STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of
October 16, 2000 by and among XxxxxX0XX.xxx, Inc., a Delaware corporation (the
"Company"), and Headwaters Incorporated, a Delaware corporation (the
"Purchaser"). The Purchaser desires to make an investment in the Company on the
terms and conditions set forth in this Agreement.
In consideration of the mutual promises and covenants contained in this
Agreement, the parties to this Agreement agree as follows:
1. Purchase and Sale of Shares. Upon the terms and conditions contained
herein, and provided that Company is not in default hereunder, the Company shall
sell to the Purchaser, and the Purchaser shall purchase from the Company, on the
dates set forth in the table below, the number of shares (the "Shares") of
Common Stock of the Company determined by dividing the purchase price set forth
in the table below by the Price Per Share (as defined below):
Date Purchase Price
---- --------------
October 16, 2000 $150,000
October 20, 2000 $150,000
October 25, 2000 $110,000
November 1, 2000 $100,000
2. Price Per Share. The Price Per Share shall initially be $3.00 per
Share. The Company is currently attempting to raise $5 million in equity capital
in a limited offering (the "Offering") of which the sale of the Shares is a
part. If the Company sells equity capital in the Offering at a price per common
stock equivalent share less than $3.00 per share, then the Price Per Share
hereunder shall be adjusted to be the lowest price per common stock equivalent
share of securities sold in the Offering. If the Company does not receive a
written commitment to fund at least $2,500,000 in gross proceeds from the sale
of equity capital in the Offering on or before January 31, 2001, or if the
Company fails to receive at least $2,500,000 in gross proceeds from the sale of
equity capital in the Offering on or before February 15, 2001, then the Price
Per Share hereunder shall be adjusted to be the lower of the Price Per Share
adjusted pursuant to the preceding sentence or $0.50 per Share. All adjustments
to the Price Per Share shall be effective retroactively for all purchases
hereunder. The price per common stock equivalent share of preferred stock or
other securities sold in the Offering which are convertible into or exchangeable
for common stock shall mean the purchase price of such preferred stock or other
security divided by the maximum number of shares of common stock into which such
security may be converted or exchanged. If in connection with the Offering
affiliates of the Company transfer shares to other investors in the Offering for
a consideration less than the Price Per Share then in effect, such transferred
shares shall be considered to have been issued by the Company to such investors
as part of their purchase in the Offering.
3. Issuance of Share Certificates. Purchaser will wire transfer the
purchase price for Shares purchased to an account designated by Company on the
dates set forth in Paragraph 1. Upon receipt of such wire transferred funds,
Company shall immediately arrange for the delivery of share certificates to
Purchaser for the number of Shares then purchased based on the Price Per Share
then in effect. Immediately upon the happening of any event which causes an
adjustment to the Price Per Share pursuant to Paragraph 2, Company shall deliver
to Purchaser (i) a statement, certified by an officer of Company, setting forth
the adjusted Price Per Share, and (ii) certificate(s) for the additional Shares
which would have been issued on all prior purchase dates, had the adjusted Price
Per Share then been in effect.
4. Consulting Agreement, Cross Default. Contemporaneous with the
execution of this Agreement, Company shall enter into a six-month management
consulting agreement (the
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"Consulting Agreement" with Purchaser. A default by Company of its obligations
under the Consulting Agreement shall be considered a default under this
agreement and vice versa.
5. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser as follows:
(a) Organization. The Company (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and (ii) has all requisite power and authority to carry on its
business, to own and hold its properties and assets, to enter into and perform
this Agreement.
(b) Authorization. The execution, delivery and performance by
the Company of this Agreement have been duly and validly authorized by the
Company's Board of Directors and no authorization or approval of the Company's
shareholders is required in connection therewith. This Agreement constitutes the
legal, valid and binding obligations of the Company and each is enforceable
against the Company in accordance with its respective terms, except as such
enforcement may be limited by bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors' rights generally.
(c) No Conflict. The execution, delivery and performance by
the Company of this Agreement: (i) will not conflict with, result in a breach of
or constitute a default under any contract, agreement, indenture, loan or credit
agreement, deed of trust, mortgage, lease, security agreement or other
arrangement to which the Company is a party or by which the Company or any of
its properties or assets is bound or affected; (ii) will not cause the Company
to violate or contravene any provision of its Certificate of Incorporation or
Bylaws; or (iii) require any authorization, consent, approval, permit, exemption
or other action by or notice to any court or administrative or governmental body
pursuant to the Certificate of Incorporation or Bylaws of the Company, any law,
statute, rule or regulation to which the Company is subject or any agreement,
instrument, order, judgment or decree to which the Company is subject.
(d) Common Stock. All of the shares of Common Stock issuable
under this Agreement have been duly authorized and reserved for issuance and,
upon payment thereon and issuance thereof in accordance with the terms of this
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable.
(e) Capitalization. The authorized capital stock of the
Company consists of 25,000,000 shares of Common Stock, par value $.001 per
share, and 5,000,000 shares of Preferred Stock, par value $.001 per share, and
the Company has no authority to issue any other capital stock or security. As of
the date hereof, a total of 7,226,500 shares of Common Stock have been issued
and such shares are duly authorized, validly issued, fully paid and
nonassessable and no shares of Preferred Stock have been issued. Except as
provided in this Agreement and the Company's Certificate of Incorporation, there
are no outstanding preemptive, conversion or other rights, subscriptions,
options, warrants, calls, contracts, demands, commitments, convertible or
exchangeable securities or other instruments, agreements or arrangements of any
character or nature whatever issued by or binding upon the Company for the
purchase or acquisition of any shares of its capital stock, other than (i)
outstanding warrants to purchase an aggregate of 200,000 shares of Common Stock,
and (ii) options granted or to be granted to employees and consultants of the
Company under the Company's stock option plan to be implemented.
(f) Financial Statements. Company has provided Purchaser with
its financial statements for the years ended September 30, 2000. Such annual
financial statements have been prepared in accordance with generally accepted
accounting principles, consistently applied. Such interim financial statements
do not contain full footnote disclosure and but have otherwise been prepared in
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accordance with generally accepted accounting principles, consistently applied.
All such financial statements present fairly the results of operations of the
Company for the periods stated and its financial condition as of the date the
balance sheets contained therein.
(g) Full Disclosure. No statement by Company contained in this
Agreement or any other instrument or document given by Company in connection
with this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary, in light of the circumstances under which it
was made, in order to make the statements herein or therein not misleading.
6. Restrictions on Transfer and Purchaser Representations. In acquiring
the Shares, the Purchaser makes the following representations, warranties and
agreements:
(a) The Purchaser understands that the Shares will be issued
by the Company without registration under the Securities Act of 1933, as amended
("Act"), and without qualification and/or registration under applicable state
securities laws pursuant to specific exemptions from registration and/or
qualification contained in the Act and in applicable state securities laws. The
Purchaser understands that the foregoing exemptions depend upon, among other
things, the bona fide nature of his investment intent as expressed herein.
(b) The Purchaser agrees that none of the Shares, nor any
interest in the Shares, will be sold, transferred, or otherwise disposed of by
him without registration and/or qualification under the Act or applicable state
securities laws unless the Purchaser first demonstrates to the satisfaction of
the Company that specific exemptions from such registration and qualification
requirements are available with respect to such resale or disposition or
provides the Company an opinion of counsel satisfactory to the Company that a
contemplated transfer may be made without violation of the Act or applicable
state securities laws.
(c) The Purchaser represents and warrants to the Company the
following:
(i) The Purchaser is acquiring the Shares for
investment purposes only, for such Purchaser's own account, and not as
nominee or agent for any other person, and not with a view to, or for
resale in connection with, any distribution thereof within the meaning
of the Act.
(ii) The Purchaser has received all the information
he considers necessary or appropriate to evaluate the risks and merits
of an investment in the Shares, and has had an opportunity to discuss
the Company's business, management, financial affairs and prospects
with the Company's management.
(iii) The Purchaser is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated under the
Act. All information that such Purchaser has provided to the Company
including, but not limited to, the information contained in the
investor questionnaire delivered in connection herewith, is complete
and accurate and may be relied upon by the Company.
(iv) The Purchaser is able to bear the economic risks
related to a purchase of the Shares. The Purchaser either has a
pre-existing personal or business relationship with the Company or any
of its officers, directors of controlling persons, or by reason of the
Purchaser's business or financial experience or the business or
financial experience of his professional advisor who is unaffiliated
with and who is not compensated by the Company or any
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affiliated or selling agent of the Company, directly or indirectly, has
the capacity to protect his own interests in connection with the
subject transactions.
(d) The Purchaser acknowledges that the Shares to be issued to
him will contain a legend which prohibits an offer to transfer or a transfer of
all or any portion of the Shares unless the Shares are registered under the Act
or unless an exemption from registration is available with respect to such
resale or disposition.
7. Piggyback Registration Rights. The Company hereby grants the
Purchaser "piggyback" registration rights to register all common stock of the
Company now owned or hereafter acquired by the Purchaser (the "Registrable
Securities") for resale under the Act. If the Company determines to file a
registration statement to which the registration rights apply, it shall so
notify the undersigned and allow the undersigned twenty one (21) days to elect,
in writing, to include the Registrable Securities therein. If the offering is
being underwritten, the Purchaser will enter into an underwriting agreement with
such underwriter and will pay underwriting discounts, commissions and expenses
with respect to its sales, as well as any taxes on such sales and the cost of
any separate counsel retained by the Purchaser; provided that all other costs of
the Registration Statement shall be borne by the Company. The piggyback
registration rights described herein shall not apply with respect to
registrations on inappropriate forms, such as Form S-8 or S-4. Shares of Common
stock owned by the Purchaser shall cease to be Registrable Securities at such
time as, in the opinion of Company's counsel reasonably satisfactory to
Purchaser, such shares may be publicly sold without registration under the Act.
These registration rights shall be binding upon successors to the Company by way
of merger or otherwise and shall be assignable to subsequent owners of the
Registrable Securities who do not receive unrestricted and un-legended
certificates therefor.
8. Co-Sale. The Company shall cause its officers, directors and 10%
shareholders (the "Principal Holders") to agree that they will not sell Company
common stock held by them unless they first give Purchaser notice of such
proposed sale and allow Purchaser to include common stock (including the Shares
and other common stock now owned or hereafter acquired) in such sale on the same
terms and conditions. The amount of common stock which Purchaser may include in
the sale shall be in the same proportion as Purchaser's holdings bear to the
holdings of the Principal Holder(s) giving notice of the proposed sale.
Purchaser's co-sale rights shall not apply to gifts or other transfers primarily
for family or estate-planning purposes; provided that the transferee remains
obligated with respect to future sales, and shall not apply to open market sales
into an established public market for the common stock. Purchaser's co-sale
rights shall expire after the Company has successfully completed an underwritten
public offering of its common stock. The Company shall place appropriate legends
regarding such co-sale rights on the certificates of the Principal Holders.
9. Indemnification. The Purchaser hereby indemnifies the Company, its
affiliates and its agents and holds them harmless from and against any and all
loss, damage, liability or expense, including costs and reasonable attorneys'
fees, incurred by the Company (or its affiliates or agents) by reason of or in
connection with any misrepresentation made by Purchaser herein, any breach of
any of Purchaser's warranties, or Purchaser's failure to fulfill any of his
covenants or agreements under this Agreement. This Agreement and the
representations and warranties contained herein shall survive Purchaser's
purchase of the Shares and shall be binding upon Purchaser's heirs, executors,
administrators, successors and assigns.
10. Market Stand-off. Except as provided in Paragraph 7, the Purchaser
(on behalf of himself, his successors and assigns), agrees not to sell or
otherwise transfer or dispose of any Shares acquired under this Agreement for a
period not to exceed one hundred eighty (180) days following the effective date
of a registration statement of the Company filed under the Act in connection
with an
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underwritten public offering of the Company's Common Stock if so requested by
the underwriter of such offering. The Company may impose stock transfer
instructions with respect to the shares subject to the foregoing restriction
until the end of such period. Provided, however, that in the event a majority of
shareholders of the Company's stock sign a lock up agreement in conjunction with
the registration of the stock, the Purchaser shall be obligated to abide by the
same terms and conditions as such a lock up agreement requires.
11. Severability. In the event any provision of this Agreement shall
finally be determined to be unlawful, such provision shall be deemed to be
severed from this Agreement and every other provision of this Agreement shall
remain in full force and effect.
12. Attorneys' Fees. In the event any action in law or equity,
arbitration or other proceeding is brought for the enforcement of this Agreement
or in connection with any of the provisions of this Agreement, the prevailing
party or parties shall be entitled to its attorneys' fees and other costs
reasonably incurred in such action or proceeding.
13. Notices. Any notice to be given hereunder shall be given (except as
otherwise expressly set forth herein) by registered or certified mail, postage
prepaid, by cable, telex or facsimile, or may be delivered by hand or by
messenger and shall be deemed to have been received as follows: if given by
registered or certified mail, five business days after posting; if given by
cable, two business days after dispatch; if given by telex or facsimile, one
business day after dispatch; and if delivered by hand or by messenger and
receipted for by or on behalf of the party to whom the notice is directed, at
the time of such delivery. Any notice shall be sent to the address given in the
signature blocks of this Agreement or to such other address as the relevant
party may notify to the other.
14. Entire Agreement; Amendment. Other than the Consulting Agreement
and disclosure materials given to Purchaser in connection herewith, this
Agreement and the exhibits hereto contain all of the agreements between the
parties with respect to the matters contained herein and supersedes all prior
written or oral and all contemporaneous oral agreements or understandings
between the parties pertaining to any such matters. No provision of this
Agreement may be amended or added to except by an agreement in writing signed by
the parties to this Agreement.
15. Controlling Law. This Agreement shall be governed by, interpreted
under, and construed and enforced in accordance with the laws of the State of
California applicable to agreements made and to be performed wholly within the
State of California. In the event a judicial proceeding is necessary, the sole
forum for resolving disputes arising under or relating to this Agreement shall
be the applicable courts in Orange County, California, and all related appellate
courts, and the parties hereby consent to the jurisdiction of such courts, and
that venue shall be in Orange County, California.
16. Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original but all of which shall constitute one and the same
instrument. "COMPANY"
STYLE X0XX.XXX, INC., a Delaware corporation
By: /s/ Xxxxx Xxxxxxx
----------------------
Name: Xxxxx Xxxxxxx
Title: Chairman
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Address: 00000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
The foregoing Agreement is hereby accepted as of the date first above written.
"PURCHASER"
HEADWATERS, INCORPORATED
a Delaware corporation
By: /s/ Xxxx X. Xxxxxx
----------------------
Xxxx Xxxxxx,
CEO
Address:
00000 X. Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
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