AGREEMENT AMONG THE FOUNDERS OF STIRLING ACQUISITION CORPORATION
EXHIBIT
10.3
STIRLING
ACQUISITION CORPORATION
This
Agreement Among the Founders of Stirling Acquisition Corporation (the
“Agreement”) is made effective as of May 7, 2007 (the “Effective Date”) between
Xxxx X. Xxxxxxxx (“Xxxxxxxx) and Xxxxxx X. Xxxxx (“Xxxxx”), Xxxxxxx xx
Xxxxxxxxxx, Xxxxxxxxxxx 0000 Barberêche; Xxxxx X. Xxxxxx (“Xxxxxx”), 0000
Xxxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxx 00000; and Xxxx X. Xxxxx (“Xxxxx”), 0000
Xxxxxxxxx Xxxxxx Xxxxx, Xx. Xxxxxxxxxx, Xxxxxxx 00000. Petersen, Fefer, Xxxxxx
and Xxxxx are collectively referred to herein as “Founders.”
WHEREAS,
from
December 2000 through December 2005, the Founders were stockholders, directors
and officers of Win or Lose Acquisition Corporation, a novel blank check shell
that registered its securities under the Securities Act, effected two public
distributions of its stock, and was ultimately unable to identify and negotiate
an acquisition transaction with a suitable privately held company;
and
WHEREAS,
the
combined financial losses of the Founders with respect to Win or Lose amounted
to $256,045 and the substantial bulk those losses were financed by cash
contributions from Xxxxxxxx and Fefer;
WHEREAS,
the
Founders believe the structure that was developed for Win or Lose has
substantial potential value and justifies a second effort to create a registered
blank check shell and attempt to identify and negotiate an acquisition
transaction with a suitable privately held company; and
WHEREAS,
the
Founders believe their plan to make another effort to create a registered blank
check shell will require a more modest financial commitment than Win or Lose,
but still require significant cash investments to provide operating capital
and
pay certain anticipated costs; and
WHEREAS,
the
Founders wish to formalize their past agreements with respect to the formation
of a new entity named Stirling Acquisition Corporation, to define their
respective financial commitments to Stirling; and if Stirling’s activities are
successful, to establish protocols, procedures and mechanisms for the ultimate
recovery of their cumulative investments in both Win or Lose and
Stirling;
NOW,
THEREFORE,
In
consideration of the mutual promises contained herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Founders agree as follows:
Article
I
Capitalization
of Stirling
The
Founders have concluded that Stirling will require at least $40,000 in cash
and
working capital to finance its proposed activities during the period between
the
completion of the proposed gift share distribution and the closing of an
acquisition transaction. The Founders also expect that Stirling will incur
an
indeterminate amount of costs and expenses in connection with the registration
of its securities and the completion of the gift share distribution. The
Founders hereby jointly and severally agree to contribute such additional
capital as Stirling may reasonably require to pay the costs incurred by it
prior
to the completion of the gift share distribution and to leave Stirling with
at
least $40,000 in cash and working capital upon completion of the gift share
distribution.
Article
II
Past
and Future Contributions to Stirling
In
connection with the December 2006 creation of Stirling, Xxxxxxxx and Xxxxx
contributed $20,000 in cash to Stirling on behalf of the Founders and paid
$1,000 of incorporation costs. They subsequently advanced $14,000 to Xxxxxxx
Xxxxx LLP as an initial retainer, for a cumulative investment of $35,000. To
ensure that Stirling’s future expenses are promptly paid and that it will have
sufficient capital to conduct its planned operations, the Founders agree to
make
additional capital contributions as follows:
| 1. |
Xxxxx
and Xxxxxx shall contribute the next $35,000 in capital that Stirling
requires to register its securities under the Securities Act and
provide
adequate working capital for its planned activities. Once the
contributions of the Founders are equalized, any further capital
contributions that Stirling may reasonably require shall be apportioned
among the Founders on a ratable basis.
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| 2. |
All
contributions to Stirling before the completion of its gift share
distribution shall be accounted for as voluntary contributions to
Stirling’s paid-in capital and the number of shares owned by a
contributing Founder shall not be increased in recognition of such
contributions. Even if the cumulative capital contributions of the
Founders are not equalized prior to completion of the gift share
distribution, the number of shares owned by each Founder shall not
be
adjusted upwards or downward to reflect disparities in the actual
amounts
of capital contributed by them.
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| 3. |
If
Stirling requires less than $35,000 in additional capital between
the date
of this agreement and the completion of the gift share distribution,
then
the required capital contribution from Xxxxx and Xxxxxx shall be
limited
to Stirling’s actual cash requirements. In the event that Stirling
requires more than $35,000 in additional capital during the period
before
the completion of the gift share distribution, then the Founders
shall
make the required excess contributions on a ratable basis. In the
event
that Xxxxx and Xxxxxx are unable to make any required capital
contributions on a timely basis, Xxxxxxxx and Fefer shall make the
required contributions.
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| 4. |
The
Founders agree that Stirling will not request an order of effectiveness
for its planned registration statement under the Securities Act until
the
Founders have made arrangements to transfer sufficient capital to
pay the
anticipated costs of the gift share distribution and leave Stirling
with a
net cash and working capital balance of at least
$40,000.
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| 5. |
If
it becomes apparent that the aggregate amount needed to pay Stirling’s
registration costs and provide for adequate operating capital will
be
substantially greater than $70,000, then Xxxxx and Xxxxxx may refuse
to
make the $35,000 in capital contributions contemplated by this Agreement,
provided that they shall be required to contribute such amounts as
may be
necessary to pay any accumulated costs that cannot be paid with the
amounts presently available to
Stirling.
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Article
III
Investment
Recovery Pool
Stirling’s
business plan contemplates the resale of up to 1,350,000 founders’ shares in
connection with an acquisition transaction. While it is impossible to predict
the amount of cash that the Founders will ultimately receive in connection
with
the resale of founders’ shares, the proceeds of such sales are expected to be
substantial. The Founders hereby agree that 50% of any net cash proceeds they
receive from the resale of founders’ shares shall be paid into a segregated
“Investment Recovery Pool” and then distributed to the Founders based on their
cumulative cash investments in both Win or Lose and Stirling. In furtherance
of
the foregoing, the Founders agree:
| 1. |
All
amounts previously contributed to Win or Lose or Stirling by the
Founders
shall be accounted for in a separate ledger that shows the cumulative
investments of the Founders. Amounts carried as capital contributions
shall not be increased to reflect the relative value of services
rendered
to either Win or Lose or Stirling, or be reduced to reflect any overhead
payments or compensation received from Win or Lose or
Stirling.
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| 2. |
For
purposes of calculating the net cash proceeds from the resale of
founders’
shares, all third party costs paid by the Founders in connection
with the
negotiation, documentation and closing of an acquisition transaction
shall
be treated as allowable deductions from the gross
proceeds.
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| 3. |
Distributions
from the Investment Recovery Pool shall be allocated among the Founders
based on their cumulative cash investments in Win or Lose and Stirling,
provided that in the event that contributions to the Investment Recovery
Pool exceed the cumulative investments of all Founders, then any
excess
shall be distributed ratably among the
Founders.
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| 4. |
In
the event that the amounts contributed to the Investment Recovery
Pool are
not sufficient to fully reimburse the cumulative contributions of
the
Founders to Win or Lose and Stirling, then any excess shall be carried
forward as an imbalance between the Founders contributions and recovered
from up to 50% of the net proceeds from any additional blank check
shells
the Founders may elect to organize in the
future.
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| 5. |
Notwithstanding
any other provision in this Agreement, no Founder shall have any
claim
against or interest in any shares of stock in the post-acquisition
company
that another Founder is able to retain in connection with an acquisition
transaction and all such shares shall be and remain the sole and
exclusive
property of the Founder who is the registered owner of those
shares.
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Article
IV
No
Personal Liability
The
Founders acknowledge that their past investments in Win or Lose and Stirling
and
their anticipated additional investments in Stirling are personal risk
investments and the existence of disparities in their respective capital
contributions to the two companies and any additional blank check shells they
may elect to organize in the future shall not give rise to any claim for
contribution or reimbursement from another Founder except to the extent that
such payments are specifically provided for in Article III. Each of the Founders
hereby releases and discharges any and all claims he or she may have against
another Founder that arises from or is based on disparities in the relative
capital contributions of the Founders.
Article
V
No
Litigation
Each
of
the Founders hereby releases any rights he has or may have under applicable
law
to bring legal action against another Founder with respect to the organization
and operations of Win or Lose, Stirling and any additional blank check shells
the Founders may elect to organize in the future. If any disputes arise that
cannot be resolved through negotiation or mediation among the parties, the
Founders sole recourse shall be to exclude one or more Founders from
participation in any additional blank check shells the remaining Founders may
elect to organize in the future. In the event that one or more Founders shall
elect to commence legal action against another Founder with respect to the
organization and operations of Win or Lose, Stirling and any additional blank
check shells the Founders may elect to organize in the future, this Article
shall constitute an irrevocable consent to a motion to dismiss such litigation
with prejudice.
Article
V
No
Other Agreements
The
Founders’ relationship with each other is based on a mutual trust and respect
and their intention is to cooperate in good faith for their mutual benefit.
Nothing in this agreement shall deprive any Founder of his right to exercise
sound business judgment with respect to the future activities of Stirling or
require the unanimous agreement of the Founders with respect to future business
decisions. To the extent that any Founder is able to retain any shares in
connection with an acquisition transaction, all decision with respect to the
voting, sale or other disposition of those shares shall be within the sole
discretion of the holder and no other Founder shall have any right to take
part
in the decisions made by another Founder or share in any sale proceeds received
by another Founder. The Founders expressly agree that from and after the closing
of an acquisition transaction, they will scrupulously refrain from any conduct
that could give rise to an inference that the Founders are acting in concert
with respect to their ownership of securities in the post-acquisition
company.
Article
VI
Miscellaneous
This
Agreement constitutes the entire agreement of the parties and supersedes all
prior communications, understandings and agreements relating to the subject
matter hereof, whether oral or written.
No
modification or claimed waiver of any provision of this Agreement shall be
valid
except by written amendment signed by the Founders.
If
any
provision or provisions of this Agreement shall be held to be invalid, illegal,
unenforceable or in conflict with the law of any jurisdiction, the validity,
legality and enforceability of the remaining provisions shall not in any way
be
affected or impaired thereby.
Waiver
of
any provision herein shall not be deemed a waiver of any other provision herein,
nor shall waiver of any breach of this Agreement be construed as a continuing
waiver of other breaches of the same or other provisions of this Agreement.
All
notices given pursuant to this Agreement shall be in writing and may be
delivered by hand, by e-mail, by facsimile transmission or by any other means
that give rise to a permanent record of delivery. Notices delivered by hand,
by
e-mail and by fax shall be deemed received when sent. Notices delivered by
mail
shall be deemed received 5 days after mailing.
IN
WITNESS WHEREOF,
the
parties have executed this Agreement by their respective, duly authorized
representatives as of the date first above written.
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Xxxx
X. Xxxxxxxx
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Xxxxxx
X. Xxxxx
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/s/
XXXX X. XXXXXXXX
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/s/
XXXXXX X. XXXXX
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Xxxxx
X. Xxxxxx
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Xxxx
X. Xxxxx
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/s/
XXXXX X. XXXXXX
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/s/
XXXX X. XXXXX
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