AGREEMENT TO ASSUME REPURCHASE OBLIGATIONS
EXHIBIT
10.19
THIS
AGREEMENT TO ASSUME REPURCHASE OBLIGATIONS (the “Agreement”), dated this
5th
day of
June, 2006, and entered into by and between Xxxx’x, Inc., a Delaware corporation
(the “Company”), Xxxx Xxxx, an individual (“Xxxx Xxxx”), and Xxx Xxxx, an
individual (“Xxx Xxxx”).
WHEREAS,
Xxx Xxxx and Xxxx Xxxx (the “Purchasers”) are the brothers of Xxxxxxxxxxx Xxxx,
the Chairman of the Board of Directors, Chief Executive Officer and Chief
Financial Officer of the Company;
WHEREAS,
the Company issued an aggregate of 333,156 shares (the “Rescission Shares”) of
its common stock, par value $0.0001 (the “Common Stock”) to various parties
during the period from September 2, 2005 through and including April 7, 2006
(the “Sales Period”);
WHEREAS,
the Rescission Shares sold by the Company during the Sales Period were not
registered under the Securities Act of 1933, as amended (the “Securities Act”),
and were not registered or qualified under the securities laws of any state
in
which such sales were made;
WHEREAS,
the Company, in connection with the sale of the shares of Common Stock to be
registered under the Securities Act, intends to offer to repurchase the
Rescission Shares for the consideration paid for such Rescission Shares,
together with applicable interest as required under the laws of the states
in
which such shares were sold, in order to effect a legal rescission offer and
extinguish any state law claims for liability in connection with the
unregistered or unqualified sales of the Rescission Shares; and
WHEREAS,
the Company and the Purchasers believe it is appropriate and in the best
interests of the Company that the Purchasers assume the repurchase obligations
of the Company associated with the Rescission Shares;
NOW,
THEREFORE, the Company and the Purchasers agree as follows:
1. Conduct
of Rescission Offer.
During
the period set forth in a registration statement, to be filed by the Company
with respect to a rescission offer (the “Rescission Offer”) for the Rescission
Shares, as the period in which the Company shall conduct the Rescission Offer,
but in no event after December 31, 2006, the Company shall offer to repurchase
all Rescission Shares in such a manner as is designed and intended to eliminate
the right of each purchaser of Rescission Shares to seek damages or otherwise
assert a liability against the Company under the state law governing the sale
of
unregistered or unqualified securities to such purchaser. Accordingly, the
Company shall use its best efforts to conduct the Rescission Offer in accordance
with the requirements of the applicable provisions of applicable state law
related to the Rescission Offer.
2. Assumption
of Company Obligations.
In
consideration of the Rescission Offer to be conducted by the Company pursuant
to
the provisions of paragraph 1:
(a)
Xxxx
Xxxx agrees to assume the obligations of the Company which arise in connection
with the repurchase by the Company of up to the initial $250,000 of Rescission
Shares to be repurchased by the Company, including the consideration paid by
investors and interest at the rate and in the amount determined by applicable
state law; and
(b)
Xxx
Xxxx agrees to assume the obligations of the Company which arise in connection
with the repurchase by the Company of the
remaining Rescission Shares to be repurchased by the Company,
which
are not subject
to the repurchase obligation
by Xxxx
Xxxx
under
Section 2(a) hereof,
including the consideration paid by investors and interest at the rate and
in
the amount determined by applicable state law.
3.
Payment.
Each of
the Purchasers shall pay to the Company, within ten (10) business days of the
receipt of a statement from the Company of the amount required to be paid by
the
Company to investors who shall tender Rescission Shares for repurchase by the
Company, an amount equal to all amounts owing by the Company to such investors
with respect to the obligations of the Company assumed by the Purchasers
pursuant to Section 2. Within five (5) business days of the receipt of payment
from either of the Purchasers pursuant to this Section 3, the Company shall
deliver to the payor duly executed stock certificates for that number of shares
of Common Stock which is equal to the number of Rescission Shares for which
such
payor has assumed and paid in full the Company’s obligations.
4.
Status
of Shares.
Each of
the Purchasers warrants and represents that:
(a)
He
will not sell, transfer, or otherwise dispose of any shares of Common Stock
acquired pursuant to this Agreement, except pursuant to an effective
registration statement filed under the Securities Act with the Securities and
Exchange Commission or an exemption from such registration and in compliance
with applicable state securities laws; and
(b)
Any
shares of Common Stock to be acquired pursuant to this Agreement will be for
his
own account and for investment and without the intention of reselling the same
and that there is no agreement with others regarding the sale, transfer, or
other disposition of any of such shares of Common Stock.
5.
Miscellaneous.
(a)
Entire
Agreement.
This
Agreement (including the documents referred to herein) constitutes the entire
agreement between the parties and supersedes any prior understandings,
agreements, or representations by or between the parties, written or oral,
to
the extent they related in any way to the subject matter hereof.
(b)
Succession
and Assignment.
This
Agreement shall be binding upon and inure to the benefit of the parties named
herein and their respective successors and permitted assigns. No party may
assign either this Agreement or any of its rights, interests, or obligations
hereunder.
(c)
Counterparts;
Facsimile Signature.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original but all of which together will constitute one and the same
instrument. The parties hereto, and their respective successors and assigns,
are
hereby authorized to rely upon the signature of each person on this Agreement,
which are delivered by facsimile, as constituting a duly authorized,
irrevocable, actual, current delivery of this Agreement with original ink
signatures of each such Person
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(d)
Headings.
The
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement.
(e)
Notices.
All
notices that are required or may be given pursuant to this Agreement must be
in
writing and shall be deemed duly give or made as of the date delivered
personally, sent by a recognized courier service, sent by a recognized overnight
delivery service, sent by facsimile (but only if followed by transmittal by
a
recognized courier service, by a recognized overnight delivery service or
delivered in hand for delivery on the next business day) or sent by registered
or certified mail, postage prepaid, to the parties at the following addresses
(or to the attention of such other Person or such other address as any party
may
provide to the other parties by notice in accordance with this Section
5(e):
If
to the
Company, to:
XXXX’X,
Inc.
00000
Xxxxx Xxxxxx Xxxxxx
Xxx
Xxxxxxx, XX 00000
Attn:
Xxxxxxxxxxx X. Xxxx
President
& CEO
Facsimile
no. (000) 000-0000
If
to
Xxxx Xxxx, to:
________________________
________________________
________________________
________________________
Facsimile
no. (___) ___-____
If
to Xxx
Xxxx, to:
________________________
________________________
________________________
________________________
Facsimile
no. (___) ___-____
or
such
other addresses as shall be furnished in writing by any party in the manner
for
giving notices hereunder, and any such notice or communication shall be deemed
to have been given as of the date so delivered.
(f)
Governing
Law.
This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of California without giving effect to any choice or conflict
of law provision or rule (whether of the State of California or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of California.
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(g)
Amendments
and Waivers.
No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by the parties. No waiver by any party of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(h)
Severability.
Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability
of
the remaining terms and provisions hereof or the validity or enforceability
of
the offending term or provision in any other situation or in any other
jurisdiction.
(i)
Specific
Performance.
Each
party acknowledges and agrees that the other party would be damaged irreparably
in the event any of the provisions of this Agreement are not performed in
accordance with their specific terms or otherwise are breached. Accordingly,
each party agrees that the other party shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in
any
action instituted in any court of the United States or any state thereof having
jurisdiction over the parties, in addition to any other remedy to which it
may
be entitled, at law or in equity.
(j)
Attorneys'
Fees.
If
attorneys' fees or other costs are incurred to secure performance of any
obligations hereunder, or to establish damages for the breach thereof or to
obtain any other appropriate relief, whether by way of prosecution or defense,
the prevailing party will be entitled to recover reasonable attorneys' fees
and
costs incurred in connection therewith, including on appeal
therefrom.
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first above written.
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(“Company”)
XXXX’X,
INC.
a
Delaware corporation
By:
/s/ Xxxxxxxxxxx X.
Xxxx
Xxxxxxxxxxx
X. Xxxx
Chief
Executive Officer
(“Xxxx
Xxxx”)
By:
/s/ Xxxx
Xxxx
Xxxx
Xxxx, an individual
(“Xxx
Xxxx”)
By:
/s/ Xxx
Xxxx
Xxx
Xxxx, an individual
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