VOTING AGREEMENT
Exhibit
10.8
This
Voting Agreement (this “Agreement”) is made and
entered into as of March 30, 2007 (the “Effective
Date”), by and among Baywood International Inc., a Nevada
corporation (the “Company”), and the individuals
listed as stockholders on Exhibit A attached hereto (the
“Shareholders”).
A. Concurrently
herewith, the Company is issuing to certain investors (the
“Investors”) in a private placement pursuant to Rule
506 of Regulation D promulgated under the Securities Act of 1933, as amended,
units (the “Units”) consisting of (i) 5,000 shares of
Series I 8% cumulative convertible preferred stock and (ii) 250,000 common
stock
purchase warrants (the “Private
Placement”).
B. Northeast
Securities, Inc. (“NESC”) acted as the exclusive
placement agent with respect to the Private Placement.
C. As
an inducement to the Investors to purchase the Units, the Company, NESC and
the
Shareholders desire to enter into this Agreement to set forth their agreements
and understandings with respect to how shares of the Company’s capital stock
held by the Shareholders will be voted on certain matters.
NOW
THEREFORE, in consideration of the above recitals and the mutual
covenants made herein, the parties hereby agree as follows:
1. ELECTION
OF THE NESC DESIGNEES TO THE COMPANY'S BOARD OF
DIRECTORS.
1.1 Voting
Board Composition. During the term of this Agreement,
each Shareholder agrees to vote all shares of capital stock of the Company
now
or hereafter directly or indirectly owned (of record or beneficially) by
such
Shareholder, in such manner as may be necessary to elect (and maintain in
office) a five-person Board of Directors (the “Board”)
consisting of, in part, two (2) individuals designated from time to time
in a
writing delivered to the Company and signed by NESC (the “NESC
Designees”).
1.2 Initial
NESC Designees. The initial NESC Designees shall be as
set forth on Schedule A hereto.
1.3 Changes
in NESC Designees. From time to time during the term of
this Agreement NESC may, in its sole discretion:
(a) elect
to remove from the Board any incumbent NESC Designee who occupies a Board
seat
for which NESC is entitled to designate one of the two NESC Designees under
Section 1.1, by a writing signed by NES and delivered to the Company and
the NESC Designee being removed; and/or
(b) designate
one or more new NESC Designees for election to the Board seats for which
NESC is
entitled to designate the NESC Designees under Section 1.1 (whether to
replace one or more prior NESC Designees or to fill a vacancy in such Board
seat(s)); provided, however, that such removal and/or designation
is approved in a writing signed by NESC. In the event of such a
removal and/or designation of the NESC Designees under this Section 1.3,
the Shareholders shall vote their shares of the Company’s capital stock as
provided in Section 1.1 to cause: (a) the removal from the Board of
the NESC Designee(s) so designated for removal by NESC; and (b) the election
to
the Board of any new NESC Designees so designated for election to the Board
by
NESC.
1.4 Notice;
Covenant to Vote in Accord. The Company shall promptly
give each of the Shareholders written notice of any change in composition
of the
Board and of any proposal by NESC to remove or elect one or more NESC
Designee(s). In any election of directors of the Board, the
Shareholders shall vote their shares in a manner sufficient to elect to the
Board the individuals to be elected thereto as provided in this Section
1.
2. FURTHER
ASSURANCES. Each of the Shareholders and the
Company agree not to vote any shares of the Company’s capital stock, or to take
any other actions, that would in any manner defeat, impair, be inconsistent
with
or adversely affect the stated intentions of the parties under Section 1
of this
Agreement.
3. TRANSFEREES;
LEGENDS ON CERTIFICATES.
3.1 Effect
on Transferees. Each and every transferee or assignee of
any shares of capital stock of the Company from any Shareholder shall be
bound
by and subject to the terms and conditions of this Agreement that are applicable
to the transferor or assignor of such shares, and the Company shall require,
as
a condition precedent to the transfer of any shares of capital stock of the
Company subject to this Agreement, that the transferee agrees in writing
to be
bound by, and subject to, all the terms and conditions of this Agreement;
provided, however, that this Section 3.1 shall not apply to
transferees who purchase such shares of capital stock of the Company (a)
in
connection with a transaction that results in a Change of Control or (b)
in a
transaction involving a national securities exchange or the over-the-counter
bulletin board.
3.2 Legend. The
Shareholders agree that all Company share certificates now or hereafter held
by
them that represent shares of capital stock of the Company subject to this
Agreement will be stamped or otherwise imprinted with a legend to read as
follows, and the Shareholders and the Company agree to take all necessary
action
in order to stamp or imprint such legend on existing share certificates held
by
the Shareholders; provided, however, that this Section 3.2 shall
not apply to share certificates that represent shares of capital stock of
the
Company that are registered with the Securities and Exchange Commission and
are
therefore freely tradable without restriction:
2
“THE
SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO AGREEMENTS AND RESTRICTIONS
WITH REGARD TO THE VOTING OF SUCH SHARES AND THEIR TRANSFER, AS PROVIDED
IN THE
PROVISIONS OF A VOTING AGREEMENT, A COPY OF WHICH IS ON FILE IN THE OFFICE
OF
THE SECRETARY OF THE COMPANY.”
4. ENFORCEMENT
OF AGREEMENT. Each of the Shareholders and the Company
acknowledge and agree that any breach by any of them of this Agreement shall
cause NESC irreparable harm which may not be adequately compensable by money
damages. Accordingly, in the event of a breach or threatened breach
by a Shareholder or the Company of any provision of this Agreement, NESC
shall
be entitled to the remedies of specific performance, injunction or other
preliminary or equitable relief, including the right to compel any such
breaching Shareholder to vote such Shareholder’s shares of capital stock of the
Company in accordance with the provisions of this Agreement, in addition
to such
other rights remedies as may be available to NESC for any such breach or
threatened breach, including but not limited to the recovery of money
damages.
5. TERM. This
Agreement shall commence on the Effective Date and shall terminate upon the
first to occur of the following:
(a) The
third anniversary of the Effective Date;
(b) The
execution by NESC of a written agreement to terminate this
Agreement;
(c) Immediately
prior to the closing of (i) any consolidation or merger of the Company with
or
into any other corporation(s) in which the holders of the Company’s issued and
outstanding shares immediately before such consolidation or merger do not,
immediately after such consolidation or merger, retain stock representing
a
majority of the voting power of the surviving corporation of such consolidation
or merger or stock representing a majority of the voting power of a corporation
that wholly owns, directly or indirectly, the surviving corporation of such
consolidation or merger; or (ii) the sale, transfer or assignment of securities
of the Company representing a majority of the voting power of all the Company’s
issued and outstanding voting securities by the holders thereof to an acquiring
party in a single transaction or series of related transactions (each a
“Change of Control”).
3
6. GENERAL
PROVISIONS.
6.1 Notices. Any
and all notices required or permitted to be given to a party pursuant to
the
provisions of this Agreement will be in writing and will be effective and
deemed
to provide such party sufficient notice under this Agreement on the earliest
of
the following: (i) at the time of personal delivery, if delivery
is in person; (ii) at the time of transmission by facsimile, addressed to
the
other party at its facsimile number specified herein (or hereafter modified
by
subsequent notice to the parties hereto), with confirmation of receipt made
by
both telephone and printed confirmation sheet verifying successful transmission
of the facsimile; (iii) one (1) business day after deposit with an express
overnight courier for United States deliveries, or two (2) business days
after
such deposit for deliveries outside of the United States, with proof of delivery
from the courier requested; or (iv) three (3) business days after deposit
in the
United States mail by certified mail (return receipt requested) for United
States deliveries. All notices for delivery outside the United States
will be sent by facsimile or by express courier. Notices by facsimile
shall be machine verified as received. All notices not delivered
personally or by facsimile will be sent with postage and/or other charges
prepaid and properly addressed to the party to be notified at the address
or
facsimile number as follows, or at such other address or facsimile number
as
such other party may designate by one of the indicated means of notice herein
to
the other parties hereto as follows:
(a) if
to the Shareholders, at each such Shareholder’s address on Exhibit A
hereto;
(b) if
to NESC, marked “Attention: Xxxxx Xxxxxx”, at Northeast Securities, Inc., 000
Xxxx Xxxxxx, 0xx Xxxxx,
Xxx Xxxx,
XX 00000; and
(c) if
to the Company, marked “Attention: President”, at Baywood
International, Inc., 00000 Xxxxx 00xx Xxxxx,
Xxxxx 0,
Xxxxxxxxxx, XX 00000.
6.2 Entire
Agreement. This Agreement and the documents referred to
herein, together with all the Exhibits hereto, constitute the entire agreement
and understanding of the parties with respect to the subject matter of this
Agreement, and supersede any and all prior understandings and agreements,
whether oral or written, between or among the parties hereto with respect
to the
specific subject matter hereof.
6.3 Governing
Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York, without giving effect
to that
body of laws pertaining to conflict of laws.
6.4 Severability. If
any provision of this Agreement is determined by any court or arbitrator
of
competent jurisdiction to be invalid, illegal or unenforceable in any respect,
such provision will be enforced to the maximum extent possible given the
intent
of the parties hereto. If such clause or provision cannot be so
enforced, such provision shall be stricken from this Agreement and the remainder
of this Agreement shall be enforced as if such invalid, illegal or unenforceable
clause or provision had (to the extent not enforceable) never been contained
in
this Agreement. Notwithstanding the foregoing, if the value of this
Agreement based upon the substantial benefit of the bargain for any party
is
materially impaired, which determination as made by the presiding court or
arbitrator of competent jurisdiction shall be binding, then both parties
agree
to substitute such provision(s) through good faith
negotiations.
4
6.5 Third
Parties. Nothing in this Agreement, express or implied,
is intended to confer upon any person, other than the parties hereto and
their
successors and assigns, any rights or remedies under or by reason of this
Agreement.
6.6 Successors
And Assigns. Except as otherwise provided in this
Agreement, this Agreement, and the rights and obligations of the parties
hereunder, will be binding upon and inure to the benefit of their respective
successors, assigns, heirs, executors, administrators and legal
representatives.
6.7 Titles
and Headings. The titles, captions and headings of this
Agreement are included for ease of reference only and will be disregarded
in
interpreting or construing this Agreement. Unless otherwise
specifically stated, all references herein to “sections” and “exhibits” will
mean “sections” and “exhibits” to this Agreement.
6.8 Counterparts. This
Agreement may be executed in any number of counterparts, each of which when
so
executed and delivered will be deemed an original, and all of which together
shall constitute one and the same agreement.
6.9 Adjustments
for Stock Splits, Etc. Wherever in this Agreement there
is a reference to a specific number of shares of capital stock of the Company
of
any class or series, then, upon the occurrence of any subdivision, combination
or stock dividend of such class or series of stock, the specific number of
shares so referenced in this Agreement shall automatically be proportionally
adjusted to reflect the effect on the outstanding shares of such class or
series
of stock by such subdivision, combination or stock dividend.
6.10 Aggregation
of Stock. For purposes of this Agreement, all shares
held or acquired by affiliated entities or persons shall be aggregated together
for the purpose of determining the availability of any rights under this
Agreement.
6.11 Further
Assurances. The parties agree to execute such further
documents and instruments and to take such further actions as may be reasonably
necessary to carry out the purposes and intent of this Agreement.
6.12 Facsimile
Signatures. This Agreement may be executed and delivered
by facsimile and upon such delivery the facsimile signature will be deemed
to
have the same effect as if the original signature had been delivered to the
other party. The original signature copy shall be delivered to the
other party by express overnight delivery. The failure to deliver the
original signature copy and/or the nonreceipt of the original signature copy
shall have no effect upon the binding and enforceable nature of this
Agreement.
5
6.13 Amendment
and Waivers. This Agreement may be amended only by a
written agreement executed by the Company, NESC and a majority-in-interest
of
the Shareholders (calculated on the basis of the number of votes then entitled
to be cast by each Shareholder for the election of directors of the Company);
provided, however, that from time to time additional new investors
in the Company's capital stock may be added as "Shareholders" to this Agreement,
without obtaining the signature, consent or permission of any of the
Shareholders, immediately upon execution and delivery to the Company of
counterpart signature pages to this Agreement, at which time such additional
new
shareholders shall become party to and bound by this Agreement, it being
understood that upon receipt of such counterpart signature pages the Company
shall promptly amend and furnish to the Shareholders a revised Exhibit A
hereto. No amendment of or waiver of, or modification of any
obligation under this Agreement will be enforceable against the Company,
NESC or
any Shareholders unless set forth in a writing signed as provided in the
preceding sentence by the party or parties against whom enforcement is
sought. Any amendment effected in accordance with this Section 6.13
will be binding upon all parties hereto and each of their respective successors
and assigns. No delay or failure to require performance of any
provision of this Agreement shall constitute a waiver of that provision as
to
that or any other instance. No waiver granted under this Agreement as
to any one provision herein shall constitute a subsequent waiver of such
provision or of any other provision herein, nor shall it constitute the waiver
of any performance other than the actual performance specifically
waived.
6
IN
WITNESS WHEREOF, the parties have executed this Voting Agreement on the
date and year first written above.
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BAYWOOD
INTERNATIONAL, INC.
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NORTHEAST
SECURITIES, INC.
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By:
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By:
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Name:
Xxxx X. Xxxxxxxxxx
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Name:
Xxxxx Xxxxxx
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Title: Chief
Executive Officer
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Title:
Senior Vice President
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SHAREHOLDERS:
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Xxxx
Xxxxxxxxxx, in his personal capacity
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Xxxx
Xxxxxxx
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O.
Xxx Xxxxx, III
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Xxxxxx
Xxxxxxxxx
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Xxxxxxxx
XxXxxxx
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Xxxxxxx
Xxxx
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SCHEDULE
A – INITIAL DESIGNEES
O.
Xxx
Xxxxx, III
Xxxxx
Xxxxxx
8
EXHIBIT
A – Schedule of Shareholders
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Shareholder
and Address
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Number
and Description of Shares of Capital Stock Subject to Voting
Agreement
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Percent
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Xxxx
Xxxxxxxxxx
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c/o
Baywood International, Inc.
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00000
X. 00xx
Xxxxx, Xxxxx 0
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Xxxxxxxxxx,
XX 00000
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Xxxx
Xxxxxxx
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c/o
Baywood International, Inc.
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00000
X. 00xx
Xxxxx, Xxxxx 0
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Xxxxxxxxxx,
XX 00000
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O.
Xxx Xxxxx, III
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c/o
Northeast Securities, Inc.
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000
Xxxx Xxxxxx, 0xx
Xxxxx
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Xxx
Xxxx, XX 00000
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Xxxxxx
Xxxxxxxxx
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0000
Xxxxx Xxxx Xxxxxxx
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Xxx
Xxxxxxxx, XX 00000
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Xxxxxxxx
XxXxxxx
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c/o
Northeast Securities, Inc.
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000
Xxxx Xxxxxx, 0xx
Xxxxx
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Xxx
Xxxx, XX 00000
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Xxxxxxx
Xxxx
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c/o
Northeast Securities, Inc.
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000
Xxxx Xxxxxx, 0xx
Xxxxx
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Xxx
Xxxx, XX 00000
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TOTALS:
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9
