STOCK PURCHASE AGREEMENT
Exhibit
10.17
This
STOCK PURCHASE AGREEMENT (this “Agreement”) is entered into as of November 27,
2006 by and between Accountabilities, Inc., a Delaware corporation (the
“Issuer”) and Tri-State Employment Services, Inc., a Nevada corporation (the
“Investor”).
RECITALS
WHEREAS,
the Investor desires to purchase from the Issuer, and the Issuer desires to
issue and sell to the Investor, 1,000,000 shares (the “Shares”) of the Issuer’s
Common Stock, $.01 par value (the “Common Stock”); and
NOW,
THEREFORE, the parties agree as follows:
ARTICLE
I.
SALE
AND PURCHASE OF COMMON STOCK
1.1 Sale
and Purchase of Common
Stock. Upon the terms and subject to the conditions set forth
herein, the Issuer hereby issues and sells to the Investor and the Investor
hereby purchases from the Issuer one million (1,000,000) Shares for a cash
purchase (the “Purchase Price”) price per Share equal to $.40
($400,000 in the aggregate). Contemporaneous with the execution of
this Agreement, the Investor is (a) paying Two Hundred Thousand Dollars
($200,000) by wire transfer to an account designated by the Issuer and (b)
delivering a promissory note (the Note”) payable to the Issuer in the remaining
amount of the Purchase Price, and the Issuer is delivering certificates
representing the Shares to the Investor registered in the name of the
Investor. The form of Note is attached hereto as Exhibit
A.
ARTICLE
II.
REPRESENTATIONS
AND WARRANTIES OF THE ISSUER
2.1 Organization
and Standing;
Certificate of Incorporation and By-laws. The Issuer is a
corporation duly organized and existing under the laws of Delaware and is in
good standing under such laws. Each of the Issuer’s Subsidiaries is a
corporation duly organized and existing under the laws of its respective
jurisdiction of incorporation and is in good standing under such
laws. Each of the Issuer and its Subsidiaries has the requisite
corporate power to own the properties owned by it and to conduct business as
being conducted by it.
2.2 Corporate
Power. The
Issuer has the requisite corporate power and authority to enter into this
Agreement, issue and sell the Shares to the Investor and carry out and perform
its obligations under the terms of this Agreement.
2.3 Capitalization. The
Issuer’s authorized capital stock consists of 95,000,000 shares of Common Stock,
of which 12,600,000 shares are issued and are outstanding as of the date of
this
Agreement, and 5,000,000 shares of Preferred Stock, of which no shares are
outstanding as of the date of this Agreement. All the aforesaid
issued and outstanding shares
1
are
duly
authorized, validly issued, fully paid and nonassessable. There are
no outstanding preemptive, conversion or other rights, options, warrants or
agreements granted or issued by or binding upon the Issuer for the purchase
or
acquisition of any shares of its capital stock.
2.4 Authorization. All
corporate action on the part of the Issuer necessary for the authorization,
execution, delivery and performance by the Issuer of this Agreement and the
consummation of the transactions contemplated herein and for the authorization,
issuance and delivery of the Shares has been taken. This Agreement is
a valid and binding agreement of the Issuer, enforceable in accordance with
its
terms. The execution, delivery and performance by the Issuer of this
Agreement and compliance herewith and the issuance and sale of the Shares will
not result in any violation of and will not conflict with, or result in a breach
of any of the terms of, or constitute a default under, any provision of law
to
which the Issuer is subject, the Issuer’s Certificate of Incorporation or
By-laws, or any mortgage, indenture, agreement, instrument, judgment, decree,
order, rule or regulation or other restriction to which the Issuer or any
predecessor thereof is a party or by which it is bound, or result in the
creation of any lien, charge, mortgage or other encumbrance (“Lien”) upon any of
the properties or assets of the Issuer pursuant to any such term, or result
in
the suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license, authorization or approval applicable to the Issuer’s operations or any
of its assets or properties. No shareholder has any preemptive rights
or rights of first refusal by reason of the issuance of the
Shares. The Shares, when issued in compliance with the provisions of
this Agreement, will be validly issued, fully paid and nonassessable, and will
be free of any Liens.
2.5 Financial
Information. The Issuer has delivered to Investor (A) an
unaudited balance sheet of the Issuer’s professional and workforce solutions
staffing services operations (the “Operations”) as of September 30, 2006 and (B)
an unaudited statement of operations and an unaudited statement of cash flows
of
the Operations for the fiscal year ended September 30, 2006 (the
“Financial Statements”). The Financial Statements present fairly the
financial position, results of operations, cash flows, changes in financial
position and changes in shareholders’ equity (deficit), as applicable, of the
Operations at the dates and for the periods to which they relate, have been
prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods involved (except as otherwise
indicated in the notes thereto) and show all material liabilities, absolute
or
contingent, of the Operations required to be recorded therein in accordance
with
generally accepted accounting principles as at the respective dates thereof
(subject to customary year-end audit adjustments).
2.6 Consents. No
consent,
approval, qualification, order or authorization of, or filing with, any
governmental or regulatory authority is required in connection with the Issuer’s
valid execution, delivery or performance of this Agreement, or the offer, sale
or issuance of the Shares by the Issuer, or the consummation of any other
transaction contemplated on the part of the Issuer hereby, except the filing
of
notices under applicable state and federal securities laws.
2.7 No
Undisclosed
Liabilities. Except (i) as and only to the extent set forth on
the Financial Statements, (ii) as disclosed on Schedule 2.9 hereto and
(ii) for liabilities and obligations incurred in the ordinary course of
business since September 30, 2006 consistent with past practice, the Issuer
has
no liabilities or obligations, whether absolute, accrued,
2
contingent
or otherwise, that would be required to be recorded on a balance sheet prepared
in accordance with generally accepted accounting principles.
2.8 Compliance
with Laws and
Orders. The Issuer is in compliance in all material respects with
all applicable laws, rules, regulations, permits, orders or other pronouncements
of any governmental entity having the effect of law and no action or proceeding
is pending or, to the Issuer’s knowledge, threatened, against the Issuer
alleging any failure to so comply.
2.9 Tax
Status. Except as
set forth on Schedule 2.9:
|
(a)
|
the
Issuer (i) has made or filed
all federal, state, local and foreign tax returns, reports, statements
and
declarations required by any jurisdiction to which it is subject,
and each
such return, report, statement and declaration is true, correct and
complete in all material respects, (ii) has paid all material taxes,
penalties, interest, additions to tax and other governmental assessments
and charges to the extent due and payable, whether or not shown to
be due
on any such return, report, statement or declaration, (iii) has withheld
or deducted all material taxes or other amounts from payments to
employees
or other persons required to be deducted or withheld, and has timely
paid
over such taxes or other amounts to the appropriate taxing authorities
to
the extent due and payable and (iv) has set aside on its books provisions
adequate for the payment of all material taxes for periods subsequent
to
the periods to which such returns, reports, statements or declarations
apply; and
|
|
(b)
|
there
are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any
jurisdiction, and, to the knowledge of the Issuer, there is no basis
for
any such claim.
|
2.10 No
Stockholder
Approval. No stockholder approval is required to be obtained by
the Issuer for the sale or issuance of the Shares to the Investor hereby or
for
the Issuer’s performance of this Agreement. Each of the Sellers under
that certain Stock Purchase Agreement dated as of the date of this Agreement
between such Sellers and the Investor has been made aware of the transactions
contemplated by this Agreement, including the Purchase Price, and has consented
thereto.
2.11 Disclosure. No
representations or warranties in this Article II of this Agreement, including
the Schedules, and no statement contained in any document (including the
Financial Statements) furnished to the Investor or any of its representatives
pursuant to the provisions hereof or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of material
fact or omits or will omit to state any material fact necessary, in light of
the
circumstances under which it was made, in order to make the statements herein
or
therein not misleading. There are no facts known to the Issuer which have or
could reasonably be expected to have a material adverse effect on the
assets, liabilities (contingent or otherwise), results of operations, financial
condition or prospects of the Issuer which have not been set forth in this
Agreement, including any Schedule and the Financial Statements.
3
ARTICLE
III.
REPRESENTATION
AND WARRANTIES OF THE INVESTOR
The
Investor represents and warrants to the Issuer as follows:
3.1 Corporate
Power. The
Investor has the requisite corporate power and authority to enter into this
Agreement and the requisite corporate power and authority to purchase the Shares
and to carry out and perform its obligations under this Agreement.
3.2 Investment. The
Investor is acquiring the Shares for investment for its own account (or for
the
account of one of its Subsidiaries) and not with the view to, or for resale
in
connection with, any distribution thereof. It understands that the
Shares have not been and, subject to the terms of this Agreement, will not
be
registered under the Securities Act by reason of a specified exemption from
the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of its investment intent as express
herein.
3.3 Accredited
Investor
Status. The Investor is an “accredited investor” as that term is
defined in Rule 501(a) promulgated under the Securities Act of 1933, as
amended.
3.4 Limitations
on
Disposition. The Investor acknowledges that the Shares must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available and, except as provided
in Article V, the Issuer has no obligation to register the Shares or make
available an exemption from registration. The Investor has been
advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions. The
Investor consents to affixing on certificates representing the Shares the
following legend:
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL FOR
OR
SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT
REQUIRED.
3.5 Access
to Data. The
Investor has had an opportunity to discuss the Issuer’s business, management and
financial affairs with the Issuer’s management. The Investor
understands that the Issuer is considering (a) a transaction (a “Sale
Transaction”) in which would transfer a substantial portion of its business and
operations to a corporation in exchange for shares of that corporation which
has
shares traded on the OTC Bulletin Board (a “Potential Purchaser”) and (b)
issuing convertible notes and warrants in a private placement transaction which
could ultimately have the effect of diluting the Investor’s percentage interest
in the
4
Issuer.
The Investor agrees that it shall not use any such information, or disclose
such
information to others for use, in connection with purchasing, selling or trading
in the securities of the Issuer or any Potential Purchaser identified to it
in
any manner that is in violation of legal or regulatory restrictions applicable
from time to time, and Investor acknowledges a duty not to purchase, sell or
trade in securities on the basis of any material inside information that is
not
publicly known.
3.6 Authorization. All
corporate action on the part of the Investor necessary for the authorization,
execution, delivery and performance by the Investor of this Agreement and the
consummation of the transactions contemplated herein has been
taken. This Agreement is a valid and binding agreement of the
Investor, enforceable in accordance with its terms. The execution,
delivery and performance by the Investor of this Agreement and compliance
herewith will not result in any violation of and will not conflict with, or
result in a breach of any of the terms of, or constitute a default under, any
provision of law to which the Investor is subject, the Investor’s Articles of
Incorporation, or any mortgage, indenture, agreement, instrument, judgment,
decree, order, rule or regulation or other restriction to which the Investor
or
any predecessor thereof is a party or by which it is bound.
ARTICLE
IV.
BOARD
REPRESENTATION
As
soon
as reasonably practicable after the date hereof, the Board of Directors of
the
Issuer shall appoint a designee of Investor as a director of the
Company. For so long as the Investor owns all of the Shares it is
acquiring pursuant to this Agreement and the shares of Issuer Common Stock
being
acquired pursuant to the Stock Purchase Agreement of even date herewith between
Investor and certain stockholders of Issuer, the Board of Directors will include
a designee of Investor on each slate of nominees proposed to
stockholders of the Issuer for election to the Board of Directors and shall
recommend to the stockholders the election of such designee to the
Board.. The Issuer will not enter into a Sale Transaction unless the
Potential Purchaser agrees to a similar provision with respect to representation
on the Board of Directors of the Potential Purchaser.
ARTICLE
V.
INDEMNITY
5.1 Indemnification
by the Issuer. Subject to the terms and conditions
of this Article V, the Issuer agrees to reimburse, indemnify and hold harmless
the Investor, its directors, officers, employees, agents, representatives and
its present and future affiliates (each, an “Investor Indemnified Party”)
from, against and in respect of any and all demands, claims, actions or causes
of action, assessments, losses, damages, liabilities, costs and expenses,
including interest, penalties, and reasonable attorneys’ fees and disbursements
(collectively, “Losses”) incurred by any Investor Indemnified Party
resulting from, or that exist, relate, or arise due to, any of the following
(collectively, “Investor Claims”):
|
(a)
|
prior
to their expiration in
accordance with Section 6.3, any breach of any representation or
warranty
made by the Issuer in this
Agreement;
|
5
|
(b)
|
the
nonfulfillment of any
covenant or agreement of the Issuer pursuant to this Agreement;
and
|
|
(c)
|
any
and all actions, suits, proceedings, claims or demands incident to
any of
the foregoing or initiated to enforce the indemnification provisions
herein.
|
5.2 Indemnification
by the Investor. Subject to the terms and conditions of this
Article V, the Investor agrees to reimburse, indemnify and hold harmless the
Issuer, and its directors, officers, employees, agents, representatives and
its
present and future affiliates (collectively, the “Issuer Indemnified
Parties”) from, against and in respect of any and all Losses incurred by any
Issuer Indemnified Party resulting from, or that exist or arise due to, any
of
the following (collectively, “Issuer Claims,” and together with Investor
Claims, “Claims”):
|
(a)
|
prior
to their expiration in
accordance with Section 6.3, any breach of any representation or
warranty
made by the Investor in this
Agreement;
|
|
(b)
|
the
nonfulfillment of any
covenant or agreement of the Investor pursuant to this Agreement;
and
|
|
(c)
|
any
and all actions, suits,
proceedings, claims or demands incident to any of the foregoing or
initiated to enforce the indemnification provisions
herein.
|
5.3 Procedures
for
Indemnification. No party shall be liable for any Claim for
indemnification under this Article V unless written notice of a Claim for
indemnification is delivered by the party seeking indemnification (the
“Indemnified Party”) to the party from whom indemnification is sought
(the “Indemnifying Party”) prior to the expiration of the applicable
survival period, if any, set forth in Section 6.3. If any third party
notifies the Indemnified Party with respect to any matter which may give rise
to
a Claim for indemnification (a “Third Party Claim”) against the
Indemnifying Party under this Article V, then the Indemnified
Party shall notify the Indemnifying Party promptly thereof in writing and in
any
event within 30 days after receiving notice from a third party; provided that
no
delay on the part of the Indemnified Party in notifying the Indemnifying Party
shall relieve the Indemnifying Party from any obligation hereunder except to
the
extent the Indemnifying Party is materially prejudiced thereby. All
notices given pursuant to this Section 5.3 shall describe
with reasonable specificity the Third Party Claim and the basis of the
Indemnified Party’s Claim for indemnification. Upon the Indemnified
Party giving notice of the Third Party Claim to the Indemnifying Party, the
Indemnifying Party shall be entitled to participate therein and, to the extent
desired, to assume the defense thereof with counsel of its choice as long as
the
Indemnifying Party agrees in writing that the Indemnified Party is entitled
to
indemnification by the Indemnifying Party for such action. If the
Indemnifying Party provides the Indemnified Party with notice of its
determination to assume the defense of such Third Party Claim, the Indemnified
Party may nevertheless participate in (but not control) such defense, but the
Indemnifying Party shall not be liable to the Indemnified Party for any legal
or
other expenses subsequently incurred by the Indemnified Party in connection
with
the defense of the Third
6
Party
Claim, other than reasonable costs of investigation, unless the Indemnifying
Party does not actually assume the defense thereof following notice of such
election. If the Indemnifying Party does not assume the defense of
such Third Party Claim, the Indemnified Party shall have the right to undertake
the defense of such Third Party Claim, by counsel or other representatives
of
its own choosing, on behalf of and for the account and risk of the Indemnifying
Party. Neither the Indemnified Party nor the Indemnifying Party shall
consent to the entry or any judgment or enter into any settlement of any Third
Party Claim that might give rise to liability of the other party under this
Article V without such party’s consent, which consent shall not be unreasonably
withheld, conditioned or delayed.
MISCELLANEOUS
5.4 Opinion
of
Counsel. Contemporaneous wit the execution of this Agreement, the
Issuer shall deliver or cause to be delivered an opinion of counsel in a form
satisfactory to Investor.
5.5 Governing
Law. This
Agreement shall be governed in all respects by the laws of the State of
Delaware.
5.6 Survival. The
representations, warranties, covenants and agreements made herein shall for
one
year after the date hereof.
5.7 Successors
and
Assigns. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors and assigns of the parties hereto.
5.8 Entire
Agreement; Amendment;
Waiver. This Agreement (including the Schedules and Annexes
hereto) and the other documents delivered pursuant hereto constitute the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and thereof. Neither this Agreement nor any terms
hereof may be amended, waived, discharged or terminated, except by a written
instrument signed by the Issuer and the Investor.
5.9 Separability. In
case
any provision of this Agreement shall be invalid, illegal or unenforceable,
the
validity, legality and enforceability of the remaining provisions shall not
in
any way be affected or impaired thereby.
5.10 Agent’s
Fees.
|
(a)
|
The
Issuer hereby agrees to
indemnify and to hold the Investor harmless of and from any liability
for
commission or compensation in the nature of an agent’s fee to any broker
or other Person or firm (and the costs and expenses of defending
against
such liability or asserted liability) arising from any act by the
Issuer
or any of its employees or representatives in connection with the
transactions contemplated by this
Agreement.
|
7
|
(b)
|
The
Investor hereby agrees to
indemnify and to hold the Issuer harmless from any liability for
any
commission or compensation in the nature of an agent’s fee or other Person
or firm (and the costs and expenses of defending against such liability
or
asserted liability) arising from any act by the Investor or any of
its
employees or representatives in connection with the transactions
contemplated by this Agreement.
|
5.11 Titles
and
Subtitles. The titles of the paragraphs and subparagraphs of this
Agreement are for convenience of reference only and are not to be considered
in
construing this Agreement.
5.12 United
States
Dollars. All dollar amounts in this Agreement are in United
States Dollars.
5.13 Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall
be
an original, but all of which together shall constitute one
instrument.
| ACCOUNTABILITIES, INC. | TRI-STATE EMPLOYMENT SERVICES, INC. | |||
|
/s/
Xxxxx
Xxxxxxx
|
/s/
Xxxxxx
Xxxxxxx
|
|||
|
Name:
Xxxxx
Xxxxxxx
|
Name:
Xxxxxx
Xxxxxxx
|
|||
|
Title:
President
|
Title:
President
|
8
SCHEDULE
2.9
Tax
Status
Certain
tax returns required to be filed by the Issuer’s predecessor, Humana Trans
Services Holding Corp. (“Humana”), and Humana’s subsidiaries have not yet been
filed, including the returns for 2004 and 2005. The Issuer estimates that the
unpaid tax liabilities of one of such subsidiaries is approximately
$400,000.
9
