Amendment No. 1 to the
STOCK PURCHASE AGREEMENT
This Amendment No. 1, dated as of January 31, 2004 to the Stock Purchase
agreement (the "Agreement"), dated as of April 2003, among ChampionLyte
Holdings, Inc. (the "Seller"), and Advantage Fund I, LLC hereto ("Purchaser").
WHEREAS, subject to the terms and conditions set forth in this Agreement in
accordance with Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act"), the Seller desires to issue and sell to the Purchaser desires
to purchase from the Seller (i) up to $ 1,000,000 of the common stock (the
"Common Stock") of ChampionLyte Holdings, Inc. (the "Company" a/k/a the "Seller"
if and only if the Company is selling the Common Stock to the Purchaser), as
more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Seller and the Purchaser agree as
follows:
ARTICLE I
PURCHASE AND SALE
1.1 The Closing
(a) The Closing. Subject to the terms and conditions set forth in this
Agreement, the Seller shall issue and sell to the Purchaser and the Purchaser
shall purchase from the Seller the Common Stock for an aggregate installment
payment purchase price of $ 1,000,000. The closing of the purchase and sale of
the Common Stock (the "Closing") shall take place at the offices of Xxxxxx &
Xxxxxx, LLP, Attorneys at Law ("Xxxxxx & Jaclin"), immediately following the
execution hereof or such later date as the parties shall agree. The date of the
Closing is hereinafter referred to as the "Closing Date."
(i) On the Closing Date, the parties shall deliver or shall cause to be
delivered the following: (A) the Seller shall deliver to Xxxxxx & Xxxxxx: (1)
Common Stock in the aggregate principal equal to 100% of the Purchased Stock (as
defined hereafter) plus the Security Deposit Stock, as defined hereafter. (2) a
Power of Attorney, in the form of Exhibit A, (3) an executed Registration Rights
Agreement, dated the date hereof, among the Seller and the Purchaser, in the
form of Exhibit B (the "Registration Rights Agreement"), and (4) Transfer Agent
Instructions, in the form of Exhibit C, delivered to and acknowledged by the
transfer agent for the Common Stock (the "Transfer Agent Instructions"), and (B)
each Purchaser will deliver to Xxxxxx & Jaclin: (1) 100% of the installment of
the purchase price indicated below such Purchaser's name on the signature page
to this Agreement in United States dollars in immediately available funds by
wire transfer or check to Xxxxxx & Xxxxxx, who shall act as escrow agent in this
transaction in addition to acting as legal counsel to Purchaser.
(ii) Xxxxxx & Jaclin shall act as escrow agent and upon its receipt of the
Common Stock and installment purchase price and its confirmation of the validity
of receipt of the same, Xxxxxx & Xxxxxx shall release the installment purchase
price to the Seller and the Common Stock that has been prorata purchased to the
Purchaser. Any Common Stock which has not been fully paid for by the Purchaser
based on the fact that the total purchase price is being paid in installments,
shall be held in escrow by Xxxxxx & Jaclin and shall only be released as is
discussed hereafter.
(iii) The purchase price for the Common Stock is $0.07 per share for the Common
Stock. The Purchaser shall be obligated to purchase $ 1,000,000 worth of Common
Stock, which shall be paid for in twenty equal installments of fifty thousand
dollars each (the "Installment"). The exact number of shares of Common Stock
purchased shall be calculated on the $0.07 per share basis. In addition to the
Purchased Stock, the Seller shall deliver to Xxxxxx & Xxxxxx Common Stock in the
amount of 200% of the number of shares of the Purchased Stock to be held in
escrow by Xxxxxx & Jaclin, (the "Security Deposit Stock").
1.2 Defined Terms. The Purchased Stock and Security Deposit Stock shall
collectively be known as the "Shares" or "Securities".
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Seller. The Seller hereby makes the
following representations and warranties to the Purchaser:
(a) Organization and Qualification. The Seller is an individual or a corporation
duly incorporated, validly existing and in good standing under the laws of its
state of incorporation with the requisite corporate power and authority to own
and use its properties and assets and to carry on its business as currently
conducted. The Seller is duly qualified to do business and is in good standing
as a foreign corporation or other entity in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate, (x)
adversely affect the legality, validity or enforceability of the Securities (as
defined below) or any of this Agreement, the Registration Rights Agreement, the
Transfer Agent Instructions, or the Power of Attorney (collectively, the
"Transaction Documents"), (y) have or result in a material adverse effect on the
results of operations, assets, prospects, or condition (financial or otherwise)
of the public company whose stock is being purchased under this Agreement, or
(z) adversely impair the Seller's ability to perform fully on a timely basis its
obligations under any of the Transaction Documents (any of (x), (y) or (z), a
"Material Adverse Effect").
(b) Authorization; Enforcement. The Seller has the requisite power and authority
to enter into and to consummate the transactions contemplated by each of the
Transaction Documents and otherwise to carry out its obligations thereunder. The
execution and delivery of each of the Transaction Documents by the Seller and
the consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company and no further
action is required by the Company. Each of the Transaction Documents has been
duly executed by the Seller and, when delivered in accordance with the terms
hereof, will constitute the valid and binding obligation of the Seller
enforceable against the Seller in accordance with its terms. Neither the Seller
nor any related entity is in violation of any of the provisions of its
respective certificate or articles of incorporation, by-laws or other
organizational or charter documents.
(c) Capitalization. The number of authorized, issued and outstanding capital
stock of the Company is accurately set forth in the public filings of the
Company, or, if it is not, then the Seller has attached hereto as Exhibit D the
accurate information. Except as disclosed in Exhibit D, the Company owns all of
the capital stock of each Subsidiary. No shares of Common Stock are entitled to
preemptive or similar rights, nor is any holder of the securities of the Company
or any Subsidiary entitled to preemptive or similar rights arising out of any
agreement or understanding with the Company, the Seller or any Subsidiary by
virtue of any of the Transaction Documents. Except as disclosed in Exhibit D,
there are no outstanding options, warrants, script rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings, or arrangements by which the Company, the Seller or
any Subsidiary is or may become bound to issue additional shares of Common
Stock, or securities or rights convertible or exchangeable into shares of Common
Stock. This Agreement will not obligate the Seller or the Company to issue
shares of Common Stock or other securities to any
Person other than the Purchaser and will not result in a right of any holder of
Company securities to adjust the exercise or conversion or reset price under
such securities.
(d) Issuance of this Agreement. The Seller will have (and will, at all times
while this Agreement is outstanding, maintain) an adequate reserve of duly
authorized shares of Common Stock, reserved for issuance to the Purchaser, to
enable it to perform its conversion, exercise and other obligations under this
Agreement. Such number of reserved and available shares of Common Stock shall
not be less than the sum of 250% of the number of shares of the Purchased Stock.
(e) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Seller and the consummation by the Seller of the transactions
contemplated thereby do not and will not (i) conflict with or violate any
provision of the Seller or Company's or any Subsidiary's certificate or articles
of incorporation, bylaws or other charter documents (each as amended through the
date hereof), or (ii) subject to obtaining the Required Approvals (as defined
below), conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), as could not, individually or in the aggregate, have or
result in a Material Adverse Effect. The business of the Company is not being
conducted in violation of any law, ordinance or regulation of any governmental
authority, except for violations which, individually or in the aggregate, could
not have or result in a Material Adverse Effect.
(f) Filings, Consents and Approvals. Neither the Seller, Company nor any
Subsidiary is required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Seller or the
Company of the Transaction Documents, other than (i) the filings required
pursuant to Section 3.10, (ii) the filing with the Securities and Exchange
Commission (the "Commission") of a registration statement meeting the
requirements set forth in the Registration Rights Agreement and covering the
resale of the Shares, (iii) applicable Blue Sky filings, and (iv) in all other
cases where the failure to obtain such consent, waiver, authorization or order,
or to give such notice or make such filing or registration could not have or
result in, individually or in the aggregate, a Material Adverse Effect (the
items described in clauses (i)-(iv) are collectively, the "Required Approvals").
(g) Litigation; Proceedings. There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Seller, threatened against or affecting the Seller or the Company or any of its
Subsidiaries or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an "Action") which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, individually or in the aggregate, have or result in a
Material
Adverse Effect. Neither the Seller, Company nor any Subsidiary, nor any director
or officer thereof, is or has been the subject of any Action involving a claim
of violation of or liability under federal or state securities laws or a claim
of breach of fiduciary duty. The Seller or Company does not have pending before
the Commission any request for confidential treatment of information and the
Seller and Company has no knowledge of any expected such request that would be
made prior to the Effectiveness Date (as defined in the Registration Rights
Agreement). There has not been, and to the best of the Seller and Company's
knowledge there is not pending or contemplated, any investigation by the
Commission involving the Seller or the Company or any current or former director
or officer of the Company.
(h) No Default or Violation. Neither the Seller, Company nor any Subsidiary (i)
is in default under or in violation of (and no event has occurred which has not
been waived which, with notice or lapse of time or both, would result in a
default by the Seller, Company or any Subsidiary under), nor has the Seller,
Company or any Subsidiary received notice of a claim that it is in default under
or that it is in violation of, any indenture, loan or credit agreement or any
other agreement or instrument to which it is a party or by which it or any of
its properties is bound, (ii) is in violation of any judgment or order of any
court, arbitrator or governmental body, or (iii) is in violation of any statute,
rule or regulation of any governmental authority, in each case of clauses (i),
(ii) or (iii) above, except as could not individually or in the aggregate, have
or result in a Material Adverse Effect.
(i) Private Offering. Assuming the accuracy of the representations and
warranties of the Purchaser set forth in Sections 2.2(b)-(g), the offer,
issuance and sale of the Securities to the Purchaser as contemplated hereby are
exempt from the registration requirements of the Securities Act. Neither the
Seller, Company nor any Person acting on its behalf has taken or is
contemplating taking any action which could subject the offering, issuance or
sale of the Securities to the registration requirements of the Securities Act
including soliciting any offer to buy or sell the Securities by means of any
form of general solicitation or advertising.
(j) SEC Documents; Financial Statements. The Company has filed all reports
required to be filed by it under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), including, without limitation, all filings required
pursuant to Sections 13(a) and 15(d) thereof, for the two years preceding the
date hereof (or such shorter period as the Company was required by law to file
such material) (the foregoing materials being collectively referred to herein as
the "SEC Documents" and, together with the Schedules to this Agreement, the
"Disclosure Materials") on a timely basis or has received a valid extension of
such time of filing and has filed any such SEC Documents prior to the expiration
of any such extension. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Documents, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. All material
agreements to which the Company is a party or to which the property or assets of
the Company are subject have been filed as exhibits to the SEC Documents as
required under the Exchange Act. The financial statements of the Company
included in the SEC Documents comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved
("GAAP"), 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 and its consolidated subsidiaries as of and for the
dates thereof 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. Since the date of this Agreement, except as
specifically disclosed in the SEC Documents, (a) there has been no event,
occurrence or development that has or that could result in a Material Adverse
Effect, (b) the Company has not incurred any liabilities (contingent or
otherwise) other than (x) liabilities incurred in the ordinary course of
business consistent with past practice and (y) liabilities not required to be
reflected in the Company's financial statements pursuant to GAAP or required to
be disclosed in filings made with the Commission, (c) the Company has not
altered its method of accounting or the identity of its auditors and (d) the
Company has not declared or made any payment or distribution of cash or other
property to its stockholders or officers or directors (other than in compliance
with existing Company stock option plans) with respect to its capital stock, or
purchased, redeemed (or made any agreements to purchase or redeem) any shares of
its capital stock.
(k) Investment Company. The Company is not, and is not an Affiliate (as defined
in Rule 405 under the Securities Act) of, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(l) Certain Fees. No fees or commissions will be payable by the Company to any
broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other Person with respect to the transactions contemplated by
this Agreement. The preceding sentence does not include the Purchaser's
attorneys fees and costs, which shall be payable by the Seller/Company. The
Purchaser shall have no obligation with respect to any fees or with respect to
any claims made by or on behalf of other Persons for fees of a type contemplated
in this Section that may be due in connection with the transactions contemplated
by this Agreement. The Company shall indemnify and hold harmless the Purchaser,
their employees, officers, directors, agents, and partners, and their respective
Affiliates, from and against all claims, losses, damages, costs (including the
costs of preparation and attorney's fees) and expenses suffered in respect of
any such claimed or existing fees, as such fees and expenses are incurred.
(m) Solicitation Materials. Neither the Company nor any Person acting on the
Company's behalf has solicited any offer to buy or sell the Securities by means
of any form of general solicitation or advertising.
(n) Exclusivity. The Seller shall not issue and sell securities to any Person
other than the Purchaser without the specific prior written consent of the
Purchaser.
(o) Seniority. No indebtedness of the Company is senior to the Securities in
right of payment, whether with respect to interest or upon liquidation or
dissolution, or otherwise except as previously disclosed to the Purchaser.
(p) Listing and Maintenance Requirements. The Company has not, in the two years
preceding the date hereof, received notice (written or oral) from the OTC
Bulletin Board ("OTC") or any stock exchange, market or trading facility on
which the Common Stock is or has been listed (or on which it has been quoted) to
the effect that the Company is not in compliance with the listing or maintenance
requirements of such exchange, market or trading facility. The Company is,
and has no reason to believe that it will not in the foreseeable future continue
to be, in compliance with all such listing and maintenance requirements.
(q) Patents and Trademarks. The Company and its Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and rights which
are necessary or material for use in connection with their respective businesses
as described in the SEC Documents and which the failure to so have would have a
Material Adverse Effect (collectively, the "Intellectual Property Rights").
Neither the Company nor any Subsidiary has received a written notice that the
Intellectual Property Rights used by the Company or its Subsidiaries violates or
infringes upon the rights of any Person. To the best knowledge of the Company,
all such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights.
(r) Registration Rights; Rights of Participation. Except as disclosed in Section
6(c) of the Registration Rights Agreement, the Company has not granted or agreed
to grant to any Person any rights (including "piggy-back" registration rights)
to have any securities of the Company registered with the Commission or any
other governmental authority which has not been satisfied. Except as set forth
on Schedule 6(b) to the Registration Rights Agreement, no Person has any right
of first refusal, preemptive right, right of participation, or any similar right
to participate in the transactions contemplated by the Transaction Documents.
(s) Regulatory Permits. The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses as described in the SEC Documents, except where the failure to
possess such permits could not, individually or in the aggregate, have or result
in a Material Adverse Effect ("Material Permits"), and neither the Company nor
any such Subsidiary has received any notice of proceedings relating to the
revocation or modification of any Material Permit.
(t) Title. The Company and the Subsidiaries have good and marketable title in
fee simple to all real property owned by them which is material to the business
of the Company and its Subsidiaries and good and marketable title in all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all Liens, except for Liens
as do not materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company and its
Subsidiaries. Any real property and facilities held under lease by the Company
and its Subsidiaries are held by them under valid, subsisting and enforceable
leases of which the Company and its Subsidiaries are in compliance and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries.
(v) Labor Relations. No material labor problem exists or, to the knowledge of
the Company, is imminent with respect to any of the employees of the Company.
(w) Disclosure. The Seller confirms that neither it nor any other Person acting
on its behalf has provided any of the Purchaser or its agents or counsel with
any information that constitutes or might constitute material non-public
information. The Seller understands and confirms that the Purchaser shall be
relying on the foregoing representations in effecting transactions in securities
of the Company. All disclosure provided to the Purchaser regarding the Company,
its business
and the transactions contemplated hereby, including the Schedules to this
Agreement, furnished by or on behalf of the Seller are true and correct 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, in light
of the circumstances under which they were made, not misleading.
(x) Solvency. Based on the financial condition of the Company as of the Closing
Date, (i) the Company's fair saleable value of its assets exceeds the amount
that will be required to be paid on or in respect of the Company's existing
debts and other liabilities (including known contingent liabilities) as they
mature; (ii) the Company's assets do not constitute unreasonably small capital
to carry on its business for the current fiscal year as now conducted and as
proposed to be conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the Company, and
project capital requirements and capital availability thereof; and (iii) the
current cash flow of the Company, together with the proceeds the Company would
receive, were it to liquidate all of its assets, after taking into account all
anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its debt when such amounts are required to be paid. The Company does
not intend to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be payable on or in
respect of its debt).
2.2 Representations and Warranties of the Purchaser. Each Purchaser hereby for
itself and for no other Purchaser represents and warrants to the Seller as
follows:
(a) Organization; Authority. Such Purchaser is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with the requisite corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations thereunder. The purchase by
such Purchaser of the Securities hereunder has been duly authorized by all
necessary action on the part of such Purchaser. Each of this Agreement and the
Registration Rights Agreement has been duly executed by such Purchaser, and when
delivered by such Purchaser in accordance with the terms hereof, will constitute
the valid and legally binding obligation of such Purchaser, enforceable against
it in accordance with its terms.
(b) Intent. Such Purchaser is acquiring the Securities as principal for its own
account and not with a view to act as a statutory underwriter, without
prejudice, however, to such Purchaser's right, to sell or otherwise dispose of
all or any part of such Securities. Nothing contained herein shall be deemed a
representation or warranty by such Purchaser to hold the Securities for any
period of time. Such Purchaser is acquiring the Securities hereunder in the
ordinary course of its business. Such Purchaser does not have any agreement or
understanding, directly or indirectly, with any Person to distribute the
Securities.
(c) Purchaser Status. At the time such Purchaser was offered the Securities, it
was, and at the date hereof it is an "accredited investor" as defined in Rule
501(a) under the Securities Act.
(d) Experience of such Purchaser. Such Purchaser, either alone or together with
its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment.
(e) Ability of such Purchaser to Bear Risk of Investment. Such Purchaser is able
to bear the economic risk of an investment in the Securities and, at the present
time, is able to afford a complete loss of such investment.
(f) Access to Information. Such Purchaser acknowledges that it has reviewed the
Disclosure Materials and has been afforded (i) the opportunity to ask such
questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Company's
financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information which the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment and to verify the
accuracy and completeness of the information contained in the Disclosure
Materials. Neither such inquiries nor any other investigation conducted by or on
behalf of such Purchaser or its representatives or counsel shall modify, amend
or affect such Purchaser's right to rely on the truth, accuracy and completeness
of the Disclosure Materials and the Company's representations and warranties
contained in the Transaction Documents.
(g) General Solicitation. Such Purchaser is not purchasing the Securities as a
result of or subsequent to any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.
(h) Reliance. Such Purchaser understands and acknowledges that
(i) the Securities are being offered and sold to it without registration under
the Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the foregoing representations and such Purchaser hereby consents to such
reliance.
The Company acknowledges and agrees that no Purchaser makes or has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 Transfer Restrictions. (a) Securities which have been transferred pursuant
to this Agreement and which contain a restrictive legend may only be disposed of
pursuant to an effective registration statement under the Securities Act, to the
Company or pursuant to an available exemption from or in a transaction not
subject to the registration requirements of the Securities Act, and in
compliance with any applicable federal and state securities laws. In connection
with any transfer of Securities other than pursuant to an effective registration
statement or to the Company, except as otherwise set forth herein, the Company
may require the transferor thereof to provide to the Company an opinion of
counsel selected by the transferor, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of
such transferred securities under the Securities Act. Notwithstanding the
foregoing, the Company, without requiring a legal opinion as described in the
immediately preceding sentence, hereby consents to and agrees to register on the
books of the Company and with any transfer agent for the securities of the
Company any transfer of Securities by a Purchaser to an Affiliate of such
Purchaser or to one or more funds or managed accounts under common management
with such Purchaser, and any transfer among any such Affiliates or one or more
funds or managed accounts, provided that the transferee certifies to the Company
that it is an "accredited investor" as defined in Rule 501(a) under the
Securities Act and that it is acquiring the Securities solely for investment
purposes (subject to the qualifications hereof). Any such transferee shall agree
in writing to be bound by the terms of this Agreement and shall have the rights
of a Purchaser under this Agreement and the Registration Rights Agreement.
(b) The Purchaser agree to the imprinting on any non-free trading stock that has
been purchased, so long as is required by this Section 3.1(b), of the following
legend on the Securities:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
[CONVERTIBLE] [EXERCISABLE] HAVE BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS, AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.
The Shares shall not contain the legend set forth above nor any other legend if
the issuance of the Shares occurs at any time while, the Shares received are
free trading, a Shares Registration Statement is effective under the Securities
Act or the holder of any such security is relying on Rule 144 promulgated under
the Securities Act ("Rule 144") in connection with the resale of such Shares or
in the event there is not an effective Shares Registration Statement at such
time and Rule 144 is not then available if, in the opinion of counsel to the
Company, such legend is not required under applicable requirements of the
Securities Act (including judicial interpretations and pronouncements issued by
the staff of the Commission). The Company shall permit Purchaser Counsel to
issue the legal opinion included in the Transfer Agent Instructions to the
Company's transfer agent on the day that the Shares Registration Statement is
declared effective by the Commission (the "Effective Date"). The Company agrees
that in the event any Shares are issued with a legend in accordance with this
Section 3.1(b), it will, within three (3) Trading Days after request therefor by
a Purchaser, provide such Purchaser with a certificate or certificates
representing such Shares, free from such legend at such time as such legend
would not have been required under this Section 3.1(b) had such issuance
occurred on the date of such request. The Company may not make any notation on
its records or give instructions to any transfer agent of the Company which
enlarge the restrictions of transfer set forth in this Section.
3.2 Acknowledgment of Dilution. The Seller acknowledges that the issuance of the
Shares, will result in dilution of the outstanding shares of Common Stock, which
dilution may be substantial under certain market conditions. The Seller further
acknowledges that its obligation to issue Shares in accordance with this
Agreement, is unconditional and absolute, subject to the limitations set forth
herein, regardless of the effect of any such dilution.
3.3 Furnishing of Information. As long as the Purchaser own Securities, the
Seller agrees to help the Company to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to Section
13(a) or 15(d) of the Exchange Act, to the extent the Seller's assistance is
needed. As long as the Purchaser own Securities, if the Company is not required
to file reports pursuant to such sections, it will prepare and furnish to the
Purchaser and make publicly available in accordance with Rule 144(c) promulgated
under the Securities Act such information as is required for the Purchaser to
sell the Securities under Rule 144 promulgated under the Securities Act. The
Seller further covenants that it will take such further action as any holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Person to sell Underlying Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act, including causing its attorneys to render
and deliver any legal opinion required in order to permit a Purchaser to receive
Shares free of all restrictive legends and to subsequently sell Shares under
Rule 144 upon receipt of a notice of an intention to sell or other form of
notice having a similar effect. Upon the request of any such Person, the Company
shall deliver to such Person a written certification of a duly authorized
officer as to whether it has complied with such requirements.
3.4 Integration. The Seller shall not, and shall use its best efforts to ensure
that, no Affiliate of the Company shall, sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in Section
2 of the Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Purchaser.
3.5 Increase in Authorized Shares. If on any date the Seller would be, precluded
from issuing Shares as would then be issuable upon a conversion to permit the
Purchaser to receive the shares subscribed for (the "Current Required Minimum"),
due to the unavailability of a sufficient number of authorized but unissued or
reserved shares of Common Stock, then the Seller shall cause the Board of
Directors of the Company to promptly prepare and mail to the stockholders of the
Company proxy materials requesting authorization to amend the Company's
certificate or articles of incorporation to increase the number of shares of
Common Stock which the Company is authorized to issue to at least such number of
shares as reasonably requested by the Purchaser in order to provide for such
number of authorized and unissued shares of Common Stock to enable the Seller to
comply with this Agreement. In connection therewith, the Seller shall make sure
that the Board of Directors shall (a) adopt proper resolutions authorizing such
increase, (b) recommend to and otherwise use its best efforts to promptly and
duly obtain stockholder approval to carry out such resolutions (and hold a
special meeting of the stockholders no later than the earlier to occur of the
sixtieth (60th) day after delivery of the proxy materials relating to such
meeting and the ninetieth (90th) day after request by a holder of Securities to
issue the number of Shares in accordance with the terms hereof) and (c) within
five (5) Business Days of obtaining such stockholder authorization, file an
appropriate amendment to the Company's certificate or articles of incorporation
to evidence such increase.
3.6 Reservation and Listing of Underlying Shares. (a) The Seller shall make sure
that the Company shall (i) in the time and manner required by any national
securities exchange, market, trading or quotation facility on which the Common
Stock is then traded, prepare and file with such national securities exchange,
market, trading or quotation facility on which the Common Stock is then traded
an additional shares listing application covering a number of shares of Common
Stock which is not less than the Shares, (ii) take all steps necessary to cause
such shares of Common Stock to be approved for listing on any such national
securities exchange, market or trading or quotation facility on which the Common
Stock is then listed as soon as possible thereafter, and (iii) provide to the
Purchaser evidence of such listing, and the Company shall maintain the listing
of its Common Stock thereon. The Company shall take the necessary actions to
immediately list a number of Shares as equals no less than the then Current
Required Minimum.
(b) The Seller shall make sure that the Company shall maintain a reserve of
shares of Common Stock for issuance, respectively in accordance with this
Agreement, in such amount as may be required to fulfill its obligations in full
under the Transaction Documents, which reserve shall equal no less than the then
Current Required Minimum.
3.7 Conversion and Exercise Procedures. The Transaction Documents sets forth the
totality of the procedures with respect to this Agreement, including the form of
legal opinion, if necessary, that shall be rendered to the Company's transfer
agent and such other information and instructions as may be reasonably necessary
to enable the Purchaser to receive the Return.
3.8 Conversion and Exercise Obligations of the Company. The Seller shall make
sure that the Company shall honor and shall deliver Shares in accordance with
the respective terms, conditions and time periods set forth in the Transaction
Documents.
3.9 Subsequent Financing; Limitation on Registrations.(a) From the date of this
Agreement through the 360th day following the Closing Date and the 180th day
following the Effective Date, the Seller shall make sure that the Company will
not offer, sell, grant any option to purchase or any right to reprice
securities, or otherwise dispose of (or announce any offer, sale, grant or any
option to purchase or other disposition) any Common Stock or equity or equity
equivalent securities (including the issuance of any debt or other instrument
that is at any time over the life thereof convertible into or exchangeable for
Common Stock), and the Company will cause its Subsidiaries not to offer, sell or
issue during such period any of such Subsidiary's securities which provide the
holder thereof the right to receive any Common Stock (collectively, "Common
Stock Equivalents") except as agreed to by the Purchaser.
(b) From the date of this Agreement through the 360th day following the
Effective Date, the Seller shall make sure that the Company will not offer,
sell, grant any option to purchase or any right to reprice securities, or
otherwise dispose of (or announce any offer, sale, grant or any option to
purchase or other disposition) any Common Stock or Common Stock Equivalents
(collectively, a "Subsequent Placement"), unless (A) the Company delivers to
each Purchaser a written notice (the "Subsequent Placement Notice") of its
intention to effect such Subsequent Placement, which Subsequent Placement Notice
shall describe in reasonable detail the proposed terms of such Subsequent
Placement, the amount of proceeds intended to be raised thereunder, the Person
with whom such Subsequent Placement shall be effected, and attached to which
shall be a term sheet or similar document relating thereto and (B) no Purchaser
notifies the Company by 6:30 p.m. (New York City
time) on the tenth Trading Day after its receipt of the Subsequent Placement
Notice of its objection to the Subsequent Placement.
(c) Except for (x) the Shares, (y) securities of the Company permitted pursuant
to Section 6(c) of the Registration Rights Agreement to be registered in the
Registration Statement, and (z) Common Stock permitted to be issued pursuant to
Section 3.9(e), the Seller shall make sure that the Company may not until the
90th day after the Effective Date file a registration statement to register any
of its securities.
(d) With respect to Section 3.9(a), (b) and (c), restrictive periods shall be
extended for the number of Trading Days during such period (A) in which trading
in the Common Stock is suspended by any securities exchange or market or
quotation system on which the Common Stock is then listed, or (B) that the
Registration Statement is not effective following the Effective Date, or (C)
that the prospectus included in the Registration Statement may not be used by
the holders thereof for the resale of Securities following the Effective Date.
(e) The restrictions contained in Section 3.9(a) and (b) shall not apply to the
granting of options or warrants to employees, officers and directors of the
Company, and the issuance of Common Stock upon exercise of such options or
warrants granted under any stock option plan heretofore or hereinafter duly
adopted by the Company. The restrictions contained in Sections 3.9(a) and (b)
shall also not apply to shares of Common Stock issuable upon exercise of any
currently outstanding warrants and other outstanding convertible securities of
the Company, in each case as and to the extent disclosed in Schedule 2.1(c) (but
not as to any amendments or modifications of the terms of such securities after
the date of this Agreement, including "back-dated" agreements).
3.10 Certain Securities Laws Disclosures; Publicity. The Seller shall make sure
that, if legally required, the Company shall: (i) on the Closing Date, issue a
press release acceptable to the Purchaser disclosing the transactions
contemplated hereby, (ii) file with the Commission a Report on Form 8-K
disclosing the transactions contemplated hereby within ten Business Days after
the Closing Date, and (iii) timely file with the Commission a Form D promulgated
under the Securities Act. The Seller shall make sure that the Company shall, no
less than two Business Days prior to the filing of any disclosure required by
clauses (ii) and (iii) above, provide a copy thereof to the Purchaser for their
review. The Seller shall make sure that the Company shall consult with Purchaser
in issuing any other press releases or otherwise making public statements or
filings and other communications with the Commission or any regulatory agency or
stock market or trading facility with respect to the transactions contemplated
hereby and neither party shall issue any such press release or otherwise make
any such public statement, filings or other communications without the prior
written consent of the other, except that if such disclosure is required by law
or stock market regulations, in which such case the disclosing party shall
promptly provide the other party with prior notice of such public statement,
filing or other communication. Notwithstanding the foregoing, the Seller shall
not publicly disclose the name of the Purchaser, or include the name of the
Purchaser in any filing with the Commission, or any regulatory agency, trading
facility or stock market without the prior written consent of the Purchaser,
except to the extent such disclosure (but not any disclosure as to the
controlling Persons thereof) is required by law or stock market regulations, in
which case the Company shall provide the Purchaser with prior notice of such
disclosure.
3.11 Non-Disclosure of Non-Public Information.(a) The Seller shall make sure
that the Company shall not disclose non-public information to the Purchaser or
their advisors or representatives unless prior to disclosure of such information
the Company identifies such information as being non-public information and the
Purchaser enter into a non-disclosure agreement in form mutually acceptable to
the Company and the Purchaser.
(b) The Seller represents that it does not disseminate non-public information to
any investors who purchase stock in the Company in a public offering, to money
managers or to securities analysts. Notwithstanding the foregoing or anything
herein to the contrary, the Seller will immediately notify the Purchaser of any
event or the existence of any circumstance (without any obligation to disclose
the specific event or circumstance) of which it becomes aware, (whether or not
requested of the Company specifically or generally during the course of due
diligence by such persons or entities), which, if not disclosed in the
prospectus included in the Registration Statement would cause such prospectus to
include a material misstatement or to omit a material fact required to be stated
therein in order to make the statements, therein in light of the circumstances
in which they were made, not misleading.
3.12 Transfer of Intellectual Property Rights. Except in connection with the
sale of all or substantially all of the assets of the Company or licensing
arrangements in the ordinary course of the Company's business, the Seller shall
make sure that the Company shall not transfer, sell or otherwise dispose of any
Intellectual Property Rights, or allow any of the Intellectual Property Rights
to become subject to any liens, or fail to renew such Intellectual Property
Rights (if renewable and it would otherwise lapse if not renewed), without the
prior written consent of the Purchaser.
3.13 Use of Proceeds. The Seller shall not use the net proceeds from the sale of
the Securities hereunder for any unlawful purpose.
3.14 Reimbursement. If any Purchaser becomes involved in any capacity in any
action, proceeding or investigation brought by or against any Person, including
stockholders of the Company, solely as a result of acquiring the Securities
under this Agreement, the Seller will reimburse such Purchaser for its
reasonable legal and other expenses (including, but not limited to, the cost of
any investigation, preparation or travel) incurred in connection therewith, as
such expenses are incurred. The reimbursement obligations of the Seller under
this paragraph shall be in addition to any liability which the Seller may
otherwise have, shall extend upon the same terms and conditions to any
affiliates of the Purchaser who are actually named in such action, proceeding or
investigation, and partners, directors, agents, employees and controlling
persons (if any), as the case may be, of the Purchaser and any such affiliate,
and shall be binding upon and inure to the benefit of any successors, assigns,
heirs and personal representatives of the Company, the Purchaser and any such
affiliate and any such Person. The Seller also agrees that neither the Purchaser
nor any such affiliates, partners, directors, agents, employees or controlling
persons shall have any liability to the Seller, Company or any Person asserting
claims on behalf of or in right of the Company solely as a result of acquiring
the Securities under this Agreement. The Seller shall also be responsible for
the payment of all attorneys fees, costs and escrow agent fees incurred by the
Purchaser with regards to this transaction and the Security Deposit Stock may be
used and sold to pay for the attorneys fees, costs and escrow agent fees of this
transaction via the attorneys of the Purchaser/escrow agent selling that number
of shares of the Security Deposit Stock as necessary to pay for the attorneys
fees as they are incurred and the attorney of the Purchaser/escrow agent is
specifically authorized to do so.
3.15 Shareholder Rights Plan. No claim will be made or enforced by the Seller or
any other Person that any Purchaser is an Acquiring Person" under any
shareholders rights plan or similar plan or arrangement in effect or hereafter
adopted by the Company, or that any Purchaser could be deemed to trigger the
provisions of any such plan or arrangement, by virtue of receiving Securities or
shares of Common Stock under the Transaction Documents.
ARTICLE IV
MISCELLANEOUS
4.1 Fees and Expenses. At the Closing, the Company shall reimburse the Purchaser
for their legal fees and expenses incurred in connection with the preparation
and negotiation of the Transaction Documents and may be later required to prepay
any services to be provided under the Transaction Documents, including but not
limited to the preparation of a registration statement, if necessary, by paying
to Purchaser's counsel said sum of money or securities reflected in or
securities reflected in the closing statement (Exhibit "E") for this transaction
and anticipated work related thereto. Purchaser's legal counsel shall also have
the right to obtain the payment of fees through the sale of the stock reflected
in the Security Deposit and thereafter, directing the transfer agent to issue
replacement shares to be held for security, if necessary. The amount
contemplated by the immediately preceding sentence shall be retained by the
Purchaser's counsel and shall not be delivered to the Company at the Closing.
Other than the amount contemplated herein, and except as otherwise set forth in
the Registration Rights Agreement, each party shall pay the fees and expenses of
its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement. The Seller shall pay all
filing fees, edgarizing fees, stamp and other taxes and duties levied in
connection with the issuance and registration of the Securities, if a
registration statement is necessary.
4.2 Entire Agreement; Amendments. The Transaction Documents, together with the
Exhibits and Schedules thereto and Transfer Agent Instructions, contain the
entire understanding of the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings, oral or written, with
respect to such matters, which the parties acknowledge have been merged into
such documents, exhibits and schedules.
4.3 Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of (i) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified in this Section prior to 6:30 p.m. (New York City time) on a
Business Day, (ii) the Business Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified in this Agreement later than 6:30 p.m. (New York City time) on
any date and earlier than 11:59 p.m. (New York City time) on such date, (iii)
the Business Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given.
4.4 Amendments; Waivers. No provision of this Agreement may be waived or amended
except in a written instrument signed, in the case of an amendment, by the
Seller and each of
the Purchaser or, in the case of a waiver, by the party against whom enforcement
of any such waiver is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter.
4.5 Headings. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.
4.6 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns. The
Seller may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchaser. Except as set forth in
Section 3.1(a), the Purchaser may not assign this Agreement or any of the rights
or obligations hereunder without the consent of the Seller. This provision shall
not limit any Purchaser's right to transfer securities or transfer or assign
rights under the Registration Rights Agreement.
4.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person.
4.8 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Florida, without regard to the principles of conflicts of law thereof. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in Palm Beach County, Florida for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of any of
the Transaction Documents), and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery). Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law. Each party irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby. If either party shall commence an action or proceeding to enforce any
provisions of a Transaction Document, then the prevailing party in such action
or proceeding shall be reimbursed by the other party for its attorneys fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.
4.9 Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing.
4.10 Execution. This Agreement may be executed in two or more counterparts, all
of which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event
that any signature is delivered by facsimile transmission, such signature shall
create a valid and binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect as if such
facsimile signature page were an original thereof.
4.11 Severability. In case any one or more of the provisions of this Agreement
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affecting or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
4.12 Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of the Purchaser
will be entitled to specific performance of the obligations of the Seller under
the Transaction Documents. The parties hereto agree that monetary damages may
not be adequate compensation for any loss incurred by reason of any breach of
its obligations described in the foregoing sentence and hereby agrees to waive
in any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
4.13 Independent Nature of Purchaser's Obligations and Rights. In the event
there are multiple Purchaser under this Agreement, then the obligations of each
Purchaser under any Transaction Document is several and not joint with the
obligations of any other Purchaser and no Purchaser shall be responsible in any
way for the performance of the obligations of any other Purchaser under any
Transaction Document.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.
CHAMPIONLYTE HOLDINGS, INC
By: s/s Xxxxx Xxxxxxxx
-------------------------------------
Signature
Print Name: Xxxxx Xxxxxxxx
Title: President
ADVANTAGE FUND I, LLC
By: s/s Xxxxxx Press
-------------------------------------
Signature
Print Name: Xxxxxx Press
Title: Vice President
Purchase Price: $50,000 installment payment
Address for Notice: Purchaser
c/o Anslow & Xxxxxx, LLP
With copies to: Xxxxxx & Jaclin, LLP
0000 Xxxxx 0
Xxxxxxxx, XX 00000
