STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of
July 7, 2000 by and among XxxxxX0XX.xxx, Inc., a Delaware corporation (the
"Company"), and Covol Technologies, Inc., a Delaware corporation (the
"Purchaser"). The Purchaser desires to make an investment in the Company on the
terms and conditions set forth in this Agreement.
In consideration of the mutual promises and covenants contained in this
Agreement, the parties to this Agreement agree as follows:
1. Purchase and Sale of Shares. Upon the terms and conditions contained
herein, and subject to the terms and conditions of the Letter Agreement executed
concurrently herewith (the "Letter Agreement") between the Company and the
Purchaser, the Company hereby sells to the Purchaser, and the Purchaser hereby
purchases from the Company, 750,000 shares (the "Shares") of Common Stock of the
Company, at a purchase price of $2.00 per share. The purchase of the Shares
shall be subject to the conditions set forth in the Letter Agreement and such
purchase shall be made in three stages in accordance with the dates set forth in
the Letter Agreement.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser as follows:
(a) Organization. The Company (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and (ii) has all requisite power and authority to carry on its
business, to own and hold its properties and assets, to enter into and perform
this Agreement.
(b) Authorization. The execution, delivery and performance by
the Company of this Agreement have been duly and validly authorized by the
Company's Board of Directors and no authorization or approval of the Company's
shareholders is required in connection therewith. This Agreement constitutes the
legal, valid and binding obligations of the Company and each is enforceable
against the Company in accordance with its respective terms, except as such
enforcement may be limited by bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors' rights generally.
(c) No Conflict. The execution, delivery and performance by
the Company of this Agreement: (i) will not conflict with, result in a breach of
or constitute a default under any contract, agreement, indenture, loan or credit
agreement, deed of trust, mortgage, lease, security agreement or other
arrangement to which the Company is a party or by which the Company or any of
its properties or assets is bound or affected; (ii) will not cause the Company
to violate or contravene any provision of its Certificate of Incorporation or
Bylaws; or (iii) require any authorization, consent, approval, permit, exemption
or other action by or notice to any court or administrative or governmental body
pursuant to the Certificate of Incorporation or Bylaws of the Company, any law,
statute, rule or regulation to which the Company is subject or any agreement,
instrument, order, judgment or decree to which the Company is subject.
(d) Common Stock. All of the shares of Common Stock issuable
under this Agreement have been duly authorized and reserved for issuance and,
upon payment thereon and issuance thereof in accordance with the terms of this
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable.
(e) Capitalization. The authorized capital stock of the
Company consists of 25,000,000 shares of Common Stock, par value $.001 per
share, and 5,000,000 shares of Preferred Stock,
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par value $.001 per share,, and the Company has no authority to issue any other
capital stock or security. As of the date hereof, a total of [5,957,500] shares
of Common Stock have been issued and such shares are duly authorized, validly
issued, fully paid and nonassessable. Except as provided in this Agreement and
the Company's Certificate of Incorporation, there are no outstanding preemptive,
conversion or other rights, subscriptions, options, warrants, calls, contracts,
demands, commitments, convertible or exchangeable securities or other
instruments, agreements or arrangements of any character or nature whatever
issued by or binding upon the Company for the purchase or acquisition of any
shares of its capital stock, other than (i) outstanding warrants to purchase an
aggregate of 200,000 shares of Common Stock, and (ii) options granted or to be
granted to employees and consultants of the Company under the Company's stock
option plan to be implemented.
(f) Full Disclosure. No statement by Company contained in this
Agreement or any other instrument or document given by Company in connection
with this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary, in light of the circumstances under which it
was made, in order to make the statements herein or therein not misleading.
3. Restrictions on Transfer and Purchaser Representations. In acquiring
the Shares, the Purchaser makes the following representations, warranties and
agreements:
(a) The Purchaser understands that the Shares will be issued
by the Company without registration under the Securities Act of 1933, as amended
("Act"), and without qualification and/or registration under applicable state
securities laws pursuant to specific exemptions from registration and/or
qualification contained in the Act and in applicable state securities laws. The
Purchaser understands that the foregoing exemptions depend upon, among other
things, the bona fide nature of his investment intent as expressed herein.
(b) The Purchaser agrees that none of the Shares, nor any
interest in the Shares, will be sold, transferred, or otherwise disposed of by
him without registration and/or qualification under the Act or applicable state
securities laws unless the Purchaser first demonstrates to the satisfaction of
the Company that specific exemptions from such registration and qualification
requirements are available with respect to such resale or disposition or
provides the Company an opinion of counsel satisfactory to the Company that a
contemplated transfer may be made without violation of the Act or applicable
state securities laws.
(c) The Purchaser represents and warrants to the Company the
following:
(i) The Purchaser is acquiring the Shares for
investment purposes only, for such Purchaser's own account, and not as
nominee or agent for any other person, and not with a view to, or for
resale in connection with, any distribution thereof within the meaning
of the Act.
(ii) The Purchaser has been furnished with and
carefully read the Company's Private Placement Memorandum dated July
15, 1999 and the update letter dated March 7, 2000.
(iii) The Purchaser has received all the information
he considers necessary or appropriate to evaluate the risks and merits
of an investment in the Shares, and has had an opportunity to discuss
the Company's business, management, financial affairs and prospects
with the Company's management.
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(iv) The Purchaser is an "accredited investor" within
the meaning of Rule 501 of Regulation D promulgated under the Act. All
information which such Purchaser has provided to the Company including,
but not limited to, the information contained in the investor
questionnaire delivered in connection herewith, is complete and
accurate and may be relied upon by the Company.
(v) The Purchaser is able to bear the economic risks
related to a purchase of the Shares. The Purchaser either has a
pre-existing personal or business relationship with the Company or any
of its officers, directors of controlling persons, or by reason of the
Purchaser's business or financial experience or the business or
financial experience of his professional advisor who is unaffiliated
with and who is not compensated by the Company or any affiliated or
selling agent of the Company, directly or indirectly, has the capacity
to protect his own interests in connection with the subject
transactions.
(d) The Purchaser acknowledges that the Shares to be issued to
him will contain a legend which prohibits an offer to transfer or a transfer of
all or any portion of the Shares unless the Shares are registered under the Act
or unless an exemption from registration is available with respect to such
resale or disposition.
4. Indemnification. The Purchaser hereby indemnifies the Company, its
affiliates and its agents and holds them harmless from and against any and all
loss, damage, liability or expense, including costs and reasonable attorneys'
fees, incurred by the Company (or its affiliates or agents) by reason of or in
connection with any misrepresentation made by Purchaser, any breach of any of
Purchaser's warranties, or Purchaser's failure to fulfill any of his covenants
or agreements under this Agreement. This Agreement and the representations and
warranties contained herein shall survive Purchaser's purchase of the Shares and
shall be binding upon Purchaser's heirs, executors, administrators, successors
and assigns.
5. Market Stand-off. The Purchaser (on behalf of himself, his
successors and assigns), agrees not to sell or otherwise transfer or dispose of
any Shares acquired under this Agreement for a period not to exceed one hundred
eighty (180) days following the effective date of a registration statement of
the Company filed under the Act in connection with an underwritten public
offering of the Company's Common Stock if so requested by the underwriter of
such offering. The Company may impose stock transfer instructions with respect
to the shares subject to the foregoing restriction until the end of such period.
6. Severability. In the event any provision of this Agreement shall
finally be determined to be unlawful, such provision shall be deemed to be
severed from this Agreement and every other provision of this Agreement shall
remain in full force and effect.
7. Attorneys' Fees. In the event any action in law or equity,
arbitration or other proceeding is brought for the enforcement of this Agreement
or in connection with any of the provisions of this Agreement, the prevailing
party or parties shall be entitled to its attorneys' fees and other costs
reasonably incurred in such action or proceeding.
8. Notices. Any notice to be given hereunder shall be given (except as
otherwise expressly set forth herein) by registered or certified mail, postage
prepaid, by cable, telex or facsimile, or may be delivered by hand or by
messenger and shall be deemed to have been received as follows: if given by
registered or certified mail, five business days after posting; if given by
cable, two business days after dispatch; if given by telex or facsimile, one
business day after dispatch; and if delivered by hand or by messenger and
receipted for by or on behalf of the party to whom the notice is directed, at
the time of
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such delivery. Any notice shall be sent to the address given in the signature
blocks of this Agreement or to such other address as the relevant party may
notify to the other.
9. Entire Agreement; Amendment. Other than the terms of the Letter
Agreement (which shall control and modify this Agreement), this Agreement and
the exhibits hereto contain all of the agreements between the parties with
respect to the matters contained herein and supersedes all prior written or oral
and all contemporaneous oral agreements or understandings between the parties
pertaining to any such matters. No provision of this Agreement may be amended or
added to except by an agreement in writing signed by the parties to this
Agreement.
10. Controlling Law. This Agreement shall be governed by, interpreted
under, and construed and enforced in accordance with the laws of the State of
California applicable to agreements made and to be performed wholly within the
State of California. In the event a judicial proceeding is necessary, the sole
forum for resolving disputes arising under or relating to this Agreement shall
be the applicable courts in Orange County, California, and all related appellate
courts, and the parties hereby consent to the jurisdiction of such courts, and
that venue shall be in Orange County, California.
11. Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original but all of which shall constitute one and the same
instrument. "COMPANY"
STYLE X0XX.XXX, INC., a Delaware corporation
By: /s/ Xxxxxxx Xxxxxxxxx
-------------------------------
Xxxxxxx Xxxxxxxxx,
CEO
Address: 0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
The foregoing Agreement is hereby accepted as of the date first above written.
"PURCHASER"
COVOL TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxx
----------------------
Xxxx Xxxxxx,
CEO
Address:
0000 Xxxxx Xxxxxxxx Xxxx
Xxxx, XX 00000
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