Exhibit 1
STOCK EXCHANGE AGREEMENT (this "AGREEMENT"), dated as of June 11, 2001,
among PPI Capital Group, Inc., a Utah corporation (the "COMPANY"), and the
signatories hereto (the "STOCKHOLDERS").
WHEREAS, the Company, DP Merger Corp., a Delaware corporation
("MergerSub"), and XxxxxxXxxxxxxxx.xxx, Inc., a Delaware corporation ("DPI"),
have entered into that certain Agreement and Plan of Merger dated as of May 15,
2001 (the "MERGER AGREEMENT"), pursuant to which MergerSub will merge with and
into DPI, and DPI will become a wholly owned subsidiary of the Company (the
"MERGER"); and
WHEREAS, as a result of the Merger, the Company will issue to the
Stockholders the number of shares (the "Issued Shares") of the Company's common
stock, par value $.001 per share ("COMPANY COMMON STOCK") set forth opposite
such Stockholder's name in Exhibit A attached hereto; and
WHEREAS, each of the Stockholders have agreed to surrender 75% of the
Issued Shares (the "Surrendered Shares") in exchange for the number of common
stock purchase warrants (the "COMPANY WARRANTS") set forth opposite such
Stockholder's name in Exhibit A; and
WHEREAS, the execution and delivery of this Agreement by the Company is
a condition precedent to the closing of the transactions contemplated by the
Merger Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company, and the Purchaser agree
as follows:
ARTICLE I
EXCHANGE PROCEDURES; CLOSING
1.1 EXCHANGE PROCEDURES
(a) Subject to and on the terms and conditions hereof, in
reliance on the representations and warranties of the Company and in
consideration of the issuance of the Company Warrants to the Stockholders, the
Stockholders agree to surrender for cancellation to the Company the Surrendered
Shares.
(b) Subject to and on the terms and conditions hereof, in
reliance on the representations and warranties of the Stockholders and in
consideration for the surrender and cancellation of the Surrendered Shares, the
Company shall issue the Company Warrants to the Stockholders.
1.2 CLOSING. The closing of the transactions contemplated by this
Agreement shall occur immediately following the effective time of the Merger. At
the Closing (i) the Stockholders shall surrender certificates representing the
Surrendered Shares for cancellation, and (ii) the Company shall issue to the
Stockholders the Company Warrants.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
makes the following representations and warranties to each of the Stockholders:
(a) ORGANIZATION AND QUALIFICATION. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Utah with the requisite corporate power and authority to own and use
its properties and assets and to carry on its business as currently conducted.
(b) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and to otherwise to carry out its obligations
hereunder. The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of the Company and no further
action is required by the Company. This Agreement has been duly executed by the
Company and, when delivered in accordance with the terms hereof, will constitute
the valid and binding obligation of the Company enforceable against the Company
in accordance with its terms. The Company is not is in violation of any of the
provisions of its certificate of incorporation, by-laws or other organizational
or charter documents.
(c) ISSUANCE OF THE COMPANY WARRANTS. The Company will have an
adequate reserve of duly authorized shares of Common Stock, reserved for
issuance to the Stockholders, to enable it to perform its obligations under the
Company Warrants. The shares of Company Common Stock issuable upon exercise of
the Company Warrants are collectively referred to herein as the "Underlying
Shares." When issued in accordance with the terms of this Agreement and the
Company Warrants, the Company Warrants and the Underlying Shares will be duly
authorized, validly issued, fully paid and nonassessable.
(d) NO CONFLICTS. The execution, delivery and performance of
this Agreement and the consummation by the Company of the transactions
contemplated hereby do not and will not (i) conflict with or violate any
provision of the Company's certificate or articles of incorporation, bylaws or
other charter documents (each as amended through the date hereof), or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a the Company debt or otherwise) or other understanding
to which the Company or any Subsidiary is a party or by which any property or
asset of the Company or any Subsidiary is bound or affected, or (iii) result in
a violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Company or
a Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company is bound or
affected
2.2 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each of the
Stockholders represents and warrants to the Company, with himself/itself only,
as follows:
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(a) ORGANIZATION; AUTHORITY. This Agreement has been duly
executed by the Stockholder, and when delivered by the Stockholder in accordance
with the terms hereof, will constitute the valid and legally binding obligation
of the Stockholder, enforceable against it in accordance with its terms.
(b) INVESTMENT INTENT. The Stockholder is acquiring the Company
Warrants as principal for its own account for investment purposes only and not
with a view to or for distributing or reselling such securities or any part
thereof. Such Stockholder does not have any agreement or understanding, directly
or indirectly, with any Person to distribute the Warrants or the Underlying
Shares.
ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 TRANSFER RESTRICTIONS. (a) The Warrants and the Underlying Shares
may only be disposed of pursuant to an effective registration statement under
the Securities Act or pursuant to an available exemption from or in a
transaction not subject to the registration requirements of the Securities Act,
and in compliance with any applicable federal and state securities laws.
(b) The Stockholder agrees to the imprinting, so long as is
required by this Section 3.1(b), of the following legend on the Securities:
THESE SHARES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS.
ARTICLE IV
MISCELLANEOUS
4.1 ENTIRE AGREEMENT; AMENDMENTS. This Agreement with the Exhibits
hereto contains the entire understanding of the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
oral or written, with respect to such matters, which the parties acknowledge
have been merged into such documents, exhibits and schedules.
4.2 NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 6:30 p.m. (New York City
time) on a Business Day, (ii) the Business Day after the date of transmission,
if such notice or
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communication is delivered via facsimile at the facsimile telephone number
specified in this Agreement later than 6:30 p.m. (New York City time) on any
date and earlier than 11:59 p.m. (New York City time) on such date, (iii) the
Business Day following the date of mailing, if sent by. nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given. The address for such notices and communications
shall be as follows:
If to the Company: PPI Capital Group, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxx 00000
Attn: President
If to a Purchaser: To the address set forth under such
Purchaser's name on the signature pages
hereto.
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
4.3 AMENDMENTS; WAIVERS. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and each of the Stockholders or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.
4.4 HEADINGS. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
4.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Stockholders.
4.6 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
4.7 GOVERNING LAW. The corporate laws of Delaware shall govern all
issues concerning the relative rights of the Company and its stockholders. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of California, without regard to the
principles of conflicts of law thereof. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in San Diego,
CA, for the adjudication of any dispute hereunder or in connection herewith or
with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or
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proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
4.8 SURVIVAL. The representations, warranties, agreements and
covenants contained herein shall survive the Exchange Date and the delivery and
exercise of the Company Warrants.
4.9 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
4.10 SEVERABILITY. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affecting or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
4.11 REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Stockholders will be entitled to specific performance of the obligations of the
Company under the Company Warrants. The parties hereto agree that monetary
damages may not be adequate compensation for any loss incurred by reason of any
breach of obligations described in the foregoing sentence and hereby agrees to
waive in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate.
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SIGNATURE PAGES FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Exchange
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
PPI CAPITAL GROUP, INC.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxx Xxxxxxxxx
Title: President
/s/ Xxxxx Xxxxxxxxxx
--------------------------------------------
Xxxxx Xxxxxxxxxx
Address for Notice:
c/o Direct Xxxxxxxxx.xxx Inc.
0000 Xxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
/s/ Xxxxxx Xxxx
--------------------------------------------
Xxxxxx Xxxx
Address for Notice:
c/o Direct Xxxxxxxxx.xxx Inc.
0000 Xxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
MIDORI USA Corporation
By: /s/ Xxxxx Xxxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Managing Director
Address for Notice:
c/o Direct Xxxxxxxxx.xxx Inc.
0000 Xxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
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EXHIBIT A to Stock Exchange Agreement
Number of
Number of Surrendered Number
Name of Stockholder Issued Shares Shares of Warrants
--------------------------- --------------- --------------- ---------------
Xxxxx X. Xxxxxxxxxx 10,762,500 8,071,875 8,071,875
Xxxxxx Xxxx 1,537,500 1,153,125 1,153,125
Midori USA Corporation 3,075,000 2,306,250 2,306,250
EXHIBIT B to Stock Exchange Agreement
FORM OF WARRANT AGREEMENT
See Exhibit 2
