THIRD AMENDMENT TO STOCK PURCHASE AGREEMENT
THIRD
AMENDMENT TO STOCK PURCHASE AGREEMENT
This
Third Amendment to Stock Purchase Agreement (this “Amendment”),
dated
as of April 15, 2008, is made by and among Iakona, Inc. (“Iakona”),
Xxxxx
Xxxxx (“Xxxxx”,
and
together with Iakona, “Seller”),
All
Ad Acquisition Inc. (“Buyer”)
and
solely for purposes of Section 9.3 of the Purchase Agreement, Xxxxxx Capital
Partners LLC (“Xxxxxx
Capital”).
Each
of Seller, Buyer and Xxxxxx Capital are sometimes referred to herein
individually as a “Party”
and
collectively as the “Parties”.
WHEREAS,
the Parties are parties to a Stock Purchase Agreement dated as of November
14,
2007, as amended by the First Amendment, dated January 11, 2008 and the Second
Amendment, dated February 28, 2008 (collectively, the “Purchase
Agreement”),
pursuant to which Seller shall sell to Buyer, and Buyer shall purchase from
Seller, all of the issued and outstanding shares in the capital of Ad Authority,
Inc.;
WHEREAS,
Section 10.3 of the Purchase Agreement allows amendment of the Purchase
Agreement only by a written instrument duly executed by or on behalf of each
Party thereto; and
WHEREAS,
the Parties wish to amend the Purchase Agreement as set forth
herein.
NOW
THEREFORE, in consideration of the foregoing and the mutual promises, covenants
and agreements of the Parties, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Parties hereby
agree as follows:
1. Definitions.
Capitalized terms used but not defined herein shall have the meaning ascribed
to
them in the Purchase Agreement.
2. Purchase
Price.
Section
1.2 of the Purchase Agreement is hereby amended and restated in its entirety
to
read as follows:
“The
purchase price for the Shares shall be $8,000,000, payable as set forth in
Section 1.3 hereof, plus 6,400,000 shares of common stock of Morlex, Inc.,
a
Colorado corporation and the sole stockholder and parent company of Buyer
(“Parent”),
to be
delivered in accordance with Section 1.3 hereof (collectively, the “Purchase
Price”).”
3. Payment
of Purchase Price.
Section
1.3 of the Purchase Agreement is hereby amended and restated in its entirety
to
read as follows:
“At
the
Closing, Buyer will deliver (or cause to be delivered) to Seller:
(a) The
sum
of $3,500,000 in immediately available funds by wire transfer to an account
specified by Seller in writing to Buyer not later than three (3) Business Days
prior to Closing. For purposes of this Agreement, the term “Business
Day”
shall
mean any day, other than a Saturday or a Sunday, that is neither a legal holiday
nor a day on which banking institutions are generally authorized or required
by
law or regulation to close in The City of New York.
(b) A
promissory note in the principal amount of $4,500,000 issued by Parent in favor
of Seller along with a Security Agreement relative thereto, substantially in
the
form of that collectively attached as Exhibit
G
hereto.
(c) Instructions
to the Parent’s transfer agent to issue to the Seller one or more certificates
evidencing Seller’s ownership of 6,400,000 shares of common stock of Parent,
which Buyer represents and warrants to Seller: (i) represents 19.73%% of the
issued and outstanding common stock of Parent on a fully diluted basis as of
the
date hereof and (ii) assuming the accuracy of the representations and warranties
of Seller in this Agreement, has been duly authorized, validly issued, fully
paid and non-assessable and has been issued in full compliance with all
applicable federal and state securities laws.
(d) Cash
in
an amount sufficient to: (i) make the payment set forth in Section 5.14(a)
hereof and subsection (i) of Section 5.14(b) hereof, and (ii) reimburse Seller
for all amounts of Seller’s documented legal and accounting expenses incurred in
connection with the transactions contemplated by the Purchase Agreement and
raising the funds necessary to close such transactions that were not previously
reimbursed by Buyer (provided that Seller has, prior to the Closing, delivered
to Buyer evidence reasonably satisfactory to Buyer documenting all such expenses
previously reimbursed and to be reimbursed at the Closing as expenses incurred
in connection with the transactions contemplated by the Purchase Agreement
and
raising the funds necessary to close such transactions).”
4. Non-Competition
/ Non-Solicitation.
Section
5.9(d) of the Purchase Agreement is hereby amended in its entirety to read
as
follows:
“Notwithstanding
the foregoing, if Xxxxx Xxxxx’x employment relationship with the Company is
terminated by the Company without cause or by Xx. Xxxxx for Good Reason (as
such
terms are defined in the Employment Agreement), then the covenants of
Section
5.9(a)
and
Section
5.9(b)
hereof
shall only apply until the earlier of: (i) one year following the date of
termination of his employment and (ii) three years after the Closing Date.
Notwithstanding the foregoing, in the event that an Event of Default (as defined
in the Secured Promissory Note and the Security Agreement, as applicable) has
occurred and is continuing under that certain Secured Promissory Note or that
certain Security Agreement, each of even date herewith issued by Company and
Morlex Inc. is favor of Seller, then the covenants of Section
5.9(a)
and
Section
5.9(b)
hereof
shall immediately terminate and be of no further force and effect.”
5. Employee
Benefit Plans.
Section
5.10 of the Purchase Agreement is hereby amended in its entirety to read as
follows:
“Buyer
shall, or shall cause the Company to, provide for employees of the Company
who
are employed after the Closing Date to be eligible for participation in a common
stock incentive plan for up to 10% of Parent’s issued and outstanding common
stock.”
6. Employee
Matters.
Section
5.14 of the Purchase Agreement is hereby amended in its entirety to read as
follows:
“5.14
Employee
Matters.
(a) Cancellation
of Stock Options and Redemption of SARs.
On the
Closing Date, all stock options of the Company shall be cancelled for no
consideration. The Sellers hereby represent and warrant that the exercise price
of all such stock options is higher than the per share consideration to be
received by the Sellers pursuant to the transactions contemplated by this
Agreement. On the Closing Date, all stock appreciation rights of the Company
shall be cancelled, and each holder of such stock appreciation rights of the
Company, identified on Exhibit
E
hereto,
shall receive from the Company (i) an amount in cash (subject to any
required tax withholdings) set forth opposite such person’s name on Exhibit
E
hereto,
payable through the payroll of the Company and (ii) an unsecured promissory
note, substantially in the form of Exhibit H hereto, for the amount set forth
opposite such person’s name in Exhibit
E
hereto,
payable through the payroll of the company (subject to any required tax
withholdings).
(b) Consideration
for Non-Compete and Non-Solicitation Agreements.
At
Closing, in consideration for each person listed on Exhibit
C
hereto
entering into a Non-Compete and Non-Solicitation Agreement, the Buyer shall
deliver to such person (i) an amount in cash (without interest and subject
to
any required tax withholdings) set forth opposite such person’s name on
Exhibit
C
hereto,
payable through the payroll of the Company and (ii) an unsecured promissory
note, substantially in the form of Exhibit
H
hereto,
for the amount set forth opposite such person’s name in Exhibit
C hereto,
payable
through the payroll of the company (without interest and subject to any required
tax withholdings).
(c) Employee
Stock Grants.
At
Closing, or within 5 Business Days thereafter, the Buyer shall cause to be
delivered to each of the employees of the Company listed on Exhibit
I
hereto
the number of shares of common stock of Parent set forth next to such employee’s
name on Exhibit I hereto.”
7. Conditions
to Obligations of Buyer.
Sections 6.1 (l) is hereby deleted in its entirety and is replaced with the
following: “[Reserved.]”
8. Conditions
to Obligations of Seller.
Section
6.2 (e) is hereby deleted in its entirety and is replaced with the
following:
“(e) Registration
Rights Agreement.
Buyer
shall have delivered to Seller an executed Amended and Restated Registration
Rights Agreement, in the form attached hereto as Exhibit
F,
and
such agreement shall be in full force and effect. Buyer hereby represents and
warrants that the Amended and Restated Registration Rights Agreement has been
duly authorized by the Board of Directors of the Parent, and has been duly
executed by the Parent and the Holders (as defined in the Amended and Restated
Registration Rights Agreement).”
9. Counterparts.
Section
10.11 is hereby deleted in its entirety and is replaced with the
following:
“SECTION
10.11 Counterparts.
For the
convenience of the parties hereto, this Agreement and any amendments hereto
may
be executed in any number of counterparts and by facsimile or electronic mail,
each such counterpart being deemed to be an original instrument, and all such
counterparts together constituting the same agreement.”
10. Definitions.
Section
10.14 of the Purchase Agreement is hereby amended by adding the following
definition:
“Parent
………………………………………………………§1.2”
11. Exhibits.
The
Exhibits to the Purchase Agreement are hereby amended as follows:
(a) by
replacing Exhibit
C thereto
with Exhibit
A
to this
Amendment;
(b) by
replacing Exhibit
E
thereto
with Exhibit
B
to this
Amendment;
(b) Investor
Rights Agreement, in the form of Exhibit
F
to the
Purchase Agreement, shall be replaced with the Registration Rights Agreement,
substantially in the form of Exhibit
C
to this
Amendment, for all purposes of the Agreement;
(b) by
adding
Exhibit
G
thereto,
substantially in the form of Exhibit
D
to this
Amendment;
(c) by
adding
Exhibit
H
thereto,
substantially in the form of Exhibit
E
to this
Amendment; and
(d) by
adding
Exhibit
I
thereto,
substantially in the form of Exhibit
F
to this
Amendment.
12. Purchase
Agreement.
The
Purchase Agreement shall remain in full force and effect, as amended
hereby.
[Signature
page follows]
IN
WITNESS WHEREOF,
and
intending to be legally bound hereby, the Parties have caused this Amendment
to
be duly executed and delivered as of the date first above
written.
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By:
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/s/
Xxxxx Xxxxx
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Name:
Xxxxx Xxxxx
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Title:
President
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| /s/ Xxxxx Xxxxx | |
| XXXXX XXXXX, as an individual | |
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ALL
AD ACQUISITION INC.
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By:
|
/s/
Xxxxxxx X. Xxxxxx
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Name:
Xxxxxxx X. Xxxxxx
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|
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Title:
President
|
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For
purposes of Section 9.3 of the Agreement only:
|
|
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XXXXXX
CAPITAL PARTNERS LLC
|
|
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By:
|
/s/
Xxxxxxx Xxxx
|
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Name:
Xxxxxxx Xxxx
|
|
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Title:
Manager
|
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EXHIBIT
A
EXHIBIT
C
SPECIFIED
EMPLOYEES AND CONSIDERATION
Such
exhibit is on file with the Company’s records.
EXHIBIT
B
EXHIBIT
E
STOCK
APPRECIATION RIGHTS REDEMPTION
Such
exhibit is on file with the Company’s records.
EXHIBIT
C
EXHIBIT
F
REGISTRATION
RIGHTS AGREEMENT
See
Attached.
EXHIBIT
D
EXHIBIT
G
SECURED
PROMISSORY NOTE
See
Attached.
EXHIBIT
E
EXHIBIT
H
UNSECURED
PROMISSORY NOTE
See
Attached.
EXHIBIT
F
EXHIBIT
I
EMPLOYEE
STOCK ISSUANCES
Such
exhibit is on file with the Company’s records.
