STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of August __, 1999 by and
between ION NETWORKS, INC., a Delaware corporation having its principal offices
at 00 Xxxxxxxx Xxxx, Xxxxxx, Xxx Xxxxxx 00000 (the "Company"), and each of the
parties set forth on the schedule (the "Schedule") attached hereto
(collectively, the "Buyers").
W I T N E S S E T H:
WHEREAS, the Company desires to issue and sell to the Buyers
shares of common stock, par value $.001 per share, of the Company (the "Common
Stock"); and
WHEREAS, the Buyers desire to purchase two million (2,000,000)
shares of Common Stock (the "Shares") in accordance with the allocation set
forth in the Schedule.
NOW THEREFORE, in consideration of the promises and mutual
covenants, agreements, representations and warranties herein contained, the
parties hereto agree as follows:
1. Sale and Purchase of Shares. Subject to the terms and
conditions of this Agreement, the Company hereby sells, assigns, transfers and
delivers to the Buyers, and each of the Buyers hereby purchases from the
Company, for and in consideration of the Purchase Price (as hereinafter
defined), the Shares in accordance with the allocation set forth on the
Schedule.
2. Purchase Price and Payment.
2.1. Subject to the terms and conditions of this Agreement,
the purchase price to be paid by the Buyers to the Company for and in
consideration of the sale to the Buyers of the Shares is an amount equal to
$9,500,000 (the "Purchase Price").
2.2. The Purchase Price shall be paid by the Buyers to the
Company at the Closing (as hereinafter defined) by wire transfer of immediately
available funds to an account designated by the Company to the Buyers.
3. Closing.
3.1. The sale and purchase of the Shares shall take place at
the offices of the Company on the date hereof or on such other date or at such
other location as the parties hereto shall mutually agree upon (hereinafter
referred to as the "Closing" or the "Closing Date").
3.2. At the Closing, the Company shall:
(a) sell, transfer, assign and deliver to the Buyers
the Shares;
(b) deliver to Xxxxxxx Capital Group LLC, the
representative of the Buyers (the "Representative"), (i) copies of the
certificate of incorporation, as amended, and the by-laws of the Company, each
as certified by a duly authorized officer of the Company, (ii) resolutions or
minutes of the board of directors of the Company authorizing this Agreement and
the transactions contemplated hereby, as certified by a duly authorized officer
of the Company, (iii) a certificate of good standing of the Company from the
Secretary of State of the State of Delaware bearing a recent date thereof and
(iv) certificates representing the Shares in the respective names of the Buyers
(or their respective nominees as indicated on the Schedule) and (v) and an
opinion of Xxxxxx Xxxxxx Flattau & Klimpl, LLP, counsel to the Company,
addressed to the Buyers with respect to the valid existence and good standing of
the Company, the due authorization, execution and delivery of this Agreement and
the issuance and sale of the Shares, and that the Shares, upon issuance and sale
to the Buyers, are duly authorized, validly issued, fully paid and
nonassessable.
4. Registration of Shares.
4.1. The Company shall use its best efforts to (i) file a
registration statement (the "Registration Statement"), within sixty (60) days of
the Closing Date, on Form S-3 or other applicable form, registering for resale
the Shares and (ii) cause the Registration Statement to be declared effective
under the Securities Act of 1933, as amended (the "Act") as soon thereafter as
reasonably practicable. The Company promptly shall provide Buyers with such
copies of the final Prospectus contained in the Registration Statement after it
becomes effective as they shall reasonably request. In addition, the Company
shall (a) use its best efforts to keep the Registration Statement effective for
a period ending on the earlier of (x) two (2) years from its effective date or
(y) when all such Shares can be sold without limitation or delay under Rule 144
and (b) file all reports and forms required to be filed by it under the
Securities Exchange Act of 1934, as amended ("Reports") on a timely basis so
long as Buyers own any Shares and shall provide the Representative copies
thereof when filed.
4.2. Notwithstanding anything contained herein to the
contrary, the Company shall be entitled to postpone the filing of the
Registration Statement otherwise required to be prepared and filed by it in
accordance with Section 4.1 or, in the event the Registration Statement has been
declared effective, without suspending such effectiveness, instruct the Buyers
(or any subsequent holders thereof) not to sell or distribute any Shares (a
"Delay") as long as the reason for non-disclosure continues, if the Company
would be required to disclose in the Registration Statement the existence of any
fact relating to a material business situation, transaction or negotiation, or
would be required to disclose information that the Company has not otherwise
made public, in each case, that the Company reasonably determines is in the best
interests of the Company not to disclose at such time, and unless and until the
holders furnish to the Company in writing information that may be required to
prepare the disclosure required by Items 507 and 508 of Regulation S-K
promulgated under the Act, with respect to such Buyer's Shares being sold under
the Registration Statement provided that, with respect to clauses (i) and (ii)
above, the Company shall only be entitled to a maximum of three (3) Delays, each
Delay not to exceed a period of thirty (30) days; and further provided, that no
period of Delay shall commence within 60 days of a previous Delay.
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4.3. Each of the Buyers shall (i) reasonably cooperate with
the Company in connection with the preparation and filing of the Registration
Statement and execute and deliver any agreements or instruments reasonably
requested by the Company or its counsel in connection therewith and (ii) upon
discovery that, or upon the happening of any event as a result of which, the
Registration Statement (or any prospectus included therein), as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, in the light of the circumstances under which they were made (as
determined by the Company or its counsel in its sole discretion), forthwith
discontinue its disposition of Shares pursuant to the Registration Statement,
until such time as the Buyers (or any holders) have received a supplemented or
amended prospectus from the Company relating thereto. The Company agrees to use
its best efforts to prepare any necessary amendments or supplements to the
Registration Statement as soon as reasonably practicable after the same becomes
necessary and to provide to the Representative and/or Buyers quantities of such
amendments or supplements reasonably sufficient for the distribution thereof.
4.4. The Company shall indemnify and hold harmless each of the
Buyers, the Representative and their respective officers, directors, employees,
members, agents, affiliates and control persons (each of the foregoing, a "Buyer
Indemnitee") who is or may be a party or is or may be threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative by reason of or arising
from any actual or alleged misrepresentation or misstatement of facts or
omission to represent or state any fact or omission to state a fact necessary to
make the facts stated under the circumstances not materially misleading, in the
Registration Statement or any amendment or supplement thereto or to the
prospectus incorporated therein from and against any claim, losses, liabilities,
costs and expenses (including attorney's fees, judgments, fines and amounts paid
in settlement) ("Loss") actually and reasonably incurred by any such Buyer
Indemnitee in connection with such claim, action, suit or proceeding or the
defense thereof, except to the extent such Loss is the direct result of a
misstatement or omission for which such Buyer Indemnitee is liable to the
Company under Section 5.10; provided, however, that the indemnification
contained in this Section 4.4 with respect to any preliminary prospectus shall
not inure to the benefit of any Buyer Indemnitee on account of any such Loss
arising from the sale of the Shares by such Buyer Indemnitee to any person if a
copy of the definitive prospectus shall not have been delivered or sent to such
person within the time required by the Act and the regulations thereunder, and
an untrue statement or alleged untrue statement or omission or alleged omission
of a material fact contained in such preliminary prospectus was corrected in the
definitive prospectus.
5. Representations and Warranties of the Buyers. Each of the
Buyers represents, warrants and covenants to the Company as to himself, herself
or itself, as follows:
5.1. The decision to purchase the Shares and the execution and
delivery of this Agreement by each of the Buyers, the performance by the Buyers
of their respective obligations hereunder and the consummation by the Buyers of
the transactions contemplated hereby have been
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duly authorized and no other proceedings on the part of the Buyers are
necessary. The person(s) executing this Agreement on behalf of the Buyers have
all right, power and authority to execute and deliver this Agreement on behalf
of the Buyers. This Agreement has been duly executed and delivered by the Buyers
and, assuming the due authorization, execution and delivery hereof by the
Company, will constitute the legal, valid and binding obligations of each of the
Buyers, enforceable against each of the Buyers in accordance with its terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and the availability of equitable remedies.
5.2. The execution and delivery of this Agreement and the
agreements and documents contemplated hereby by the Buyers and the consummation
of the transactions contemplated hereby do not and will not (a) with or without
the giving of notice or the passage of time or both, violate, conflict with,
result in the breach or termination of, constitute a default under, or result in
the right to accelerate or loss of rights under or the creation of any lien,
encumbrance or charge upon any assets or property of any of the Buyers, pursuant
to the terms or provisions of any contract, agreement, commitment, indenture,
mortgage, deed of trust, pledge, security agreement, note, lease, license,
covenant, understanding or other instrument or obligation to which any of the
Buyers is a party or by which any of the Buyers' properties or assets may be
bound or affected, or (b) violate any order, writ, injunction, judgment or
decree of any court, administrative agency or governmental body binding upon any
of the Buyers.
5.3. Each of the Buyers is aware of what constitutes an
Accredited Investor as that term is defined under Regulation D promulgated under
the Act (an "Accredited Investor"), and under the laws, if any, of each state
governing the Buyers, and each of the Buyers is an Accredited Investor for
purposes of Regulation D and the laws, if any, of the state governing the
Buyers. Each of the Buyers is able to bear the economic risks of this investment
and, consequently, without limiting the generality of the foregoing, is able to
hold the Shares for an indefinite period of time and has a sufficient net worth
to sustain a loss of its entire investment in the Company in the event such loss
should occur.
5.4. Each of the Buyers acknowledges that it is a
sophisticated investor, has such knowledge and experience in financial and
business matters in general and through its investment adviser, the
Representative, has full familiarity with the current business and future
business prospects of the Company and the financial and other affairs of the
Company and acknowledges that it has had access to and has received sufficient
written and oral information about the Company, including any and all such
information requested by the Buyers and including copies of all of the publicly
available information prepared by the Company in order to make an informed
decision as to the acquisition of the Shares by the Buyers, including without
limitation, the Annual Report of the Company on Form 10-KSB for the year ended
March 31, 1999. In addition, each of the Buyers acknowledges that it has had
access to the officers, directors and employees of the Company to discuss the
business, affairs and prospects of the Company and has had the opportunity to
obtain additional information necessary to evaluate the merits and the risks of
engaging in the transactions contemplated by this Agreement. Each of the Buyers
through its investment adviser, the Representative, has reached an independent
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decision with respect to the advisability of the sale of the Shares and, in
arriving at its decision, has considered both the value of the Shares as well as
the present condition and future prospects of the Company.
5.5. Each of the Buyers is acquiring the Shares for its own
account for investment and not with a view to or for resale in connection with
any distribution of the Shares. It has not offered or sold any portion of the
Shares and has no present intention of dividing the Shares with others or of
selling, distributing or otherwise disposing of any portion of the Shares either
currently or after the passage of a fixed or determinable period of time or upon
the occurrence or non-occurrence of any predetermined event or circumstance.
5.6. Each of the Buyers understands that the sale of the
Shares has not been registered under the Act in reliance upon an exemption
therefrom for non-public or limited offerings. Each of the Buyers understands
that the Shares must be held indefinitely unless the sale or other transfer
thereof is subsequently registered under the Act or an exemption from such
registration is available at that time.
5.7. No Buyer (i) is a "broker-dealer" or an "affiliate" of a
broker-dealer as such terms are defined under the Act or (ii) is acting in
concert with any other Buyer in connection with the transactions contemplated
hereby.
5.8. Any obligation or liability for taxes (state, federal or
otherwise) incurred by any of the Buyers in connection with this Agreement or
the transactions contemplated hereby shall be the responsibility of and be paid
for by the Buyers.
5.9. Each of the Buyers acknowledges that it has been advised
to consult with its own attorney regarding legal matters concerning the Company
and to consult with its tax advisor regarding the tax consequences of acquiring
the Shares.
5.10. Each of the Buyers agrees to indemnify and hold harmless
the Company and each officer, director, employee, agent or control person of the
Company, who is or may be a party or is or may be threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, to the extent by reason of or
arising from any misrepresentation or misstatement of material facts or omission
to state material facts necessary to make the facts stated, under the
circumstances, not materially misleading, made or omitted by such Buyer to the
Company in a writing provided to the Company expressly for the purpose of
inclusion in the Registration Statement or any amendment thereto, against
losses, liabilities and expenses for which the Company, or any officer, director
or control person of the Company has not otherwise been reimbursed (including
attorneys' fees, judgments, fines and amounts paid in settlement) actually and
reasonably incurred by the Company or such officer, director or control person
in connection with such action, suit or proceeding.
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5.11. The power of attorney executed and delivered to the
Representative by each of the Buyers, a copy of which powers of attorney have
been provided to the Company, is in full force and effect.
5.12. None of the Buyers has employed any broker or incurred
any liability for any brokerage fees in connection with the transactions
contemplated hereby.
5.13. Certificates for the Shares shall contain a restrictive
legend substantially in the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT@), OR ANY OTHER APPLICABLE SECURITIES LAWS AND
HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE
DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A
TRANSACTION THAT IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH
REGISTRATION REQUIREMENTS.
6. Representations and Warranties of the Company. The Company
represents and warrants to each of the Buyers as follows:
6.1. The Company has the authority to execute and deliver this
Agreement and perform all of its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement and the agreements and
documents contemplated hereby are valid and legally binding obligations of the
Company, enforceable against it in accordance with their respective terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and the availability of equitable remedies
6.2. The execution and delivery of this Agreement and the
agreements and documents contemplated hereby by the Company and the consummation
of the transactions contemplated hereby do not and will not (a) with or without
the giving of notice or the passage of time or both, violate, conflict with,
result in the breach or termination of, constitute a default under, or result in
the right to accelerate or loss of rights under or the creation of any lien,
encumbrance or charge upon any assets or property of the Company, pursuant to
the terms or provisions of any contract, agreement, commitment, indenture,
mortgage, deed of trust, pledge, security agreement,
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note, lease, license, covenant, understanding or other instrument or obligation
to which the Company is a party or by which the Company's properties or assets
may be bound or affected, or (b) violate any order, writ, injunction, judgment
or decree of any court, administrative agency or governmental body binding upon
the Company.
6.3. The Shares, when issued and delivered to the Buyers in
accordance with the terms of this Agreement, shall be duly authorized, validly
issued, fully-paid and nonassessable.
6.4. The authorized capital stock of the Company consists of
50,000,000 shares of Common Stock and 200,000 shares of preferred stock, par
value $10.00 per share ("Preferred Stock"). As of July 26, 1999, 10,961,859
shares of Common Stock and no shares of Preferred Stock were issued and
outstanding. The Company has not granted or issued any rights, options or
warrants to acquire, or securities convertible into or exchangeable for any
Common Stock or other capital stock of the Company or rights or agreements with
respect to any thereof (all of the foregoing, collectively, the "Rights"),
except for those Rights disclosed in the annual report on Form 10-KSB/A filed by
the Company for the fiscal year ended March 31, 1999 and/or in the preliminary
proxy statement filed by the Company for the 1999 annual meeting of the
Company's shareholders (the "Proxy Statement"). The Company has not granted or
issued any Rights since the date of the Proxy Statement.
6.5. The Company has timely filed all Reports within the last
two (2) years, and to the Company's knowledge, all such Reports (i) were
prepared substantially in accordance with the Act and the rules and regulations
thereunder and (ii) did not, at the time they were filed, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
6.6. Each of the Company's audited financial statements for
the last two (2) fiscal years (including any notes thereto) and all unaudited
financial statements delivered to the Representative were prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout such periods and fairly present the financial position of the Company
on the dates and for the periods referred to therein.
6.7. The Company presently intends to utilize the proceeds
from the sale of the Shares contemplated by this Agreement for general corporate
and working capital purposes.
6.8. No sales of Common Stock or other securities by the
Company within the last six (6) months would require integration under the Act
and Regulation D promulgated thereunder or would materially adversely affect the
sale of the Shares or the timely effectiveness of the Registration Statement
referred in Section 4.1.
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7. Survival of Representations, Warranties, Covenants and
Agreements. The parties covenant and agree that their respective
representations, warranties, covenants and agreements contained in this
Agreement shall survive the execution and delivery of this Agreement.
8. Notices. All notices and other communications which are
required or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered in person or sent by registered or
certified mail, return receipt requested, postage prepaid, or delivered via
facsimile to the parties hereto at the following addresses:
If to the Company: Ion Networks, Inc.
00 Xxxxxxxx Xxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxx
Facsimile No.: (000) 000-0000
If to the Buyers: c/o Zesiger Capital Group LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
or to such other address as any party hereto shall have specified by notice in
writing to the other party hereto. All such notices and communications shall be
deemed to have been received on the date of delivery thereof or the fifth
business day after the mailing thereof.
9. Expenses. Each of the parties hereto shall pay the fees and
expenses of its counsel, accountants and other experts and all other expenses
incurred by such party incident to the negotiation, preparation and execution of
this Agreement.
10. Miscellaneous.
10.1. Partial Invalidity. If it is found in a final judgment
of a court of competent jurisdiction (not subject to a further appeal) that any
term or provision of this Agreement is invalid or unenforceable, (a) the
remaining terms and provisions of this Agreement shall be unimpaired and shall
remain in full force and effect and (b) the invalid or unenforceable provision
or term of this Agreement shall be enforced to the greatest extent enforceable.
10.2. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument. This Agreement may
be executed via facsimile.
10.3. Successors and Assigns. The benefits of this Agreement
shall inure to the parties hereto, their respective successors and assigns and
to the indemnified parties hereunder and
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their successors and representatives, and the obligations and liabilities
assumed in this Agreement by the parties hereto shall be binding upon their
respective successors and assigns.
10.4. Governing Law. This Agreement and the legal relations
between the parties hereto shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York without giving effect to
principles of conflicts or choice of law thereof.
10.5. Headings. Headings of the Sections in this Agreement are
for reference purposes only and shall not be deemed to have any substantive
effect.
10.6. Entire Agreement; Amendments. This Agreement and any
documents contemplated hereby contain, and are intended as, a complete statement
of all the terms of the arrangements between the parties with respect to the
matters provided for, and supersede any and all prior agreements, arrangements
and understandings between the parties with respect to the matters provided for
herein. No alteration, waiver, amendment, change or supplement hereto shall be
binding or effective unless the same is set forth in writing, signed by the
parties hereto or a duly authorized representative thereof.
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement
on the day and year first above written.
ION NETWORKS, INC.
By:_____________________________________
Name: Xxxxxxx X. Xxxx
Title: President
ALZA CORPORATION RETIREMENT PLAN,
CITY OF MILFORD PENSION & RETIREMENT
FUND, NFIB CORPORATE ACCOUNT, PUBLIC
EMPLOYEE RETIREMENT SYSTEM OF IDAHO,
CITY OF STAMFORD FIREMEN'S PENSION
FUND, STATE OF OREGON PERS/ZCG, THE
XXXXXXX XXXXXX FOUNDATION, XXXX
XXXXXX FOUNDATION, ROANOKE COLLEGE,
XXXXXX FAMILY LLC, XXXXX XXXXXXX, XXXX
& XXXX XXXXXXXX JTWROS, THE XXXXXX
XXXXXXXX FAMILY TRUST, XXXX XXX X.
XXXXXXXX TRUST FOR SELF, HBL
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CHARITABLE UNITRUST, XXXXXX XXXXXXXX,
XXXXX XXXX, XXXXXX X. XXXXXXX, XXXXXX
CAPITAL, LLC, XXXXXXX X. XXXXX, XXXXXX
TRUST CO. OF THE BAHAMAS LTD. AS
TRUSTEE U/A/D 11/30/93, XXXXX XXXX
XXXXXXX, XXXXXXX X. XXXXX, XXXXX
FAMILY LLC, XXXXXX & XXXXX XXXXXXX
JTWROS, XXXXXX X. XXXXXXX, XXXXXX
XXXXXX XXXXXXX, XXXXXXX INVESTMENT
PARTNERS LP
By: Xxxxxxx Capital Group LLC
as agent and attorney-in-fact for each of
the persons named as Buyers on the Schedule
attached hereto
By:______________________________
Name: Xxxxxx X. Xxxxxxx
Title: President
---------------------------------------
Xxxxxx X. Xxxxxxx
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SCHEDULE
PURCHASER SHARE QTY TOTAL COST
--------- --------- ----------
Alza Corporation Retirement Plan 40,000 $ 190,000
City of Milford Pension & Retirement Fund 75,000 $ 356,250
NFIB Corporate Account 60,000 $ 285,000
Public Employee Retirement System of Idaho 500,000 $ 2,375,000
City of Stamford Firemen's Pension Fund 75,000 $ 356,250
State of Oregon PERS/ZCG 645,000 $ 3,063,750
The Xxxxxxx Xxxxxx Foundation 40,000 $ 190,000
Xxxx Xxxxxx Foundation 45,000 $ 213,750
Roanoke College 45,000 $ 213,750
Xxxxxx Family LLC 20,000 $ 95,000
Xxxxx Xxxxxxx 12,000 $ 57,000
Xxxx & Xxxx Xxxxxxxx JTWROS 10,000 $ 47,500
The Xxxxxx Xxxxxxxx Family Trust 15,000 $ 71,250
Xxxx Xxx X. Xxxxxxxx Trust for Self 15,000 $ 71,250
HBL Charitable Unitrust 15,000 $ 71,250
Xxxxxx Xxxxxxxx 40,000 $ 190,000
Xxxxx Xxxx 15,000 $ 71,250
Xxxxxx X. Xxxxxxx 12,000 $ 57,000
Xxxxxx Capital, LLC 13,000 $ 61,750
Xxxxxxx X. Xxxxx 50,000 $ 237,500
Xxxxxx Trust Co. of the Bahamas Ltd. as Trustee
U/A/D 11/30/93 35,000 $ 168,250
Xxxxx Xxxx Xxxxxxx 20,000 $ 95,000
Xxxxxxx X. Xxxxx 13,000 $ 61,750
Xxxxx Family LLC 85,000 $ 403,750
Xxxxxx & Xxxxx Xxxxxxx JTWROS 10,000 $ 47,500
Xxxxxx X. Xxxxxxx 50,000 $ 237,500
Xxxxxx Xxxxxx Xxxxxxx 25,000 $ 118,750
Xxxxxxx Investment Partners LP 20,000 $ 95,000
Total 2,000,000 $ 9,500,000
