SHARE CONTRIBUTION AGREEMENT
----------------------------
THIS SHARE CONTRIBUTION AGREEMENT is made this 29th day of
September, 2005 by and among Universal Capital Management, Inc. (the "Company"),
Xxxxx X. Xxxx ("Xxxx"), and Xxxxxxx X. Xxxxxxx ("Xxxxxxx").
BACKGROUND:
On March 31, 2005, BF Acquisition Group IV, Inc. ("BF") merged
with and into the Company (the "Merger"). In connection with the Merger, Xxxxxxx
and Bovi received, in exchange for their shares of BF, 150,000 and 200,000
shares, respectively, of the common stock of the Company. The staff of the
Securities and Exchange Commission (the "Staff") believes that the Merger may
have violated Section 57 of the Investment Company Act of 1940 (the "1940 Act")
by virtue of the relationship between Bovi or Xxxxxxx on the one hand and the
Company on the other hand.
The Staff also believes that the Merger may have violated
Section 23(b) of the 1940 Act by virtue of the fact that the stockholder
approval obtained by the Company in connection with the Merger did not satisfy
all of the requirements of the 1940 Act.
The parties to this Agreement do not agree with the views of
the Staff. Nonetheless, the parties to this Agreement desire to avoid further
discussions with the Staff regarding the matter.
NOW, THEREFORE, for and in consideration of the mutual
covenants contained in this Agreement, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. Stockholder Approval. The Company shall and hereby agrees to submit for
consideration by the stockholders of the Company, the question of whether the
Merger and the Merger Agreement should be ratified, adopted, and approved by the
holders of a majority of the Company's outstanding voting securities and the
holders of a majority of the Company's outstanding voting securities that are
not affiliated persons of the Company (collectively, the "Stockholder Approval
Requirement"). In seeking such ratification, adoption, and approval, the Company
shall prepare, file with the Securities and Exchange Commission, and distribute
to Company stockholders a proxy statement which describes the Merger and the
Staff's inquiries regarding the Merger.
2. Capital Contribution. Messrs. Bovi and Xxxxxxx shall and hereby agree,
severally and not jointly, that if the Stockholder Approval Requirement is
satisfied on or before December 31, 2005, they shall contribute to the capital
of the Company, without further consideration to be received by either of them
from the Company, the 200,000 shares and 150,000 shares of Company common stock
received by them, respectively, in the Merger.
3. Representation, Warranty and Covenant. Each of Bovi and Xxxxxxx hereby
represent and warrant to the Company, severally and not jointly, that the shares
of
Company common stock received by him in the Merger are owned by him, and have
not been sold, pledged, assigned or otherwise transferred. Each of Bovi and
Xxxxxxx hereby covenant and agree, severally and not jointly, that he will not
sell, pledge, assign, or otherwise transfer any of such shares prior to January
1, 2006, other than a transfer of such shares to the Company pursuant to the
terms of this Agreement.
4. No Admission of Liability. The parties acknowledge that they are
entering into this Share Contribution Agreement solely for the purpose of
facilitating resolution of the Staff's beliefs and of avoiding the
inconvenience, expense, and uncertainty of further discussions with the Staff,
and no such party concedes that it is liable or responsible with respect to any
matter in connection with the Merger or the Merger Agreement, or that any such
matter constituted a violation of the 1940 Act or any of the rules promulgated
thereunder.
5. Miscellaneous.
(a) Binding Nature of Agreement; No Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and assigns, except that no party
may assign or transfer its rights nor delegate its obligations under this
Agreement without the prior written consent of the other parties hereto.
(b) Execution in Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.
(c) Provisions Separable. The provisions of this Agreement are independent
of and separable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.
(d) Entire Agreement. This Agreement contains the entire understanding
among the parties hereto with respect to the subject matter hereof, and
supersedes all prior and contemporaneous agreements and understandings,
inducements or conditions, express or implied, oral or written, except as herein
contained. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms hereof.
This Agreement may not be modified or amended other than by an agreement in
writing.
(e) Paragraph Headings. The Paragraph and subparagraph headings in this
Agreement have been inserted for convenience of reference only; they form no
part of this Agreement and shall not affect its interpretation.
-2-
IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and year first above written.
UNIVERSAL CAPITAL
MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------
Xxxxxxx X. Xxxxx, President
/s/ Xxxxx X. Xxxx (SEAL)
-----------------
Xxxxx X. Xxxx
/s/ Xxxxxxx X. Xxxxxxx (SEAL)
----------------------
Xxxxxxx X. Xxxxxxx
-3-
