EXHIBIT 10.53
EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT is entered as of February 19, 2004, by and among
Xxxxxx Xxxxxxx Promotions, Inc., a Delaware corporation ("CKP") and Xxxxxx
Xxxxxxx ("Xxxxxxx").
WITNESSETH:
WHEREAS, between September 2002 and July 2003, Xxxxxxx has loaned CKP an
aggregate of $1,824,734.06 pursuant to a series of promissory notes (the
"Notes"), of which $1,693,076 remains due and owing from CKP to Xxxxxxx;
WHEREAS, Xxxxxxx desires to convert the Notes into shares of Series B
Convertible Preferred Stock, $0.01 par value per share, of CKP with the rights
and preferences memorialized in the attached Certificate of Designation ("CKP
Series B");
WHEREAS, the Boards of Directors of CKP deem it advisable and in the best
interests of CKP to consummate the transactions contemplated by this Agreement
in order to remove such debt from its balance sheet, upon the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth herein and in reliance upon the undertakings,
representations, warranties and indemnities contained herein, CKP, and Xxxxxxx
hereby agree as follows:
ARTICLE 1
EXCHANGE OF SHARES; CLOSING
Section 1.1 Sale of Shares. Subject to the terms and conditions herein
stated, Xxxxxxx agrees at the Closing to exchange the Notes for the Shares, free
and clear of any and all liens.
Section 1.2 Consideration. In consideration for the exchange of the Notes
by Xxxxxxx, CKP agrees at the Closing to issue and deliver an aggregate of
67,723.04 shares of CKP Series B (the "New Shares") to Xxxxxxx.
Section 1.3 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place simultaneously with the execution and
delivery hereof at the offices of CKP or such other place as the parties may
agree.
Section 1.4 Deliveries at Closing. At the Closing:
(a) CKP shall deliver to the Xxxxxxx:
(i) certificate, registered in the name of the Xxxxxxx, representing the
New Shares;
(ii) resolutions of CKP's board of directors authorizing this Agreement and
the transactions contemplated hereby;
(iii) the Certificate of Amendment to the Certificate of Designation for
the Series B Convertible Preferred Stock
(b) Xxxxxxx shall deliver to CKP:
(i) the Notes to be cancelled.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF XXXXXXX
Xxxxxxx represents and warrants to CKP as of the date hereof as follows:
Section 2.1 Ownership. Xxxxxxx is the sole record and beneficial owners of
the Notes. Xxxxxxx has good and marketable title to the Notes and the absolute
right to deliver the Notes in accordance with the terms of this Agreement, free
and clear of all Liens. The transfer of the Notes to CKP in accordance with the
terms of this Agreement transfers good and marketable title to the Notes to CKP
free and clear of all liens, restrictions, rights, options and claims of every
kind.
Section 2.2. Investment Representation. Xxxxxxx acknowledges that the New
Shares are restricted securities, that Xxxxxxx is acquiring the New Shares for
his own account with the present intention of holding the New Shares for
purposes of investment and not with a view to distribution within the meaning of
the Securities Act of 1933, as amended and that the New Shares will bear a
legend to such effect. Xxxxxxx has relied solely on his independent
investigation in making the decision to purchase the New Shares.
Section 2.3 No Other Representations or Warranties. Except as set forth
above in this Section 2, no other representations or warranties of any kind,
express or implied, are made in this Agreement by Xxxxxxx to CKP.
Section 2.4 Conversion. Xxxxxxx acknowledges that the Company has
10,648,707 shares of common stock currently issued and outstanding and that
there are other securities outstanding which are convertible into Class A shares
of common stock which, if converted would result in the Company exceeding its
authorized capital, accordingly Xxxxxxx acknowledges that the Series B Preferred
Stock shall be convertible into shares of common stock only if and when the
proposed increased in the Company's authorized shares of common stock from
20,000,000 to 100,000,000, which increase is included in the Company's
preliminary proxy statement on Schedule 14A filed with the Securities and
Exchange Commission on January 13, 2004 (the "Authorized Share Increase"), is
approved by the Company's shareholders.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF CKP
CKP represents and warrants to Xxxxxxx as of the date hereof as follows:
Section 3.1 Organization. CKP is a corporation duly organized, validly
existing and in good standing under the laws of Delaware and has all requisite
corporate power and authority to own its properties and carry on its business as
now being conducted.
Section 3.2 Capitalization. As of the date of this Agreement , the
authorized capital stock of CKP consists of 20,000,000 shares of common stock,
$.001 par value per share and 5,000,000 shares of preferred stock, $.01 par
value per share, the Company has the following shares which are validly issued
and outstanding: (i) 10,648,707 shares of Common Stock, par value $.01 per
share, of all classes (the "Common Stock"); (ii) warrants to acquire 7,498,986
shares of Common Stock; (iii) options to acquire 315,832 shares of Common Stock;
(iv) 117,500 shares of Series A Preferred Stock, par value $.01 per share, that
are convertible into 1,175,000 shares of Common Stock (the "Series A Preferred
Stock"); (v) 399,751.37 shares of Series B Convertible Preferred Stock, par
value $0.01 per share, that are convertible into 19,987,569 shares of Common
Stock (the "Series B Preferred Stock"); (vi) 27,922.1 shares of Series C
Redeemable Convertible Preferred Stock, par value $0.01 per share, that are
convertible into 2,792,210shares of Common Stock (the "Series C Preferred
Stock"); and (vii) 399,752 shares of Series D Preferred Stock, par value $0.01
per share, that are not convertible into Common Stock (the "Series D Preferred
Stock"). The Series B Preferred Stock shall be convertible into shares of common
stock only if and when the proposed increased in the Company's authorized shares
of common stock from 20,000,000 to 100,000,000, which increase is included in
the Company's preliminary proxy statement on Schedule 14A filed with the
Securities and Exchange Commission on January 13, 2004 (the "Authorized Share
Increase"), is approved by the Company's shareholders.
Section 3.3 Authority; Enforceability. CKP has the requisite corporate
power and authority to execute and deliver this Agreement and to carry out its
obligations hereunder. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of CKP and no other
corporate proceedings on the part of CKP are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement has
been duly executed and delivered by CKP and constitutes a valid and binding
obligation of CKP, enforceable against CKP in accordance with its terms, except
as (a) enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent transfer, moratorium or similar laws from time to time in effect
affecting creditors' rights generally and (b) the availability of equitable
remedies may be limited by equitable principles of general applicability.
Section 3.4 Third Party Consents. No consent, authorization, order or
approval of, or filing or registration with, any governmental authority or other
person is required for the execution and delivery of this Agreement or the
consummation by CKP of any of the transactions contemplated hereby.
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Section 3.5 CKP Series B. All shares of CKP Series B to be issued pursuant
to this Agreement will be, when issued, duly authorized, validly issued, fully
paid and non-assessable.
Section 3.6 No Other Representations or Warranties. Except as set forth
above in this Section 3, no other representations or warranties, express or
implied, are made in this Agreement by CKP to the Xxxxxxx.
ARTICLE 4
MISCELLANEOUS
Section 4.1 Survival of Representations, Warranties and Agreements. The
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Closing
and shall not be limited or affected by any investigation by or on behalf of any
party hereto.
Section 4.2. Further Assurances. Each of CKP and Xxxxxxx will use its or
his, as the case may be, best efforts to take all action and to do all things
necessary, proper or advisable on order to consummate and make effective the
transactions contemplated by this Agreement.
Section 4.3 Entire Agreement; No Third Party Beneficiaries. This Agreement
(including the documents, exhibits and instruments referred to herein) (a)
constitutes the entire agreement and supersedes all prior agreements, and
understandings and communications, both written and oral, among the parties with
respect to the subject matter hereof, and (b) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
Section 4.4 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of New York without regard to any
applicable principles of conflicts of law.
Section 4.5 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same document.
Section 4.6 Amendment and Modification. This Agreement may not be amended
or modified except by an instrument in writing signed by each of the parties
hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed themselves or by their respective duly authorized officers as of the date
first written above.
XXXXXX XXXXXXX PROMOTIONS, INC.
By:
Name:
Title:
Xxxxxx Xxxxxxx, individually
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