unemployment insurance or other similar obligations and
(iv) statutory mechanics, material liens or other like liens arising in the
ordinary course of business not yet due and payable. With respect to the
property and assets it leases, DTLL is in compliance in all material respects
with such leases and, to the Company’s and RBL’s knowledge, holds a valid
leasehold interest free of any liens, claims, or encumbrances. All DTLL 's
properties and assets are, in all material respects, in good operating and
usable condition, subject to normal wear and tear.
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2.11 Intellectual
Property.
(a) As
used
herein, the term “Intellectual Property Right” means any trademark, service
xxxx, trade name, invention, patent, trade secret, copyright, know-how
(including any registrations or applications for registration of any of the
foregoing) or any other similar type of proprietary intellectual property right,
in each case which is used or held for use or otherwise necessary in connection
with the conduct of the business of DTLL. DTLL owns, free and clear of all
liens
and encumbrances, all Intellectual Property Rights necessary in connection
with
the conduct of its business and has the right to use the foregoing without
the
payment of any royalty.
(b) DTLL
has
not been sued nor charged in writing with or been a defendant in any claim,
suit, action or proceeding relating to its business that has not been finally
terminated prior to the date hereof and that involves a claim of infringement
by
DTLL of any Intellectual Property Right of any other Person. No Intellectual
Property Right is subject to any outstanding order, judgment, decree,
stipulation or agreement restricting the use thereof by DTLL or restricting
the
licensing thereof by DTLL to any Person. DTLL has not entered into any agreement
to indemnify any other Person against any charge of infringement of any
Intellectual Property Right.
(c) DTLL
has
taken all reasonable precautions to protect and maintain the confidentiality
of
all proprietary processes, research and development results and other know-how
of DTLL, the value of which to DTLL is contingent upon maintenance of the
confidentiality thereof. All employees and consultants of DTLL have executed
DTLL’s standard form of confidentiality agreement.
2.12 Compliance
with Laws; No Defaults.
(a) DTLL
is
not in violation of any provisions of any law or regulation or in violation
of
any judgment, injunction, order or decree binding upon or applicable to DTLL,
except for violations that have not had and would not reasonably be expected
to
have, individually or in the aggregate, a material adverse effect on
DTLL.
(b) Neither
DTLL nor any officer, director or employee of DTLL has made any payment of
funds
of DTLL, or purchased any property with funds of DTLL, in a manner prohibited
by
law and no funds of DTLL or property purchased with the funds of DTLL have
been
set aside to be used for any payment prohibited by law. DTLL has not made,
offered or agreed to offer anything of value to any government official,
political party or candidate for political office (or any person that DTLL
knows
or has reason to know will offer anything of value to any such person) in
violation of the Foreign Corrupt Practices Act of 1977, as amended.
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(c) DTLL
is
not in default, nor has it been notified by any other party that it is in
default, under any material contract, and, to the best knowledge of DTLL, no
other party to any such contract is in default thereunder. DTLL has not received
notice that any party to any material contract intends to cancel or terminate
any such agreement.
2.13 Commissions/Finders'
Fees.
There
is no investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of the Company or RBL who might
be
entitled to any fee or commission from Purchaser, DTLL or any of their
respective affiliates upon consummation of the transactions contemplated by
this
Agreement.
2.14 Tax
and Other Liabilities.
All
taxes required by law which are due and payable by DTLL have been paid; all
taxes DTLL is obligated to withhold from amounts owing to any employee or third
party have been withheld; and all tax returns and reports required by law to
have been filed by DTLL have been duly filed and reflect the amounts due and
paid. There are in effect no waivers of applicable statutes of limitations
with
respect to any taxes, governmental charges, duties, imports, levies or fees
for
any year and DTLL has not agreed to any extension of time with respect to any
tax assessment or deficiency. The tax returns of DTLL have not been and are
not
being audited by the Internal Revenue Service for any of DTLL’s tax periods. No
tax liens have been asserted against any of DTLL’s assets, and any potential
assessment or any additional taxes for periods for which returns have been
filed
is not expected to exceed the recorded liability therefor.
2.15 Securities
Act.
Neither
the registration of any security under the Securities Act or the securities
laws
of any state is required in connection with the issuance, execution and delivery
of the Shares in the manner contemplated hereunder.
2.16 Government
Consents.
The
execution, delivery and performance by the Company and RBL of this Agreement
and
the transactions contemplated hereby require no action by or in respect of,
or
filing with, any governmental authority other than (a) compliance with the
applicable requirements of the Securities Act; and (b) compliance with any
state
securities or Blue Sky Laws that, individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on the
Company.
3. Representations
and Warranties of Purchaser.
Purchaser represents and warrants to the Company that:
3.1 Organization;
Good Standing; Qualification and Corporate Power.
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(a) Purchaser
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Michigan and has all requisite power
and
authority to carry on its business as now conducted and as proposed to be
conducted. Purchaser is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure so to qualify would have
a
material adverse effect on its business or properties.
(b) Purchaser
has all requisite legal and corporate power and authority to execute and deliver
this Agreement, to purchase the Shares and to carry out and perform its
obligations under the terms of this Agreement and to consummate the transactions
contemplated hereby. All necessary limited liability company action has been
taken by Purchaser with respect to the execution, delivery and performance
by
Purchaser of this Agreement and the consummation of the transactions
contemplated hereby.
3.2 Authorization.
This
Agreement has been duly authorized, executed and delivered by Purchaser and
constitutes the legal, valid and binding obligations of Purchaser, enforceable
in accordance with its terms, subject to (i) applicable bankruptcy, insolvency,
reorganization and moratorium laws, (ii) other laws of general application
affecting the enforcement of creditors' rights generally and general principles
of equity, (iii) the discretion of the court before which any proceeding
therefor may be brought and (iv) the limitation by federal or state securities
laws or by public policy of rights to indemnification.
3.3 Commissions/Finders'
Fees.
There
is no investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of Purchaser who might be entitled
to any fee or commission from the Company or its affiliates upon consummation
of
the transactions contemplated by this Agreement.
3.4 Purchase
Entirely for Own Account; No Public Solicitation.
This
Agreement is made with Purchaser in reliance upon Purchaser’s representation to
the Company that, and Purchaser hereby represents that, the Shares will be
acquired for investment for Purchaser's own account, not as a nominee or agent,
and not with a view to the resale or distribution of any part thereof. Purchaser
has no present intention of selling, granting any participation in, or otherwise
distributing the Shares acquired by Purchaser. Purchaser has no contract,
undertaking, agreement or arrangement with any Person to sell or transfer,
or
grant any participation to such Person or to any third Person, with respect
to
the Shares to be acquired by Purchaser. Purchaser is not participating in this
transaction as a result of or subsequent to (i) any advertisement, article,
notice or other communication published in any newspaper, magazine or similar
media or broadcast over television, radio or the Internet or (ii) any seminar
or
meeting whose attendees have been invited by any general solicitation or general
advertising.
3.5 Disclosure
of Information.
Purchaser has received and has carefully reviewed a copy of DTLL’s Form 10-K for
the year ended December 31, 2004 (including all of the exhibits thereto), DTLL’s
Financial Statements, DTLL’s Form 10-Q for the quarter ended September 30, 2005
and DTLL’s current reports on Form 8-K. Purchaser has had an opportunity to
discuss DTLL’s business, management and financial affairs with qualified
representatives of DTLL’s management and to ask questions about DTLL’s business
and prospects. Purchaser understands that such discussions, as well as the
written information issued by the Company, were intended to describe the aspects
of DTLL’s business which it believes to be material and all such questions have
been answered to Purchaser’s satisfaction.
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3.6 Restricted
Securities.
Purchaser understands that the Shares have not been registered under the
Securities Act. The purchase and sale of the Shares pursuant to this Agreement
is being made pursuant to appropriate exemptions from the registration and
prospectus requirements of the securities rules. Purchaser understands that
the
Shares are a “restricted security” under applicable federal and state securities
laws.
3.7 Accredited
Investor.
Purchaser is an “accredited investor” as that term is defined in Rule 501(a) of
Regulation D promulgated under the Securities Act and is an investor familiar
with the types of risks inherent in the acquisition of the Shares. By reason
of
Purchasers’ knowledge and experience in financial and business matters in
general, and investments of this type in particular, Purchaser is capable of
evaluating the merits and risks of an investment in the Shares, and can afford
to bear such risks, including the risks of losing the entire investment.
4. Miscellaneous.
4.1 Survival
of Warranties.
The
representations, warranties and covenants of the Company, RBL and Purchaser
contained in or made pursuant to this Agreement shall survive the Closing;
provided that the representations and warranties of the Company and RBL
contained in Sections 2.6, 2.7, 2.8, 2.9, 2.11, 2.12, 2.13, 2.14 and 2.16 shall
survive for a period of two years (it being understood that all other
representations and warranties shall survive for the applicable statute of
limitations).
4.2 Successors
and Assigns.
The
provisions of this Agreement shall be binding upon and inure to the benefit
of
the parties hereto and their respective successors and assigns; provided that
neither the Company nor RBL may assign, delegate or otherwise transfer any
of
its rights or obligations under this Agreement without the consent of Purchaser.
Except as provided under this Section 5, neither this Agreement nor any
provision hereof is intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
4.3 Governing
Law.
This
Agreement shall be governed by and construed under the laws of the State of
Illinois, without regard to principles of conflicts of laws and rules of such
state.
4.4 Counterparts.
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
instrument.
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4.5 Titles
and Subtitles.
The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.
4.6 Notices.
Unless
otherwise provided, any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given (i) upon personal
delivery to the party to be notified, (ii) four (4) days after deposit with
the
United States Post Office, by registered or certified mail, postage prepaid,
or
(iii) one day after deposit with a reputable overnight courier service and
addressed to the party to be notified at the address indicated for such party
on
the signature page hereof, or at such other address as such party may designate
by ten (10) days' advance written notice to the other parties, with a copy
for
Purchaser to Xxxxx Xxxxxx, Weed & Co and Seller RBL to Xxxxxxxx etal.
4.7 Entire
Agreement; Amendments and Waivers.
This
Agreement constitutes the full and entire understanding and agreement among
the
parties with regard to the subjects hereof. Any term of this Agreement may
be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company, RBL and Purchaser.
Any amendment or waiver effected in accordance with this Section 5.7 shall
be binding upon each holder of any securities purchased under this Agreement
at
the time outstanding, each future holder of all such securities, and the Company
and RBL.
4.8 Severability.
If one
or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement and the
balance of the Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
4.9 Expenses.
Each
party to this Agreement shall pay all costs and expenses incurred by such party
with respect to the negotiation, execution, delivery and performance of this
Agreement and the ancillary documents.
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IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
| PURCHASER: | ||
| Island Residences Club, Inc | ||
| |
|
|
| By: | /s/ Xxxxxx Xxxxxxx | |
|
By:
|
Director/CEO |
|
| Xxxxxxx Xxxxx | ||
| |
|
|
| By: | /s/ /Xxxxxxx Xxxxx | |
|
|
Name:
individual
Xxxxxxx
Xxxxx
|
|
| SELLER: | ||
| Rotate Black LLC | ||
| |
|
|
| By: | /s/ Xxxx X. Xxxxxxx | |
|
|
Name: Xxxx X. Xxxxxxx |
|
| Its: Managing Director | ||
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