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EXHIBIT 1
STOCK OPTION AGREEMENT
THE STOCK OPTION AGREEMENT (the "Agreement") is made and entered into
as of the 27th day of October, 1996, by and among E.P. Family Partners, Ltd., a
Colorado limited partnership ("EP"), Hay Foundation, Inc., a Florida not for
profit corporation ("Hay"); Tropical Time, Inc., a Florida corporation; and
Xxxxxx Xxx Xxxxxx ("Xxx Xxxxxx") (the foregoing entities and individuals are
hereinafter referred to collectively as the "Shareholders" and individually as
a "Shareholder"), and Ocean Reef Management, Inc., a Florida corporation (the
"Investor").
RECITALS
A. The Shareholders desire to grant an option to the Investor,
and the Investor desires to obtain an option to purchase from the Shareholders
an aggregate of 1,609,800 shares (the "Shares") of the common stock, par value
$_____ per share (the "Common Stock") of Xxx Xxxx Marketing , Inc., a Delaware
corporation ("Xxx Xxxx").
AGREEMENT
NOW, THEREFORE, in consideration of Investor's contemporaneous payment
to the Shareholders of an aggregate of $10.00, the premises and mutual covenants
set forth in this Agreement, and such other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Investor and each
Shareholder agree as follows:
ARTICLE I
OPTION
Section 1.1 Option to Purchase. Subject to the terms and
conditions of this Agreement, each of the Investors severally hereby grants to
the Investor the option ("Option") to purchase the Common Stock at the Exercise
Price (as defined in Section 1.4 hereof), as follows:
(a) from Hay Foundation - 113,000 shares;
(b) from Tropical Time, Inc. - 38,300 shares;
(c) from Xxxxxx Xxx Xxxxxx -- 1,311,700 shares
(d) from E.P. Family Partners - 146,800 shares
Section 1.2 Exercise of Option.
(a) Each of the Options may be exercised in whole or in
part at any time, and from time to time, during the period commencing on the
date hereof and ending on the six month anniversary hereof (the "Expiration
Date").
(b) Investor may exercise each Option by delivering to
each of the Shareholders prior to the Expiration Date written notice (the
"Option Notice") specifying the total number of Shares of Common Stock that it
will purchase pursuant to such exercise, together with a copy of the Option
Notice delivered to each other Shareholder. Subject to compliance with
subparagraph (a) above, the exercise of the Option shall be effective upon
receipt of such Option Notices by the Shareholders (the date of receipt of such
Option Notice being herein called the "Notice Date"). If the Option shall be
exercised in part the
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Shareholders shall notify the Investor on or before the 5th day subsequent to
the Notice Date, the identity of the Shareholder(s) who shall transfer the
Common Stock set forth in the Option Notice. Absent such notification, all
sales of Common Stock hereunder shall be on a pro rata basis.
Section 1.3 Closing of Exercise.
(a) The consummation of any transfer required pursuant to the
exercise of an Option created by this Agreement shall constitute the "Closing",
and the date and time of such Closing shall constitute the "Closing Date".
(b) The Closing shall take place at the principal offices of
Investor at 10:00 a.m. on the 10th day subsequent to the Notice Date unless the
parties agree to another date and place.
(c) At or prior to the closing, each Shareholder shall deliver to
Investor a certificate or certificates evidencing ownership of nor less than
that number of shares of Common Stock designated for purchase in the Option
Notice of exercise of such Investor's Option accompanied by a duly executed
stock power in power in favor of Investor covering the number of shares of
stock to be purchase upon such exercise.
(d) Shareholders hereby represent and warrant to Investor that the
shares of Common Stock acquired by Investor upon exercise of the Option shall
be acquired free and clear of any liens, encumbrances, security interests, or
claims of any type whatsoever (other than any legend on the stock certificates
that may be required by federal or state securities laws and a legend referring
to the provisions of the Voting Agreement and Irrevocable Proxy executed
concurrently herewith). At the Closing, each Shareholder shall deliver to
Investor a certificate addressed to Investor stating that as of the Closing
Date, such Shareholder has good, indefeasible and marketable title to the
Common Stock purchased by Investor upon exercise of the Option and the right to
sell, assign and transfer same to Investor free and clear of all security
interests, liens, pledges and encumbrances of any kind or character other than
restrictions on transfer under federal and state securities laws.
(e) Unless this Option has expired, this Option shall continue to
represent, following the exercise of this Option in part, the right to purchase
the number of shares, if any, with respect to which this Option shall not then
have been exercised.
Section 1.4 Exercise Price.
(a) The exercise price ("Exercise Price") for the shares of Common
Stock purchased upon exercise of an Option (either in whole or in part) shall
be $4.50 per share, subject to adjustment as provided in Subsection (b), below.
(b) Subject to any required action by the shareholders of the
Company, the number of Shares covered by each Option, as well as the exercise
price per share of Common Stock, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split or the payment of a stock dividend with respect to the
Common Stock or any other increase or decrease in the number of issued shares
of Common Stock effected without receipt of consideration by the Company.
Section 1.5 Method of Payment.
Payment for the Shares upon exercise of any Option shall be made in
cash or wire transfer.
Section 1.6 Restrictions on Transferability.
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(a) Shareholder shall not, without the written consent of Investor,
transfer, assign, pledge, hypothecate, sell or in any way alienate or grant any
interest in any of the 1,609,800 shares of Common Stock subject to this Option,
whether voluntarily or by operation of law, prior to the Expiration Date.
(b) Any purported transfer of any interest in the Common Stock
subject to any Option in violation of the provisions of this Agreement shall be
void and ineffectual, shall not operate to transfer any interest in or title to
the purported transferee, shall not affect Investor's right to purchase the
Common Stock or interest therein purported to be transferred shall remain
subject to the provisions of this Agreement.
Section 1.7 Legend. Shareholders shall promptly take all
appropriate action so that at all times prior to the Expiration Date, the
shares of Common Stock subject to each Option shall bear a legend to the effect
that such shares are subject to the provisions of this Agreement and may not be
sold, pledged, transferred, assigned, hypothecated, or otherwise alienated
except in compliance with the provisions hereof.
Section 1.8 Reorganization, Consolidation, Merger, etc. In case
the Company after the date hereof shall (a) effect a reorganization, (b)
consolidate with or merge with or into any other person (other than a
consolidation or merger in which the Company is the continuing corporation and
which does not result in any reclassification, capital reorganization or other
change of outstanding shares of Common Stock), or (c) transfer all or
substantially all of its properties or assets to any other person (other than a
sale/leaseback, mortgage or other financing transaction) under any plan or
arrangement contemplating the dissolution of the Company, then, in each such
case, the Investor, upon the exercise of the Option as provided in Section 1.2
hereof at any time after the consummation of such reorganization, consolidation
or merger or the effective date of such dissolution, as the case may be, shall
be entitled to receive (and the Company shall be entitled to deliver), in lieu
of the shares of Common Stock issuable upon such exercise prior to such
consummation or such effective date, the stock and other securities and
property (including cash) to which the Investor would have been entitled upon
such consummation or in connection with such dissolution, as the case may be,
if such holder had so exercised the Option.
ARTICLE II
REPRESENTATIONS OF SHAREHOLDERS
Section 2.1 Authority. Such Shareholder has the power and
authority to execute this Agreement and perform such Shareholder's obligations
hereunder. This Agreement has been duly executed and delivered by such
Shareholder and (assuming the due execution and delivery hereof by the Investor
and each of the other Shareholders) constitutes a valid and binding obligation
of such Shareholder enforceable against such Shareholder in accordance with its
terms, except to the extent that its enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally or by general equitable principles.
Section 2.2 Ownership and Delivery of Stock. Such Shareholder
owns all of the Stock to be sold to the Investor free and clear of any and all
pledges, security interests, liens, charges, proxies, calls or other
encumbrances of any nature whatsoever. Such Shareholder's delivery of a
certificate or certificates representing the Stock being purchased by the
Investor pursuant to this Agreement, against payment therefor pursuant to the
terms hereof, will transfer valid title to such Stock to the Investor, free and
clear of any and all pledges, security interests, liens, charges, proxies,
calls, subscriptions, agreements or commitments of any character (other than
those arising by or through the Investor), subject only to (i) restrictions
arising under applicable Federal and state securities laws, and (ii) the
additional restrictions
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and covenants arising under the Voting Agreement and Irrevocable Proxy
described in Section 5.2 hereof.
ARTICLE III
REPRESENTATIONS OF INVESTOR
The Investor hereby represents and warrants to the Corporation and
Shareholders as follows:
Section 3.1. Authority, Approval and Enforceability. This
Agreement has been duly executed and delivered by the Investor. Such Investor
has all requisite power and authority to execute and deliver this Agreement, to
consummate the transactions contemplated hereby, and to perform this
obligations hereunder. Assuming the due execution and delivery of this
Agreement by each of the Shareholders, this Agreement constitutes the legal,
valid and binding obligation of Investor, enforceable in accordance with their
respective terms, except as such enforcement may be limited by general
equitable principles or by applicable bankruptcy, insolvency, moratorium, or
similar laws and judicial decisions from time to time in effect which affect
creditors' rights generally.
Section 3.2 Access to Information. The Investor has been offered
the opportunity to ask questions of, and receive answers from, the Shareholders
and to obtain any additional information, to the extent that the Shareholders
possess such information or could have acquired it without unreasonable effort
or expense, necessary to verify the accuracy of the information with respect to
Xxx Xxxx, delivered to Investor and has in general had access to all
information such Investor has deemed material to an investment decision with
respect to the purchase of the Shares.
Section 3.3 Certain Risks. The Investor understands the
speculative nature of and risks involved in the proposed investment in Xxx
Xxxx, and all matters relating to the structure and the operations of Xxx Xxxx
have been discussed and explained to Investor's satisfaction.
Section 3.4 The Investor. The Investor is an "accredited
investor," as that term is defined in Rule 501(a) of Regulation D promulgated
under the Securities Act.
Section 3.5 Reliance on Representations. The Investor has
discussed with, and relied upon the advice of such Investor's counsel with
regard to, the meaning and legal consequences of such Shareholder's
representations and warranties herein and the considerations involved in making
an investment in the Corporation, and the Investor understands that the
Corporation and Shareholders are relying on the information set forth herein.
Section 3.6 Restrictions on Transfer. The Investor understands
that (i)the shares of Stock to be sold to the Investor pursuant to this
Agreement are "restricted securities" within the meaning of Rule 144 ("Rule
144") of the Securities Act of 1933, as amended (the "Securities Act"); (ii)the
sale of such securities has not been nor will it be registered under the
Securities Act; (iii)such securities must be held indefinitely and that no
transfer of such securities may be made by the Investor unless (A) the sale
of such securities has been registered under the Securities Act and any
applicable state securities laws, or (B)an exemption from registration is
available under applicable state securities laws and the Securities Act,
including in accordance with the terms and conditions of Rule 144; and (iv)in
any event, the exemption from registration under Rule 144 will not be available
unless such securities have been beneficially owned for at least two years.
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ARTICLE IV
COVENANTS
From and after the date of this Agreement and until the earlier of the
Closing and Expiration Date (if the Option Notice has not been theretofore
delivered).
Section 4.1 Access to Information. The Shareholders shall use
their best efforts to permit Investor and its authorized employees, agents,
accountants, legal counsel and other representatives to have reasonable access
to the books, records, employees, counsel, accountants, engineers and other
representatives of the Shareholders at all times during normal business hours
as reasonably requested by Investor for the purpose of conducting an
investigation of the Xxx Xxxx'x financial condition, corporate status,
operations, prospects, business and assets. The Shareholder shall make
available to Investor for examination and reproduction all documents and data
of every kind and character relating to the Xxx Xxxx in possession or control
of, or subject to reasonable access by, the Shareholder, including, without
limitation, all files, records, data and information relating to the assets
(whether stored in paper, magnetic or other storage media) and all agreements,
instruments, contracts, assignments, certificates, orders, and amendments
thereto.
Section 4.2 Best Efforts. Subject to the terms and conditions of
this Agreement, each party hereto shall use reasonable efforts to take or cause
to be taken all actions and do or cause to be done all things required under
applicable law in order to permit Investor to consummate the purchase of the
Shares pursuant hereto, including, without limitation, using their reasonable
efforts to obtain all authorizations, consents and approvals of any regulatory
authority or other Person which are required for or in connection with such
purchase.
ARTICLE V
ADDITIONAL AGREEMENT
Section 5.1 Confidentiality. The Investor shall, and shall
cause its or his Affiliates and their respective employees, agents,
accountants, legal counsel and other representatives and advisers to, hold in
strict confidence all, and not divulge or disclose any, information of any kind
made available to Investor pursuant to Section 4.1 or otherwise concerning the
transactions contemplated by this Agreement, Xxx Xxxx or its business;
provided, however, that the foregoing obligation of confidence shall not apply
to information that is or becomes generally available to the public other than
as a result of a disclosure by the Investor or any of his agents, accountants,
legal counsel or other representatives or advisers. This covenant shall
survive the Closing for a period of one (1) year.
Section 5.2 Voting Agreement. Contemporaneously herewith, each
of the Shareholders is executing and delivering to Investor a Voting Agreement
and Irrevocable Proxy with respect to the Shares of Common stock subject to
this Option Agreement.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Notices.
(a) Addresses. Any notices, requests, demands and other
communications required or permitted to be given hereunder must be in writing
and, except as otherwise specified in writing, will be deemed to have been duly
given when personally delivered, telexed
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or facsimile transmitted, or three days after deposit in the United States
mail, by certified mail, postage prepaid, return receipt requested, as follows.
The addresses of the Corporation, the Shareholders and the Investor, which
shall be considered to be their last known addresses unless subsequently
changed in accordance with the provisions of this Agreement, are as follows:
IF ANY SHAREHOLDER: c/o Xxxxxx Xxx Xxxxxx
00000 X.X. 00xx Xxxxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
IF THE INVESTOR: ________________________________________
________________________________________
________________________________________
________________________________________
Any party may change its address for the purposes of this Agreement by giving
notice of such change of address to the other parties in the manner herein
provided for giving notice.
(b) Form of Notice. Any notice or communication
hereunder must be in writing, and may be personally delivered or given by
registered or certified mail, return receipt requested, and if given by
registered or certified mail, shall be deemed to have been given and received
forty-eight hours after deposit in the United States mail of a registered or
certified letter, return receipt requested, containing such notice, properly
addressed, with postage prepaid; and if given otherwise than by registered or
certified mail, it shall be deemed to have been given when received by the
party to whom it is addressed at the time received.
(c) Failure to Notify of Changed Address. It shall be
the responsibility of each of the parties to this Agreement to notify all other
parties of their respective addresses and any changes thereof, and any
objections to the performance of any act required hereunder based upon a
failure to receive a notice mailed in conformity with the provisions of this
Agreement shall be meritless.
Section 6.2 Modification. This Agreement may only be amended,
terminated or modified by the written consent of all parties.
Section 6.3 Successors. This Agreement shall be binding upon the
parties hereto, their heirs, administrators, successors, executors and assigns,
and the parties hereto do covenant and agree that they themselves and their
respective heirs, executors, successors, administrators and assigns will
execute any and all instruments, releases, assignments and consents that may be
reasonably required of them to more fully execute the provisions of this
Agreement.
Section 6.4 Counterparts. This Agreement may be executed in
several counterparts, each of which shall serve as an original for all
purposes, but all copies of which shall constitute but one and the same
Agreement.
Section 6.5 Headings. All headings set forth in this Agreement
are intended for convenience only and shall not control or affect the meaning,
construction or effect of this Agreement or of any of the provisions thereof.
Section 6.6 Governing Law. This Agreement shall be governed by
and shall be construed and enforced in accordance with the laws of the State of
Florida.
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Section 6.7 Waiver. 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 subsequent breach by any party.
Section 6.8 Entire Agreement. This Agreement constitutes the
entire Agreement of the parties hereto with respect to the transactions
contemplated hereby, and it is hereby agreed that any prior oral or written
agreements concerning the sale or disposition of Stock shall be null and void.
Section 6.9 Severability. If any provision of this Agreement
shall be held to be illegal or unenforceable, such illegality or
unenforceability shall extend to that provision solely, and the remainder of
this Agreement shall be enforced as if such illegal or unenforceable provision
were not incorporated herein.
Section 6.10 Specific Performance. The right to own and vote the
Shares is hereby declared by the parties hereto to be a unique right, the loss
of which is not susceptible to monetary quantification. Consequently, the
parties hereto agree that an action for specific performance of the purchase
and sale obligations created by this Agreement is a proper remedy for the
breach of its provisions. If the parties to this Agreement are forced to
institute legal proceedings to enforce their rights in accordance with the
provisions of this Agreement, they shall be entitled to recover their
reasonable attorneys' fees and court costs incurred in enforcing such rights.
Section 6.11 Stock References. References to "Shares" herein
shall mean (i)any Share purchased or otherwise acquired by the Investor,
(ii)any equity securities issued or issuable directly or indirectly with
respect to the Share referred to in clause (i) above by way of stock dividend
or stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization, and (iii)any other shares of any
class or series of capital stock of the Corporation held by the Investor.
IN WITNESS WHEREOF, the parties to this Agreement have hereunto set
their names as of the date first above written.
OCEAN REEF MANAGEMENT, INC.
By: /s/ Xxxx Xxxxxxxxxx
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Xxxx Xxxxxxxxxx, President
E.P. FAMILY PARTNERS, LTD.
By: /s/ Xxxxxx Xxx Xxxxxx
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Xxxxxx Xxx Xxxxxx, General Partner
/s/ Xxxxxx Xxx Xxxxxx
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Xxxxxx Xxx Xxxxxx, Individually
HAY FOUNDATION, INC.
By: /s/ Xxxxxx Xxx Xxxxxx
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Xxxxxx Xxx Xxxxxx, President
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