STOCK PURCHASE AGREEMENT
THIS
STOCK PURCHASE AGREEMENT
(this "Agreement") is made effective the 31st day of December, 2007 by and
between, Prevention Xxxxxxxxx.xxx, Inc., a Nevada corporation located at 0000
Xx. Xxxxxxxx Xxxx., Xxx Xxxxx, XX 00000 (the "Company") and Paragon Capital
LP,
a Delaware limited partnership located at 000 Xxxx 00xx
Xxxxxx,
00xx
xx, Xxx Xxxx, XX 00000 (the "Purchaser").
RECITALS
WHEREAS,
the Purchaser desires
to purchase certain shares of the Company's common stock (the “Common Stock”) on
the terms and conditions set forth herein; and
WHEREAS,
the Company desires to
issue
and sell shares of the Common Stock to the Purchaser on the terms and conditions
set forth herein.
AGREEMENT
NOW,
THEREFORE, in
consideration of the foregoing recitals and the mutual promises hereinafter
set
forth, and, other good and valuable consideration, the parties hereto agree
as
follows:
1. Authorization,
Sale and
Issuance of Shares and Options
1.1
Authorization
The Company shall issue 71,428,571 shares of Common Stock (the “Shares”) par
value $0.01 per share which shall be equal to 73.58% of the Company's issued
and
outstanding Common Stock inclusive of all notes, warrants or other convertible
securities, to the Purchaser at a purchase price of $.0035 per share for an
aggregate value of $250,000 to be purchased as set forth below, and the Letter
Agreement set forth as Schedule A attached hereto.
1.2
Sale and Issuance
of
the Shares Subject to the terms and conditions hereof the Company shall
sell and Purchaser shall purchase the Shares at the Closing, as defined
below.
2.
Closing
2.1
Closing: Upon
the Closing, the Purchaser will deliver to the Company a wire or certified
check
in the amount of the purchase price for the purchase of the Shares.
2.3
Delivery:
Subject to the terms of this Agreement, within five (5) days of the Closing,
the
Company will deliver to the Purchaser the certificates representing the Shares
to be purchased by the Purchaser from the Company.
3.
Representations
and Warranties of the Company. The Company
hereby
represents and warrants to the Purchaser as of the Closing date as
follows:
3.1
Organization and
Standing: Articles and Bylaws The Company is and will be a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Nevada and will have all requisite corporate power and authority to
carry on its business as proposed to be conducted.
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3.2
Corporate Power
The Company will have at the Closing, all requisite corporate power to enter
into this Agreement and to sell and issue the Shares. This Agreement shall
constitute a valid and binding obligation of the Company enforceable in
accordance with its respective terms, except as the same may be limited by
bankruptcy, insolvency, moratorium, and other laws of general application
affecting the enforcement of creditors' rights.
3.3
Capitalization
The authorized capital stock of the Company is 100,000,000 shares of Common
Stock, par value $0.01 per share, of which, 26,644,362 shares are
issued and outstanding. All such issued and outstanding shares have been duly
authorized and validly issued, are fully paid and non-assessable. The
Company agrees that it will not issue any additional shares prior to Closing
without the authorization of the Purchaser.
3.4
Authorization
(a) Corporate
Action All corporate action on the part of the Company necessary
for
the authorization, execution and delivery of this Agreement, the sale and
issuance of the Shares and the performance of the Company's obligations
hereunder will be taken prior to the Closing. This Agreement constitutes a
valid
and legally binding obligation of the Company, enforceable in accordance with
its terms.
(b) Valid
Issuance The Shares, when issued in compliance with the
provisions of this Agreement will be duly authorized, validly issued, fully
paid
and non-assessable, and will be free of any liens or encumbrances caused or
created by the Company; provided, however,
that
all such shares may be subject to restrictions on transfer under state and
federal securities laws as set forth herein, and as may be required by future
changes in such laws.
(c) No
Preemptive Rights
Except as provided herein, no person currently has or will have any right of
first refusal or any preemptive rights in connection with the issuance of the
Shares, or any future issuance of securities by the Company.
3.5
Compliance with
Other
Instruments The Company will not be in violation of any term of the
Company's Articles or Bylaws, nor will the Company be in violation of
or in
default in any material respect under the terms of any mortgage, indenture,
contract, agreement, instrument, judgment, or decree, the violation of which
would have a material adverse effect on the Company as a whole, and to the
knowledge of the Company, is not in violation of any order, statute, rule,
or
regulation applicable to the Company, the violation of which would have a
material adverse effect on the Company. The execution, delivery and performance
of and compliance with this Agreement and the issuance and sale of the Shares
will not (a) result in any such violation, or (b) be in conflict with or
constitute a default under any such term, or (c) result in the creation of
any
mortgage, pledge, lien, encumbrance, or charge upon any of the properties or
assets of the Company pursuant to any such term.
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4. Representations
and
Warranties of Purchaser and Restrictions on Transfer Imposed by the Securities
Act.
4.1
Representations
and
Warranties by the Purchaser. The Purchaser represents and warrants to the
Company as follows:
(a) Investment
Intent
This Agreement is made with the Purchaser in reliance upon the Purchaser's
representations to the Company, evidenced by the Purchaser's execution of this
Agreement, that the Purchaser is acquiring the Shares for investment for the
Purchaser's own account, not as nominee or agent, and not with a view to or
for
resale in connection with, any distribution or public offering thereof within
the meaning of the Securities Act and applicable law. The Purchaser has the
full
right, power, and authority to enter into and perform this
Agreement.
(b) Shares
Not
Registered The Purchaser understands and acknowledges that the
offering of the Shares pursuant to this Agreement will not be registered under
the Securities Act on the grounds that the offering and sale of securities
contemplated by this Agreement are exempt from registration under the Securities
Act pursuant to Section 4(2) thereof and exempt from registration pursuant
to
applicable state securities or blue sky laws, and that the Company's reliance
upon such exemptions is predicated upon such Purchaser's representations set
forth in this Agreement. The Purchaser acknowledges and understands that the
Shares must be held indefinitely unless the Shares are subsequently registered
under the Securities Act and qualified under state law or unless an exemption
from such registration and such qualification is available.
(c) No
Transfer Except as set forth in Section 4.4 hereunder, the
Purchaser covenants that in no event will the Purchaser dispose of any of the
Shares (other than in conjunction with an effective registration statement
for
the Shares under the Securities Act in compliance with Rule 144 promulgated
under the Securities Act) unless and until (i) the Purchaser shall have notified
the Company of the proposed disposition and shall have furnished the Company
with a statement of the circumstances surrounding the proposed disposition,
and
(ii) if reasonably requested by the Company, the Purchaser shall have furnished
the Company with an opinion of counsel satisfactory in form and substance to
the
Company to the effect that (x) such disposition will not require registration
under the Securities Act, and (y) appropriate action necessary for compliance
with the Securities Act and any other applicable state, local, or foreign law
has been taken, and (iii) the Company has consented, which consent shall not
be
unreasonably withheld.
(d) Knowledge
and
Experience The Purchaser
(i) has
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of the Purchaser's prospective investment
in
the Shares; (ii) has the ability to bear the economic risks of the Purchaser's
prospective investment; (iii) has been furnished with and had access to such
information as the Purchaser has considered necessary to make a determination
as
to the purchase of the Shares together with such additional information as
is
necessary to verify the accuracy of the information supplied; (iv) has had
all
questions which have been asked by the Purchaser satisfactorily answered by
the
Company; and (v) has not been offered the Shares by any form of advertisement,
article, notice, or other communication published in any
newspaper, magazine, or similar medium; or broadcast over television or radio;
or any seminar or meeting whose attendees have been invited by any such
medium.
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(e) Not
organized to
Purchase. The Purchaser has not been organized for the purpose
of purchasing the Shares.
(f)
Name
Change. The Purchaser agrees that within 30 days from Closing
they will file an amendment in the State of Nevada to change the name of the
Company and will notify Xxxxxxxxx when such action has been
taken. Xxxxxxxxx shall retain the Intellectual Property rights to the
name Prevention Xxxxxxxxx.xxx, Inc.
4.2
Legends Each
certificate representing the Shares shall be endorsed with the following
legends:
(a)
Federal Legend.
The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "Act") and are "restricted
securities" as defined in rule 144 promulgated under the Act. The securities
may
not be sold or offered for sale or otherwise distributed except (i) in
conjunction with an effective registration statement for the shares under the
Act, or (ii) pursuant to an opinion of counsel, satisfactory to the company,
that such registration or compliance is not required as to said sale, offer,
or
distribution.
(b)
Other Legends.
With respect to any other legends required by applicable law, the Company need
not register a transfer of legended Shares, and may also instruct its transfer
agent not to register the transfer of the Shares, unless the conditions
specified in such legend is satisfied.
4.3 Rule
144. The Purchaser is aware of the adoption of Rule 144 by the
SEC promulgated under the Securities Act, which permits limited public resale
of
securities acquired in a nonpublic offering, subject to the satisfaction of
certain conditions. The Purchaser understands that under Rule 144, the
conditions include, among other things: the availability of certain, current
public information about the issuer and the resale occurring not less than
one
year after the party has purchased and paid for the securities to be
sold.
5.
Conditions
to
Closing
5.1
Conditions to the
Purchaser's Obligations The obligations of the Purchaser to purchase the
Shares at the Closing are subject to the fulfillment to its satisfaction, on
or
prior to the Closing, of the following conditions, any of which may be waived
in
accordance with the provisions of subsection 8.1 hereof:
(a) Representations
and
Warranties Correct: Performance of Obligations The representations and
warranties made by the Company in Section 3 hereof shall be true and correct
when made and at the Closing. The Company's business and assets shall not have
been adversely affected in any material way prior to the Closing. The
Company shall have
performed in all material respects all obligations and conditions herein
required to be performed or observed by it on or prior to the
Closing.
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(b) Consents and Waivers
The Company shall have obtained in a timely fashion any and all consents,
permits, and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement.
5.2
Conditions to
Obligations of the Company The Company's obligation to sell the Shares at
the Closing is subject to the condition that the representations and warranties
made by the Purchaser in Section 4 hereof shall be true and correct when made,
and on the Closing.
6.
Affirmative
Covenants of the Company The Company hereby covenants and agrees as
follows:
6.1
Financial
Information The Company will furnish holders of the Shares with annual
audited financial statements together with such notes and commentary by
management as is usual and customary.
7. Registration
Rights
The
Purchaser is not entitled to any registration rights under this Agreement or
associated with the purchase of the Shares. The purchase shall be subject to
such private restrictions on the transfer of the Shares as are designated from
time to time by the Company or its investment bankers or
underwriters.
8. Risk
Factors
The
securities offered hereby are speculative in nature and involve a high degree
of
risk. They should be purchased only by persons who can afford to lose their
entire investment in the company, therefore, each prospective investor should,
prior to purchase, consider very carefully the following risk
factors:
8.1
Arbitrary
Determination of Stock Price The price of the Shares have been determined
arbitrarily by the Company. The price should not be regarded as an indication
of
any future market price of the Company's stock and has no relation to the value
of the Company's stock.
8.2
Dependence on Key
Personnel The success of the Company is dependent
on the
efforts and abilities of its current officers and directors. If the Company
were
to lose the services of such officers, its business could be materially and
adversely affected.
8.3
Audited Financial
Statements The Company has prepared or caused to be prepared current
audited financial statements through the year ending April 30, 2007. The balance
sheet and income statement included therein have been prepared in accordance
with generally accepted accounting principles.
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8.4
Discretion in
Application of Proceeds In order to accommodate changing circumstances,
the Company's management may allocate the proceeds of this financing in
accordance with its needs and operation. Subject to the supervision of the
Board
of Directors, the Company's management will be given discretion in the
application of the proceeds.
8.5
Restrictions on
Transfer The Shares may not be resold unless such sale is registered or
qualifies for an exemption from registration under the Act and all applicable
state securities laws. The Shares should be considered a suitable investment
only for investors whose financial position is such that they will be able
to
hold the Shares for an indefinite period. Some state laws may impose additional
restrictions on transfer of the Shares.
For
all of the reasons stated in the
risk factors and others, including, without limitation, those set forth herein,
these shares involve a high degree of risk. Any person considering an investment
in the securities offered should be aware of these factors. These securities
should only be purchased by persons who can afford a total loss of their
investment in the company and have no immediate need for a return of or on
their
investment.
9. Officers
and
Directors
9.1
Directors of the Company after Closing. At the Closing, Xxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx and Xxxxxx Xxxxxx shall resign as Directors of
the
Company and Xxxx Xxxxxxxxx will become the sole member of the Board of Directors
of the Company.
9.2
Officers of the Company after Closing. At the Closing, Xxxxx Xxxxxxxxx shall
resign as President, Chief Executive Officer, Chief Financial Officer and all
other executive positions with the Company and Xxxx Xxxxxxxxx will be appointed
as the President, Chief Executive Officer, Chief Financial Officer of the
Company.
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10.
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Miscellaneous
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10.1
Governing Law
This Agreement shall be governed in all respects by the laws of the State of
New
York as such laws are applied to agreements between residents entered into
and
to be performed entirely within New York.
10.2
Survival The
representations, warranties, covenants and agreements made herein shall survive
the Closing of the transactions contemplated hereby, notwithstanding any
investigation made by the Purchaser. All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf
of
the Company pursuant hereto or in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company
hereunder as of the date of such certificate or instrument.
10.3
Successors and
Assigns Except as otherwise expressly provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors, and administrators of the parties
hereto.
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10.4
Entire
Agreement This Agreement and the other documents delivered pursuant
hereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof and they supersede,
merge, and render void every other prior written and/or oral understanding
or
agreement among or between the parties hereto.
10.5
Notices, Etc.
All notices and other communications required or permitted hereunder shall
be in
writing and shall be delivered personally, mailed by first class mail, postage
prepaid, or delivered by courier or overnight delivery, addressed (a) if to
a
Purchaser, at such Purchaser's address set forth above , or at such other
address as such Purchaser shall have furnished to the Company in writing, or
(b)
if to the Company, at its address set forth at the beginning of this Agreement,
or at such other address as the Company shall have
furnished to the Purchaser in writing. Notices that are mailed shall be deemed
received five (5) days after deposit in the United States mail. Notices sent
by
courier or overnight delivery shall be deemed received two (2) days after they
have been so sent.
10.6
Severability In
case any provision of this Agreement shall be found by a court of law to be
invalid, illegal, or unenforceable, the validity, legality, and enforceability
of the remaining provisions of this Agreement shall not in any way be affected
or impaired thereby.
10.7 Finder's
Fees and Other
Fees
(a) The
Company (i) represents and warrants that it has retained no finder or broker
in
connection with the transactions contemplated by this Agreement, and (ii) hereby
agrees to indemnify and to hold Purchaser harmless from and against any
liability for commission or compensation in the nature of a finder's fee to
any
broker or other person or firm (and the costs and expenses of defending against
such liability or asserted liability) for which the Company, or any of its
employees or representatives, is responsible.
(b) The
Purchaser (i) represents and warrants that the Purchaser has retained no finder
or broker in connection with the transactions contemplated by this Agreement,
and (ii) hereby agrees to indemnify and to hold the Company harmless from and
against any liability for any commission or compensation in the nature of a
finder's fee to any broker or other person or firm (and the costs and expenses
of defending against such liability or asserted liability) for which such
Purchaser is responsible.
10.8
Expenses The
Company and the Purchaser shall each bear their own expenses and legal fees
in
connection with the consummation of this transaction.
10.9 Titles
and Subtitles
The titles of the sections and subsections of this Agreement are for convenience
of reference and are not to be considered in construing this
Agreement.
10.10 Counterparts
This
Agreement may be executed in any number of counterparts, each of which shall
be
an original, but all of which together shall constitute one
instrument.
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10.11 Delays
or Omissions
No delay or omission to exercise any right, power, or remedy accruing to the
Company or to any holder of any securities issued or to be issued hereunder
shall impair any such right, power, or remedy of the Company or such holder,
nor
shall it be construed to be a waiver of any breach or default under this
Agreement, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any failure to exercise any right, power, or
remedy or any waiver of any single breach or a waiver of any other right, power,
or remedy or breach or default theretofore or thereafter occurring. All
remedies, either under this Agreement, or by law or otherwise afforded to the
Company or any holder, shall be cumulative and not alternative.
IN
WITNESS WHEREOF, the
parties hereto have executed this Agreement this ____ day of December,
2007.
COMPANY:
PREVENTION
XXXXXXXXX.XXX,
INC.
/s/
Xxxxx
Xxxxxxxxx
XXXXX
XXXXXXXXX, PRESIDENT
PURCHASER:
PARAGON
CAPITAL LP
/s/
Xxxx Xxxxxxxxx
XXXX
XXXXXXXXX, MANAGING MEMBER OF PARAGON CAPITAL ADVISORS LLC, GENERAL PARTNER
OF
PARAGON CAPITAL LP
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