Exhibit 10.26
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of September 16, 2003,
is entered into by and between FRONTLINE COMMUNICATIONS CORP., a Delaware
corporation, with headquarters located at Xxx Xxxx Xxxx Xxxxx, 0xx Xxxxx, P. O.
Xxx 0000, Xxxxx Xxxxx, XX 00000 (the "Company"), and the undersigned (the
"Buyer").
Buyer hereby represents and warrants to, and agrees with the Company as follows:
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, (THE "1933 ACT"), ARE RESTRICTED SECURITIES (AS DEFINED
IN RULE 144 UNDER THE 1933 ACT) AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO REGISTRATION UNDER THE 1933 ACT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT. THE SECURITIES ARE
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER SUCH LAWS PURSUANT TO REGISTRATION OR AN
EXEMPTION THEREFROM. THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER REGULATORY
AUTHORITY ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
WITNESSETH:
WHEREAS, the Company and the Buyer are executing and delivering this Agreement
in reliance upon exemptions from securities registration afforded under
Regulation D ("Regulation D") as promulgated by the United States Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act") and/or Section 4(2) of the 1933 Act; and
WHEREAS, the Company will issue to Buyer, upon the terms and conditions of this
Agreement (i) shares of common stock, $.01 par value per share (the "Common
Stock") of the Company, and (ii) Warrants to purchase shares of Common Stock
(the "Warrant Shares"). The Common Stock, Warrants and Warrant Shares are
hereinafter referred to collectively, as the "Securities";
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
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1. AGREEMENT TO PURCHASE; PURCHASE PRICE.
a. Purchase. The undersigned hereby agrees to purchase from the Company
U.S.D.$150,000 of Common Stock of the Company (the "Shares") at a price per
share equal to $.30 (the "Purchase Price Per Share").
b. Warrant Coverage. The Buyer shall receive warrants to purchase 150,000
shares of Common Stock on the Closing Date. The Warrants shall have a five
year term and an exercise price of $.40.
c. Form of Payment. The Buyer shall pay the purchase price for the Shares by
delivering immediately available good funds in United States Dollars to the
bank account designated by the Company.
d. Method of Payment. Payment of the purchase price for the Common Stock shall
be made by wire transfer of funds to:
Not later than 4:00 p.m., Eastern Standard Time, on or before September 19, 2003
the Buyer shall wire the Purchase Price to the Company. Upon execution of this
Agreement, the Company shall instruct its transfer agent to issue the Shares.
The Company shall deliver the certificate representing the Shares being
purchased to the Buyer within three (3) business days of execution of this
Agreement. Time is of the essence with respect to such payment, and failure by
the Buyer to make such payment, shall allow the Company to cancel this
Agreement.
2. BUYER REPRESENTATIONS, WARRANTIES; ACCESS TO INFORMATION; INDEPENDENT
INVESTIGATION.
The Buyer represents and warrants to, and covenants and agrees with, the Company
as follows:
a. The Buyer is purchasing the Shares for its own account for investment only
and not with a view towards the resale, public sale or distribution thereof and
not with a view to or for sale in connection with any distribution thereof;
b. The Buyer is (i) an "accredited investor" as that term is defined in Rule 501
of the General Rules and Regulations under the 1933 Act by reason of Rule
501(a)(3), and (ii) experienced in making investments of the kind described in
this Agreement and the related documents, (iii) able, by reason of the business
and financial experience of its officers (if an entity) and professional
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advisors (who are not affiliated with or compensated in any way by the Company
or any of its affiliates or selling agents), to protect its own interests in
connection with the transactions described in this Agreement, and the related
documents, and (iv) able to afford the entire loss of its investment in the
Securities;
c. All subsequent offers and sales of the Securities by the Buyer shall be made
pursuant to registration under the 1933 Act or pursuant to an exemption from
registration;
d. The Buyer understands that the Securities are and will be, as the case may
be, offered and sold, to it in reliance on specific exemptions from the
registration requirements of federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and the Buyer's compliance
with, the representations, warranties, agreements, acknowledgements and
understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to receive and
offer of and acquire the Common Stock and of the Securities, as the case may be;
e. The Buyer and its advisors, if any, have either been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Securities which have been
requested by the Buyer or have had access thereto. The Buyer and its advisors,
if any, have been afforded the opportunity to ask questions of the Company and
have received complete and satisfactory answers to any such inquiries. Without
limiting the generality of the foregoing, the Buyer has also had the opportunity
to obtain and to review the Company's (1) Quarterly Reports on Form 10-QSB for
the fiscal quarter ended March 31, 2003, and (2) Forms 8-K and 8-K/A filed since
December 31, 2002, the (3) Company's Form 10KSB for the period ended December
31, 2002, and (4) copies of the Company's press releases since December 31, 2002
(the "Company's SEC Documents").
f. The Buyer understands that its investment in the Securities involves a high
degree of risk;
g. The Buyer understands that no federal or state agency or any other government
or governmental agency has passed on or made any recommendation or endorsement
of the Securities;
h. This Agreement has been duly and validly authorized, executed and delivered
on behalf of the Buyer and is a valid and binding agreement of the Buyer
enforceable in accordance with its terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally.
i. The Buyer is not purchasing the Securities as a result of, or pursuant to,
any advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio or
presented at any seminar or meeting whose attendees, including the Buyer, had
been invited by any general advertising or general solicitation.
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3. COMPANY REPRESENTATIONS
The Company represents and warrants to the Buyer that:
a. Concerning the Shares. The Shares have been duly authorized and, when paid
for as provided herein, will be duly and validly issued, fully paid and
non-assessable and will not subject the holder thereof to personal liability by
reason of being such holder. There are no preemptive rights of any stockholder
of the Company, as such, to acquire the Common Stock.
b. Reporting Company Status. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is duly qualified as a foreign corporation in all jurisdictions in which the
failure to so qualify would have a material adverse effect on the Company and
its subsidiaries taken as a whole. The Company has registered its Common Stock
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the Common Stock is listed and traded on The American Stock
Exchange. The Company has filed all material required to be filed pursuant to
all reporting obligations under either Section 13(a) or l5(d) of the Exchange
Act.
c. Stock Purchase Agreement; Registration Rights Agreement and Stock. This
Agreement and the Registration Rights Agreement, the form of which is attached
hereto (the "Registration Rights Agreement"), have been duly and validly
authorized by the Company, this Agreement has been duly executed and delivered
by the Company and this Agreement is, and the Registration Rights Agreement,
when executed and delivered by the Company, will be, valid and binding
agreements of the Company enforceable in accordance with their respective terms,
subject as to enforceability to general principles of equity, the
indemnification provisions of the Registration Rights Agreement, and to
bankruptcy, insolvency, moratorium, and other similar laws affecting the
enforcement of creditors' rights generally; and the Securities will be duly and
validly issued, fully paid and non-assessable when delivered on behalf of the
Company upon payment therefor in accordance with this Agreement, subject to
general principles of equity and to bankruptcy, insolvency, moratorium, or other
similar laws affecting the enforcement of creditors' rights generally.
d. Non-contravention. The execution and delivery of this Agreement and the
Registration Rights Agreement by the Company, the issuance of the Securities,
and the consummation by the Company of the other transactions contemplated by
this Agreement, the Registration Rights Agreement, and the Common Stock do not
and will not conflict with or result in a breach by the Company of any of the
terms or provisions of or constitute a default under, the articles of
incorporation or by-laws of the Company, or any material indenture, mortgage,
deed of trusts or other material agreement or instrument to which the Company is
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a party or by which it or any of its properties or assets are bound, or any
material existing applicable law, rule, or regulation or any applicable decree,
judgment, or order of any court, United States federal or state regulatory body,
administrative agency, or other governmental body having jurisdiction over the
Company or any of its properties or assets, except such conflict, breach or
default which would not have a material adverse effect on the transactions
contemplated herein. The Company has obtained any and all waivers required in
order to enter into this Agreement.
e. Approvals. No authorization, approval or consent of any court, governmental
body, regulatory agency, self-regulatory organization, or stock exchange or
market is required to be obtained by the Company for the issuance and sale of
the Securities to the Buyer as contemplated by this Agreement.
f. SEC Filings. None of the Company's filings with the Securities and Exchange
Commission since December 31, 2002 contained, at the time they were filed, any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements made therein in light of the circumstances under which
they were made, not misleading. The Company has since June 1, 1998 filed all
requisite forms, reports and exhibits thereto with the Securities and Exchange
Commission. Buyer represents that it has received copies of all of the Company's
filings with the Securities and Exchange Commission since December 31, 2002,
including but not limited to the Preliminary Proxy Statement on Form 14A.
g. Absence of Certain Changes. Since December 31, 2002, there has been no
material adverse change and no material adverse development in the business,
properties, operations, financial condition, outstanding securities, or results
of operations of the Company, except as disclosed in the documents referred to
in Section 2(f) hereof.
h. Full Disclosure. There is no fact known to the Company (other than general
economic conditions known to the public generally) that has not been disclosed
in writing to the Buyer (including through the publicly filed documents of the
Company) that (i) could reasonably be expected to have a material adverse effect
on the condition (financial or otherwise) or in the business affairs, properties
or assets of the Company or (ii) could reasonably be expected to materially and
adversely affect the ability of the Company to perform its obligations pursuant
to this Agreement.
i. Absence of Litigation. Except as disclosed in the documents referred to in
Section 2(f) hereof, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board or body pending or, to the
knowledge of the Company or any of its subsidiaries, threatened against or
affecting the Company or any of its subsidiaries, wherein an unfavorable
decision, ruling or finding would have a material adverse effect on the
properties, business, condition (financial or other), or results of operations
of the Company and its subsidiaries taken as a whole or the transactions
contemplated by this Agreement or any of the documents contemplated hereby or
which would materially adversely affect the validity or enforceability of, or
the authority or ability of the Company to perform its obligations under, this
Agreement or any of such other documents.
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4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer Restrictions. The Buyer acknowledges that (1) the Securities have
not been and are not being registered under the provisions of the 1933 Act and,
except as provided in the Registration Rights Agreement, the Securities have not
been and are not being registered under the 1933 Act, and may not be transferred
unless (A) subsequently registered thereunder, or (B) the Buyer shall have
delivered to the Company an opinion of counsel, reasonably satisfactory in form,
scope and substance to the Company and its counsel, to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration; (2) any sale of the Securities made in
reliance on Rule 144 promulgated under the 1933 Act may be made only in
accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such Securities under circumstances in which the
seller, or the person through whom the sale is made, may be deemed to be an
underwriter, as that term is used in the 1933 Act, may require compliance with
some other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (3) neither the Company nor any other person is under any
obligation to register the Securities (other than pursuant to the Registration
Rights Agreement) under the 1933 Act or to comply with the terms and conditions
of any exemption thereunder.
b. Restrictive Legend. The Buyer acknowledges and agrees that until such time as
the Common Stock have been registered under the 1933 Act as contemplated by the
Registration Rights Agreement and sold in accordance with such Registration
Statement, the shares of Common Stock, shall bear a restrictive legend in
substantially the following form (and a stop transfer order may be placed
against transfer of the shares of Common Stock):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES") HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT''),
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED OR SOLD EXCEPT IN
RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND SUCH LAWS OR PURSUANT TO A REGISTRATION STATEMENT.
c. Registration Rights Agreement. The parties hereto agree to enter into the
Registration Rights Agreement on or before the Closing Date (as hereinafter
defined).
d. Filings. The Company undertakes and agrees to make all necessary filings in
connection with the sale of the Common Stock to the Buyer as required by United
States securities laws and regulations, or by AMEX. Buyer agrees to make all
necessary filings with the SEC, including Schedule 13D, if applicable.
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e. Reporting Status. Provided the Buyer beneficially owns any of the Shares, the
Company shall file all reports required to be filed with the SEC pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and the Company shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would permit such termination. Notwithstanding the
foregoing, the provisions of this clause shall terminate once the Buyer becomes
eligible to sell the Common Stock issued in this transaction pursuant to Rule
144.
f. Use of Proceeds. The Company will use the proceeds from the sale of the
Shares (excluding amounts paid by the Company for legal fees in connection with
the sale of the Common Stock) for working capital and shall not, directly or
indirectly (except in any situation where the Company is acquired by merger or
otherwise by a third party) use such proceeds for any loan to or investment in
any other corporation, partnership enterprise or other person.
5. ADJUSTMENTS
a. Stock dividends; splits. If after the date on which the Shares are first
issued to Buyer and while Buyer still owns said Shares, the number of
outstanding shares of Common Stock is increased by a stock dividend payable in
shares of Common Stock or by a split of shares of Common Stock or other similar
event, then, on the date following the date fixed for the determination of
holders of Common Stock entitled to receive such stock dividend or split, the
number of shares of Common Stock purchased by the Buyer shall be increased in
proportion to such increase in outstanding shares (ignoring for this purpose any
provision for the repurchase or cash payment of fractional shares).
b. Aggregation of shares. If after the date on which the Shares are first issued
to Buyer and while Buyer still owns said Shares, the number of outstanding
shares of Common Stock is decreased by a reverse stock-split, consolidation,
combination or reclassification of shares of Common Stock or other similar
event, then, after the effective date of such reverse stock-split,
consolidation, combination or reclassification, the number of shares of Common
Stock purchased by the Buyer shall be decreased in proportion to such decrease
in outstanding shares (ignoring for this purpose any provision for the
repurchase or cash payment of fractional shares).
c. Reorganization, etc. If after the date on which the Shares are is first
issued to the Buyer, any capital reorganization or reclassification of the
Shares, or consolidation or merger of the Company with another corporation, or
the sale of all or substantially all of its assets to another corporation or
other similar event shall be effected, then, as a condition of such
reorganization, reclassification, consolidation, merger, or sale, lawful and
fair provision shall be made whereby the Buyer shall thereafter have the right
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to purchase and receive upon the basis and upon the terms and conditions
specified in this Agreement such shares of stock, securities, or assets as may
be issued or payable with respect to or in exchange for a number of outstanding
shares of such Common Stock equal to the number of shares of such stock
immediately theretofore purchasable and receivable upon the exercise of the
rights represented by this Agreement had such reorganization, reclassification,
consolidation, merger, or sale not taken place, and in such event appropriate
provision shall be made with respect to the rights and interests of the Buyer to
the end that the provisions hereof shall thereafter be applicable, as nearly as
may be in relation to any share of stock, securities, or assets thereafter
deliverable upon the exercise hereof. Upon the occurrence of any event specified
in this section, the Company shall give written notice of the record date for
such dividend, distribution, or subscription rights, or the effective date of
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding up or issuance. Such notice shall also specify the date as
of which the holders of Common Stock of record shall participate in such
dividend, distribution, or subscription rights, or shall be entitled to exchange
their Common Stock for stock, securities, or other assets deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding up or issuance. Failure to give such notice, or any defect
therein shall not affect the legality or validity of such event.
d. Notices of Changes. Upon every adjustment of the number of shares of Common
Stock purchased by the Buyer, the Company shall give written notice thereof to
the Buyer, which notice shall state the increase or decrease, if any, in the
number of shares of Common Stock purchased by the Buyer setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.
6. TRANSFER AGENT INSTRUCTIONS.
(i) Promptly following the delivery by the Buyer of the aggregate purchase price
for the Shares in accordance with Section l(c) hereof the Company will instruct
its transfer agent to issue certificates for the Shares purchased, bearing the
restrictive legend specified in Section 4(b) of this Agreement. The Shares shall
be registered in the name of the Buyer or its nominee (duly assigned to), and in
such denominations to be specified by the Buyer. If the Buyer provides the
Company with an opinion of counsel reasonably satisfactory to the Company and
its counsel that registration of a resale by the Buyer of any of the Securities
in accordance with clause (1)(B) of Section 4(a) of this Agreement is not
required under the 1933 Act, the Company shall (except as provided in clause (2)
of Section 4(a) of this Agreement) permit the transfer of the Securities. (ii)
After effectiveness of a Registration Statement, and upon receipt of an Exercise
Notice in the form annexed hereto as Exhibit A, the Company shall deliver the
number of shares specified in the Notice to the Buyer, free of any restrictive
legend (except for any legend required under the '33 Act) or stop transfer
instructions, to the address specified in the notice within seven (7) business
days of the Company's receipt of the notice.
7. CLOSING DATE.
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The date and time of the issuance and sale of the Shares (the "Closing Date")
shall be September 19, 2003.
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Buyer understands that the Company's obligation to sell the Shares to the
Buyer pursuant to this Agreement is conditioned upon:
a. The receipt and acceptance by the Company of such Agreement as evidenced by
execution of such Agreement;
b. The accuracy on the Closing Date of the representations and warranties of the
Buyer contained in this Agreement as if made on the Closing Date and the
performance by the Buyer on or before the Closing Date of all covenants and
agreements of the Buyer required to be performed on or before the Closing Date;
c. There shall not be in effect any law, rule or regulation prohibiting or
restricting the transactions contemplated hereby, or requiring any consent or
approval which shall not have been obtained.
9. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to purchase the Common Stock
is conditioned upon:
a. Acceptance by Buyer of an Agreement for the sale of Shares, as indicated by
execution of this Agreement;
b. Delivery by the Company to the Buyer the certificate representing the Shares
in accordance with this Agreement;
c. The accuracy on the Closing Date of the representations and warranties of the
Company contained in this Agreement as if made on the Closing Date and the
performance by the Company on or before the Closing Date of all covenants and
agreements of the Company required to be performed on or before the Closing
Date; and
d. The Company shall prepare a Board Resolution authorizing this offering, a
copy of which shall be delivered to Buyer.
10. GOVERNING LAW: MISCELLANEOUS.
This Agreement shall be governed by and interpreted in accordance with the laws
of the State of Delaware. Each of the parties consents to the jurisdiction of
the Supreme Court of the State of New York, County of Rockland (or the federal
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courts whose districts encompass any part of the County of Rockland) in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based on forum non coveniens, to the bringing of any such proceeding in such
jurisdictions. A facsimile transmission of this signed Agreement shall be legal
and binding on all parties hereto. This Agreement may be signed in one or more
counterparts, each of which shall be deemed an original. The headings of this
Agreement are for convenience of reference and shall not form part of, or affect
the interpretation of, this Agreement. If any provision of this Agreement shall
be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction. This Agreement may be amended only by an instrument
in writing signed by the party to be charged with enforcement. This Agreement
supersedes all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof.
11. NOTICES. Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be deemed effectively
given upon personal delivery or seven business days after deposit in the United
States Postal Service, by (a) advance copy by fax, and (b) mailing by express
courier or registered or certified mail with postage and fees prepaid, addressed
to each of the other parties thereunto entitled at the following addresses, or
at such other addresses as a party may designate by ten days advance written
notice to each of the other parties hereto.
COMPANY: Xxxxxxx Xxxx-Xxxxxxxx, President
Frontline Communications Corp.
Xxx Xxxx Xxxx Xxxxx, 0X Xxxxx
P. O. Xxx 0000
Xxxxx Xxxxx, XX 00000
Telecopier No.: 0-000-000-0000
WITH A COPY TO: Xxxx XxXxxxxxxx, Esq.
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
0000 X Xxxxxx XX Xxxxx 000
Xxxxxxxxxx, XX 00000
Telecopier No.: 0-000-000-0000
BUYER: At the address set forth on the signature
page of this Agreement.
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each party's representations and
warranties shall survive the execution and delivery hereof of this Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer or one of
its officers thereunto duly authorized as of the date set forth below.
NUMBER OF SHARES OF COMMON STOCK TO BE PURCHASED: 500,000
AGGREGATE PURCHASE PRICE OF SUCH COMMON STOCK: $150,000
SIGNATURES FOR ENTITIES
BUYER: Platinum Partners Value Arbitrage Fund, LLP
c/o Xxxx Norlicht
000 X. 00xx Xxxxxx
Xxx Xxxx, XX
IN WITNESS WHEREOF, the undersigned represents that the foregoing statements are
true and correct and that it has caused this Stock Purchase Agreement to be duly
executed on its behalf this 16th day of September, 2003.
000 X. 00xx Xxxxxx, XX, XX 00000 ___/s/________________________________
Address Platinum Partners Value Arbitrage Fund,
LLP
Printed Name of Subscriber
Telecopier No. (000) 000-0000 By: Xxxxx Xxxxxxx
(Signature of Authorized Person)
Cayman Islands CFO
Jurisdiction of Incorporation Printed Name and Title
or Organization
Federal Identification No.: 141861957
This Agreement has been accepted as of the date set forth below.
FRONTLINE COMMUNICATIONS CORP
By: _____/s/________________________ Date: September 16, 2003
Printed Name and Title: Xxxxxxx X. Xxxx-Xxxxxxxx, CEO
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