STOCK PURCHASE AGREEMENT
Exhibit
10.10
THIS
STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of
October 22, 2007, is made by and between Longfoot Communications Corp. a
Delaware corporation (the “Company”), the Investors listed on
Exhibit A hereto (each, an “Investor” and
collectively, the “Investors”) and Sim Xxxxx, Xxxxxx Xxxxx, Xxxx
Xxxxx, PP6O, LLC, Gusmail, LLC and 32 Mayall, LLC (collectively, the
“Existing Stockholders”).
RECITALS
A. The
Investors desire to acquire from the Company, and the Company desires to issue
and sell to the Investors, in the manner and on the terms and conditions
hereinafter set forth, shares of Common Stock of the Company as set forth herein
(collectively, the “Shares”).
B. In
connection with the Investors’ purchase of the Shares, the Company and the
Investors desire to establish certain rights and obligations between
themselves.
AGREEMENTS
NOW,
THEREFORE, in consideration of these premises, the mutual covenants and
agreements herein contained and for other good and valuable consideration,
the
sufficiency and receipt of which are hereby acknowledged, the Company and the
Investors hereby agree as follows:
SECTION
I DEFINITIONS.
The
following terms when used in this Agreement have the following respective
meanings:
“1933
Act” means the Securities Act of 1933, as amended.
“1934
Act” means the Securities Exchange Act of 1934, as
amended.
“Affiliate”
means with respect to any Person, any (i) officer, director, partner or holder
of more than 10% of the outstanding shares or equity interests of such Person,
(ii) any Relation of such Person, or (iii) any other Person which directly
or
indirectly controls, is controlled by, or is under common control with such
Person. A Person will be deemed to control another Person if such
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of the “Controlled”
Person, whether through ownership of voting securities, by
contract, or
otherwise.
“Business
Day” means a day other than Saturday, Sunday or statutory holiday in
the State of New York and in the event that any action to be taken hereunder
falls on a day which is not a Business Day, then such action shall be taken
on
the next succeeding Business Day.
“Businesses”
has the meaning set forth in Section 4.1(k).
“Bylaws”
means the Bylaws of the Company.
“Certificate
of Incorporation” means the Certificate of Incorporation of the
Company, as amended and restated and as on file with the Secretary of State
of
the State of Delaware on the date of this Agreement.
“Closing
Date” has the meaning set forth in Section 3.1
hereof.
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“Closing”
has the meaning set forth in Section 3.1 hereof.
“Common
Stock” means shares of the common stock, $0.001 par value, of the
Company.
“Company
Stockholder Approval” means the approval by the requisite vote of the
stockholders of the Company of the Company Stockholder Proposals.
“Company
Stockholder Proposals” means (i) the consummation
of the Divestment, (ii) the consummation of the Reverse Split,
(iii) the proposed amendment to the Certificate of Incorporation of the
Company (A) increasing the number of shares of Common Stock that the
Company shall be authorized to issue to 225 million shares of common stock,
$0.001 par value, of the Company and 25 million shares of preferred stock,
$0.001 par value, of the Company, (B) providing for indemnification of and
advancement of expenses for officers and directors to the maximum extent
permitted by applicable law, (C) providing that the size of the Board shall
be determined as provided in the Company’s bylaws, and (D) such other
changes reasonably satisfactory to the Investors and (iv) adoption of new
bylaws in a form reasonably satisfactory to the Investors.
“Divestment”
has the meaning set forth in Section 5.3.
“End
Date” shall have the meaning as used in
Section 7.1(b)(i).
“Existing
Stockholders” has the meaning set forth in the introductory paragraph
hereto.
“GAAP”
means generally accepted accounting principles.
“Governmental
Authority” means the United States, any state or municipality, the
government of any foreign country, any subdivision of any of the foregoing,
or
any authority, department, commission, board, bureau, agency, court, or
instrumentality of any of the foregoing.
“Knowledge”
as to the Company means the actual knowledge of the officers of the Company
after due and diligence inquiry of the employees or agents of the Company
reasonably believed to have knowledge of such matters.
“Lien”
means any mortgage, lien, pledge, security interest, easement, conditional
sale
or other title retention agreement, or other encumbrance of any
kind.
“Material
Adverse Effect” means a change or effect in the condition (financial or
otherwise), properties, assets, liabilities, rights, operations or business
of
the Company which change or effect, individually or in the aggregate, could
reasonably be expected to be materially adverse to such condition, properties,
assets, liabilities, rights, operations or business.
“Person”
means an individual, corporation, limited liability company, partnership, joint
venture, trust, unincorporated organization, or Governmental
Authority.
“Proxy
Statement” means the proxy statement or information statement
for the Stockholders Meeting, together with any amendments or supplements
thereof.
“Purchase
Price” means the cash and cash equivalents of the Company at the
Closing Date after deducting any and all liabilities, including liabilities
related in any manner to (i) the Stockholders Consent,
(ii) soliciting approval of the Company Stockholder Proposals and
(iii) the costs and expenses of the transactions contemplated
hereby.
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“Reverse
Split” means a one-for-three (1:3) combination, consolidation or “reverse split”
of the currently outstanding shares of the Company so that approximately
1,631,616 shares of common stock shall thereupon be outstanding.
“SEC”
means the Securities and Exchange Commission.
“SEC
Filings” has the meaning set forth in
Section 4.2(f) hereof.
“Shares”
shall have the meaning set forth in the recitals hereto.
“Stockholders”
mean the record holders of shares of capital stock of the Company.
“Stockholders
Consent” means the written consent of the Existing
Stockholders and other stockholders of the Company to approve and effect the
Company Stockholder Approval.
SECTION
II PURCHASE AND SALE
OF COMMON STOCK.
2.1 Issuance
and Purchase of Common Stock
At the Closing and after giving effect to the Reverse Split, based upon the
representations, warranties, covenants and agreements of the parties set forth
in this Agreement, the Company shall issue and sell to the Investors, and the
Investors shall purchase from the Company, an aggregate of 1,698,212 Shares,
which are being allocated among the Investors as provided in Exhibit A
attached hereto. At the Closing, the Company will issue and deliver
to each of the Investors a stock certificate registered in the name of each
such
Investor representing the number of Shares set forth opposite such Investor’s
name on Exhibit A, against payment of the percentage of the Purchase Price
set forth opposite such Investor’s name on Exhibit A. At the
Closing, no more than 3,329,828 shares of common stock shall be issued and
outstanding. The Shares to be issued to the Investors will equal, in the
aggregate, fifty-one percent (51%) of the outstanding capital stock of the
Company on the Closing Date, on a fully-diluted basis, after giving effect
to
the exercise of all exercisable instruments and securities. The
Company represents and warrants that without limitation, this calculation takes
into account any shares of Common Stock issuable upon the exercise of
outstanding options or warrants to purchase shares of Common Stock and that
no
convertible securities are issued and outstanding.
2.2 Payment
for Common Stock
At the Closing Date, for all of the Shares, the Investors shall pay to the
Company, in the aggregate, the Purchase Price. The Investors will pay
the Purchase Price by wire transfers of immediately available funds to an
account designated in writing by the Company.
SECTION
III THE
CLOSING.
3.1 Closing
The closing of the issuance and sale of the Shares pursuant to
Section 2.1 hereof and certain of the other transactions
contemplated hereby (the “Closing”) will take place at the offices of
the Company located at 0000 Xxxxxx Xxxx., Xxxxx 000, Xxxx Xxxxxxxxx. Xxxxxxxxxx
00000 on the next business day (or such later date as the parties hereto may
agree) following the satisfaction or waiver of the conditions set forth in
Section VI hereof (the “Closing Date”), or at such other time or
place as the parties mutually agree.
3.2 Deliveries
by the Company
At the Closing, the Company shall deliver or cause to be delivered to the
Investors the following items (in addition to any other items required to be
delivered to the Investors pursuant to any other provision of this
Agreement):
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(a) certificates
representing the Shares being issued and sold by the Company to the Investors
pursuant to Section 2.1 hereof, duly recorded on the books of
the Company in the names of each of the Investors as set forth on
Exhibit A;
(b) a
certificate of the Secretary of State of the State of Delaware as to the good
standing of the Company dated within five days prior to the Closing
Date;
(c) resignations
of such of the current directors and officers from their positions as
directors and officers of the Company as requested by the
Investors;
(d) Duly
executed corporate actions fixing the size of the Board at a number satisfactory
to the Investors, accepting any resignations pursuant to Section
3.2(c) and appointing persons reasonably satisfactory to the
Investors as directors and officers of the Company; and
(e) Evidence
satisfactory to the Investors that the Company Stockholder Proposals have been
approved and as to the amount of cash, cash equivalents and liabilities of
the
Company at the Closing.
3.3 Deliveries
by the Investors
At the Closing, each of the Investors shall deliver or cause to be delivered
to
the Company (in addition to any other items required to be delivered to the
Company pursuant to any other provision of this Agreement) payment by wire
transfer of immediately available funds necessary to satisfy each Investor’s
obligations to the Company under Section 2.2 hereof and to
result in payment to the Company of the Purchase Price.
SECTION
IV REPRESENTATIONS
AND WARRANTIES.
4.1 Representations
and Warranties of the Company
In order to induce each of the Investors to purchase the Common Stock that
it is
purchasing hereunder, the Company and the Existing Stockholders represent and
warrant to the Investors that:
(a) Organization
and Standing. The Company is duly incorporated and validly
existing under the laws of the State of Delaware, and has all requisite
corporate power and authority to own or lease its properties and assets and
to
conduct its business as it is presently being conducted. The Company
does not own any equity interest, directly or indirectly, in any other Person
or
business enterprise. The Company is qualified to do business and is
in good standing in each jurisdiction in which the failure to so qualify could
reasonably be expected to have a material adverse effect upon its assets,
properties, financial condition, results of operations or
business. The Company has one subsidiary.
(b) Capitalization. At
the date of this Agreement and before giving effect to the Reverse Split, the
authorized capital stock of the Company consists of (i) 50,000,000 shares of
Common Stock, of which 4,894,848 shares are issued and outstanding, and (ii)
1,000,000 shares of Preferred Stock, of which no shares are issued and
outstanding. The Company has no other equity securities of any class issued,
reserved for issuance or outstanding. Except as set forth below,
there are (x) no outstanding options, offers, warrants, conversion rights,
contracts or other rights to subscribe for or to purchase from the Company,
or
agreements obligating the Company to issue, transfer, or sell (whether formal
or
informal, written or oral, firm or contingent), shares of capital stock or
other
securities of the Company (whether debt, equity, or a combination thereof)
or
obligating the Company to grant, extend, or enter into any such agreement and
(y) no agreements or other understandings (whether formal or informal, written
or oral, firm or contingent) which require or may require the Company to
repurchase any of its Common Stock. There are no preemptive or
similar rights with respect to the Company’s capital stock. There are
no anti-dilution or price adjustment provisions contained in any security issued
by the Company (or in any agreement providing rights to security
holders).
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The
Company is not a party to, and to the Knowledge of the Company and the Existing
Stockholders, no Stockholder is a party to, any voting agreements, voting
trusts, proxies or any other agreements, instruments or understandings with
respect to the voting of any shares of the capital stock of the Company, or
any
agreement with respect to the transferability, purchase or redemption of any
shares of the capital stock of the Company. The issue and sale of the
Shares to the Investors does not obligate the Company to issue any shares of
capital stock or other securities to any Person (other than the Investors)
and
will not result in a right of any holder of Company securities to adjust the
exercise, conversion, exchange or reset price under such
securities. The outstanding Common Stock is all duly and validly
authorized and issued, fully paid and nonassessable. As of the date hereof,
there are: no shares of common stock reserved for issuance upon
exercise of outstanding stock options and no shares reserved for issuance upon
exercise of outstanding warrants. The Company does not have issued or
outstanding any convertible securities. Upon issuance of the Shares
to the Investors at the Closing, the Investors shall own 51% of the issued
and
outstanding Shares of the Company on a fully-diluted basis.
(c) Capacity
of the Company and the Existing Stockholders; Authorization; Execution of
Agreements. Each of the Company and each of the Existing
Stockholders has all requisite power, authority and capacity to enter into
this
Agreement and to perform the transactions and obligations to be performed by
it
hereunder. Subject to the Company Stockholder Approval as
contemplated by this Agreement, the execution and delivery of this Agreement
by
the Company, and the performance by the Company of the transactions and
obligations contemplated hereby, including, without limitation, the issuance
and
delivery of the Shares to the Investors hereunder, have been duly authorized
by
all requisite action of the Company. This Agreement has been duly
executed and delivered by a duly authorized officer of the Company and, where
applicable, the Existing Stockholders, and constitutes a valid and legally
binding agreement of the Company and each of the Existing Stockholders,
enforceable in accordance with its terms, except as enforcement thereof may
be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws of the United States (both state and federal), affecting the enforcement
of
creditors’ rights or remedies in general from time to time in effect and the
exercise by courts of equity powers or their application of principles of public
policy.
(d) Status
of Shares. The Shares being issued and purchased hereunder, all
of which are to be issued by the Company to the Investors and paid for by the
Investors pursuant to the terms of this Agreement, are and will be, when issued,
(i) duly authorized, validly issued, fully paid and nonassessable,
(ii) issued in compliance with all applicable United States federal and
state securities laws, (iii) subject to restrictions under this Agreement,
and applicable United States federal and state securities laws, have the rights
and preferences set forth in the Certificate of Incorporation, and
(iv) free and clear of all Liens.
(e) Conflicts;
Defaults. Subject to the Company Stockholder Approval, as
contemplated by this Agreement, the execution and delivery of this Agreement
by
the Company and each of the Existing Stockholders and the performance by the
Company and each of the Existing Stockholders of the transactions and
obligations contemplated hereby and thereby to be performed by it do not (i)
violate, conflict with, or constitute a default under any of the terms or
provisions of, the Certificate of Incorporation, the Bylaws, or any provisions
of, or result in the acceleration of any obligation under, any contract, note,
debt instrument, security agreement or other instrument to which the Company
or
any of the Existing Stockholders is a party or by which the Company or any
of
the Existing Stockholders, or any of its assets is bound; (ii) result in
the creation or imposition of any Liens or claims upon the Company’s assets or
upon any of the shares of capital stock of the Company; (iii) constitute a
violation of any law, statute, judgment, decree, order, rule, or regulation
of a
Governmental Authority applicable to the Company or any of the Existing
Stockholders; or (iv) constitute an event which, after notice or lapse of time
or both, would result in any of the foregoing. The Company is not
presently in violation of its Certificate of Incorporation or
Bylaws.
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(f) SEC
Filings. The SEC Filings, when filed, complied in all material
respects with the requirements of Section 15(d) of the 1934 Act, did not,
as of the dates when filed, contain an untrue statement of material fact or
omit
to state a material fact required to be stated therein or necessary to make
the
statements therein not misleading. The SEC Filings are all of the filings that
the Company was required to file with the SEC during the periods covered thereby
and all such filings were made on a timely basis when due. The
financial statements of the Company included in the SEC Filings complied in
all
material respects with the rules and regulations of the SEC with respect thereto
as in effect at the time of filing. Such financial statements have
been prepared in accordance with U.S. GAAP applied on a consistent basis during
the periods covered by such financial statements, except as may be otherwise
specified in such financial statements or the notes thereto, and fairly present
in all material respects the financial position of the Company as of and for
the
dates thereof and for the periods indicated, and the results of operations
and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments. All
material agreements to which the Company is a party or to which the property
or
assets of the Company are subject and which are required to be disclosed
pursuant to the 1934 Act are included as part of or specifically identified
in
the SEC Filings.
(g) Material
Changes. Since the date of the latest audited financial statements included
within the SEC Filings, except as specifically disclosed in the SEC Filings,
(i)
there has been no event that could result in a Material Adverse Effect, (ii)
the
Company has not incurred any liabilities (contingent or otherwise) other than
(A) trade payables and accrued expenses incurred in the ordinary course of
the
business of a shell corporation consistent with past practice and (B)
liabilities not required to be reflected in the Company’s financial statements
pursuant to U.S. GAAP as required to be disclosed in filings made with the
SEC,
(iii) the Company has not altered its method of accounting or the identity
of
its auditors, except as disclosed in its SEC Filings (iv) the Company has not
declared or made any dividend or distribution of cash or other property to
its
stockholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock and (v) the Company has not issued any equity
securities to any officer, director or affiliate, except 129,870 shares issued
to PP6O, LLC on August 23, 2007 and 259,740 shares issued to PP6O, LLC on
October 4, 2007, in each instance for valid consideration consisting of
conversion of debt.
(h) Absence
of Litigation. There is no action, suit, claim, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of
the
Company, threatened against or affecting the Company.
(i) Brokers,
Finders, and Agents. The Company is not, directly or indirectly,
obligated to anyone acting as broker, finder or in any other similar capacity
in
connection with this Agreement or the transactions contemplated
hereby. No Person has or, immediately following the consummation of
the transactions contemplated by this Agreement, will have, any right, interest
or valid claim against the Company or the Investors for any commission, fee
or
other compensation as a finder or broker in connection with the transactions
contemplated by this Agreement, nor are there any brokers’ or finders’ fees or
any payments or promises of payment of similar nature, however characterized,
that have been paid or that are or may become payable in connection with the
transactions contemplated by this Agreement, as a result of any agreement or
arrangement made by the Company.
(j) Application
of Takeover Protections. Except as provided in Delaware General
Corporation Law Section 203 (“GCL 203”), there is no control
share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the
Company’s Certificate of Incorporation or Bylaws that is or could become
applicable to any of the Investors as a result of the Investors and the Company
fulfilling their obligations or exercising their rights under this Agreement,
including without limitation, as a result of the Company’s issuance of the
Shares and the Investors’ ownership of the Shares.
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(k) Absence
of Businesses. Neither the Company nor any subsidiary is engaged
in any business other than the businesses relating to the construction,
development, acquisition, management and operation of low power television
(“LPTV”) stations and AM/FM stations in the United States (the
“Businesses”), which Businesses shall be divested by
December 7, 2007, as provided in Section 5.3 and
neither the Company nor any subsidiary has any liability or obligation of any
kind or nature other than liabilities or obligations that ordinarily and
customarily directly relate to the maintenance of a public company or
liabilities and obligations of the Businesses that will be divested by the
Company and assumed by the Existing Stockholders or a third party satisfactory
to the Investors pursuant to Section 5.3. Such
divestment shall be in compliance with all applicable laws, rules and
regulations
(l) Disclosure. All
disclosure materials provided to the Investors regarding the Company, its
business and the transactions contemplated hereby, including the Schedules
to
this Agreement, furnished by or on behalf of the Company are true and correct
in
all material respects and as otherwise contemplated in this Agreement and do
not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein not
misleading. No event or circumstance has occurred or information
exists with respect to the Company or its business, properties, operations
or
financial condition, which, under applicable law, rule or regulation, requires
public disclosure or announcement by the Company, but which has not been so
publicly announced or disclosed. The Company acknowledges and agrees
that no Investor makes or has made (i) any representations or warranties with
respect to the transactions contemplated hereby other than those specifically
set forth in Section 4.2 or (ii) any statement, commitment or
promise to the Company or any of its representatives which is or was an
inducement to the Company to enter into this Agreement.
4.2 Representations
and Warranties of the Investors
Each of the Investors hereby severally, but not jointly, represents and
warrants to the Company that:
(a) Investment
Intent. The Shares being purchased by the Investor hereunder is
being purchased for its own account, not as a nominee or agent, and not with
the
view to, or for resale in connection with, any distribution or public offering
thereof within the meaning of the 1933 Act. The Investor understands
that such Shares have not been registered under the 1933 Act by reason of their
issuance in a transaction exempt from the registration and prospectus delivery
requirements of the 1933 Act pursuant to Section 4(2) thereof and/or the
provisions of Rule 506 of Regulation D promulgated thereunder, and under the
securities laws of applicable states and agrees to deliver to the Company,
if
requested by the Company, an investment letter in customary form. The
Investor further understands that the certificates representing such Shares
bear
a legend substantially similar to the following and agrees that it will hold
such Shares subject thereto:
THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES
LAWS. NEITHER THIS SECURITY NOR ANY PORTION HEREOF OR INTEREST HEREIN
MAY BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS
THE
SAME IS REGISTERED UNDER SAID ACTS AND APPLICABLE STATE SECURITIES LAWS OR
UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THE COMPANY SHALL
HAVE RECEIVED, AT THE EXPENSE OF THE HOLDER HEREOF, EVIDENCE OF SUCH EXEMPTION
REASONABLY SATISFACTORY TO THE COMPANY (WHICH MAY INCLUDE, AMONG OTHER THINGS,
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY).
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(b) Capacity
of the Investor; Execution of Agreement. Such Investor has all
requisite power, authority, and capacity to enter into this Agreement and to
perform the transactions and obligations to be performed by it hereunder. The
execution and delivery of this Agreement, and the performance by the Investor
of
the transactions and obligations contemplated hereby have been duly authorized
by all requisite corporate or individual, as the case may be, action of the
Investor. This Agreement has been duly executed and delivered by the
Investor and constitutes a valid and legally binding agreement of the Investor,
enforceable in accordance with its terms, except as enforcement thereof may
be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws, both state and federal, affecting the enforcement of creditors’ rights or
remedies in general from time to time in effect and the exercise by courts
of
equity powers or their application of principles of public policy.
(c) Accredited
Investor. Each Investor is an “accredited
investor” as defined in Rule 501(a) of Regulation D promulgated under
the 1933 Act.
(d) Suitability
and Sophistication. The Investor has (i) such knowledge and
experience in financial and business matters that it is capable of independently
evaluating the risks and merits of purchasing the Shares it is purchasing;
(ii)
independently evaluated the risks and merits of purchasing such Shares and
has
independently determined that the Shares are a suitable investment for it;
and
(iii) sufficient financial resources to bear the loss of its entire investment
in such Shares. The Investor has had an opportunity to review: the
Company’s Annual Report on Form 10-K for the year ended December 31, 2006 and
the Company’s quarterly reports on Form 10-Q for the periods ended March 31,
2007 and June 30, 2007 and other filings made by the Company under Section
13(a)
of the Exchange Act since January 1, 2004 or such later time as the Company
commenced such filings (the “SEC Filings”).
(e) Brokers,
Finders, and Agents. The Investor is not, directly or indirectly,
obligated to anyone acting as broker, finder, or in any other similar capacity
in connection with this Agreement or the transactions contemplated
hereby. No Person has or, immediately following the consummation of
the transactions contemplated by this Agreement, will have, any right, interest
or valid claim against the Company or the Investor for any commission, fee
or
other compensation as a finder or broker in connection with the transactions
contemplated by this Agreement, nor are there any brokers’ or finders’ fees or
any payments or promises of payment of similar nature, however characterized,
that have been paid or that are or may become payable in connection with the
transactions contemplated by this Agreement, as a result of any agreement or
arrangement made by the Investor.
(f) Nationality;
Residence. Each Investor is a citizen of the United States of
America and a resident of, or organized within, the state set forth underneath
such Investor’s name on Exhibit A attached to this
Agreement.
4.3 Rule
144
Each the Investor acknowledges that the Shares it will be purchasing must be
held indefinitely unless subsequently registered under the 1933 Act or unless
an
exemption from such registration is available. Each of the Investors
is aware of the provisions of Rule 144 promulgated under the 1933 Act which
permit limited resale of shares purchased in a private placement subject to
the
satisfaction of certain conditions, including, among other things, the
availability of certain current public information about the Company, the resale
occurring not less than one year after a party has purchased and paid for the
security to be sold, the sale being effected through a “broker’s
transaction” or in transactions directly with a “market maker” and
the number of shares being sold during any three-month period not exceeding
specified limitations.
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SECTION
V COVENANTS OF THE
PARTIES.
5.1 Commercially
Reasonable Efforts
Subject to the terms and conditions hereof, each party will use commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate the transactions contemplated by this
Agreement as promptly as practicable after the date hereof, including (i)
preparing and filing as promptly as practicable all documentation to effect
all
necessary applications, notices, petitions, filings, tax ruling requests and
other documents and to obtain as promptly as practicable all consents, waivers,
licenses, orders, registrations, approvals, permits, tax rulings and
authorizations necessary or advisable to be obtained from any Person and/or
any
Governmental Authority in order to consummate any of the transactions
contemplated by this Agreement, (ii) executing and delivering such other
documents, instruments and agreements as any party hereto shall reasonably
request, and (iii) taking all reasonable steps as may be necessary to obtain
all
such material consents, waivers, licenses, registrations, permits,
authorizations, tax rulings, orders and approvals. In furtherance and
not in limitation of the foregoing, each party hereto agrees to vigorously
defend any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the transactions contemplated
hereby, including seeking to have any stay or temporary restraining order
entered by any Governmental Authority vacated or
reversed. Notwithstanding the foregoing, in no event shall any party
have any obligation, in order to consummate the transactions contemplated
hereby, to (a) take any action(s) that would result in a material adverse change
in the benefits to the Company on the one hand or to the Investors on the other
of this Agreement, or (b) dispose of any material assets or make any material
change in its business other than as contemplated by this Agreement, or (c)
expend any material amount of funds or otherwise incur any material burden
other
than those contemplated by this Agreement.
5.2 Certain
Filings; Cooperation in Receipt of Consents.
(a) The
Company and the Investors shall cooperate with one another in (i) determining
whether any other action by or in respect of, or filing with, any Governmental
Authority is required, or any actions, consents, approvals or waivers are
required to be obtained from parties to any material contracts, in connection
with the consummation of the transactions contemplated hereby, and (ii) taking
or seeking any such other actions, consents, approvals or waivers or making
any
such filings, furnishing information required in connection
therewith. Each party shall permit the other party to review any
communication given by it to, and shall consult with each other in advance
of
any meeting or conference with, any Governmental Authority or, in connection
with any proceeding by a private party, with any other Person, and to the extent
permitted by the applicable Governmental Authority or other Person, give the
other party the opportunity to attend and participate in such meetings and
conferences, in each case in connection with the transactions contemplated
hereby.
(b) The
Company shall timely file all reports required to be filed by it pursuant to
Section 13(a) of the 1934 Act and all other documents required to be filed
by it
with the SEC under the 1933 Act or the 1934 Act from the date of this Agreement
to the Closing.
5.3 Divestment
of Businesses
Each of the Company and the Existing Stockholders covenants and agrees that
by
December 7, 2007, the Company will, and that they will cause the
Company to, divest itself of the Businesses. The Company and the
Existing Stockholders also covenant and agree that, by
December 7, 2007, the Company will, and that they will cause the
Company to, also divest itself of any and all assets and liabilities related
in
any manner to the Businesses, including, without limitation, all shares of
capital stock of Village Broadcasting Corp., a Delaware corporation
(“VBC”), provided, that in no event shall the Company transfer any cash
or cash equivalents of VBC (other than accounts receivable related to the
Businesses) (the transactions in the preceding two sentences are hereinafter
referred to collectively as the
“Divestment”). Notwithstanding the foregoing, the terms of
the Divestment must be satisfactory to and approved by the stockholders of
the
Company as provided in Section 5.2.
9
In
addition, any and all such liabilities and obligations being divested shall
be
assumed by the Existing Stockholders or a third party and the Company shall
be
released from all such liabilities and obligations, and the Divestment shall
be
in compliance with any and all applicable laws, rules and
regulations.
5.4 Stockholders
Consent
The Company shall cause a meeting of its stockholders to be duly called and
held, or the Existing Stockholders shall execute the Stockholders Consent,
for
the purposes of obtaining the Company Stockholder Approval as soon as reasonably
practicable. Except as provided in the next sentence, (a) the
Board of Directors of the Company shall recommend approval and adoption by
its
stockholders of the Company Stockholder Proposals (the “Company
Recommendation”), and (b) the Company shall use commercially
reasonable efforts to solicit the Company Stockholder Approval. The
Board of Directors of the Company shall be permitted to (i) not recommend
to the Company’s Stockholders that they give the Company Stockholder Approval,
or (ii) withdraw or modify in a manner materially adverse to the Investors
the Company Recommendation, only if the Board of Directors by a majority vote
determines in its good faith judgment (after consultation with outside legal
counsel) that it is necessary to withdraw or modify the Company Recommendation
to comply with its fiduciary duties under applicable law.
5.5 Public
Announcements
The parties shall consult with each other before issuing, and provide each
other
a reasonable opportunity to review and comment upon, any press release or public
statement with respect to this Agreement and the transactions contemplated
hereby and, except as may be required by applicable law, will not issue any
such
press release or make any such public statement prior to such
consultation.
5.6 Access
to Information; Notification of Certain Matters.
(a) From
the
date hereof to the Closing and subject to applicable law, the Company shall
(i)
give to each of the Investors, its counsel, financial advisors, auditors and
other authorized representatives reasonable access to the offices, properties,
books and records of the Company, and (ii) furnish or make available to each
of
the Investors, its counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as
such
Persons may reasonably request.
(b) Each
party hereto shall give notice to each other party hereto, as promptly as
practicable after the event giving rise to the requirement of such notice,
of:
(i) any
communication received by such party from, or given by such party to, any
Governmental Authority in connection with any of the transactions contemplated
hereby;
(ii) any
notice or other communication from any Person alleging that the consent of
such
Person is or may be required in connection with the transactions contemplated
by
this Agreement; and
(iii) any
actions, suits, claims, investigations or proceedings commenced or, to its
knowledge, threatened against, relating to or involving or otherwise affecting
such party or any of its Affiliates that, if pending on the date of this
Agreement, would have been required to have been disclosed, or that relate
to
the consummation of the transactions contemplated by this Agreement;
provided, however, that the delivery of any notice pursuant to
this Section 5.6(b) shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
10
5.7 Anti-Takeover
Provisions
The Company’s Board of Directors will take such action as may be necessary to
waive the applicability of the provisions of GCL 203 to the transactions
contemplated by this Agreement.
5.8 Board
of Directors
The Company agrees to set the size of its Board of Directors at five members,
appoint three designees of Xxxxxxx Xxxxx, M.D. to the Board at Closing and
obtain any necessary resignations from members of the Board so that immediately
after the Closing the Board of Directors shall consist of five
members.
5.9 Interim
Operations of the Company
During the period from the date of this Agreement to the Closing, the Company
shall conduct its business only in the ordinary course of business consistent
with past practice, except to the extent otherwise necessary to comply with
the
provisions hereof and with applicable laws and
regulations. Additionally, during the period from the date of this
Agreement to the Closing, except as required hereby in connection with this
Agreement, the Company shall not, without the prior consent of a majority in
interest of the Investors, (i) amend or otherwise change its Certificate of
Incorporation or Bylaws, (ii) issue, sell or authorize for issuance or sale
(including, but not limited to, by way of stock split or dividend), shares
of
any class of its securities or enter into any agreements or commitments of
any
character obligating it to issue such securities, other than in connection
with
the exercise of outstanding warrants or outstanding stock options granted to
directors, officers or employees of the Company prior to the date of this
Agreement; (iii) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property) with respect to its common
stock, (iv) redeem, purchase or otherwise acquire, directly or indirectly,
any
of its capital stock, (v) enter into any material contract or agreement or
material transaction or make any material capital expenditure other than those
relating to the transactions contemplated by this Agreement, (vi) create, incur,
assume, maintain or permit to exist any indebtedness except as otherwise
incurred in the ordinary course of business, consistent with past practice,
(vii) pay, discharge or satisfy claims or liabilities (absolute, accrued,
contingent or otherwise) other than in the ordinary course of business
consistent with past practice, (viii) cancel any material debts or waive any
material claims or rights, (ix) make any loans, advances or capital
contributions to, or investments in financial instruments of any Person, (x)
assume, guarantee, endorse or otherwise become responsible for the liabilities
or other commitments of any other Person, (xi) grant any increase in the
compensation payable or to become payable by the Company to any of its
employees, officers or directors or any increase in any bonus, insurance,
pension or other employee benefit plan, payment or arrangement made to, for
or
with any such employees, officers or directors, (xii) enter into any employment
contract or grant any severance or termination pay or make any such payment
with
or to any officer, director or employee of the Company, (xiii) alter in any
material way the manner of keeping the books, accounts or records of the Company
or the accounting practices therein reflected other than alterations or changes
required by GAAP or applicable law, (xiv) enter into any indemnification,
contribution or similar contract pursuant to which the Company may be required
to indemnify any other Person or make contributions to any other Person, (xv)
amend or terminate any existing contracts in any manner that would result in
any
material liability to the Company for or on account of such amendment or
termination or (xvi) or change any existing or adopt any new tax accounting
principle, method of accounting or tax election except as provided herein or
agreed to in writing by the Investors.
5.10 Indemnification
Each of the Existing Stockholders hereby agrees to indemnify and hold harmless
each of the Investors and their respective officers, directors, stockholders,
members, partners, agents and representatives from and against any and all
claims, demands, losses, damages, expenses or liabilities (including reasonable
attorneys’ fees) due to or arising out of a material breach of any
representation, warranty, covenant, agreement or obligation provided by the
Company or the Existing Stockholders hereunder or in any other certificate,
instrument or document contemplated hereby or thereby or (ii) any breach of
Section 5.3 or any liabilities or obligations of the Company
or any subsidiary of any kind or nature whatsoever relating to the Businesses,
the Divestment (including any claims related to divestment to affiliates or
the
exercise of fiduciary duties) or any other business operated by the Company
or
any subsidiary prior to the Closing as provided in
Section 5.3, but excluding only those liabilities and
obligations that ordinarily and customarily directly relate to the maintenance
of a public shell company.
11
5.11 No
Further Reverse Splits. Each Party covenants that for a period of twenty-four
(24) full months following the Closing to take no action to effect or permit
any
further reverse splits, reverse combinations or reverse consolidations of the
outstanding shares of the Company.
SECTION
VI CONDITIONS.
6.1 Conditions
to the Obligations of Each Party
The obligations of the Company and the Investors to consummate the transactions
contemplated by this Agreement are subject to the satisfaction of the following
conditions:
(a) The
Company Stockholder Approval shall have been obtained and the actions referred
to therein shall have been consummated;
(b) No
Governmental Authority of competent authority or jurisdiction shall have issued
any order, injunction or decree, or taken any other action, that is in effect
and restrains, enjoins or otherwise prohibits the consummation of the
transactions contemplated hereby; and
(c) The
parties shall have obtained or made all consents, approvals, actions, orders,
authorizations, registrations, declarations, announcements and filings
contemplated by this Agreement.
6.2 Conditions
to the Obligations of the Company
The obligations of the Company to consummate the transactions contemplated
by
this Agreement are subject to the satisfaction of the following further
conditions:
(a) The
Investors shall have performed in all material respects all of their obligations
hereunder required to be performed by them at or prior to the
Closing;
(b) The
representations and warranties of each of the Investors contained in this
Agreement shall have been true and correct when made and at and as of the time
of the Closing as if made at and as of such time (except to the extent any
such
representation or warranty expressly speaks as of an earlier date, in which
case
it shall be true and correct as of such date); and
(c) The
Company shall have received a certificate signed by each of the Investors to
the
foregoing effect.
6.3 Conditions
to the Obligations of the Investors
The obligations of the Investors to consummate the transactions contemplated
by
this Agreement are subject to the satisfaction of the following further
conditions:
(a) The
Company shall have performed in all material respects all of its obligations
hereunder required to be performed by it at or prior to the
Closing;
(b) The
representations and warranties of the Company contained in this Agreement shall
have been true and correct when made and at and as of the time of the Closing
as
if made at and as of such time (except to the extent any such representation
or
warranty expressly speaks as of an earlier date, in which case it shall be
true
and correct as of such date);
12
(c) The
Investors shall have received a certificate signed by the president or acting
president of the Company to the foregoing effect; and
(d) The
Shares being sold to the Investors hereunder for the Purchase Price shall
represent 51% of the issued and outstanding shares of capital stock of the
Company on a fully-diluted basis.
SECTION
VII TERMINATION.
7.1 Termination
This Agreement may be terminated at any time prior to the Closing by written
notice by the terminating party to the other party (except if such termination
is pursuant to Section 7.1(a)), whether before or after the
Company Stockholder Approval shall have been obtained.
(a) by
mutual
written agreement of the Investors and the Company;
(b) by
either
the Investors or the Company, if
(i) the
transactions contemplated by this Agreement shall not have been consummated
by
December 7, 2007 (the “End Date”); provided,
however, that the right to terminate this Agreement
under this
Section 7.1(b)(i) shall not be available to any party whose
breach of any provision of or whose failure to perform any obligation under
this
Agreement has been the cause of, or has resulted in, the failure of the
transactions to occur on or before the End Date; or
(ii) a
judgment, injunction, order or decree of any Governmental Authority having
competent jurisdiction enjoining the Company or the Investors from consummating
the transactions contemplated by this Agreement is entered and such judgment,
injunction, judgment or order shall have become final and nonappealable and,
prior to such termination, the parties shall have used their respective
commercially reasonable efforts to resist, resolve or lift, as applicable,
such
judgment, injunction, order or decree; provided, however, that the right to
terminate this Agreement under this Section 7.1(b)(ii) shall
not be available to any party whose breach of any provision of or whose failure
to perform any obligation under this Agreement has been the cause of such
judgment, injunction, order or decree.
(iii) at
the
Company Stockholder Meeting (including any adjournment or postponement thereof),
the Company Stockholder Approval shall not have been obtained; or
(c) by
the
Company:
(i) if
a
breach of or failure to perform any representation, warranty, covenant or
agreement on the part of the Investors set forth in this Agreement
shall have occurred which would cause the conditions set forth in Sections
6.2(a), 6.2(b) or 6.2(c) not
to be satisfied, and any such condition shall be incapable of being satisfied
by
the End Date or such breach or failure to perform has not been cured within
ten
days after notice of such breach or failure to perform has been given by the
Company to the Investors.
(d) by
the
Investors:
(i) if
a
breach of or failure to perform any representation, warranty, covenant or
agreement on the part of the Company set forth in this Agreement shall have
occurred which would cause the conditions set forth in Sections
6.3(a), 6.3(b), 6.3(c) or 6.3(d) not to be
satisfied, and any such condition is incapable of being satisfied by the End
Date or such breach or failure to perform has not been cured within ten days
after notice of such breach or failure to perform has been given by the
Investors to the Company.
13
7.2 Effect
of Termination
If this Agreement is terminated pursuant to Section 7.1,
except as set forth in Section 7.3 below, there shall be no
liability or obligation on the part of the Investors or the Company, or any
of
their respective officers, directors, shareholders, agents or Affiliates, except
that the provisions of this Section 7.2,
Section 7.3 and Section VIII of this Agreement shall
remain in full force and effect and survive any termination of this Agreement
and except that, notwithstanding anything to the contrary contained in this
Agreement, neither the Company nor the Investors shall be relieved of or
released from any liabilities or damages arising out of its material breach
of
or material failure to perform its obligations under this
Agreement.
7.3 Expenses.
Whether
or not the transactions contemplated by this Agreement are consummated, all
fees
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such
expenses.
SECTION
VIII MISCELLANEOUS.
8.1 Waivers
and Amendments
This Agreement may be amended or modified in whole or in part only by a writing
which makes reference to this Agreement executed by the Investors, the Company
and the Existing Stockholders. The obligations of any party hereunder
may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the party
claimed to have given the waiver; provided, however, that any waiver by any
party of any violation of, breach of, or default under any provision of this
Agreement or any other agreement provided for herein shall not be construed
as,
or constitute, a continuing waiver of such provision, or waiver of any other
violation of, breach of or default under any other provision of this Agreement
or any other agreement provided for herein.
8.2 Entire
Agreement
This Agreement (together with the Schedules and the Exhibits hereto) and the
other agreements and instruments expressly provided for herein, together set
forth the entire understanding of the parties hereto and supersede in their
entirety all prior contracts, agreements, arrangements, communications,
discussions, representations, and warranties, whether oral or written, among
the
parties with respect to the subject matter hereof.
8.3 Governing
Law
This Agreement shall in all respects be governed by and construed in accordance
with the internal substantive laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
8.4 Public
Announcements
The parties shall consult with each other before issuing, and provide each
other
a reasonable opportunity to review and comment upon, any press release or public
statement with respect to this Agreement and the transactions contemplated
hereby and, except as may be required by applicable law, will not issue any
such
press release or make any such public statement prior to such
consultation.
8.5 Notices
Any notice, request or other communication required or permitted hereunder
shall
be in writing and be deemed to have been duly given (a) when personally
delivered or sent by facsimile transmission (the receipt of which is confirmed
in writing), (b) one Business Day after being sent by a nationally recognized
overnight courier service or (c) five Business Days after being sent by
registered or certified mail, return receipt requested, postage prepaid, to
the
parties at their respective addresses set forth below.
14
|
If
to the Company or the Existing Stockholders:
|
Longfoot
Communications Corp
0000
Xxxxxx Xxxx, Xxxxx 000
Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx
Xxxxx, CEO
|
|
with
a courtesy copy (not constituting notice) to:
|
Xxxxx
X. Xxxxxxxx, Esq.
Law
Offices of Xxxxx X. Xxxxxxxx and Associates
0000
Xxxxxx Xxxx., 0xx
Xxxxx
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000)
000-0000
|
|
if
to Investors:
|
At
the addresses set forth across from each Investor’s name on
Exhibit A hereto.
|
|
with
a copy to:
|
Xxxxxx
X. Xxxxxxxx, Esq.
Xxxxxxxxx
Xxxxxxx, P.A.
0000
Xxxxxxxx Xxxxxx
Xxxxx,
Xxxxxxx 00000
Facsimile: (000)
000-0000
and
Any
party by written notice to the other may change the address or the
persons
to whom notices or copies thereof shall be
directed.
|
8.6 Counterparts;
Facsimile Signatures
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, and all of which together will constitute
one
and the same instrument. Any facsimile copy of this Agreement will be
deemed an original for all purposes.
8.7 Successors
and Assigns
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns, except
that the Company may not assign or transfer its rights hereunder without the
prior written consent of the Investors.
8.8 Third
Parties
Nothing expressed or implied in this Agreement is intended, or shall be
construed, to confer upon or give any Person other than the parties hereto
and
their successors and assigns any rights or remedies under or by reason of this
Agreement.
8.9 Schedules
The Schedules and Exhibit A attached to this Agreement are incorporated
herein and shall be part of this Agreement for all purposes.
8.10 Headings
The
headings in this Agreement are solely for convenience of reference and shall
not
be given any effect in the construction or interpretation of this
Agreement.
15
8.11 Interpretation
Whenever
the context may require, any pronoun used herein shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns, pronouns
and verbs shall include the plural and vice versa.
[Signature
Page Follows]
16
SIGNATURES
PAGES TO
BY
AND AMONG
THE
EXISTING STOCKHOLDERS AND THE
INVESTORS
IN
WITNESS WHEREOF, the Company and each of the Investors have executed this
Agreement as of the date first above written.
| THE COMPANY: | |||
| Longfoot Communications Corp. | |||
| a Delaware corporation | |||
|
By:
|
/s/ XXXXXX XXXXX | ||
| Name: Xxxxxx Xxxxx | |||
| Title: CEO | |||
| THE INVESTORS: | |||
| Frost Gamma Investment Trust | |||
|
By:
|
/s/ XXXXXXX XXXXX | ||
| /s/ XX. XXXX XXXXX | |||
| Xx. Xxxx Xxxxx | |||
| /s/ XXXXXX X. XXXXX | |||
| Xxxxxx X. Xxxxx | |||
| /s/ XXXXXXXX XXXXXXXX | |||
| Xxxxxxxx Xxxxxxxx | |||
| THE EXISTING STOCKHOLDERS: | |||
| /s/ SIM XXXXX | |||
| Sim Xxxxx | |||
| /s/ XXXXXX XXXXX | |||
| Xxxxxx Xxxxx | |||
17
| /s/ XXXX XXXXX | |||
| Xxxx Xxxxx | |||
| PP6O, LLC | |||
|
|
By:
|
/s/ SIM XXXXX | |
| Its: | Member | ||
| Gusmail, LLC | |||
|
|
By:
|
/s/ XXXXXX XXXXX | |
| Its: | Member | ||
| 32 Mayall, LLC | |||
|
|
By:
|
/s/ XXXX XXXXX | |
| Its: | Member | ||
18
EXHIBIT A
SCHEDULE
OF INVESTORS
|
Name,
Address and
State
of Residence
|
Number
of Shares of Common
Stock
to be Purchased
|
Percentage
of
Shares
Purchased
|
|
Frost
Gamma Investments Trust
0000
Xxxxxxxx Xxxxxxxxx
Xxxxx
0000
Xxxxx,
Xxxxxxx 00000
|
1,222,713
|
72%
|
|
Xx. Xxxx
Xxxxx
0000
Xxxxxxxx Xxxxxxxxx
Xxxxx
0000
Xxxxx,
Xxxxxxx 00000
|
305,677
|
18%
|
|
Xxxxxx
X. Xxxxx
0000
Xxxxxxxx Xxxxxxxxx
Xxxxx
0000
Xxxxx,
Xxxxxxx 00000
|
84,911
|
5%
|
|
Xxxxxxxx
Xxxxxxxx
0000
Xxxxxxxx Xxxxxxxxx
Xxxxx
0000
Xxxxx,
Xxxxxxx 00000
|
84,911
|
5%
|
A-1
