STOCK PURCHASE AGREEMENT
Exhibit 10.1
THIS STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of December 19, 2007, is
made by and between xxxxxXxxxxxx.xxx, Inc., a Delaware corporation (the “Company”), and the
Investors listed on Exhibit A hereto (each, an “Investor” and collectively, the
“Investors”).
RECITALS
A. The Investors desire to acquire from the Company, and the Company desires to issue and sell
to the Investors, in the manner and on the terms and conditions hereinafter set forth, shares of
Common Stock of the Company as set forth herein (collectively, the “Shares”).
B. In connection with the Investors’ purchase of the Shares, the Company and the Investors
desire to establish certain rights and obligations between themselves.
AGREEMENTS
NOW, THEREFORE, in consideration of these premises, the mutual covenants and agreements herein
contained and for other good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, the Company and the Investors hereby agree as follows:
SECTION I DEFINITIONS.
The following terms when used in this Agreement have the following respective meanings:
“1933 Act” means the Securities Act of 1933, as amended.
“1934 Act” means the Securities Exchange Act of 1934, as amended.
“Affiliate” means with respect to any Person, any (i) officer, director, partner or
holder of more than 10% of the outstanding shares or equity interests of such Person, (ii) any
relative of such Person, or (iii) any other Person which directly or indirectly controls, is
controlled by, or is under common control with such Person. A Person will be deemed to control
another Person if such Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of the “Controlled” Person, whether through
ownership of voting securities, by contract, or otherwise.
“Business Day” means a day other than Saturday, Sunday or statutory holiday in the
State of New York and in the event that any action to be taken hereunder falls on a day which is
not a Business Day, then such action shall be taken on the next succeeding Business Day.
“Bylaws” means the Bylaws of the Company.
“Certificate of Incorporation” means the Certificate of Incorporation of the Company,
as amended and restated and as on file with the Secretary of State of the State of Delaware on the
date of this Agreement.
“Closing Date” has the meaning set forth in Section 3.1 hereof.
“Closing” has the meaning set forth in Section 3.1 hereof.
“Common Stock” means shares of the common stock, $0.001 par value, of the Company.
“Company Stockholder Approval” means the approval by the requisite vote of the
stockholders of the Company of the Company Stockholder Proposals.
“Company Stockholder Proposals” means (i) the consummation of the Reverse Split, (ii)
the proposed amendment to the Certificate of Incorporation of the Company increasing the number of
shares of capital stock that the Company shall be authorized to issue to 800 million shares of
capital stock, consisting of 750 million shares of common stock, $0.001 par value, of the Company
and 50 million shares of preferred stock, $0.001 par value, of the Company, and (iii) such other
changes reasonably satisfactory to the Investors.
“End Date” shall have the meaning as used in Section 7.1(b)(i).
“GAAP” means generally accepted accounting principles in the United States.
“Governmental Authority” means the United States, any state or municipality, the
government of any foreign country, any subdivision of any of the foregoing, or any authority,
department, commission, board, bureau, agency, court, or instrumentality of any of the foregoing.
“Knowledge” as to the Company means the actual knowledge of the officers of the
Company after due and diligence inquiry of the employees or agents of the Company reasonably
believed to have knowledge of such matters.
“Lien” means any mortgage, lien, pledge, security interest, easement, conditional sale
or other title retention agreement, or other encumbrance of any kind.
“Material Adverse Effect” means a change or effect in the condition (financial or
otherwise), properties, assets, liabilities, rights, operations or business of the Company which
change or effect, individually or in the aggregate, could reasonably be expected to be materially
adverse to such condition, properties, assets, liabilities, rights, operations or business.
“Person” means an individual, corporation, limited liability company, partnership,
joint venture, trust, unincorporated organization, or Governmental Authority.
“Proxy Statement” means the proxy statement or information statement for the
Stockholders Meeting, together with any amendments or supplements thereof.
“Purchase Price” means the cash and cash equivalents of the Company at the Closing
Date after deducting any and all liabilities, including liabilities related in any manner to (i)
the Stockholders Consent, (ii) soliciting approval of the Company Stockholder Proposals and (iii)
the costs and expenses of the transactions contemplated hereby.
“Reverse Split” means a one-for-ten (1:10) combination, consolidation or “reverse
split” of the currently outstanding shares of the Company.
“SEC” means the Securities and Exchange Commission.
“SEC Filings” has the meaning set forth in Section 4.2(f) hereof.
“Shares” shall have the meaning set forth in the recitals hereto.
“Stockholders” mean the record holders of shares of capital stock of the Company.
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“Stockholders Consent” means the written consent of stockholders holding that number
of the issued and outstanding shares of the Company necessary to approve and effect the Company
Stockholder Approval.
SECTION II PURCHASE AND SALE OF COMMON STOCK.
2.1 Issuance and Purchase of Common Stock. At the Closing and after giving effect to
the Reverse Split, based upon the representations, warranties, covenants and agreements of the
parties set forth in this Agreement, the Company shall issue and sell to the Investors, and the
Investors shall purchase from the Company, that number of Shares, which are being allocated among
the Investors as provided in Exhibit A attached hereto, so that the Shares to be issued to
the Investors will equal, in the aggregate, fifty-one percent (51%) of the outstanding capital
stock of the Company on the Closing Date, on a fully-diluted basis, after giving effect to the
exercise of all exercisable instruments and securities. At the Closing, the Company will issue and
deliver to each of the Investors a stock certificate registered in the name of each such Investor
representing the number of Shares equal to the percentage of the total number of shares to be
delivered to the Investors set forth opposite such Investor’s name on Exhibit A, against
payment of the percentage of the Purchase Price set forth opposite such Investor’s name on
Exhibit A.
2.2 Payment for Common Stock. At the Closing Date, for all of the Shares, the
Investors shall pay to the Company, in the aggregate, the Purchase Price. The Investors will pay
the Purchase Price by wire transfers of immediately available funds to an account designated in
writing by the Company.
SECTION III THE CLOSING.
3.1 Closing. The closing of the issuance and sale of the Shares pursuant to
Section 2.1 hereof and certain of the other transactions contemplated hereby (the
“Closing”) will take place at the offices of the Company located at 0000 Xxxxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxx, Xxxxxxx 00000 on the next business day (or such later date as the
parties hereto may agree) following the satisfaction or waiver of the conditions set forth in
Section VI hereof (the “Closing Date”), or at such other time or place as the
parties mutually agree.
3.2 Deliveries by the Company. At the Closing, the Company shall deliver or cause to
be delivered to the Investors the following items (in addition to any other items required to be
delivered to the Investors pursuant to any other provision of this Agreement):
(a) certificates representing the Shares being issued and sold by the Company to the Investors
pursuant to Section 2.1 hereof, duly recorded on the books of the Company in the names of
each of the Investors as set forth on Exhibit A;
(b) a certificate of the Secretary of State of the State of Delaware as to the good standing
of the Company dated within five days prior to the Closing Date; and
(c) evidence satisfactory to the Investors that the Company Stockholder Proposals have been
approved and as to the amount of cash, cash equivalents and liabilities of the Company at the
Closing.
3.3 Deliveries by the Investors. At the Closing, each of the Investors shall deliver
or cause to be delivered to the Company (in addition to any other items required to be delivered to
the Company pursuant to any other provision of this Agreement) payment by wire transfer of
immediately available
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funds necessary to satisfy each Investor’s obligations to the Company under Section
2.2 hereof and to result in payment to the Company of the Purchase Price.
SECTION IV REPRESENTATIONS AND WARRANTIES.
4.1 Representations and Warranties of the Company. In order to induce each of the
Investors to purchase the Common Stock that it is purchasing hereunder, the Company represents and
warrants to the Investors that:
(a) Organization and Standing. The Company is duly incorporated and validly existing
under the laws of the State of Delaware, and has all requisite corporate power and authority to own
or lease its properties and assets and to conduct its business as it is presently being conducted.
The Company does not own any equity interest, directly or indirectly, in any other Person or
business enterprise. The Company is qualified to do business and is in good standing in each
jurisdiction in which the failure to so qualify could reasonably be expected to have a material
adverse effect upon its assets, properties, financial condition, results of operations or business.
The Company has no subsidiaries.
(b) Capitalization. At the date of this Agreement and before giving effect to the
Reverse Split, the authorized capital stock of the Company consists of (i) 300,000,000 shares of
Common Stock, of which 55,402,762 shares are issued and outstanding, and (ii) 5,000,000 shares of
Preferred Stock, of which no shares are issued and outstanding and of which 2,100 shares are
designated as Series A Exchangeable Preferred Stock. The Company has no other class or series of
equity securities authorized, issued, reserved for issuance or outstanding. Except for options to
purchase 213,990 shares of Common Stock at an average exercise price of $0.30 per share, there are
(x) no outstanding options, offers, warrants, conversion rights, contracts or other rights to
subscribe for or to purchase from the Company, or agreements obligating the Company to issue,
transfer, or sell (whether formal or informal, written or oral, firm or contingent), shares of
capital stock or other securities of the Company (whether debt, equity, or a combination thereof)
or obligating the Company to grant, extend, or enter into any such agreement and (y) no agreements
or other understandings (whether formal or informal, written or oral, firm or contingent) which
require or may require the Company to repurchase any of its Common Stock. There are no preemptive
or similar rights with respect to the Company’s capital stock. There are no anti-dilution or price
adjustment provisions contained in any security issued by the Company (or in any agreement
providing rights to security holders). The Company is not a party to, and, to the Knowledge of the
Company, no Stockholder is a party to, any voting agreements, voting trusts, proxies or any other
agreements, instruments or understandings with respect to the voting of any shares of the capital
stock of the Company, or any agreement with respect to the transferability, purchase or redemption
of any shares of the capital stock of the Company. The issue and sale of the Shares to the
Investors does not obligate the Company to issue any shares of capital stock or other securities to
any Person (other than the Investors) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset price under such securities. The
outstanding Common Stock is all duly and validly authorized and issued, fully paid and
nonassessable. As of the date hereof, there are: 213,990 shares of common stock reserved for
issuance upon exercise of outstanding stock options and no shares reserved for issuance upon
exercise of outstanding warrants. The Company does not have issued or outstanding any convertible
securities. The Company will not issue any securities prior to the Closing, except as contemplated
in connection with the Reverse Split. Upon issuance of the Shares to the Investors at the Closing,
the Investors shall own 51% of the issued and outstanding Shares of the Company on a fully-diluted
basis.
(c) Capacity of the Company; Authorization; Execution of Agreements. The Company has
all requisite power, authority and capacity to enter into this Agreement and to perform the
transactions and obligations to be performed by it hereunder. Subject to the Company Stockholder
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Approval as contemplated by this Agreement, the execution and delivery of this Agreement by
the Company, and the performance by the Company of the transactions and obligations contemplated
hereby, including, without limitation, the issuance and delivery of the Shares to the Investors
hereunder, have been duly authorized by all requisite action of the Company. This Agreement has
been duly executed and delivered by a duly authorized officer of the Company and constitutes a
valid and legally binding agreement of the Company, enforceable in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws of the United States (both state and federal), affecting the enforcement of
creditors’ rights or remedies in general from time to time in effect and the exercise by courts of
equity powers or their application of principles of public policy.
(d) Status of Shares. The Shares being issued and purchased hereunder, all of which
are to be issued by the Company to the Investors and paid for by the Investors pursuant to the
terms of this Agreement, are and will be, when issued, (i) duly authorized, validly issued, fully
paid and nonassessable, (ii) issued in compliance with all applicable United States federal and
state securities laws, (iii) subject to restrictions under this Agreement, and applicable United
States federal and state securities laws, have the rights and preferences set forth in the
Certificate of Incorporation, and (iv) free and clear of all Liens.
(e) Conflicts; Defaults. Subject to the Company Stockholder Approval, as contemplated
by this Agreement, the execution and delivery of this Agreement by the Company and the performance
by the Company of the transactions and obligations contemplated hereby and thereby to be performed
by it do not (i) violate, conflict with, or constitute a default under any of the terms or
provisions of, the Certificate of Incorporation, the Bylaws, or any provisions of, or result in the
acceleration of any obligation under, any contract, note, debt instrument, security agreement or
other instrument to which the Company is a party or by which the Company, or any of its assets, is
bound; (ii) result in the creation or imposition of any Liens or claims upon the Company’s assets
or upon any of the shares of capital stock of the Company; (iii) constitute a violation of any law,
statute, judgment, decree, order, rule, or regulation of a Governmental Authority applicable to the
Company; or (iv) constitute an event which, after notice or lapse of time or both, would result in
any of the foregoing. The Company is not presently in violation of its Certificate of
Incorporation or Bylaws.
(f) SEC Filings. The SEC Filings, when filed, complied in all material respects with
the requirements of Section 15(d) of the 1934 Act, did not, as of the dates when filed, contain an
untrue statement of material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The SEC Filings are all of the filings
that the Company was required to file with the SEC during the periods covered thereby and all such
filings were made on a timely basis when due. The financial statements of the Company included in
the SEC Filings complied in all material respects with the rules and regulations of the SEC with
respect thereto as in effect at the time of filing. Such financial statements have been prepared
in accordance with GAAP applied on a consistent basis during the periods covered by such financial
statements, 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 as of and for the
dates thereof and for the periods indicated, 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. All material agreements to which the Company is a party or to which the
property or assets of the Company are subject and which are required to be disclosed pursuant to
the 1934 Act are included as part of or specifically identified in the SEC Filings.
(g) Material Changes. Since the date of the latest audited financial statements
included within the SEC Filings, except as specifically disclosed in the SEC Filings, (i) there has
been no event that could result in a Material Adverse Effect, (ii) the Company has not incurred any
liabilities
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(contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the
ordinary course of the business of a shell corporation consistent with past practice and (B)
liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP as
required to be disclosed in filings made with the SEC, (iii) the Company has not altered its method
of accounting or the identity of its auditors, except as disclosed in its SEC Filings (iv) the
Company has not declared or made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its
capital stock and (v) the Company has not issued any equity securities to any officer, director or
affiliate.
(h) Absence of Litigation. There is no action, suit, claim, proceeding, inquiry or
investigation before or by any court, public board, government agency, self-regulatory organization
or body pending or, to the knowledge of the Company, threatened against or affecting the Company.
(i) Brokers, Finders, and Agents. The Company is not, directly or indirectly,
obligated to anyone acting as broker, finder or in any other similar capacity in connection with
this Agreement or the transactions contemplated hereby. No Person has or, immediately following
the consummation of the transactions contemplated by this Agreement, will have, any right, interest
or valid claim against the Company or the Investors for any commission, fee or other compensation
as a finder or broker in connection with the transactions contemplated by this Agreement, nor are
there any brokers’ or finders’ fees or any payments or promises of payment of similar nature,
however characterized, that have been paid or that are or may become payable in connection with the
transactions contemplated by this Agreement, as a result of any agreement or arrangement made by
the Company.
(j) Application of Takeover Protections. Except as provided in Delaware General
Corporation Law Section 203 (“GCL 203”), there is no control share acquisition, business
combination, poison pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s Certificate of Incorporation or Bylaws that is or could
become applicable to any of the Investors as a result of the Investors and the Company fulfilling
their obligations or exercising their rights under this Agreement, including without limitation, as
a result of the Company’s issuance of the Shares and the Investors’ ownership of the Shares.
(k) Absence of Businesses. Neither the Company nor any subsidiary is engaged in any
business and neither the Company nor any subsidiary has any liability or obligation of any kind or
nature other than liabilities or obligations that ordinarily and customarily directly relate to the
maintenance of a public company.
(l) Disclosure. All disclosure materials provided to the Investors regarding the
Company, its business and the transactions contemplated hereby, including the Schedules to this
Agreement, furnished by or on behalf of the Company are true and correct in all material respects
and as otherwise contemplated in this Agreement 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 not misleading. No event or circumstance has occurred or information exists with respect
to the Company or its business, properties, operations or financial condition, which, under
applicable law, rule or regulation, requires public disclosure or announcement by the Company, but
which has not been so publicly announced or disclosed. The Company acknowledges and agrees that no
Investor makes or has made (i) any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 4.2 or (ii) any
statement, commitment or promise to the Company or any of its representatives which is or was an
inducement to the Company to enter into this Agreement.
4.2 Representations and Warranties of the Investors. Each of the Investors hereby
severally, but not jointly, represents and warrants to the Company that:
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(a) Investment Intent. The Shares being purchased by the Investor hereunder is being
purchased for its own account, not as a nominee or agent, and not with the view to, or for resale
in connection with, any distribution or public offering thereof within the meaning of the 1933 Act.
The Investor understands that such Shares have not been registered under the 1933 Act by reason of
their issuance in a transaction exempt from the registration and prospectus delivery requirements
of the 1933 Act pursuant to Section 4(2) thereof and/or the provisions of Rule 506 of Regulation D
promulgated thereunder, and under the securities laws of applicable states and agrees to deliver to
the Company, if requested by the Company, an investment letter in customary form. The Investor
further understands that the certificates representing such Shares bear a legend substantially
similar to the following and agrees that it will hold such Shares subject thereto:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY PORTION HEREOF OR INTEREST HEREIN MAY BE SOLD, ASSIGNED,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS THE SAME IS REGISTERED UNDER
SAID ACTS AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE AND THE COMPANY SHALL HAVE RECEIVED, AT THE EXPENSE OF THE
HOLDER HEREOF, EVIDENCE OF SUCH EXEMPTION REASONABLY SATISFACTORY TO THE COMPANY
(WHICH MAY INCLUDE, AMONG OTHER THINGS, AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY).
(b) Capacity of the Investor; Execution of Agreement. Such Investor has all requisite
power, authority, and capacity to enter into this Agreement and to perform the transactions and
obligations to be performed by it hereunder. The execution and delivery of this Agreement, and the
performance by the Investor of the transactions and obligations contemplated hereby have been duly
authorized by all requisite corporate or individual, as the case may be, action of the Investor.
This Agreement has been duly executed and delivered by the Investor and constitutes a valid and
legally binding agreement of the Investor, enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws, both state and federal, affecting the enforcement of creditors’ rights or remedies in
general from time to time in effect and the exercise by courts of equity powers or their
application of principles of public policy.
(c) Accredited Investor. Each Investor is an “accredited investor” as defined
in Rule 501(a) of Regulation D promulgated under the 1933 Act.
(d) Suitability and Sophistication. The Investor has (i) such knowledge and
experience in financial and business matters that it is capable of independently evaluating the
risks and merits of purchasing the Shares it is purchasing; (ii) independently evaluated the risks
and merits of purchasing such Shares and has independently determined that the Shares are a
suitable investment for it; and (iii) sufficient financial resources to bear the loss of its entire
investment in such Shares. The Investor has had an opportunity to review: the Company’s Annual
Report on Form 10-K for the year ended June 30, 2007 and the Company’s quarterly report on Form
10-Q for the period ended September 30, 2007 and other filings made by the Company under Section
13(a) of the Exchange Act since January 1, 2004 (the “SEC Filings”).
(e) Brokers, Finders, and Agents. The Investor is not, directly or indirectly,
obligated to anyone acting as broker, finder, or in any other similar capacity in connection with
this Agreement or the transactions contemplated hereby. No Person has or, immediately following
the consummation of the transactions contemplated by this Agreement, will have, any right, interest
or valid
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claim against the Company or the Investor for any commission, fee or other compensation as a
finder or broker in connection with the transactions contemplated by this Agreement, nor are there
any brokers’ or finders’ fees or any payments or promises of payment of similar nature, however
characterized, that have been paid or that are or may become payable in connection with the
transactions contemplated by this Agreement, as a result of any agreement or arrangement made by
the Investor.
(f) Nationality; Residence. Each Investor is a citizen of the United States of
America and a resident of, or organized within, the state set forth underneath such Investor’s name
on Exhibit A attached to this Agreement.
4.3 Rule 144. Each Investor acknowledges that the Shares it will be purchasing must
be held indefinitely unless subsequently registered under the 1933 Act or unless an exemption from
such registration is available. Each of the Investors is aware of the provisions of Rule 144
promulgated under the 1933 Act which permit limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among other things, the
availability of certain current public information about the Company, the resale occurring not less
than one year after a party has purchased and paid for the security to be sold, the sale being
effected through a “broker’s transaction” or in transactions directly with a “market maker” and the
number of shares being sold during any three-month period not exceeding specified limitations.
SECTION V COVENANTS OF THE PARTIES.
5.1 Commercially Reasonable Efforts. Subject to the terms and conditions hereof, each
party will use commercially reasonable efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement as promptly as
practicable after the date hereof, including (i) preparing and filing as promptly as practicable
all documentation to effect all necessary applications, notices, petitions, filings, tax ruling
requests and other documents and to obtain as promptly as practicable all consents, waivers,
licenses, orders, registrations, approvals, permits, tax rulings and authorizations necessary or
advisable to be obtained from any Person and/or any Governmental Authority in order to consummate
any of the transactions contemplated by this Agreement, (ii) executing and delivering such other
documents, instruments and agreements as any party hereto shall reasonably request, and (iii)
taking all reasonable steps as may be necessary to obtain all such material consents, waivers,
licenses, registrations, permits, authorizations, tax rulings, orders and approvals. In
furtherance and not in limitation of the foregoing, each party hereto agrees to vigorously defend
any lawsuits or other legal proceedings, whether judicial or administrative, challenging this
Agreement or the transactions contemplated hereby, including seeking to have any stay or temporary
restraining order entered by any Governmental Authority vacated or reversed. Notwithstanding the
foregoing, in no event shall any party have any obligation, in order to consummate the transactions
contemplated hereby, to (a) take any action(s) that would result in a material adverse change in
the benefits to the Company on the one hand or to the Investors on the other of this Agreement, or
(b) dispose of any material assets or make any material change in its business other than as
contemplated by this Agreement, or (c) expend any material amount of funds or otherwise incur any
material burden other than those contemplated by this Agreement.
5.2 Certain Filings; Cooperation in Receipt of Consents.
(a) The Company and the Investors shall cooperate with one another in (i) determining whether
any other action by or in respect of, or filing with, any Governmental Authority is required, or
any actions, consents, approvals or waivers are required to be obtained from parties to any
material contracts, in connection with the consummation of the transactions contemplated hereby,
and (ii) taking or seeking any such other actions, consents, approvals or waivers or making any
such filings,
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furnishing information required in connection therewith. Each party shall permit the other
party to review any communication given by it to, and shall consult with each other in advance of
any meeting or conference with, any Governmental Authority or, in connection with any proceeding by
a private party, with any other Person, and to the extent permitted by the applicable Governmental
Authority or other Person, give the other party the opportunity to attend and participate in such
meetings and conferences, in each case in connection with the transactions contemplated hereby.
(b) The Company shall timely file all reports required to be filed by it pursuant to Section
13(a) of the 1934 Act and all other documents required to be filed by it with the SEC under the
1933 Act or the 1934 Act from the date of this Agreement to the Closing.
5.3 Stockholders Consent. The Company shall cause a meeting of its stockholders to be
duly called and held or shall obtain a Stockholders Consent, for the purposes of obtaining the
Company Stockholder Approval as soon as reasonably practicable. Except as provided in the next
sentence, (a) the Board of Directors of the Company shall recommend approval and adoption by its
stockholders of the Company Stockholder Proposals (the “Company Recommendation”), and (b)
the Company shall use commercially reasonable efforts to solicit the Company Stockholder Approval.
The Board of Directors of the Company shall be permitted to (i) not recommend to the Company’s
Stockholders that they give the Company Stockholder Approval, or (ii) withdraw or modify in a
manner materially adverse to the Investors the Company Recommendation, only if the Board of
Directors by a majority vote determines in its good faith judgment (after consultation with outside
legal counsel) that it is necessary to withdraw or modify the Company Recommendation to comply with
its fiduciary duties under applicable law.
5.4 Public Announcements. The parties shall consult with each other before issuing,
and provide each other a reasonable opportunity to review and comment upon, any press release or
public statement with respect to this Agreement and the transactions contemplated hereby and,
except as may be required by applicable law, will not issue any such press release or make any such
public statement prior to such consultation.
5.5 Access to Information; Notification of Certain Matters.
(a) From the date hereof to the Closing and subject to applicable law, the Company shall (i)
give to each of the Investors, its counsel, financial advisors, auditors and other authorized
representatives reasonable access to the offices, properties, books and records of the Company, and
(ii) furnish or make available to each of the Investors, its counsel, financial advisors, auditors
and other authorized representatives such financial and operating data and other information as
such Persons may reasonably request.
(b) Each party hereto shall give notice to each other party hereto, as promptly as practicable
after the event giving rise to the requirement of such notice, of:
(i) any communication received by such party from, or given by such party to, any Governmental
Authority in connection with any of the transactions contemplated hereby;
(ii) any notice or other communication from any Person alleging that the consent of such
Person is or may be required in connection with the transactions contemplated by this Agreement;
and
(iii) any actions, suits, claims, investigations or proceedings commenced or, to its
knowledge, threatened against, relating to or involving or otherwise affecting such party or any of
its Affiliates that, if pending on the date of this Agreement, would have been required to have
been
9
disclosed, or that relate to the consummation of the transactions contemplated by this
Agreement; provided, however, that the delivery of any notice pursuant to this
Section 5.5(b) shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
5.6 Anti-Takeover and Affiliated Transaction Provisions. The Company’s Board of
Directors will take such action as may be necessary to waive the applicability of the provisions of
GCL 203 and Sections 607.0901 and 607.0902 of the Florida Business Corporation Act to the
transactions contemplated by this Agreement.
5.7 Interim Operations of the Company. During the period from the date of this
Agreement to the Closing, the Company shall conduct its business only in the ordinary course of
business consistent with past practice, except to the extent otherwise necessary to comply with the
provisions hereof and with applicable laws and regulations. Additionally, during the period from
the date of this Agreement to the Closing, except as required hereby in connection with this
Agreement, the Company shall not, without the prior consent of a majority in interest of the
Investors, (i) amend or otherwise change its Certificate of Incorporation or Bylaws, (ii) issue,
sell or authorize for issuance or sale (including, but not limited to, by way of stock split or
dividend), shares of any class of its securities or enter into any agreements or commitments of any
character obligating it to issue such securities, other than in connection with the exercise of
outstanding warrants or outstanding stock options granted to directors, officers or employees of
the Company prior to the date of this Agreement; (iii) declare, set aside, make or pay any dividend
or other distribution (whether in cash, stock or property) with respect to its common stock, (iv)
redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock, (v) enter
into any material contract or agreement or material transaction or make any material capital
expenditure other than those relating to the transactions contemplated by this Agreement, (vi)
create, incur, assume, maintain or permit to exist any indebtedness except as otherwise incurred in
the ordinary course of business, consistent with past practice, (vii) pay, discharge or satisfy
claims or liabilities (absolute, accrued, contingent or otherwise) other than in the ordinary
course of business consistent with past practice, (viii) cancel any material debts or waive any
material claims or rights, (ix) make any loans, advances or capital contributions to, or
investments in financial instruments of any Person, (x) assume, guarantee, endorse or otherwise
become responsible for the liabilities or other commitments of any other Person, (xi) grant any
increase in the compensation payable or to become payable by the Company to any of its employees,
officers or directors or any increase in any bonus, insurance, pension or other employee benefit
plan, payment or arrangement made to, for or with any such employees, officers or directors, (xii)
enter into any employment contract or grant any severance or termination pay or make any such
payment with or to any officer, director or employee of the Company, (xiii) alter in any material
way the manner of keeping the books, accounts or records of the Company or the accounting practices
therein reflected other than alterations or changes required by GAAP or applicable law, (xiv) enter
into any indemnification, contribution or similar contract pursuant to which the Company may be
required to indemnify any other Person or make contributions to any other Person, (xv) amend or
terminate any existing contracts in any manner that would result in any material liability to the
Company for or on account of such amendment or termination or (xvi) or change any existing or adopt
any new tax accounting principle, method of accounting or tax election except as provided herein or
agreed to in writing by the Investors.
SECTION VI CONDITIONS.
6.1 Conditions to the Obligations of Each Party. The obligations of the Company and
the Investors to consummate the transactions contemplated by this Agreement are subject to the
satisfaction of the following conditions:
(a) The Company Stockholder Approval shall have been obtained;
10
(b) No Governmental Authority of competent authority or jurisdiction shall have issued any
order, injunction or decree, or taken any other action, that is in effect and restrains, enjoins or
otherwise prohibits the consummation of the transactions contemplated hereby; and
(c) The parties shall have obtained or made all consents, approvals, actions, orders,
authorizations, registrations, declarations, announcements and filings contemplated by this
Agreement.
6.2 Conditions to the Obligations of the Company. The obligations of the Company to
consummate the transactions contemplated by this Agreement are subject to the satisfaction of the
following further conditions:
(a) The Investors shall have performed in all material respects all of their obligations
hereunder required to be performed by them at or prior to the Closing;
(b) The representations and warranties of each of the Investors contained in this Agreement
shall have been true and correct when made and at and as of the time of the Closing as if made at
and as of such time (except to the extent any such representation or warranty expressly speaks as
of an earlier date, in which case it shall be true and correct as of such date); and
(c) The Company shall have received a certificate signed by each of the Investors to the
foregoing effect.
6.3 Conditions to the Obligations of the Investors. The obligations of the Investors
to consummate the transactions contemplated by this Agreement are subject to the satisfaction of
the following further conditions:
(a) The Company shall have performed in all material respects all of its obligations hereunder
required to be performed by it at or prior to the Closing;
(b) The representations and warranties of the Company contained in this Agreement shall have
been true and correct when made and at and as of the time of the Closing as if made at and as of
such time (except to the extent any such representation or warranty expressly speaks as of an
earlier date, in which case it shall be true and correct as of such date);
(c) The Investors shall have received a certificate signed by the president or acting
president of the Company to the foregoing effect; and
(d) The Shares being sold to the Investors hereunder for the Purchase Price shall represent
51% of the issued and outstanding shares of capital stock of the Company on a fully-diluted basis.
SECTION VII TERMINATION.
7.1 Termination. This Agreement may be terminated at any time prior to the Closing by
written notice by the terminating party to the other party (except if such termination is pursuant
to Section 7.1(a)), whether before or after the Company Stockholder Approval shall have
been obtained.
(a) by mutual written agreement of the Investors and the Company;
(b) by either the Investors or the Company, if
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(i) the transactions contemplated by this Agreement shall not have been consummated by March
31, 2008 (the “End Date”); provided, however, that the right to terminate
this Agreement under this Section 7.1(b)(i) shall not be available to any party whose
breach of any provision of or whose failure to perform any obligation under this Agreement has been
the cause of, or has resulted in, the failure of the transactions to occur on or before the End
Date; or
(ii) a judgment, injunction, order or decree of any Governmental Authority having competent
jurisdiction enjoining the Company or the Investors from consummating the transactions contemplated
by this Agreement is entered and such judgment, injunction, judgment or order shall have become
final and nonappealable and, prior to such termination, the parties shall have used their
respective commercially reasonable efforts to resist, resolve or lift, as applicable, such
judgment, injunction, order or decree; provided, however, that the right to terminate this
Agreement under this Section 7.1(b)(ii) shall not be available to any party whose breach of
any provision of or whose failure to perform any obligation under this Agreement has been the cause
of such judgment, injunction, order or decree.
(iii) the Company Stockholder Approval shall not have been obtained by December 31, 2007 (any
notice required to be given other stockholders may be given after this date, but prior to the End
Date); or
(c) by the Company:
(i) if a breach of or failure to perform any representation, warranty, covenant or agreement
on the part of the Investors set forth in this Agreement shall have occurred which would cause the
conditions set forth in Sections 6.2(a), 6.2(b) or 6.2(c) not to be satisfied, and any such
condition shall be incapable of being satisfied by the End Date or such breach or failure to
perform has not been cured within ten days after notice of such breach or failure to perform has
been given by the Company to the Investors.
(d) by the Investors:
(i) if a breach of or failure to perform any representation, warranty, covenant or agreement
on the part of the Company set forth in this Agreement shall have occurred which would cause the
conditions set forth in Sections 6.3(a), 6.3(b), 6.3(c) or 6.3(d)
not to be satisfied, and any such condition is incapable of being satisfied by the End Date or such
breach or failure to perform has not been cured within ten days after notice of such breach or
failure to perform has been given by the Investors to the Company.
7.2 Effect of Termination. If this Agreement is terminated pursuant to Section
7.1, except as set forth in Section 7.3 below, there shall be no liability or
obligation on the part of the Investors or the Company, or any of their respective officers,
directors, shareholders, agents or Affiliates, except that the provisions of this Section
7.2, Section 7.3 and Section VIII of this Agreement shall remain in full force
and effect and survive any termination of this Agreement and except that, notwithstanding anything
to the contrary contained in this Agreement, neither the Company nor the Investors shall be
relieved of or released from any liabilities or damages arising out of its material breach of or
material failure to perform its obligations under this Agreement.
7.3 Expenses.
Whether or not the transactions contemplated by this Agreement are consummated, all fees and
expenses of any party hereto incurred in connection with this Agreement and the transactions
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contemplated hereby shall be paid by the Company, regardless of which party incurs said fees
and expenses.
SECTION VIII MISCELLANEOUS.
8.1 Waivers and Amendments. This Agreement may be amended or modified in whole or in
part only by a writing which makes reference to this Agreement executed by the Investors and the
Company. The obligations of any party hereunder may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written consent of the party
claimed to have given the waiver; provided, however, that any waiver by any party of any violation
of, breach of, or default under any provision of this Agreement or any other agreement provided for
herein shall not be construed as, or constitute, a continuing waiver of such provision, or waiver
of any other violation of, breach of or default under any other provision of this Agreement or any
other agreement provided for herein.
8.2 Entire Agreement. This Agreement (together with the Schedules and the Exhibits
hereto) and the other agreements and instruments expressly provided for herein, together set forth
the entire understanding of the parties hereto and supersede in their entirety all prior contracts,
agreements, arrangements, communications, discussions, representations, and warranties, whether
oral or written, among the parties with respect to the subject matter hereof.
8.3 Governing Law. This Agreement shall in all respects be governed by and construed
in accordance with the internal substantive laws of the State of Delaware without giving effect to
the principles of conflicts of law thereof.
8.4 Public Announcements. The parties shall consult with each other before issuing,
and provide each other a reasonable opportunity to review and comment upon, any press release or
public statement with respect to this Agreement and the transactions contemplated hereby and,
except as may be required by applicable law, will not issue any such press release or make any such
public statement prior to such consultation.
8.5 Notices. Any notice, request or other communication required or permitted
hereunder shall be in writing and be deemed to have been duly given (a) when personally delivered
or sent by facsimile transmission (the receipt of which is confirmed in writing), (b) one Business
Day after being sent by a nationally recognized overnight courier service or (c) five Business Days
after being sent by registered or certified mail, return receipt requested, postage prepaid, to the
parties at their respective addresses set forth below.
| If to the Company: | xxxxxXxxxxxx.xxx, Inc. 0000 Xxxxxxxx Xxxxxxxxx Xxxxx 000 Xxxxx, Xxxxxxx 00000 Attn: Xxxxx Xxxxxxx, Chairman and President |
|||
| with a courtesy copy (not constituting notice) to: |
Xxxxxx Xxxxxx, Esq. 0000 Xxxxxxxx Xxxxxxxxx Xxxxx 0000 Xxxxx, Xxxxxxx 00000 Facsimile: (000) 000-0000 |
13
| if to Investors: | At the addresses set forth across from each Investor’s name on Exhibit A hereto. |
|||
| with a copy to: | Xxxxxx X. Xxxxxxxx, Esq. Xxxxxxxxx Xxxxxxx, P.A. 0000 Xxxxxxxx Xxxxxx Xxxxx, Xxxxxxx 00000 Facsimile: (000) 000-0000 |
|||
| and | ||||
| Any party by written notice to the other may change the address or the persons to whom notices or copies thereof shall be directed. |
8.6 Counterparts; Facsimile Signatures. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, and all of which together will
constitute one and the same instrument. Any facsimile copy of this Agreement will be deemed an
original for all purposes.
8.7 Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and permitted assigns, except
that the Company may not assign or transfer its rights hereunder without the prior written consent
of the Investors.
8.8 Third Parties. Nothing expressed or implied in this Agreement is intended, or
shall be construed, to confer upon or give any Person other than the parties hereto and their
successors and assigns any rights or remedies under or by reason of this Agreement.
8.9 Schedules. The Schedules and Exhibit A attached to this Agreement are
incorporated herein and shall be part of this Agreement for all purposes.
8.10 Headings. The headings in this Agreement are solely for convenience of reference
and shall not be given any effect in the construction or interpretation of this Agreement.
8.11 Interpretation. Whenever the context may require, any pronoun used herein shall
include the corresponding masculine, feminine or neuter forms, and the singular form of nouns,
pronouns and verbs shall include the plural and vice versa.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company and each of the Investors have executed this Agreement as of
the date first above written.
| THE COMPANY: xxxxxXxxxxxx.xxx, Inc., a Delaware corporation |
||||
| By: | /s/ Xxxxx X. Xxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxx | |||
| Title: | President | |||
| THE INVESTORS: Frost Gamma Investments Trust |
||||
| By: | /s/ Xxxxxxx Xxxxx | |||
| /s/ Xx. Xxxx Xxxxx | ||||
| Xx. Xxxx Xxxxx | ||||
| /s/ Xxxxxx X. Xxxxx | ||||
| Xxxxxx X. Xxxxx | ||||
| /s/ Xxxxxxxx Xxxxxxxx | ||||
| Xxxxxxxx Xxxxxxxx | ||||
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EXHIBIT A
SCHEDULE OF INVESTORS
SCHEDULE OF INVESTORS
| Name, Address and | Percentage of | |
| State of Residence | Shares Purchased | |
Frost Gamma Investments Trust |
80% | |
0000 Xxxxxxxx Xxxxxxxxx Xxxxx 0000 Xxxxx, Xxxxxxx 00000 |
||
Xx. Xxxx Xxxxx |
18% | |
0000 Xxxxxxxx Xxxxxxxxx Xxxxx 0000 Xxxxx, Xxxxxxx 00000 |
||
Xxxxxx X. Xxxxx |
1% | |
0000 Xxxxxxxx Xxxxxxxxx Xxxxx 0000 Xxxxx, Xxxxxxx 00000 |
||
Xxxxxxxx Xxxxxxxx |
1% | |
0000 Xxxxxxxx Xxxxxxxxx Xxxxx 0000 Xxxxx, Xxxxxxx 00000 |
A-1
