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.
IN
WITNESS WHEREOF,
the
parties have executed this Agreement on the day and year first above written.
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UNIVERSAL
CAPITAL
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MANAGEMENT,
INC.
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By:
/s/
Xxxxxxx X. Xxxxx
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Xxxxxxx
X. Xxxxx, President
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/s/
Xxxxx X. Xxxx
(SEAL)
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Xxxxx
X. Xxxx
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/s/
Xxxxxxx X. Xxxxxxx
(SEAL)
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Xxxxxxx
X. Xxxxxxx
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