STOCK PURCHASE AGREEMENT
THIS
STOCK PURCHASE AGREEMENT
(this
“Agreement”)
is
made and entered into this 5th
day of
December 2007 by and among Turnaround Partners, Inc., a Nevada corporation
having its principal place of business at 000 Xxxxx Xxxx Xxx Xxxx, Xxxxx 000,
Xxxxxxx, Xxxxx 00000 (the “Company”),
Xx.
Xxxxxxx X. Xxxxxxxx, an individual with his principal place of business at
000
Xxxxx Xxxx Xxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000 (“Xx.
Xxxxxxxx”)
and
Viewpoint Capital, LLC, a Nevada Limited Liability Company with its principal
place of business at 0000 Xxxxxxx Xxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxx 00000,
(“Buyer”,
and
together with the Company and Xx. Xxxxxxxx, the “Parties”,
and
each, a “Party”).
RECITALS:
WHEREAS,
the
Parties desire that Buyer shall acquire a controlling interest (the
“Controlling
Interest”)
of the
Company’s common stock, par value $0.001 per share (“Company
Common Stock”);
and
WHEREAS,
Buyer
is the beneficial holder of Four Million (4,000,000) shares of common stock
of
Asset Capital Group, Inc., a Nevada corporation (“ACGU
Shares”
and
the
“ACGU”,
respectively) with a value of Three Million Four Hundred Thousand Dollars
($3,400,000) based upon the closing price for ACGU common stock reported on
the
Pink Sheets LLC as of the date hereof; and
WHEREAS,
the
ACGU Shares are unrestricted, free-trading shares which trade on the Pink Sheets
LLC under the symbol “XXXX.XX”; and
WHEREAS,
in
order to effect such Controlling Interest, the Company shall issue to Buyer,
and
the Buyer shall receive from the Company, a share of convertible preferred
stock
of the Company convertible into the Controlling Interest in exchange for the
transfer by Buyer to the Company of the ACGU Shares on the terms and conditions
set forth herein below.
AGREEMENT:
NOW,
THEREFORE,
in
consideration of the foregoing recitals, the mutual promises hereinafter set
forth, and other good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the Parties agree as follows:
Article
I
1.01 Purchase
and Sale.
Subject
to the terms and conditions of this Agreement and in reliance upon the
representations, warranties, covenants and agreements contained herein, The
Company hereby agrees to issue to Buyer, and Buyer hereby agrees to receive
from
the Company, one (1) share of the Company’s Series E convertible preferred
stock, par value $0.01 per share (the “Series
E Share”)
which
such Series E Share shall convert into Three Million Four Hundred Thousand
Dollars ($3,400,000) worth of Company Common Stock in accordance with that
certain Certificate of Designation of Series E Preferred Stock in substantially
the form of Exhibit
A
attached
hereto (the “Certificate
of Designation”)
in
exchange for the transfer by Buyer to the Company of the ACGU Shares on the
date
hereof (the “Closing
Date”).
The
Series E Share shall have all of the powers, designations, preferences and
relative, participating, optional and other special rights and the Series E
Share shall convert into Company Common Stock in the manner set forth in the
Certificate of Designation.
1.02 Certificate
to be Delivered by Company.
Within
five (5) business days following the Closing Date, and subject to the terms
and
conditions of this Agreement, the Company hereby agrees to deliver a
Certificate, registered in Buyer’s name and representing the Series E Share
against the delivery by Buyer of the ACGU Shares. The Series E Share will be
delivered free of any claims or liens or encumbrances.
1.03 Certificate(s)
to be Delivered by Buyer.
Within
five (5) business days following the Closing Date, and subject to the terms
and
conditions of this Agreement, Buyer hereby agrees to deliver a Certificate(s),
registered in the name of the Company and representing the ACGU Shares against
delivery by the Company of the Series E Share. The ACGU Shares will be delivered
free of any claims or liens or encumbrances.
1.04 ACGU
Shares.
Buyer
acknowledges and agrees that as an inducement for the Company to enter into
this
Agreement and to issue the Series E Share to Buyer, the ACGU Shares shall be
unrestricted and free-trading on the Pink Sheets LLC and that the ACGU Shares
have been either registered under the Securities Act of 1933, as amended (the
“Securities
Act”)
and
the securities laws of all applicable States or, in the alternative, any
proposed transfer and sale of the ACGU Shares are not required to be registered
under the Securities Act by reason of an exemption provided by Section 4(1)
thereof and Rule 144 of the Rules and Regulations promulgated thereunder, as
the
case may be.
Article
II
2.01 Resignation
of Officers and Directors.
Effective as of the Closing Date, Xx. Xxxxxxxx shall resign as Vice Chairman
and
a Director, President and Chief Executive Officere; provided, however, that
Xx.
Xxxxxxxx shall continue to serve as President and Chief Executive Officer of
Corporate Strategies, Inc., a Texas corporation and wholly-owned subsidiary
of
the Company (“CSI”), with the understanding that the business of CSI will be
discontinued. In addition, Xx. Xxxxxxxx shall continue to receive the same
compensation as he has received through the Closing Date for his aforementioned
continued services to CSI through December 31, 2008, which such date may be
extended by mutual agreement by and among the Parties, and that the Company
shall pay any and all past amounts due and owing to Xx. Xxxxxxxx (and his
spouse, if applicable) by the Company on the Closing Date.
2.02 Relinquishment
of Non-Dilutive Rights.
The
Parties hereby acknowledge and agree that Xx. Xxxxxxxx (and his spouse)
currently hold, in the aggregate, Seven Hundred (700) shares of Series D
convertible preferred stock of the Company (“Series
D Preferred”),
which
such Series D Preferred contain certain non-dilutive rights in favor of Xx.
Xxxxxxxx and his spouse (the “Non-Dilutive
Rights”)
and
the Parties hereby further acknowledge and agree that Xx. Xxxxxxxx shall, on
the
Closing Date, relinquish such Non-Dilutive Rights effective June 30, 2009
(instead of the current date of December 31, 2010) in exchange for the Company
conveying all rights to the names “Turnaround Partners, Inc.”, “Corporate
Strategies, Inc.” and “Kipling Holdings, Inc.” as well as all title to all
furniture and equipment in the Houston office of the Company (as set forth
in
the Preamble hereof). The Parties further agree that the names of these
companies shall be changed within sixty (60) following the Closing Date. In
order to effect such relinquishment of the Non-Dilutive Rights, the Company
shall file, within five (5) business days following the Closing Date, an amended
and restated Certificate of Designation of Series D Preferred Stock
substantially in the form of Exhibit
B
attached
hereto.
2.03 Company
Financial Statements.
Buyer
hereby acknowledges and agrees that he has had an opportunity to review the
Company’s Quarterly Report on Form 10-QSB (the “Quarterly
Report”)
for
the period ended September 30, 2007 and that Buyer is fully aware of the
Company’s condition (financial and otherwise) as set forth in such Quarterly
Report. A copy of the Quarterly Report is also attached hereto as Exhibit
C.
2.04 Legal
Opinion of Buyer.
Within
five (5) business days of the Closing Date, Buyer shall provide to the Company
an opinion of counsel in a form satisfactory to the Company and the Company’s
counsel stating that the ACGU Shares have either been registered under the
Securities Act and the securities laws of all applicable States or, in the
alternative, any proposed transfer and sale of the ACGU Shares are not required
to be registered under the Securities Act by reason of an exemption provided
by
Section 4(1) thereof and Rule 144 of the Rules and Regulations promulgated
thereunder, as the case may be.
Article
III
The
Company hereby represents and warrants to Buyer as follows:
3.01
Authority.
This
Agreement has been duly executed and delivered by the Company, which has the
right, power, authority and legal capacity to enter into and perform under
this
Agreement and to consummate the transactions contemplated hereby. This Agreement
constitutes the legal, valid and binding obligation of the Company, enforceable
in accordance with its terms and conditions.
3.02 Delivery
of Stock.
The
Company will issue and deliver the Series E Share free and clear of any lien,
mortgage, adverse claim, charge, security interest, encumbrance, limitation,
contract, agreement, arrangement, understanding, instrument obligation, defect
or irregularity (“Liens”).
By
receipt of and payment for the ACGU Shares by Buyer, Buyer has acquired good
and
marketable title to the Series E Share free and clear of any Liens, including
restriction and limitations that may arise under community property or similar
laws, subject to such restriction on resale as may exist under applicable
security laws.
3.03 Organization.
The
Company is a corporation duly organized and validly existing under the laws
of
the State of Nevada currently trading on the Over-The-Counter Bulletin Board
under the trading symbol (“TRNP”).
3.04 Common
Stock.
The
authorized capital of the Company consists of Nine Hundred Million (900,000,000)
shares of Company Common Stock, of which there are approximately One Hundred
Eighteen Million Seven Hundred Thirty-Six Thousand Fifty-Eight (118,736,058)
shares issued and outstanding as of the date of this Agreement. The Company
also
has Two Million (2,000,000) shares of preferred stock authorized, of which
(a)
no shares of Series A preferred are issued and outstanding, (b) Six Thousand
Six
Hundred Sixty-Six (6,666) shares of Series B preferred are issued and
outstanding and (c) Seven Hundred (700) shares of Series D Preferred are issued
and outstanding. All shares of the Company’s capital stock are validly issued
and outstanding, fully paid and non-assessable and have not been issued in
violation of the preemptive rights of any other person to any shares of stock
of
the Company.
3.05 Brokerage
Accounts.
The
Company has not entered (directly or indirectly) into any contract with any
person, firm or corporation that would obligate the Company to pay any
commission, brokerage or “finder’s fee” in connection with the transactions
contemplated herein.
3.06 No
Defaults or Consents.
Neither
the execution nor delivery of this Agreement nor the consummation of the
transactions contemplated herein will: (i) conflict with or result in a breach,
default or violation of (a) any of the terms, provisions or conditions of any
contract or agreement, or (b) any judgment decree, order, governmental permit
certificate or license to which the Company is a party, or to which the Company
is subject or (iii) requires the Company to obtain the consent of any
non-governmental third party, except in each instance as would result in no
adverse effect on the consummation of the transactions provided for herein.
No
consent, action, approval or authorization of or registration declaration or
filing with, any governmental department, commission, agency or other
instrumentality is required in connection with the execution and delivery of
this Agreement to Buyer’s or the Company’s performance of the terms of this
Agreement.
Article
IV
Buyer
hereby represents and warrants to the Company as follows:
4.01 Organization.
The
Buyer is a limited liability company duly organized and validly existing under
the laws of the State of Nevada.
4.02 Authority.
This
Agreement has been duly executed and delivered by the Buyer, which has the
right, power, authority and legal capacity to enter into and perform under
this
Agreement and to consummate the transactions contemplated hereby. This Agreement
constitutes the legal, valid and binding obligation of the Buyer, enforceable
in
accordance with its terms and conditions. This Agreement has been executed
and
delivered by Buyer and constitutes a legal, valid and binding obligation of
Buyer and its affiliates, successors and assigns, enforceable in accordance
with
its terms.
4.03 No
Defaults or Consents.
Neither
the execution nor delivery of this Agreement nor the consummation of the
transactions contemplated herein will: (i) conflict with or result in a breach,
default or violation of (a) any of the terms, provisions or conditions of any
contract or agreement, or (b) any judgment decree, order, governmental permit
certificate or license to which Buyer is a party, or to which Buyer is subject
or (iii) requires Buyer to obtain the consent of any non-governmental third
party, except in each instance as would result in no adverse effect on the
consummation of the transactions provided for herein. No consent, action,
approval or authorization of or registration declaration or filing with, any
governmental department, commission, agency or other instrumentality is required
in connection with the execution and delivery of this Agreement to the Company’s
or Buyer’s performance of the terms of this Agreement.
4.04 Brokerage
Agreements.
Buyer
has not entered (directly or indirectly) into any contract with any person,
firm
or corporation that would obligate the Company to pay any commission, brokerage
or “finder’s fee” in connection with the transaction contemplated herein.
4.05 Suits.
There
is no suit, action, claim, investigation, or inquiry by any person or entity
or
any administrative agency or governmental body and no legal, administrative
or
arbitration proceeding pending or to Buyer’s knowledge threatened against Buyer
which has or will materially affect Buyer’s ability to consummate the
transactions contemplated herein.
4.06 Non-Affiliate
Status.
As of
the Closing Date, neither Buyer nor any member thereof is, or has been during
the previous three (3) months, an “affiliate” of ACGU as that term is defined in
paragraph (a)(1) of Rule 144.
Article
V
5.01 Expenses.
The
Company and Buyer shall each bear their own legal, accounting and other costs
and expenses incident to the negotiation and consummation of this Agreement
and
the transactions contemplated herein.
5.02 Notices.
All
notices and other communications hereunder to a Party hereto shall be deemed
to
be properly given if delivered personally or mailed to it by certified or
courier delivery mail (return receipt requested) to the address for each Party
provided in the Preamble to this Agreement or at such other address as may
have
been provided in writing subsequent to the date of this Agreement.
5.03 Headings.
The
descriptive headings are inserted for convenience only and do not constitute
a
part of the Agreement.
5.04 Prior
Agreements.
This
Agreement shall supersede all prior agreements, documents, Memorandums of
Understanding and other instruments with respect to the matters covered hereby.
5.05 Amendments.
This
Agreement may not be amended except by an instrument in writing signed on behalf
of each Party hereto.
5.06 Further
Actions.
Each
Party shall execute and deliver, without delay such other certificates,
agreements, and other documents and take such other actions as may reasonably
be
requested by the other Party in order to consummate or implement the
transactions contemplated by this Agreement.
5.07 Assignment. This
Agreement and all of the provisions hereof shall be binding upon and inure
to
the benefit of the Parties hereto and their respective successors and permitted
assigns. Except as provided in herein, nothing in this Agreement, express or
implied is intended to confer upon any person other than the Parties hereto
and
their respective successors and permitted assigns, any rights remedies or
obligations under or by reason of this Agreement.
5.08 Governing
Law.
The
terms and conditions of this Agreement shall be governed by and interpreted
in
accordance with the laws of the State of Texas not withstanding any conflict
of
law.
5.09 Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed an original, but all of which together shall constitute
one and the same instrument.
5.10 Invalidity. If
any
term or provision of this Agreement shall be held to be illegal or
unenforceable, in whole or in part, under any enactment or rule or law, the
term
or provisions shall to that extent be deemed not to form part of this Agreement
and the enforceability of the remainder of the Agreement shall not be affected.
[SIGNATURES
ON FOLLOWING PAGE]
IN
WITNESS WHEREOF, the
Parties hereto have duly executed this Agreement on the date first above
written.
|
By:
|
/s/
Xxxxxxx X. Xxxxxxxx
|
|
Name:
|
Xxxxxxx
X. Xxxxxxxx
|
|
Title:
|
President
and CEO
|
|
BUYER:
|
|
|
VIEWPOINT
CAPITAL, LLC
|
|
|
By:
|
/s/
E.G. Marchi
|
|
Name:
|
E.
G. Marchi
|
|
Title:
|
Manager
|
|
XXXXXXX
X. XXXXXXXX
|
|
| /s/ Xxxxxxx X. Xxxxxxxx | |
|
Name:
|
Xxxxxxx
X. Xxxxxxxx
|
EXHIBIT
A
CERTIFICATE
OF DESIGNATION
OF
THE
SERIES
E PREFERRED STOCK
(Par
Value $0.01 Per Share)
OF
The
undersigned, a duly authorized officer of TURNAROUND
PARTNERS, INC.,
a
Nevada corporation (f/k/a Emerge Capital Corp., the Delaware corporation and
hereinafter referred to as the “Company”),
in
accordance with the provisions of Section 78.390
of
the Nevada Revised Statutes,
DOES
HEREBY CERTIFY
that the
following resolution was duly adopted by the Board of Directors of the Company
(the “Board”)
by
unanimous written consent pursuant to Section 78.315
of
the Nevada Revised Statutes on
or
about December 5, 2007:
WHEREAS,
that
effective December 5, 2007, the Board approved the designation of Series E
convertible preferred stock, par value of $0.01 (“Series
E Preferred Stock”),
to
consist of One (1) share; and
WHEREAS,
on
December 5, 2007, the Company entered into that certain Stock Purchase Agreement
with the Buyer named therein (the “Investor”)
and
Xx. Xxxxxxx X. Xxxxxxxx whereby the Company shall issue one (1) share of Series
E Preferred Stock to the Investor in exchange for the transfer by the Investor
to the Company of Four Million (4,000,000) shares of Asset Capital Group, Inc.,
a Nevada corporation, with a fair market value of Three Million Four Hundred
Thousand Dollars ($3,400,000); and
WHEREAS,
no
shares of Series E Preferred Stock have been issued and the Board has determined
that it is in the best interests of the Company to create the powers,
designations, preferences and relative, participating, optional and other
special rights for the Series E Preferred Stock set forth herein.
RESOLVED
that the
Series E Preferred Stock shall have the following powers, designations,
preferences and relative, participating, optional and other special
rights:
DESIGNATION
AND RANK
Designation.
This resolution shall provide for a single series of preferred stock, the
designation of which shall be “Series E Preferred Stock”, par value of $0.01 per
share. The number of authorized shares constituting the Series E Preferred
Stock
is One (1) share. The Series E Preferred Stock shall have no liquidation
preference as set forth in Section 3.1 below.
Rank.
With respect to the payment of dividends and other distributions on the capital
stock of the Company, including the distribution of the assets of the Company
upon liquidation, the Series E Preferred Stock shall rank pari passu with the
Common Stock on an “as converted” basis, junior to all previously authorized
issued series of preferred stock and senior to all other series of preferred
stock.
DIVIDEND
RIGHTS
Dividends
or Distributions.
The Investor shall be entitled to receive dividends or distributions on his
share of Series E Preferred Stock on an “as converted” basis as provided in
Section 4 hereof when and if dividends are declared on the Common Stock by
the
Board. Dividends shall be paid in cash or property, as determined by the Board.
LIQUIDATION
RIGHTS
Liquidation
Preference.
The Series E Preferred Stock shall have no liquidation
preference.
CONVERSION
RIGHTS
Subject
to the limitations set forth herein below, the Investor’s share of Series E
Preferred Stock shall be convertible (the “Conversion
Rights”),
at the option of the Investor at any time and from time to time up to January
30, 2008, into that number of shares of Common Stock equal to Three Million
Four
Hundred Thousand Dollars ($3,400,000) based on the closing price of the Common
Stock on the trading date immediately preceding such date of conversion
(“Conversion
Shares”).
The shares of Common Stock received upon conversion shall be fully paid and
non-assessable shares of Common Stock.
Adjustments.
The Conversion Rights of the Series E Preferred Stock as described in Section
4.1 above shall be adjusted from time to time as follows:
In
the event of any reclassification of the Common Stock or recapitalization
involving Common Stock (including a subdivision, or combination of shares or
any
other event described in this Section 4.2) the holder of Series E Preferred
Stock shall thereafter be entitled to receive, and provision shall be made
therefore in any agreement relating to the reclassification or recapitalization,
upon conversion of the Series E Preferred Stock, the kind and number of shares
of Common Stock or other securities or property (including cash) to which such
holder of Series E Preferred Stock would have been entitled if he had held
the
number of shares of Common Stock into which the Series E Preferred Stock was
convertible immediately prior to such reclassification or recapitalization;
and
in any such case appropriate adjustment shall be made in the application of
the
provisions herein set forth with respect to the rights and interests thereafter
of the holder of the Series E Preferred Stock, to the end that the provisions
set forth herein shall thereafter be applicable, as nearly as reasonably may
be,
in relation to any shares, other securities, or property thereafter receivable
upon conversion of the Series E Preferred Stock. An adjustment made pursuant
to
this subparagraph (a) shall become effective at the time at which such
reclassification or recapitalization becomes
effective.
In
the event the Company shall declare a distribution payable in securities of
other entities or persons, evidences of indebtedness issued by the Company
or
other entities or persons, assets (excluding cash dividends) or options or
rights not referred to in Section 4.2(a) above, the holder of the Series E
Preferred Stock shall be entitled to a proportionate share of any such
distribution as though he was the holder of the number of shares of Common
Stock
of the Company into which his shares of Series E Preferred Stock are convertible
as of the record date fixed for the determination of the holders of shares
of
Common Stock of the Company entitled to receive such distribution or if no
such
record date is fixed, as of the date such distribution is
made.
Procedures
for Conversion.
In
order to exercise the Conversion Rights pursuant to Section 4.1 above, the
Investor shall deliver an irrevocable written notice of such exercise to the
Company at its principal office. The Investor shall, upon the conversion of
Series E Preferred Stock in accordance with this Section 4, surrender the
certificate representing such share of Series E Preferred Stock to the Company,
at its principal office, and specify the name or names in which the Investor
wishes the certificate or certificates for shares of Common Stock to be issued.
In case the Investor shall specify a name or names other than that of the
Investor, such notice shall be accompanied by payment of all transfer taxes
(if
transfer is to a person or entity other than the holder thereof) payable upon
the issuance of shares of Common Stock in such name or names. As promptly as
practicable, and, if applicable, after payment of all transfer taxes (if
transfer is to a person or entity other than the holder thereof), the Company
shall deliver or cause to be delivered certificates representing the number
of
validly issued, fully paid and non-assessable shares of Common Stock to which
the Investor shall be entitled. Such conversion, to the extent permitted by
law,
shall be deemed to have been effected as of the date of receipt by the Company
of any notice of conversion pursuant to this Section 4.3(a), upon the occurrence
of any event specified therein. Upon conversion of the share of Series E
Preferred Stock, such share shall cease to constitute a share of Series E
Preferred Stock and shall represent only a right to receive shares of Common
Stock into which it has been converted.
In
connection with the conversion of the share of Series E Preferred Stock, no
fractions of shares of Common Stock shall be issued, but the Company shall
pay
cash in lieu of such fractional interest in an amount equal to the product
such
fractional interest multiplied by the Reported Last Price of the Common Stock.
“Reported Last Price” means the
reported price, regular way, or, in case no sale takes place on such day, the
average of the reported closing bid and asked prices, regular way, of the Common
Stock as reported on the National Market System of the National Association
of
Securities Dealers, Inc. Automated Quotation System
(“NASDAQ”) or the Over-the-Counter
Bulletin Board (“OTCBB”), as the case
may be; or, if the Common Stock is so not quoted, the average of the closing
bid
and asked prices on such day as reported by NASDAQ or OTCBB, as the case may
be;
or, if bid and asked prices for the Common Stock on each such day shall not
have
been so reported, the average of the bid and asked prices for such day as
furnished by any New York Stock Exchange member firm regularly making a market
in the Common Stock selected for such purpose by the Company and if no such
quotations are available, the fair market value of a share of the Common Stock,
as determined by any New York Stock Exchange member firm regularly making a
market in the Common Stock selected for such purpose by the Company.
After
the effectiveness of the Reverse Split, the Company shall at all times reserve
and keep available out of its authorized Common Stock the full number of shares
of Common Stock of the Company issuable upon the conversion of the share of
Series E Preferred Stock. In the event that the Company does not have a
sufficient number of shares of authorized but unissued Common Stock necessary
to
satisfy the full conversion of share of Series E Preferred Stock, then the
Company shall call and hold a meeting of the stockholders within forty-five
(45)
days of such occurrence for the sole purpose of increasing the number of
authorized shares of Common Stock. The Board shall recommend to stockholders
a
vote in favor of such proposal and shall vote all shares held by them, in proxy
or otherwise, in favor of such proposal. This remedy is not intended to limit
the remedies available to the holder of the Series E Preferred Stock, but is
intended to be in addition to any other remedies, whether in contract, at law
or
in equity.
Notices
of Record Date.
In the event that the Company shall propose at any time: (i) to declare any
dividend or distribution upon any class or series of capital stock, whether
in
cash, property, stock or other securities; (ii) to effect any reclassification
or recapitalization of its Common Stock outstanding involving a change in the
Common Stock; or (iii) to merge or consolidate with or into any other
corporation, or to sell, lease or convey all or substantially all of its
property or business, or to liquidate, dissolve or wind up; then, in connection
with each such event, the Company shall mail to the holder of Series E Preferred
Stock:
at
least twenty (20) days’ prior written notice of the date on which a record shall
be taken for such dividend or distribution (and specifying the date on which
the
holders of the affected class or series of capital stock shall be entitled
thereto) or for determining the rights to vote, if any, in respect of the
matters referred to in clauses (ii) and (iii) in Section 4.4 above;
and
in
the case of the matters referred to in Section 4.4 (ii) and (iii) above, written
notice of such impending transaction not later than twenty (20) days prior
to
the stockholders’ meeting called to approve such transaction, or twenty (20)
days prior to the closing of such transaction, whichever is earlier, and shall
also notify such holder in writing of the final approval of such transaction.
The first of such notices shall describe the material terms and conditions
of
the impending transaction (and specify the date on which the holders of shares
of Common Stock shall be entitled to exchange their Common Stock for securities
or other property deliverable upon the occurrence of such event) and the Company
shall thereafter give such holders prompt notice of any material changes. The
transaction shall in no event take place sooner than twenty (20) days after
the Company has given the first notice provided for herein or sooner than ten
(10) days after the Company has given notice of any material changes provided
for herein.
VOTING
RIGHTS
General.
Except as otherwise provided herein or required by law, the holder of Series
E
Preferred Stock, on an “as converted” basis as of the time a vote is taken, and
the holders of Common Stock shall vote together and not as separate
classes.
Preferred
Stock.
The Investor holding one (1) share of Series E Preferred Stock shall be entitled
to cast a number of votes equal to Three Billion Four Hundrend Million
(3,400,000,000) shares of Common Stock on all matters submitted to the
stockholders of the Company for approval. The Investor holding one (1) share
of
Series E Preferred Stock shall be entitled to vote on all matters on which
the
Common Stock shall be entitled to vote. The Investor holding one (1) share
of
Series E Preferred Stock shall be entitled to notice of any stockholders meeting
in accordance with the Bylaws of the Company.
MISCELLANEOUS
Headings
of Subdivisions.
The headings of the various Sections hereof are for convenience of reference
only and shall not affect the interpretation of any of the provisions
hereof.
Severability
of Provisions.
If any right, preference or limitation of the Series E Preferred Stock set
forth
herein (as this resolution may be amended from time to time) is invalid,
unlawful or incapable of being enforced by reason of any rule of law or public
policy, all other rights, preferences and limitations set forth in this
resolution (as so amended) which can be given effect without the invalid,
unlawful or unenforceable right, preference or limitation shall, nevertheless,
remain in full force and effect, and no right, preference or limitation herein
set forth shall be deemed dependent upon any other such right, preference or
limitation unless so expressed herein.
Stock
Transfer Taxes.
The Corporation shall pay any and all stock transfer and documentary stamp
taxes
that may be payable in respect of any issuance or delivery of the share of
Series E Preferred Stock or shares of Common Stock or other securities issued
on
account of Series E Preferred Stock pursuant hereto or certificates representing
such shares or securities.
Transfer
Agent.
The Corporation may appoint, and from time to time discharge and/or replace,
a
transfer agent of the Series E Preferred Stock. Upon any such appointment or
discharge of a transfer agent, the Corporation shall send notice thereof by
first-class mail, postage prepaid, to the holder of record of Series E Preferred
Stock.
Transferability.
Subject to any transfer restriction agreements that my be entered into by the
holder of Series E Preferred Stock, the Series E Preferred Stock shall be
transferable by the holder, provided that such transfer is made in compliance
with applicable federal and state securities laws.
WITNESS
WHEREOF,
the Company has caused this amended and restated Certificate of Designation
to
be signed, under penalties of perjury, by W. Xxxxx Xxxxxxx, its Chief Financial
Officer.
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Dated: December
5, 2007
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||
|
By:
|
/s/
W. Xxxxx Xxxxxxx
|
|
|
Name:
|
W.
Xxxxx Xxxxxxx
|
|
|
Title:
|
Chief
Financial Officer
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EXHIBIT
B
AMENDED
AND RESTATED
CERTIFICATE
OF DESIGNATION
OF
THE
SERIES
D PREFERRED STOCK
(Par
Value $0.01 Per Share)
OF
The
undersigned, a duly authorized officer of TURNAROUND
PARTNERS, INC.,
a
Nevada corporation (f/k/a Emerge Capital Corp., the Delaware corporation and
hereinafter referred to as the “Company”),
in
accordance with the provisions of Section 78.390
of
the Nevada Revised Statutes,
DOES
HEREBY CERTIFY
that the
following resolution was duly adopted by the Board of Directors of the Company
(the “Board”)
by
unanimous written consent pursuant to Section 78.315
of
the Nevada Revised Statutes on
or
about December 5, 2007:
WHEREAS,
that
effective September 25, 2006, the Board approved the designation of Series
D
convertible preferred stock, par value of $0.01 (the “Series
D Preferred Stock”),
to
consist of up to One Hundred Thousand (100,000) shares; and
WHEREAS,
pursuant to that certain Purchase Agreement, originally dated September 30,
2006
(the “Original
Agreement”)
and as
amended on October 5, 2006 and further amended as of
December 30, 2006 (the “Second
Amendment”),
Xx.
Xxxxxxx X. Xxxxxxxx (the “Seller”)
sold
to the Company, and the Company purchased from the Seller, one hundred percent
(100%) of the total issued and outstanding capital stock of Kipling Holdings,
Inc., a Delaware corporation (“Kipling”),
in
exchange for (a) the Company’s assumption of all of the liabilities of Kipling,
(b) the Company expanding the Existing Anti-Dilution Rights (as such term is
defined in the Original Agreement) in favor of the Seller and (c) a nominal
cash
amount equal to the direct costs incurred by the Seller in connection with
the
Original Agreement, on the terms and conditions set forth therein;
and
WHEREAS,
pursuant to the Original Agreement, Seller had been entitled to receive and
beneficially own, directly and indirectly through his spouse (together, the
“Holders”),
approximately 93,334 shares of Series D Preferred Stock (which would be
equivalent to 933.4 shares of Series D Preferred Stock under the terms of this
newly-revised Certificate of Designation); and
WHEREAS,
in
connection with the Second Amendment, the Holders were then entitled to receive
and beneficially own, and did receive and now beneficially own as of December
31, 2006, a reduced amount equal to Seven Hundred (700) shares of Series D
Preferred Stock, which such beneficial ownership constitutes One Hundred Percent
(100%) of the total issued and outstanding shares of Series D Preferred Stock;
and
WHEREAS,
on
December 5, 2007, the Company entered into that certain Stock Purchase
Agreement, by and among the Buyer named therein and the Seller pursuant to
which
the Holders agreed, among other things, to provide for the relinquishment of
certain anti-dilution rights on June 30, 2009 instead of December 31, 2010
(as
set forth in Section 4.1 hereof) and to amend and restate this Certificate
of
Designation in order to reflect such relinquishment; and
WHEREAS,
Seven
Hundred (700) shares of Series D Preferred Stock have been issued to the Holders
and the Board has determined that it is in the best interests of the Company
to
amend and restate the powers, designations, preferences and relative,
participating, optional and other special rights for the Series D Preferred
Stock on the terms set forth herein.
RESOLVED
that the
Series D Preferred Stock shall have the following amended and restated powers,
designations, preferences and relative, participating, optional and other
special rights:
DESIGNATION
AND RANK
Designation.
This resolution shall provide for a single series of preferred stock, the
designation of which shall be “Series D Preferred Stock”, par value of $0.01 per
share. The number of authorized shares constituting the Series D Preferred
Stock
is One Hundred Thousand (100,000). The Series D Preferred Stock will have no
liquidation preference as set forth in Section 3.1 below.
1.2 Rank.
With respect to the payment of dividends and other distributions on the capital
stock of the Company, including the distribution of the assets of the Company
upon liquidation, the Series D Preferred Stock shall rank pari passu with the
common stock of the Company, par value $0.001 per share (the
“Common
Stock”),
on an “as converted” basis, junior to the Company’s Series A preferred stock,
par value $0.01 per share, junior to the Company’s Series B preferred stock, par
value $0.01 per share, junior to the Company Series C preferred stock, par
value
$0.01 per share and senior to all other series of preferred
stock.
DIVIDEND
RIGHTS
Dividends
or Distributions.
The holders of Series D Preferred Stock shall be entitled to receive dividends
or distributions on
a pro rata basis according to their holdings of shares of Series D Preferred
Stock on an as converted basis as provided in Section 4 hereof when and if
dividends are declared on the Common Stock by the Board. Dividends
shall
be paid in cash or property, as determined by the Board.
LIQUIDATION
RIGHTS
Liquidation
Preference.
The Series D Preferred Stock shall have no liquidation
preference.
CONVERSION
RIGHTS
Subject
to the limitations set forth herein below, each share of Series D Preferred
Stock held by the Holders shall be convertible (the “Conversion
Rights”),
at the option of the Holder of such share of Series D Preferred Stock, at any
time and from time to time after December 31, 2006 through December 31, 2010,
into that number of shares of Common Stock equal to the greater of (a) one
tenth of one percent (0.1%) of the total number of shares of Common Stock issued
and outstanding as of the last day of the fiscal quarter immediately preceding
such date of conversation, calculated on a fully diluted basis after giving
effect to the conversion of such share(s) of Series D Preferred Stock and (b)
One Hundred Thousand (100,000) shares of Common Stock (“Conversion
Shares”)
at the office of the Company or any transfer agent for the Series D Preferred
Stock. Each share of Series D Preferred Stock held by the Holders which has
not
been converted on or before June 30, 2009 into shares of Common Stock shall
be
convertible, at the option of the Holder of such share, at any time and from
time to time after June 30, 2009 into one tenth of one percent (0.1%) of the
total number of shares of Common Stock issued and outstanding on June 30, 2009,
calculated on a fully diluted basis after giving effect to the conversion of
such share(s) of Series D Preferred Stock (such shares shall also be referred
to
herein as “Conversion
Shares”).
The shares of Common Stock received upon conversion shall be fully paid and
non-assessable shares of Common Stock.
Adjustments.
The Conversion Rights of the Series D Preferred Stock as described in Section
4.1 above shall be adjusted from time to time as follows:
In
the event of any reclassification of the Common Stock or recapitalization
involving Common Stock (including a subdivision, or combination of shares or
any
other event described in this Section 4.2) the holders of the Series D Preferred
Stock shall thereafter be entitled to receive, and provision shall be made
therefore in any agreement relating to the reclassification or recapitalization,
upon conversion of the Series D Preferred Stock, the kind and number of shares
of Common Stock or other securities or property (including cash) to which such
holders of Series D Preferred Stock would have been entitled if they had held
the number of shares of Common Stock into which the Series D Preferred Stock
was
convertible immediately prior to such reclassification or recapitalization;
and
in any such case appropriate adjustment shall be made in the application of
the
provisions herein set forth with respect to the rights and interests thereafter
of the holders of the Series D Preferred Stock, to the end that the provisions
set forth herein shall thereafter be applicable, as nearly as reasonably may
be,
in relation to any shares, other securities, or property thereafter receivable
upon conversion of the Series D Preferred Stock. An adjustment made pursuant
to
this subparagraph (a) shall become effective at the time at which such
reclassification or recapitalization becomes effective.
In
the event the Company shall declare a distribution payable in securities of
other entities or persons, evidences of indebtedness issued by the Company
or
other entities or persons, assets (excluding cash dividends) or options or
rights not referred to in Section 4.2(a) above, the holders of the Series D
Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the Company into which their shares of Series D Preferred Stock are
convertible as of the record date fixed for the determination of the holders
of
shares of Common Stock of the Company entitled to receive such distribution
or
if no such record date is fixed, as of the date such distribution is
made.
Procedures
for Conversion.
In
order to exercise the Conversion Rights pursuant to Section 4.1 above, the
Seller shall deliver an irrevocable written notice of such exercise to the
Company, at its principal office. The Holders shall, upon any conversion of
such
Series D Preferred Stock in accordance with this Section 4, surrender
certificates representing such shares of Series D Preferred Stock to the
Company, at its principal office, and specify the name or names in which the
Seller wishes the certificate or certificates for shares of Common Stock to
be
issued. In case the Seller shall specify a name or names other than that of
the
Holders, such notice shall be accompanied by payment of all transfer taxes
(if
transfer is to a person or entity other than the holder thereof) payable upon
the issuance of shares of Common Stock in such name or names. As promptly as
practicable, and, if applicable, after0020payment of all transfer taxes (if
transfer is to a person or entity other than the holder thereof), the Company
shall deliver or cause to be delivered certificates representing the number
of
validly issued, fully paid and nonassessable shares of Common Stock to which
the
Holders shall be entitled. Such conversion, to the extent permitted by law,
shall be deemed to have been effected as of the date of receipt by the Company
of any notice of conversion pursuant to this Section 4.3(a), upon the occurrence
of any event specified therein. Upon conversion of any shares of Series D
Preferred Stock, such shares shall cease to constitute shares of Series D
Preferred Stock and shall represent only a right to receive shares of common
stock into which they have been converted.
In
connection with the conversion of any shares of Series D Preferred Stock, no
fractions of shares of Common Stock shall be issued, but the Company shall
pay
cash in lieu of such fractional interest in an amount equal to the product
such
fractional interest multiplied by the Reported Last Price of the Common Stock.
“Reported Last Price” means the
reported price, regular way, or, in case no sale takes place on such day, the
average of the reported closing bid and asked prices, regular way, of the Common
Stock as reported on the National Market System of the National Association
of
Securities Dealers, Inc. Automated Quotation System
(“NASDAQ”) or the Over-the-Counter
Bulletin Board (“OTCBB”), as the case
may be; or, if the Common Stock is so not quoted, the average of the closing
bid
and asked prices on such day as reported by NASDAQ or OTCBB, as the case may
be;
or, if bid and asked prices for the Common Stock on each such day shall not
have
been so reported, the average of the bid and asked prices for such day as
furnished by any New York Stock Exchange member firm regularly making a market
in the Common Stock selected for such purpose by the Company and if no such
quotations are available, the fair market value of a share of the Common Stock,
as determined by any New York Stock Exchange member firm regularly making a
market in the Common Stock selected for such purpose by the Company.
The
Company shall at all times reserve and keep available out of its authorized
Common Stock the full number of shares of Common Stock of the Company issuable
upon the conversion of all outstanding shares of Series D Preferred Stock.
In
the event that the Company does not have a sufficient number of shares of
authorized but unissued Common Stock necessary to satisfy the full conversion
of
the shares of Series D Preferred Stock, then the Company shall call and hold
a
meeting of the stockholders within forty-five (45) days of such occurrence
for
the sole purpose of increasing the number of authorized shares of Common Stock.
The Board shall recommend to stockholders a vote in favor of such proposal
and
shall vote all shares held by them, in proxy or otherwise, in favor of such
proposal. This remedy is not intended to limit the remedies available to the
holders of the Series D Preferred Stock, but is intended to be in addition
to
any other remedies, whether in contract, at law or in
equity.
Notices
of Record Date.
In the event that the Company shall propose at any time: (i) to declare any
dividend or distribution upon any class or series of capital stock, whether
in
cash, property, stock or other securities; (ii) to effect any reclassification
or recapitalization of its Common Stock outstanding involving a change in the
Common Stock; or (iii) to merge or consolidate with or into any other
corporation, or to sell, lease or convey all or substantially all of its
property or business, or to liquidate, dissolve or wind up; then, in connection
with each such event, the Company shall mail to each holder of Series D
Preferred Stock:
at
least twenty (20) days’ prior written notice of the date on which a record shall
be taken for such dividend or distribution (and specifying the date on which
the
holders of the affected class or series of capital stock shall be entitled
thereto) or for determining the rights to vote, if any, in respect of the
matters referred to in clauses (ii) and (iii) in Section 4.4 above;
and
in
the case of the matters referred to in Section 4.4 (ii) and (iii) above, written
notice of such impending transaction not later than twenty (20) days prior
to
the stockholders’ meeting called to approve such transaction, or twenty (20)
days prior to the closing of such transaction, whichever is earlier, and shall
also notify such holder in writing of the final approval of such transaction.
The first of such notices shall describe the material terms and conditions
of
the impending transaction (and specify the date on which the holders of shares
of Common Stock shall be entitled to exchange their Common Stock for securities
or other property deliverable upon the occurrence of such event) and the Company
shall thereafter give such holders prompt notice of any material changes. The
transaction shall in no event take place sooner than twenty (20) days after
the Company has given the first notice provided for herein or sooner than ten
(10) days after the Company has given notice of any material changes provided
for herein.
VOTING
RIGHTS
General.
Except as otherwise provided herein or required by law, the holders of Series
D
Preferred Stock, on an “as converted” basis as of the time a vote is taken, and
the holders of Common Stock shall vote together and not as separate
classes.
Preferred
Stock.
Each holder of shares of Series D Preferred Stock shall be entitled to cast
a
number of votes equal to the number of Conversion Shares to which such holder
is
entitled to receive in accordance with Section 4.1 hereof on all matters
submitted to the stockholders of the Company for approval, which votes shall
be
distributed between the holders on a pro rata basis based upon the number of
shares of Series D Preferred Stock held by the holders. Holders of Series D
Preferred Stock shall be entitled to vote on all matters on which the Common
Stock shall be entitled to vote. Each holder of Series D Preferred Stock shall
be entitled to notice of any stockholders meeting in accordance with the Bylaws
of the Company. Fractional votes shall not, however, be permitted and any
fractional voting rights resulting from the above formula (after aggregating
all
shares into which shares of Series D Preferred Stock held by each holder could
be converted), shall be disregarded.
MISCELLANEOUS
Headings
of Subdivisions.
The headings of the various Sections hereof are for convenience of reference
only and shall not affect the interpretation of any of the provisions
hereof.
Severability
of Provisions.
If any right, preference or limitation of the Series D Preferred Stock set
forth
herein (as this resolution may be amended from time to time) is invalid,
unlawful or incapable of being enforced by reason of any rule of law or public
policy, all other rights, preferences and limitations set forth in this
resolution (as so amended) which can be given effect without the invalid,
unlawful or unenforceable right, preference or limitation shall, nevertheless,
remain in full force and effect, and no right, preference or limitation herein
set forth shall be deemed dependent upon any other such right, preference or
limitation unless so expressed herein.
Stock
Transfer Taxes.
The Corporation shall pay any and all stock transfer and documentary stamp
taxes
that may be payable in respect of any issuance or delivery of shares of Series
D
Preferred Stock or shares of Common Stock or other securities issued on account
of Series D Preferred Stock pursuant hereto or certificates representing such
shares or securities.
Transfer
Agent.
The Corporation may appoint, and from time to time discharge and/or replace,
a
transfer agent of the Series D Preferred Stock. Upon any such appointment
or
discharge of a transfer agent, the Corporation shall send notice thereof
by
first-class mail, postage prepaid, to each holder of record of Series D
Preferred Stock.
Transferability.
Subject to any transfer restriction agreements that my be entered into by the
holders of Series D Preferred Stock, the Series D Preferred Stock shall be
transferable by the holders, provided that such transfer is made in compliance
with applicable federal and state securities laws.
[Signature
Page to Follow]
IN
WITNESS WHEREOF,
the
Company has caused this amended and restated Certificate of Designation to
be
signed, under penalties of perjury, by W. Xxxxx Xxxxxxx, its Chief Financial
Officer.
|
Dated: December
5, 2007
|
TURNAROUND PARTNERS, INC. | |
|
By:
|
/s/
W. Xxxxx Xxxxxxx
|
|
|
Name:
|
W.
Xxxxx Xxxxxxx
|
|
|
Title:
|
Chief
Financial Officer
|
|
EXHIBIT
C
PLEASE
SEE QUARTERLY REPORT OF THE COMPANY AT
SEPTEMBER
30, 2007 FILED WITH THE SEC ON NOVEMBER 13, 2007
