INNUITY, INC. STOCK PURCHASE AGREEMENT
Exhibit 10.23
INNUITY, INC.
This Stock Purchase Agreement (this “Agreement”) is dated as of December 29, 2006, by
and between Innuity, Inc., a Utah corporation (the “Company”), and Xxxxxxxx Xxxxxx, an
individual (the “Purchaser”).
WHEREAS, in exchange for the Note dated December 20, 2005 in the name of Xxxxxxxx Xxxxxx for
the principal amount of $111,922.43 and accrued interest on the note in the amount of $16,500.32
for a total of $128,422.75, the Company agrees to issue to the Purchaser (i) 256,846 shares of its
common stock, subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) and the rules
and regulations promulgated thereunder, including Regulation D and/or upon such other exemption
from the registration requirements of the Securities Act as may be available with respect the
investment to be made hereunder, set forth opposite the Purchaser’s name on the signature page
hereto and as more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged,
the Company and the Purchaser hereby agree as follows:
1. Purchase and Sale of Common Stock. Upon the terms and subject to the conditions set
forth herein, the Company shall issue, and the Purchaser shall purchase, 256,846 shares of the
Company’s common stock (the “Stock”). The Stock shall be issued in consideration of the
Purchaser’s cancellation of the note and accrued interest as set forth above. The closing of the
transactions contemplated by this Agreement shall occur immediately upon execution of this
Agreement and issuance of the Stock.
2. Registration Rights.
2.1 The Company shall prepare and file with the Securities and Exchange Commission (the
“Commission”) a registration statement (the “Registration Statement”) covering the
resale of the Stock (the “Registrable Securities”) as would permit or facilitate the resale
and distribution of all the Registrable Securities in the manner reasonably requested by the
holders of Registrable Securities (the “Holders”). The Registration Statement shall be on
Form SB-2 (except if the Company is not then eligible to register for resale the Registrable
Securities on Form SB-2, in which case such registration shall be on another appropriate form in
accordance herewith). Subject to the terms of this Agreement, the Company shall use its
commercially reasonable efforts to cause a Registration Statement to be declared effective under
the Securities Act as promptly as possible after the filing thereof, and shall use its commercially
reasonable to keep such Registration Statement continuously effective under the Securities Act
until the earliest of: (x) the date when all Registrable Securities covered by such Registration
Statement have been sold; (y) the date on which the Registrable Securities may be sold without any
restriction pursuant to Rule 144, as determined by the counsel to the Company, or (z) the first
(1st) anniversary of the date hereof.
2.2 Each Holder agrees to furnish to the Company a completed Questionnaire in the form
reasonably acceptable to the Company not less than two (2) trading days prior to the filing date of
the Registration Statement.
2.3 If the Company determines, in its sole discretion, for any reason including its assessment
of any adverse consequences to the Company and its shareholders of the premature disclosure of
material information, that the Registration Statement, or any prospectus related thereto, will
contain an untrue statement of a material fact or omit 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 Company shall notify the Holders to suspend the use of
any prospectus until the requisite changes to such prospectus have been made. The Company will use
its commercially reasonable efforts to ensure that the use of the prospectus may be resumed as
promptly as is practicable. The Company shall be entitled to exercise its right under this
Section 2.3 to suspend the availability of a Registration Statement and prospectus for a
period not to exceed one hundred twenty (120) days (which need not be consecutive days) in any
twelve (12) month period.
2.4 Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of
a notice from the Company described in Section 2.3, such Holder will forthwith discontinue
disposition of such Registrable Securities under the Registration Statement until such Holder’s
receipt of the copies of the supplemented prospectus and/or amended Registration Statement or until
it is advised in writing by the Company that the use of the applicable prospectus may be resumed,
and, in either case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such prospectus or Registration
Statement.
2.5 The registration rights contained in this Section 2 shall supersede all prior or
contemporaneous oral or written agreements concerning registration rights with respect to the
parties.
3. Representations and Warranties of the Purchaser. The Purchaser hereby represents and
warrants as of the date hereof to the Company as follows:
3.1 The Purchaser understands that the shares of Stock constitutes “restricted securities” and
have not been registered under the Securities Act or any applicable state securities law and is
acquiring the Stock as principal for its own account and not with a view to or for distributing or
reselling such Stock or any part thereof in violation of the Securities Act or any applicable state
securities law, has no present intention of distributing any of such Stock in violation of the
Securities Act or any applicable state securities law and has no arrangement or understanding with
any other persons regarding the distribution of such Stock (this representation and warranty not
limiting the Purchaser’s right to sell the Stock pursuant to the Registration Statement or
otherwise in compliance with applicable federal and state securities laws) in violation of the
Securities Act or any applicable state securities law. The Purchaser does not have any agreement
or understanding, directly or indirectly, with any person to distribute any of the Stock.
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3.2 At the time the Purchaser was offered the Stock, it was, and at the date hereof it is,
either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8)
under the Securities Act, or (ii) a “qualified institutional buyer” as defined in Rule 144A(a)
under the Securities Act. The Purchaser is not required to be registered as a broker-dealer under
Section 15 of the Exchange Act.
3.3 The Purchaser, either alone or together with its representatives, has such knowledge,
sophistication and experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Stock, and has so evaluated the merits
and risks of such investment. The Purchaser is able to bear the economic risk of an investment in
the Stock and, at the present time, is able to afford a complete loss of such investment.
3.4 The Purchaser acknowledges that the Stock was not offered to the Purchaser by means of any
form of general or public solicitation or general advertising, or publicly disseminated
advertisements or sales literature, including (i) any advertisement, article, notice or other
communication published in any newspaper, magazine, or similar media, or broadcast over television
or radio, or (ii) any seminar or meeting to which the Purchaser was invited by any of the foregoing
means of communication, or any other general solicitation or general advertisement.
3.5 The Purchaser understands that the Stock must be held indefinitely unless the Stock is
registered under the Securities Act or an exemption from registration is available. The Purchaser
acknowledges that it is familiar with Rule 144 of the rules and regulations of the Commission, as
amended, promulgated pursuant to the Securities Act (“Rule 144”), and that the Purchaser
has been advised that Rule 144 permits resales only under certain circumstances. The Purchaser
understands that to the extent that Rule 144 is not available, the Purchaser will be unable to sell
any Stock without either registration under the Securities Act or the existence of another
exemption from such registration requirement.
4. Other Agreements.
4.1 Transfer Restrictions.
(a) The Stock may only be disposed of in compliance with state and federal securities
laws. In connection with any transfer of Stock other than pursuant to an effective
registration statement or Rule 144, to the Company or to an affiliate of a Purchaser, the
Company may require the transferor thereof to provide to the Company an opinion of counsel
selected by the transferor and reasonably acceptable to the Company, the form and substance
of which opinion shall be satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Securities under the Securities Act. As a
condition of transfer, any such transferee shall agree in writing to be bound by the terms
of this Agreement.
(b) The Purchaser agrees to the imprinting, so long as the Company determines it is
required, of a legend on any of the Stock in substantially the following form:
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THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE ACCEPTABLE TO THE
COMPANY.
(c) The Purchaser will offer and sell any and all Stock pursuant to all applicable
federal and state securities laws, including pursuant to either the registration
requirements of the Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom.
4.2 Short Sales. The Purchaser understands and acknowledges that the Commission
currently takes the position that coverage of short sales of shares of the common stock “against
the box” prior to the effective date of the Registration Statement with the Stock is a violation of
Section 5 of the Securities Act, as set forth in Item 65, Section 5 under Section A, of the Manual
of Publicly Available Telephone Interpretations, dated July 1997, compiled by the Office of Chief
Counsel, Division of Corporation Finance.
5. Miscellaneous.
5.1 Fees and Expenses. Each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred by such party
incident to the negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in
connection with the delivery of any securities.
5.2 Entire Agreement. This Agreement contains the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and understandings,
oral or written, with respect to such matters, which the parties acknowledge have been merged into
this document.
5.3 Amendments; Waivers. No provision of this Agreement may be waived or amended
except in a written instrument signed, in the case of an amendment, by the Company and the
Purchaser; provided, however, that in the event the Company shall deliver written
notice to a Purchaser with respect to a requested waiver or amendment, the Purchaser shall be
deemed to have consented and agreed to such amendment or waiver if the Purchaser does not provide
written notice to the Company indicating the Purchaser’s non-consent within ten (10) days of
delivery by the Company of such written notice. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver
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in the future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of either party to exercise any
right hereunder in any manner impair the exercise of any such right.
5.4 Headings. The headings herein are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The
language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any party.
5.5 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns.
5.6 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not for the benefit of,
nor may any provision hereof be enforced by, any other person.
5.7 Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of Delaware, without regard to the principles of conflicts of
law thereof. If either party shall commence an action or proceeding to enforce any provisions of
the Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the
other party for its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.
5.8 Survival. The representations, warranties and covenants contained herein shall
survive the Closing and the delivery of the Stock.
5.9 Execution. This Agreement may be executed in one or more counterparts, all of
which when taken together shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission, such signature shall create a valid and binding obligation
of the party executing (or on whose behalf such signature is executed) with the same force and
effect as if such facsimile signature page were an original thereof.
5.10 Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt
to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon
so agreeing, shall incorporate such substitute provision in this Agreement.
5.11 Replacement of Securities. If any certificate or instrument evidencing any Stock
is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange
and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new
certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company
of such loss, theft or destruction and customary and reasonable indemnity, if requested. The
applicants for a new certificate or instrument under such circumstances shall also pay any
reasonable third-party costs associated with the issuance of such replacement Stock.
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5.12 Construction. The parties agree that each of them and/or their respective counsel
has reviewed and had an opportunity to revise the Agreement and, therefore, the normal rule of
construction to the effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of the Agreement or any amendments hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first indicated above.
| INNUITY, INC. | Address for Notice: | |||||
By:
|
/s/ XXXXXX X. BENCH | 0000 000xx Xxxxxx XX | ||||
| Name: Xxxxxx X. Bench | Xxxxxxx, Xxxxxxxxxx 00000 | |||||
| Title: CFO | (000) 000-0000 | |||||
| Fax: (000) 000-0000 | ||||||
With a copy to (which shall not constitute notice):
DLA Piper US LLP
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxxxx
(000) 000-0000
Fax: (000) 000-0000
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxxxx
(000) 000-0000
Fax: (000) 000-0000
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
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[PURCHASER SIGNATURE PAGE TO INNUITY, INC.
STOCK PURCHASE AGREEMENT]
STOCK PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned has caused this Stock Purchase Agreement to be duly
executed by its respective authorized signatory as of the date first indicated above.
Name of Purchaser:
|
Xxxxxxxx Xxxxxx
|
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Signature
of Authorized Signatory of Purchaser: |
/s/ XXXXXXXX XXXXXX |
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Name of Authorized Signatory: |
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Title of Authorized Signatory: |
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Email Address of Purchaser: |
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Fax Number of Purchaser: |
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Address for Notice of Purchaser:
Address for Delivery of Stock for Purchaser (if not same as above):
