EXHIBIT 1
STOCK PURCHASE AGREEMENT
EXECUTION COPY
STOCK PURCHASE AGREEMENT
DATED AS OF
JANUARY 20, 2003
BY AND BETWEEN
XXX TECHNOLOGIES, INC.
AND
TECHNOLOGY INVESTORS, LLC
TABLE OF CONTENTS
Page No.
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ARTICLE I. DEFINITIONS.................................................. 1
ARTICLE II. CLOSING..................................................... 3
2.1. Authorization of Purchased Securities.......................... 3
2.2. Purchase of Purchased Securities............................... 3
2.3. Closing........................................................ 4
ARTICLE III. PURCHASER'S REPRESENTATIONS................................ 4
3.1. Investment Intention........................................... 4
3.2. Accredited Investor............................................ 4
3.3. Corporate Existence............................................ 4
3.4. Corporate Power; Authorization; Enforceable Obligations........ 4
3.5. Brokers........................................................ 5
ARTICLE IV. COMPANY'S REPRESENTATIONS, WARRANTIES AND COVENANTS......... 5
4.1. Capitalization................................................. 5
4.2. Authorization and Issuance of the Purchased Securities......... 5
4.3. Securities Laws................................................ 5
4.4. Corporate Existence; Compliance with Laws...................... 5
4.5. Corporate Power: Authorization: Enforceable Obligations........ 6
4.6. Financial Statements........................................... 6
4.7. Taxes.......................................................... 7
4.8. Brokers........................................................ 7
4.9. Required Filings............................................... 7
4.10. Full Disclosure................................................ 7
4.11. Absence of Changes............................................. 7
ARTICLE V. CONDITIONS PRECEDENT TO CLOSING.............................. 8
5.1. Conditions Precedent to Purchaser's Obligation to Close........ 8
5.2. Conditions Precedent to Company's Obligation to Close.......... 9
ARTICLE VI. SECURITIES LAW MATTERS...................................... 10
6.1. Legends........................................................ 10
6.2. Transfer of Restricted Securities.............................. 10
6.3. Registration Rights............................................ 11
ARTICLE VII. EXPENSES................................................... 11
ARTICLE VIII. LIMITATION ON CLAIMS OF PURCHASER; INDEMNIFICATION........ 12
8.1. Limitation..................................................... 12
8.2. Indemnification by the Company................................. 12
8.3. Indemnification by the Purchaser............................... 13
8.4. Exculpation.................................................... 13
ARTICLE IX. MISCELLANEOUS............................................... 13
9.1. Notices........................................................ 13
9.2. Binding Effect; Benefits....................................... 14
9.3. Amendment...................................................... 14
9.4. Successors and Assigns; Assignability.......................... 15
9.5. Section and Other Headings..................................... 15
9.6. Severability................................................... 15
9.7. Entire Agreement............................................... 15
9.8. Counterparts................................................... 15
9.9. Publicity...................................................... 15
9.10. Governing Law.................................................. 15
9.11. No Strict Construction......................................... 16
SCHEDULE 1.0 SEC Filings
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT"), dated as of January 20,
2003, by and between Xxx Technologies, Inc., a North Carolina corporation (the
"COMPANY"), and Technology Investors, LLC, a North Carolina limited liability
company (the "PURCHASER").
The Company has agreed to issue and sell to Purchaser, and Purchaser has
agreed to purchase from the Company, upon the terms and conditions hereinafter
provided, twelve million five hundred thousand (12,500,000) shares of the
Company's Common Stock (the "COMMON STOCK"), for an aggregate purchase price of
$750,000.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, and for other good and valuable consideration, the
receipt of which is hereby acknowledged, it is agreed as follows:
ARTICLE I.
DEFINITIONS
"AUDITED FINANCIALS" shall have the meaning set forth in SECTION 4.6
hereof.
"BUSINESS DAY" shall mean any day that is not a Saturday, a Sunday or a day
on which banks are required or permitted to be closed in the State of North
Carolina.
"ARTICLES OF INCORPORATION" shall mean the Company's Articles of
Incorporation, as the same may be amended from time to time.
"CLOSING" or "CLOSING DATE" shall each have their respective meanings set
forth in SECTION 2.3 hereof.
"COMMON STOCK" shall have the meaning set forth in the recitals.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended,
and all rules and regulations promulgated thereunder.
"FINANCIALS" shall have the meaning set forth in SECTION 4.6 hereof.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect from time to time.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any state or
other political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
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"KNOWLEDGE" shall mean the actual knowledge of an executive officer of the
Company.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
business, assets, operations, prospects or financial condition of the Company.
"PERSON" shall mean any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, entity or
government (whether federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
"PURCHASED SECURITIES" shall mean the Common Stock purchased by the
Purchaser at the Closing pursuant to SECTION 2.2 of this Agreement.
"RESTRICTED SECURITIES" shall mean (i) the Purchased Securities issued
hereunder, and (ii) any securities issued and exchanged with respect to the
securities referred to in clause (i) by way of a stock dividend or stock split
or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. As to any particular Restricted
Securities, such securities shall cease to be Restricted Securities when they
have been (a) effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them, (b) been distributed
to the public through a broker, dealer or market maker pursuant to Rule 144 (or
any similar provision then in force) under the Securities Act or become eligible
for sale pursuant to Rule 144(k) (or any similar provision then in force) under
the Securities Act or (c) been otherwise transferred and new certificates for
them not bearing the Securities Act legend set forth in SECTION 6.1 have been
delivered by Company in accordance with SECTION 6.2. Whenever any particular
securities cease to be Restricted Securities, the holder thereof shall be
entitled to receive from Company, without expense, new securities of like tenor
not bearing a Securities Act legend of the character set forth in SECTION 6.1.
"SEC" shall mean the U.S. Securities and Exchange Commission, or any
successor thereto.
"SEC FILINGS" shall mean the following documents that have been filed with
the SEC, copies of which are attached hereto as SCHEDULE 1.0: (i) the annual
report of the Company on Form 10-K for the fiscal year ended April 30, 2002,
(ii) the quarterly reports of the Company on Form 10-Q for the quarterly periods
ended October 31, 2002 and July 31, 2002, (iii) the current reports of the
Company on Form 8-K, dated September 30, 2002, September 5, 2002 and February
11, 2002 and (iv) the definitive proxy statement of the Company dated July 29,
2002.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and all
rules and regulations promulgated thereunder.
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"STOCK" shall mean all shares, options, warrants, general or limited
partnership interests, limited liability company membership interest,
participations or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity whether
voting or nonvoting, including, without limitation, common stock, preferred
stock, or any other equity security (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the SEC under the Exchange
Act).
"TRANSACTION DOCUMENTS" shall mean this Agreement and all certificates and
other documents related to the transactions contemplated by this Agreement.
"UNAUDITED FINANCIALS" shall have the meaning set forth in SECTION 4.6
hereof.
References to this "AGREEMENT" shall mean this Stock Purchase Agreement,
including all amendments, modifications and supplements and any exhibits or
schedules to any of the foregoing, and shall refer to the Agreement as the same
may be in effect at the time such reference becomes operative.
Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain terms or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement, as a whole, including the schedules
hereto, as the same may from time to time be amended, modified or supplemented,
and not to any particular section, subsection or clause contained in this
Agreement. Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter.
ARTICLE II.
CLOSING
2.1. AUTHORIZATION OF PURCHASED SECURITIES. Prior to the Closing, the
Company shall have duly authorized the issuance and sale of the Purchased
Securities.
2.2. PURCHASE OF PURCHASED SECURITIES. Subject to the terms and conditions
set forth in this Agreement, on the Closing Date (as defined below), the
Purchaser will purchase from the Company, and the Company will sell to Purchaser
(i) twelve million five hundred thousand (12,500,000) shares of Common Stock for
a purchase price of $0.06 per share (the "PER SHARE PRICE") for an aggregate
purchase price of $750,000 (the "PURCHASE PRICE"). The Purchase Price will be
payable in full by Purchaser on the Closing Date in cash by wire transfer of
immediately available funds to an account designated by the Company.
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2.3. CLOSING. The closing of the purchase and sale of the Purchased
Securities (the "CLOSING") shall take place within five (5) Business Days
following the receipt of stockholder approval of the transaction contemplated by
this Agreement (the "CLOSING DATE") at the offices of Xxxxxx, Xxxxxxx & Xxxxxx,
LLP, 0000 Xxxxxxxx Xxxx, Xxxxx 0000, Xxxxxxxxx, XX 00000, or such other place as
shall be mutually agreed to by the parties hereto. On the Closing Date, the
Company will deliver to the Purchaser the items listed in SECTION 5.1 against
delivery by the Purchaser of the Purchase Price by payment of cash by wire
transfer of immediately available funds to the Company.
ARTICLE III.
PURCHASER'S REPRESENTATIONS
As of the Closing, the Purchaser makes the following representations and
warranties to the Company, each and all of which shall survive the execution and
delivery of this Agreement and the Closing hereunder:
3.1. INVESTMENT INTENTION. The Purchaser is purchasing the Purchased
Securities for its own account, for investment purposes and not with a view to
the distribution thereof. The Purchaser will not, directly or indirectly, offer,
transfer, sell, assign, pledge, hypothecate or otherwise dispose of any of the
Purchased Securities (or solicit any offers to buy, purchase, or otherwise
acquire any of the Purchased Securities), except in compliance with the
Securities Act.
3.2. ACCREDITED INVESTOR. The Purchaser is an "accredited investor" (as
that term is defined in Rule 501 of Regulation D under the Securities Act) and
by reason of its business and financial experience, it has such knowledge,
sophistication and experience in business and financial matters as to be capable
of evaluating the merits and risks of the prospective investment, is able to
bear the economic risk of such investment and it is able to afford a complete
loss of such investment.
3.3. CORPORATE EXISTENCE. The Purchaser is a North Carolina limited
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction of formation.
3.4. CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The
execution, delivery and performance by the Purchaser of the Transaction
Documents to be executed by it: (i) are within the Purchaser's power; (ii) have
been duly authorized by all necessary action; (iii) are not in contravention of
any provision of the Purchaser's governing documents; and (iv) will not violate
any law or regulation, or any order or decree of any court or governmental
instrumentality binding on the Purchaser. The Purchaser has full power and
authority to perform its obligations under the Transaction Documents. The
Transaction Documents to which the Purchaser is a party have each been duly
executed and delivered by the Purchaser and constitute the legal, valid and
binding obligations of the Purchaser, enforceable against it in accordance with
their respective terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
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faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
3.5. BROKERS. No broker or finder acting on behalf of the Purchaser brought
about the consummation of the transactions contemplated pursuant to this
Agreement and the Purchaser has no obligation to any Person in respect of any
finder's or brokerage fees (or any similar obligation) in connection with the
transactions contemplated by this Agreement.
ARTICLE IV.
COMPANY'S REPRESENTATIONS, WARRANTIES AND COVENANTS
As of the Closing, the Company makes the following representations,
warranties and covenants to each Purchaser, each and all of which shall survive
the execution and delivery of this Agreement and each Closing hereunder. The
Company shall have no liability to the Purchaser for any breach of the
representations and warranties set forth herein if, as of the date hereof or the
Closing Date, either Xxxxx X. Xxxxxxxx or Xxxx X. Xxxx had actual knowledge of
facts that would make the representations and warranties set forth herein
untrue.
4.1. CAPITALIZATION. All issued and outstanding Stock of the Company is
duly authorized, validly issued, fully paid and non-assessable.
4.2. AUTHORIZATION AND ISSUANCE OF THE PURCHASED SECURITIES. The issuance
of the Purchased Securities has been duly authorized by all necessary corporate
action on the part of the Company and, upon delivery to the Purchaser of
certificates therefor against payment in accordance with the terms hereof, the
Purchased Securities will be validly issued and fully paid and nonassessable,
free and clear of all pledges, liens, encumbrances and preemptive rights.
4.3. SECURITIES LAWS. In reliance on the representations of the Purchaser
contained in SECTION 3.1 and SECTION 3.2, the offer, issuance, sale and delivery
of the Purchased Securities, as provided in this Agreement, are exempt from the
registration requirements of the Securities Act and all applicable United States
state securities laws, and are otherwise in compliance with such laws. No
information contained in the SEC Filings contains any untrue statement of a
material fact, or omits to state a material fact necessary to make the
statements contained therein not misleading in light of the circumstances under
which made.
4.4. CORPORATE EXISTENCE; COMPLIANCE WITH LAWS. The Company (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of North Carolina; (ii) has the requisite corporate power and
authority and the legal right to own, pledge, mortgage or otherwise encumber and
operate its properties, to lease the property it operates under lease, and to
conduct its business as now being conducted in all material respects; (iii) has,
or has applied for, all material licenses, permits, consents or approvals from
or by, and has made all material filings with, and has given all material
notices to, all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct; (iv) is in compliance with
its Articles of Incorporation and by-laws in all material respects; and (v) to
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the Knowledge of the Company, is in compliance with all applicable provisions of
applicable laws, except for such non-compliance which would not have a Material
Adverse Effect.
4.5. CORPORATE POWER: AUTHORIZATION: ENFORCEABLE OBLIGATIONS. The
execution, delivery, and performance by the Company of this Agreement, the other
Transaction Documents to which it is a party and all instruments and documents
to be delivered by the Company, the issuance and sale of the Purchased
Securities and the consummation of the other transactions contemplated by any of
the foregoing: (i) are within the Company's corporate power and authority; (ii)
have been duly authorized by all necessary or proper corporate action; (iii) are
not in contravention of any provision of the Company's Articles of Incorporation
or by-laws; (iv) will not violate any law or regulation, or any order or decree
of any court or governmental instrumentality; and (v) will not conflict with or
result in the breach or termination of, constitute a default under or accelerate
any performance required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which the Company is a party or by which the
Company or any of their property is bound. This Agreement and the other
Transaction Documents have been duly executed and delivered by the Company and
constitute legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
4.6. FINANCIAL STATEMENTS.
(a) The audited financial statements of the Company, dated as of April
30, 2002 (the "AUDITED FINANCIALS"), have been prepared in accordance with the
books and records of the Company, present fairly the financial condition of the
Company as of the respective dates indicated and the results of operations for
the respective periods indicated, and have been prepared in accordance with GAAP
applied on a consistent basis. The unaudited financial statements of the
Company, dated as of October 31, 2002 (the "UNAUDITED Financials"), have been
prepared in accordance with the books and records of the Company, and present
fairly the financial condition of the Company as of the respective dates
indicated and the results of operations for the respective periods indicated,
subject to the lack of footnote disclosure and changes resulting from normal
year-end adjustments. The Audited Financials and Unaudited Financials shall be
referred to herein collectively as the "FINANCIALS."
(b) Except as set forth in the SEC Filings, the Company has no
material obligations, contingent or otherwise, including, without limitation,
liabilities for charges, long-term leases or long-term commitments that are not
reflected in the Financials, other than those incurred since October 31, 2002 in
the ordinary course of business (none of which is a liability resulting from
breach of contract, breach of warranty, tort, infringement, or any claim or
lawsuit).
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4.7. TAXES. All federal, state, local and foreign tax returns, reports and
statements required to be filed by the Company have been timely filed with the
appropriate Governmental Authority except where the failure to file such report
or statement would not have a Material Adverse Effect and all such returns,
reports and statements are true, correct and complete in all material respects.
All charges and other impositions due and payable as set forth in such returns,
reports and statements for the periods covered by such returns, reports and
statements have been paid prior to the date on which any fine, penalty, interest
or late charge may be added thereto for nonpayment thereof or any such fine,
penalty, interest or late charge has been paid. To the Knowledge of the Company,
proper and accurate amounts have been withheld by the Company from its employees
for all periods in full and complete compliance with the tax, social security
and unemployment withholding provisions of applicable federal, state, local and
foreign law and such withholdings have been timely paid to the respective
governmental agencies.
4.8. BROKERS. No broker or finder acting on behalf of the Company brought
about the consummation of the transactions contemplated pursuant to this
Agreement and the Company has no obligation to any Person in respect of any
finder's or brokerage fees (or any similar obligation) in connection with the
transactions contemplated by this Agreement. The Company is solely responsible
for the payment of all such finder's or brokerage fees.
4.9. REQUIRED FILINGS. As of the date hereof, the Company has made all
required filings under the Securities Act and Exchange Act, and, to the
Knowledge of the Company, all information contained in such filings is true and
correct in all material respects and does not contain any untrue information or
omit to state a material fact necessary to make any statements contained in such
filings not misleading in light of the circumstances under which they were made.
4.10. FULL DISCLOSURE. To the Knowledge of the Company, no information
contained in this Agreement, any other Transaction Document, the Financials or
any written statement furnished by or on behalf of the Company pursuant to the
terms of this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained herein
or therein not misleading in light of the circumstances under which they were
made.
4.11. ABSENCE OF CHANGES. For the period commencing on October 31, 2002 and
ending on the date of this Agreement: (a) the Company has not entered into any
transaction which was not in the ordinary course of business; (b) there has been
no materially adverse change in the condition (financial or otherwise),
business, property, assets or liabilities of the Company other than changes in
the ordinary course of business, none of which, individually or in the
aggregate, have had a Material Adverse Effect; (c) there has been no damage to,
destruction of or loss of physical property (whether or not covered by
insurance) which has had a Material Adverse Effect; (d) there has been no
resignation or termination of employment of any key officer, consultant or
employee of the Company, and the Company has no Knowledge of the impending
resignation or termination of employment of any such officer, consultant or
employee that, if consummated, would have a Material Adverse Effect; and (e)
there has not been any change, except in the ordinary course of business, in the
contingent obligations of the Company, by way of guaranty, endorsement,
indemnity, warranty or otherwise, that has had a Material Adverse Effect.
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ARTICLE V.
CONDITIONS PRECEDENT TO CLOSING
5.1. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE. The
obligation of the Purchaser to purchase the Purchased Securities pursuant to
SECTION 2.2 hereof at the Closing is subject to the condition that, on and as of
the Closing Date, (i) the Purchaser shall have received from the Company the
following items, each dated the Closing Date unless otherwise indicated, in form
and substance satisfactory to the Purchaser, or (ii) the following actions or
events shall have occurred, unless waived by the Purchaser.
(a) Resolutions of the stockholders, the Company's Board of Directors
and the Special Committee of the Company's Board of Directors, certified by the
Secretary or Assistant Secretary of the Company as of the Closing Date, to be
duly adopted and in full force and effect on such date, authorizing (i) the
consummation of each of the transactions contemplated by this Agreement and (ii)
officers to execute and deliver this Agreement and each other Transaction
Document to which it is a party.
(b) A copy of the Company's Articles of Incorporation and bylaws,
certified by the Secretary or Assistant Secretary of the Company as true and
correct as of the Closing Date.
(c) A copy of all third party consents and approvals, if any, that are
necessary for the consummation of the transactions contemplated hereby or that
are required in order to prevent a breach of or default under, a termination or
modification of, or acceleration of the terms of, any contract, agreement or
document required to be listed in the SEC Filings, in each case on terms and
conditions reasonably satisfactory to the Purchaser.
(d) No suit, action or other proceeding shall be pending against the
Company before any court or governmental regulatory body or authority in which
it is sought to restrain or prohibit the transactions contemplated hereby, or
that could reasonably be expected to have a Material Adverse Effect, and no
injunction, judgment, order, decree or ruling with respect thereto shall be in
effect.
(e) Since January 20, 2003:
(i) there shall have been no change or development that could
reasonably be expected to have a Material Adverse Effect; and
(ii) concurrently with the Closing, the Company's lender shall
have entered into an amendment to its loan agreement with the Company
to provide for an amortization of the Company's current indebtedness
to such lender over a period of not less than forty-one (41) months.
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(f) The Purchased Securities shall have been delivered to the
Purchaser.
(g) The Company shall have reimbursed the Purchaser for fees and
expenses incurred in connection with the preparation, execution and delivery of
the Transaction Documents and in connection with obtaining the funds necessary
to meet Purchaser's obligations hereunder, provided that such amount of
reimbursement does not exceed fifteen thousand dollars ($15,000) in the
aggregate.
5.2. CONDITIONS PRECEDENT TO COMPANY'S OBLIGATION TO CLOSE. The obligation
of the Company to issue and sell the Purchased Securities pursuant to SECTION
2.2 hereof at the Closing is subject to the condition that, on and as of the
Closing Date, (i) the Company shall have received from the Purchaser the
following items, each dated the Closing Date unless otherwise indicated, in form
and substance satisfactory to the Company, or (ii) the following actions or
events shall have occurred, unless waived by the Company.
(a) A certificate of a co-manager of the Purchaser attesting to the
due authorization of (i) the execution and delivery of the Transaction Documents
and (ii) the consummation of all transactions contemplated thereby.
(b) A copy of the Purchaser's Articles of Organization and its
Operating Agreement, certified by the Secretary or Assistant Secretary of the
Company as true and correct as of the Closing Date.
(c) No suit, action or other proceeding shall be pending against the
Purchaser before any court or governmental regulatory body or authority in which
it is sought to restrain or prohibit the transactions contemplated hereby, or
that could reasonably be expected to have a Material Adverse Effect, and no
injunction, judgment, order, decree or ruling with respect thereto shall be in
effect.
(d) The Company shall have obtained the consent and approval of its
Board of Directors and its shareholders to enter into and execute the
Transaction Documents and to engage in any and all transactions contemplated
therein.
(e) The Purchase Price shall have been delivered to the Company's bank
account.
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ARTICLE VI.
SECURITIES LAW MATTERS
6.1. LEGENDS.
(a) Each certificate representing the Purchased Securities shall bear
a legend substantially in the following form:
the shares represented by this certificate ARE EITHER OWNED BY A
PERSON OR PERSONS WHO MAY BE CONSIDERED AN AFFILIATE FOR PURPOSES OF
RULE 144 OF THE SECURITIES ACT OF 1933 (THE "ACT") OR have not been
registered under the Act. NO TRANSFER OF THESE SHARES OR ANY INTEREST
THEREIN MAY BE MADE EXCEPT PURSUANT TO RULE 144 OR AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, UNLESS THE ISSUER HAS RECEIVED
AN opinion of counsel SATISFACTORY TO IT THAT SUCH TRANSFER DOES NOT
REQUIRE REGISTRATION UNDER THE ACT.
6.2. TRANSFER OF RESTRICTED SECURITIES.
(a) Restricted Securities are transferable only pursuant to (i) public
offerings registered under the Securities Act, (ii) Rule 144 or Rule 144A of the
SEC (or any similar rule or rules then in force) if such rule is available and
(iii) subject to the conditions specified in subparagraph (b) below, any other
legally available means to transfer.
(b) In connection with the transfer of any Restricted Securities
(other than a transfer described in clause (i) or (ii) of subparagraph (a)
above), the holder thereof shall deliver written notice to the Company
describing in reasonable detail the transfer or proposed transfer, together with
an opinion of counsel which (to the Company's reasonable satisfaction) is
knowledgeable in securities law matters to the effect that such transfer of
Restricted Securities may be effected without registration of such Restricted
Securities under the Securities Act. In addition, if the holder of the
Restricted Securities delivers to the Company an opinion of counsel that no
subsequent transfer of such Restricted Securities shall require registration
under the Securities Act, the Company shall promptly upon such contemplated
transfer deliver new certificates or instruments, as the case may be, for such
Restricted Securities which do not bear the Securities Act legend set forth in
SECTION 6.1. If the Company is not required to deliver new certificate or
instruments, as the case may be, for such Restricted Securities not bearing such
legend, the holder thereof shall not transfer the same until the prospective
transferee has confirmed to the Company in writing its agreement to be bound by
the conditioned contained in this SECTION 6.2.
(c) Upon the request of a holder of Restricted Securities, the Company
shall promptly supply to such holder or such holder's prospective transferees
all information regarding the Company required to be delivered in connection
with a transfer pursuant to Rule 144 or 144A of the SEC.
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(d) If any Restricted Securities become eligible for sale pursuant to
Rule 144(k), the Company shall, upon the request of the holder of such
Restricted Securities, remove the legend set forth in SECTION 6.1 from the
certificates or instruments, as the case may be, representing such Restricted
Securities.
6.3. REGISTRATION RIGHTS. If the Company at any time proposes for any
reason to register any of its Common Stock under the Securities Act (other than
on Form S-4 or Form S-8 promulgated under the Securities Act or any successor
forms thereto or other than in connection with an exchange offer or offering
solely to the Company's stockholders), it shall promptly give written notice to
the Purchaser of its intention to so register the Common Stock. Within ten (10)
days after delivery of any such notice by the Company, the Purchaser may request
in writing to include in such registration the Purchased Securities held by the
Purchaser (which request shall specify the number of Purchased Securities
proposed to be included in such registration). Upon receipt of such Purchaser
request, the Company shall use its commercially reasonable efforts to include
all such requested Purchased Securities in such registration on the same terms
and conditions as the securities otherwise being sold in such registration;
PROVIDED, HOWEVER, that if the managing underwriter advises the Company that the
inclusion of such Purchased Securities proposed to be included in such
registration would interfere with the successful marketing (including pricing)
of the Common Stock proposed to be registered by the Company, then all shares of
Common Stock proposed to be registered by the Company shall be included in the
registration before any Purchased Securities are included in the registration.
The underwriter may then determine if any Purchased Securities will be included
in the registration; PROVIDED, HOWEVER, that the Company shall not include in
the registration any shares requested to be registered by third parties (such
shares, "THIRD PARTY SHARES") unless it includes in such registration a
percentage of Purchased Shares (expressed as a percentage of total registered
shares) that is equal to or greater than the percentage of Third Party Shares
(expressed as a percentage of total registered shares) included in such
registration. The Purchaser may exercise its rights under this SECTION 6.3 on an
unlimited number of occasions. The Company shall pay all expenses of any
registration effected under this SECTION 6.3.
ARTICLE VII.
EXPENSES
The Company agrees to reimburse the Purchaser for all fees and expenses
incurred in connection with the preparation, execution and delivery of the
Transaction Documents and in connection with obtaining the funds necessary to
meet Purchaser's obligations hereunder; PROVIDED, HOWEVER, that such fees and
expenses shall not exceed $15,000 in the aggregate; PROVIDED, FURTHER, that, in
the event the Closing is not consummated and no shares of Common Stock are
issued to the Purchaser in connection with this Agreement, the Company shall
have no obligation to reimburse the Purchaser for any attorneys' fees or
expenses, unless the Closing is not consummated as a result of (i) the Company's
failure to meet the conditions precedent set forth in SECTION 5.1(D) or SECTION
5.1(E) above, (ii) the failure of the Company's lender, concurrently with the
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Closing, to enter into an amendment to its loan agreement with the Company to
provide for an amortization of the Company's current indebtedness to such lender
over a period of not less than forty-one (41) months, (iii) the failure of the
Company's stockholders to approve the issuance and sale of the Purchased
Securities, (iv) the commencement of voluntary or involuntary bankruptcy
proceedings by or against the Company or (v) the occurrence of a Disaster Event
(as defined below) that has a Material Adverse Effect. For purposes of this
Agreement, a "DISASTER EVENT" shall mean any type of disaster that affects the
Company's corporate headquarters, including, but not limited to, fire, power
outage, flood, winter storm or similar act of God, or an act of terrorism, that
prevents such corporate headquarters from operating for any period of twenty
(20) consecutive Business Days between the date of this Agreement and the
Closing Date.
ARTICLE VIII.
LIMITATION ON CLAIMS OF PURCHASER; INDEMNIFICATION
8.1. LIMITATION.
(a) The Purchaser shall not bring any action or claim against the
Company for damages for a breach of any representation, warranty or covenant
contained herein by the Company until such damages exceed $25,000, at which time
the Purchaser may bring an action for all claims. Notwithstanding the foregoing
sentence, the Purchaser may bring a claim for fee and expense reimbursement
under SECTION 5.1(G) or under Article VII of this Agreement, subject to the
terms, limitations and restrictions set forth therein.
(b) The Company shall not bring any action or claims against the
Purchaser for damages for a breach of any representation, warranty or covenant
contained herein by the Purchaser until such damages exceed $25,000, at which
time the Company may bring an action for all claims.
8.2. INDEMNIFICATION BY THE COMPANY. The Company will indemnify and hold
harmless Purchaser and Purchaser's officers, directors, agents, employees,
subsidiaries, partners, managers, members, stockholders, attorneys, accountants
and controlling persons (collectively, the "PURCHASER INDEMNIFIED PERSONS"), and
will reimburse the Purchaser Indemnified Persons for any loss, liability, claim,
damage, expense (including costs of investigation and defense and reasonable
attorneys' fees and expenses) or diminution of value, whether or not involving a
third-party claim (collectively, "DAMAGES"), arising from or in connection with:
(a) any material breach of any representation or warranty, covenant or
agreement of the Company in this Agreement or in any other certificate,
document, writing or instrument delivered by the Company pursuant to this
Agreement, except to the extent that (i) Xxxxx Xxxxxxxx or Xxxx Xxxx had actual
knowledge of facts or circumstances that would make the representation or
warranty untrue, or (ii) the representation, warranty, covenant or agreement was
breached through the act or omission of either Xx. Xxxxxxxx or Xx. Xxxx;
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(b) any brokerage or finder's fees or commissions or similar payments
based upon any agreement or understanding made, or alleged to have been made, by
any person with the Company in connection with the Purchased Shares, unless such
agreement or understanding was made or alleged to have been made on behalf of
the Company by either Xx. Xxxxxxxx or Xx. Xxxx;
(c) any willful misconduct or gross negligence of the Company, other
than the willful misconduct or gross negligence of either Xx. Xxxxxxxx or Xx.
Xxxx; or
(d) any action by a shareholder of the Company relating to the
transaction contemplated by this Agreement.
8.3. INDEMNIFICATION BY THE PURCHASER. The Purchaser will indemnify and
hold harmless the Company and the Company's officers, directors, agents,
employees, subsidiaries, partners, stockholders, attorneys, accountants and
controlling persons, in all cases other than Xx. Xxxxxxxx and Xx. Xxxx
(collectively, the "COMPANY INDEMNIFIED PERSONS"), and will reimburse the
Company Indemnified Persons for any Damages arising from or in connection with
(a) any material breach of any representation or warranty, covenant or
agreement of the Purchaser in this Agreement or in any certificate, document,
writing or instrument delivered by the Purchaser pursuant to this Agreement; or
(b) any brokerage or finder's fees or commissions or similar payments
based upon any agreement or understanding made, or alleged to have been made by
any person with the Purchaser in connection with the Purchased Shares.
8.4. EXCULPATION. Any party from whom indemnification is sought in SECTION
8.2 and SECTION 8.3 of this Agreement shall not be liable to the extent that it
is finally judicially determined that such Damages resulted primarily from the
willful misconduct or gross negligence of the party seeking indemnification.
ARTICLE IX.
MISCELLANEOUS
9.1. NOTICES. Whenever it is provided herein that any notice, demand,
request, consent, approval, declaration or other communication shall or may be
given to or served upon any of the parties by another, or whenever any of the
parties desires to give or serve upon another any such communication with
respect to this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and either shall be
delivered in person with receipt acknowledged or by registered or certified
mail, return receipt requested, postage prepaid, or by telecopy and confirmed by
telecopy answerback addressed as follows:
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If to Purchaser:
Technology Investors, LLC
000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxx Xxxxxx
Xxxxxxx, Xxxxxx & Xxxxxx
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopy No.: (000) 000-0000
If to the Company:
Xxx Technologies, Inc.
00 XxXxxxxxxxx Xxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxx X. Xxxxx
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxxxx & Xxxxxx, L.L.P.
0000 Xxxxxxxx Xxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxx
Telecopy No.: (000) 000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, telecopied and confirmed by telecopy answerback, or
three (3) Business Days after the same shall have been deposited with the United
States mail.
9.2. BINDING EFFECT; BENEFITS. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties to this
Agreement and their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended or shall be construed to give any
person other than the parties to this Agreement or their respective successors
or assigns any legal or equitable right, remedy or claim under or in respect of
any agreement or any provision contained herein.
9.3. AMENDMENT. No amendment or waiver of any provision of this Agreement
or any other Transaction Document nor consent to any departure by the Company
therefrom, shall in any event be effective unless the same shall be in writing
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and signed by the Company and the Purchaser, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. No action taken pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action, of compliance with any
representations, warranties, covenants or agreements contained herein. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any preceding or succeeding breach
and no failure by either party to exercise any right or privilege hereunder
shall be deemed a waiver of such party's rights or privileges hereunder or shall
be deemed a waiver of such party's rights to exercise the same at any subsequent
time or times hereunder.
9.4. SUCCESSORS AND ASSIGNS; ASSIGNABILITY. All covenants contained herein
shall bind and inure to the benefit of the parties hereto and their respective
successors and assigns (including any subsequent holder of any of the Purchased
Securities or any Common Stock issuable upon exercise of the Purchased
Securities).
9.5. SECTION AND OTHER HEADINGS. The section and other headings contained
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
9.6. SEVERABILITY. In the event that any one or more of the provisions
contained in this Agreement shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision or provisions in every other respect and
the remaining provisions of this Agreement shall not be in any way impaired.
9.7. ENTIRE AGREEMENT. This Agreement and the agreements and documents
referred to herein contain the entire agreement and understanding between the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, whether written or oral, relating to such subject
matter in any way.
9.8. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
9.9. PUBLICITY. Neither the Purchaser nor the Company shall issue any press
release or make any public disclosure regarding the transactions contemplated
hereby unless such press release or public disclosure is approved by the other
party in advance. Notwithstanding the foregoing, each of the parties hereto may,
in documents required to be filed by it with the SEC or other regulatory bodies,
make such statements with respect to the transactions contemplated hereby as
each may be advised by counsel is legally necessary or advisable, and may make
such disclosure as it is advised by its counsel is required by law.
9.10. GOVERNING LAW. This Agreement shall be governed by, construed and
enforced in accordance with, the laws of the State of North Carolina without
regard to the principles thereof relating to conflict of laws. Service of
process on the parties in any action arising out of or relating to this
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Agreement shall be effective if mailed to the parties in accordance with SECTION
9.1 hereof. The parties hereto waive all right to trial by jury in any action or
proceeding to enforce or defend any rights under this Agreement.
9.11. NO STRICT CONSTRUCTION. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
* * * * *
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IN WITNESS WHEREOF, the Company and the Purchaser have executed this Stock
Purchase Agreement as of the day and year first above written.
XXX TECHNOLOGIES, INC.
By:
------------------------------------------
Name: Xxxxx X. Xxx
Its: President and Chief Executive Officer
TECHNOLOGY INVESTORS, LLC
By:
------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Its: Co-Manager
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SCHEDULE 1.0
SEC FILINGS
[attached]
