STOCK PURCHASE AGREEMENT
THIS
STOCK PURCHASE AGREEMENT (the “Agreement”)
is
made and entered into as of June 5, 2008, by and between COMPANY REPORTER
INVESTMENTS II (the “Seller”),
INTELLIHOME, INC., a Texas corporation (the “Issuer”),
and
the purchasers whose names appear on the signature page hereof (the
“Purchasers”).
WHEREAS,
Seller is the record and beneficial owner of 3,833,000 shares of the issued
and
outstanding Series A Convertible Preferred Stock (the “Series
A Preferred Shares”)
and
225,000 shares of issued and outstanding Series B Convertible Preferred Stock
(the “Series
B Preferred Shares”
and,
together with the Series A Preferred Shares, the “Stock”)
of the
Issuer;
WHEREAS,
the Purchasers are party to a Note Purchase Agreement, dated of even date
herewith (the “Funding
Agreement”),
with
the Issuer pursuant to which the Purchasers have agreed to purchase, and the
Issuer has agreed to sell, 8% Convertible Promissory Notes (the “Investor
Notes”);
WHEREAS,
as a condition of entering into the Funding Agreement, the Purchasers required
that the Seller enter into this Agreement whereby the Seller agrees to (i)
waive, and to not exercise, certain consent rights that it holds under the
terms
of the Stock with respect to the transactions contemplated in the Funding
Agreement, and (ii) sell and convey to the Purchasers all of its right, title
and interest in the Stock; all capitalized terms used and not otherwise defined
herein shall have the meaning set forth in the Funding Agreement;
WHEREAS,
the Seller is willing to sell to the Purchasers the Stock on the terms set
forth
in this Agreement.
NOW,
THEREFORE, in consideration of the mutual promises made herein and for other
good and valuable consideration, the receipt and sufficiency of which are
acknowledged, the parties hereto agree as follows:
1. Purchase
and Sale of Stock; Depository.
Subject
to the terms and conditions herein stated, the Seller agrees to sell, assign,
transfer and deliver to the Purchasers, and the Purchasers agree to purchase
from the Seller, the Stock. The Seller agrees to deliver (a) to the Purchasers
thirty percent (30%) of the Stock (the “Cash
Stock”)
upon
delivery to the Seller of the amount set forth in Section 2(a) hereof, and
(b)
to Xxxxxxx Xxxxxxx (the “Depository
Agent”),
counsel to the Issuer, not later than five (5) days after the date hereof,
certificate(s) evidencing seventy percent (70%) the Stock (the “Escrow
Stock”)
duly
endorsed in blank, or accompanied by stock powers duly executed in blank. The
Depository Agent shall hold the Escrow Stock until the earlier of (w)
satisfaction of the obligations of the Purchasers under this Agreement and
under
Section 2 of the Funding Agreement (as evidenced by a written acknowledgement
signed on behalf of the Issuer and the Purchasers (such written acknowledgement
being referred to as the “Compliance
Acknowledgement”)),
or
(x) the last day of the Initial Funding Period, or the Extended Funding Period,
if applicable (the “Depository
Period”);
at
which time the Escrow Stock shall be released (y) to the Seller if the
Depository Agent has not received a duly executed Compliance Acknowledgement
or
(z) if the Depository Agent has received a duly executed Compliance
Acknowledgement, to the Purchasers (allocated as provided for on the signature
page hereof) from time to time on a pro rata basis as the principal amount
of
the CRI Note is reduced (as reflected in a written notice in form acceptable
to
the Depository Agent, in his sole discretion, indicating the reduction in the
principal amount of the CRI Note).
2. Consideration.
As
consideration for the sale, assignment and transfer of the Stock, the Purchasers
agree to:
(a) pay
to
the Seller, in cash, upon delivery of the Cash Stock to the Purchasers in
accordance with Section 1, the sum of $60,000; and
(b) fully
and
unconditionally guarantee payment of the CRI Note.
3. Additional
Agreements of the Seller.
The
Seller agrees to:
(a) Grant
to
the Purchasers an irrevocable proxy whereby the Purchasers shall have the sole
and exclusive right to vote the Escrow Stock during the Depository Period;
and
(b) Waive
and
forego, and hereby does waive and forego, its rights accruing to the Stock
to
(i) vote upon the transactions contemplated in the Funding Agreement and (ii)
receive the stated liquidation preference with respect to the Stock; provided,
however, that the waiver provided for herein shall apply only to the
transactions contemplated in the Funding Agreement and shall not be deemed
an
amendment to the Certificates of Designation defining the rights of the
Stock.
4.
Representations
and Warranties.
(a) The
Seller represents and warrants to the Purchasers as follows:
(i) Ownership
of Stock.
The
Seller is the lawful record and beneficial owner of the Stock to be sold to
the
Purchasers or their designees, which shall be free and clear of all liens,
encumbrances, restrictions and claims of every kind and character. The delivery
to the Purchasers of the Stock pursuant to the provisions of this Agreement
will
transfer to the Purchasers valid title thereto, free and clear of any and all
encumbrances and free and clear of any and all of the terms and conditions
of
any pledge agreements and shall vest in the Purchasers the sole voting and
economic rights to the Stock.
(ii) Authority.
The
Seller has all requisite power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby and thereby.
The Seller has duly and validly executed and delivered this Agreement and,
assuming the due authorization, execution and delivery of this Agreement by
the
parties hereto and thereto other than the Seller, this Agreement constitutes
the
legal, valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its terms, except as such enforcement may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws
affecting creditors’ rights generally and general equitable
principles.
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(iii) No
Conflicts.
The
execution and delivery by the Seller of this Agreement and the consummation
of
the transactions contemplated hereby, do not and will not, by the lapse of
time,
the giving of notice or otherwise: (A) constitute a breach of any provision
contained in, or a default under, any governmental approval, any writ,
injunction, order, judgment or decree of any governmental authority or any
contract to which the Seller is a party or by which the Seller or any of its
assets and properties are bound or affected; or (B) result in or require the
creation of any lien upon the Stock or, except as otherwise provided in this
Agreement, any of the assets and properties of the Seller.
(b) Each
Purchaser represents and warrants (on its own behalf but not on behalf of any
other Purchaser) to the Seller as follows:
(i) Authority.
The
Purchaser has all requisite power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby and thereby.
The Purchaser has duly and validly executed and delivered this Agreement and,
assuming the due authorization, execution and delivery of this Agreement by
the
parties hereto and thereto other than the Purchaser, this Agreement constitutes
the legal, valid and binding obligation of the Purchaser, enforceable against
the Purchaser in accordance with its terms, except as such enforcement may
be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ rights generally and general equitable
principles.
(ii) No
Conflicts.
The
execution and delivery by the Purchaser of this Agreement and the consummation
of the transactions contemplated hereby, do not and will not, by the lapse
of
time, the giving of notice or otherwise: (A) constitute a breach of any
provision contained in, or a default under, any governmental approval, any
writ,
injunction, order, judgment or decree of any governmental authority or any
contract to which the Purchaser is a party or by which the Purchaser or any
of
its assets and properties are bound or affected; or (B) result in or require
the
creation of any lien upon the Stock or, except as otherwise provided in this
Agreement, any of the assets and properties of the Purchaser.
5. Conditions
to Closing.
The
obligation of the Purchasers to purchase, and the Seller to sell, the Stock
is
conditioned upon the satisfaction or waiver, at or prior to the consummation
of
the sale, of the following conditions:
(a) Truth
of Representations and Warranties.
The
representations and warranties of the other party contained in this Agreement
shall have been true and correct as of the date of this Agreement and shall
be
true and correct in all material respects as of the consummation of the purchase
and sale.
3
(b) Performance
of Agreements.
Each
and all of the agreements of the other party to be performed at or prior to
the
dates set forth herein pursuant to the terms hereof shall have been duly
performed in all material respects.
(c) No
Injunction.
No
court or other government body or public authority shall have issued an order
that shall then be in effect restraining or prohibiting the completion of the
transactions contemplated hereby.
(d) No
Litigation.
There
shall not be any action, suit or proceeding pending or threatened that seeks
to
make the consummation of the transactions contemplated hereby illegal or
otherwise restrict or prohibit consummation thereof.
6. Indemnification.
(a) Seller
Indemnities.
The
Seller hereby agrees to indemnify and hold harmless each of the Purchasers
and
their affiliates from and against any and all damages, claims, losses or
expenses (including reasonable attorneys’ fees and expenses) (“Damages”)
actually suffered or paid by the Purchasers or their affiliates as a result
of
the breach of any representation or warranty made by Seller in this Agreement.
To the extent that the Seller’s undertakings set forth in this Section 6(a) may
be unenforceable, the Seller shall contribute the maximum amount that it is
permitted to contribute under applicable law to the payment and satisfaction
of
all Damages incurred by the parties entitled to indemnification
hereunder.
(b) Purchaser
Indemnities.
The
Purchasers hereby agree to indemnify and hold harmless each of the Seller and
its affiliates from and against any and all Damages actually suffered or paid
by
the Seller or its affiliates as a result of the breach of any representation
or
warranty made by the Purchasers in this Agreement. To the extent that the
Purchaser’s undertakings set forth in this Section 6(b) may be unenforceable,
the Purchasers shall contribute the maximum amount that they are permitted
to
contribute under applicable law to the payment and satisfaction of all Damages
incurred by the parties entitled to indemnification hereunder.
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(c) Procedures.
The
party seeking indemnification under this Section 6 (an “Indemnified
Party”)
shall
give each party from whom indemnification is being sought (each, an
“Indemnifying
Party”)
notice
of any matter for which such Indemnified Party is seeking indemnification,
stating the amount of the Damages, if known, and method of computation thereof,
and containing a reference to the provisions of this Agreement in respect of
which such right of indemnification is claimed or arises. The obligations of
an
Indemnifying Party under this Section 6 with respect to Damages arising from
any
claims of any third party which are subject to the indemnification provided
for
in this Section 6 collectively, (“Third
Party Claims”)
shall
be governed by and contingent upon the following additional terms and
conditions: if an Indemnified Party shall receive initial notice of any Third
Party Claim, the Indemnified Party shall give the Indemnifying Party notice
of
such Third Party Claim within such time frame as is necessary to allow for
a
timely response and in any event within 30 days of the receipt by the
Indemnified Party of such notice; provided, however, that the failure to provide
such timely notice shall not release the Indemnifying Party from any of its
obligations under this Section 6 except to the extent the Indemnifying Party
is
materially prejudiced by such failure. The Indemnifying Party shall be entitled
to assume and control the defense of such Third Party Claim at its expense
and
through counsel of its choice if it gives notice of its intention to do so
to
the Indemnified Party within 30 days of the receipt of such notice from the
Indemnified Party; provided, however, that if there exists or is reasonably
likely to exist a conflict of interest that would make it inappropriate in
the
judgment of the Indemnified Party (upon advice of counsel) for the same counsel
to represent both the Indemnified Party and the Indemnifying Party, then the
Indemnified Party shall be entitled to retain its own counsel, at the expense
of
the Indemnifying Party, provided that the Indemnified Party and such counsel
shall contest such Third Party Claims in good faith. In the event the
Indemnifying Party exercises the right to undertake any such defense against
any
such Third Party Claim as provided above, the Indemnified Party shall cooperate
with the Indemnifying Party in such defense and make available to the
Indemnifying Party, at the Indemnifying Party's expense, all witnesses,
pertinent records, materials and information in the Indemnified Party’s
possession or under the Indemnified Party’s control relating thereto as is
reasonably required by the Indemnifying Party. Similarly, in the event the
Indemnified Party is, directly or indirectly, conducting the defense against
any
such Third Party Claim, the Indemnifying Party shall cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party,
at the Indemnifying Party’s expense, all such witnesses, records, materials and
information in the Indemnifying Party’s possession or under the Indemnifying
Party’s control relating thereto as is reasonably required by the Indemnified
Party. The Indemnifying Party shall not, without the written consent of the
Indemnified Party, (i) settle or compromise any Third Party Claim or consent
to
the entry of any judgment which does not include as an unconditional term
thereof the delivery by the claimant or plaintiff to the Indemnified Party
of a
written release from all liability in respect of such Third Party Claim or
(ii)
settle or compromise any Third Party Claim in any manner that may adversely
affect the Indemnified Party. Finally, no Third Party Claim which is being
defended in good faith by the Indemnifying Party or which is being defended
by
the Indemnified Party as provided above in this Section 6(b) shall be settled
by
the Indemnified Party without the written consent of the Indemnifying
Party.
7. Miscellaneous.
(a) Expenses.
The
parties hereto shall pay all of their own expenses relating to the transactions
contemplated by this Agreement, including, without limitation, the fees and
expenses of their respective counsel, financial advisors and
accountants.
(b) Captions.
The
section numbers and captions used herein are for reference purposes only, and
shall not in any way affect the meaning or interpretation of this
Agreement.
(c) Notices.
Any
notice or other communications required or permitted hereunder shall be
sufficiently given if delivered in person or sent by telecopy or by registered
or certified mail, postage prepaid, addressed, if to any of the Purchasers
or to
the Sellers at the addresses set forth on the signature page hereof, or such
other address or number as shall be furnished in writing by any such party,
and
such notice or communication shall be deemed to have been given as of the date
so delivered, sent by telecopy or mailed.
5
(d) Parties
in Interest.
This
Agreement may not be transferred, assigned, pledged or hypothecated by any
party
hereto, other than by operation of law.
(e) Counterparts.
This
Agreement may be executed in two or more counterparts, all of which taken
together shall constitute one instrument.
(f) Entire
Agreement.
This
Agreement, together with the Funding Agreement, contains the entire
understanding of the parties hereto with respect to the subject matter contained
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
(g) Jurisdiction
and Venue.
Each of
the parties hereby: (a) irrevocably submits to the non-exclusive personal
jurisdiction of any state or federal court sitting in Xxxxxx County, Texas,
over
any claim arising out of or relating to this Agreement and irrevocably agrees
that all such claims may be heard and determined in such court; and (b)
irrevocably waives, to the fullest extent permitted by applicable law, any
objection it may now or hereafter have to the laying of venue in any proceeding
brought in a state or federal court sitting in Xxxxxx County, Texas, and any
claim that any such proceeding brought in a state or federal court sitting
in
Xxxxxx County, Texas, has been brought in an inconvenient forum.
IN
WITNESS WHEREOF, each of the parties have caused this Agreement to be executed
by themselves or by their respective officers thereunto duly authorized, all
as
of the day and year first above written.
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SELLER:
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COMPANY
REPORTER INVESTMENTS II, LP
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By:
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/s/
Xxxxxxx Xxxx
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Xxxxxxx
Xxxx
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President
of General Partner
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0000
Xxxxxxxx, #000
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Xxxxxxx,
Xxxxx 00000
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ISSUER:
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By:
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/s/
Xxxx Xxxxxxx
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Xxxx
Xxxxxxx
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President
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0000
Xxxxx Xx., Xxxxx 000
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Xxxx,
Xxxxx 00000
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PURCHASERS:
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STARR CONSULTING, INC. | |
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By:
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/s/
Xxxxxx Xxxxxxxxxxx
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Name:
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Xxxxxx
Xxxxxxxxxxx
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Title:
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President
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Stock
Purchased:
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Address:
000 Xxxxx Xx.
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Xxxxxxx
Xxxxx, XX 00000
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POWER
NETWORK, INC.
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By:
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/s/
Xxx X. Xxxxxxxx
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Name:
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Xxx
X. Xxxxxxxx
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Title:
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President
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Stock
Purchased:
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Address:
0000 Xxxxxxxxxx Xxx., Xxx. 00
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Xxxxxxx
Xxxxx, XX 00000
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BAF
CONSULTING, INC.
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By:
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/s/
Xxxxxxx Xxxxxxx
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Name:
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Xxxxxxx
Xxxxxxx
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Title:
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President
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Stock
Purchased:
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Address:
000 Xxxxx Xx.
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Xxxxxxx
Xxxxx, XX 00000
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NEW
AGE SPORTS, INC.
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By:
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/s/
Xxxxxx Xxxxxxxx
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Name:
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Xxxxxx
Xxxxxxxx
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Title:
|
President
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Stock
Purchased:
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Address:
0000 Xxxxxxxxxx Xxx., Xxx. 00
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Xxxxxxx
Xxxxx, XX 00000
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PROJECT
DEVELOPMENT, INC.
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By:
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/s/
Xxxxxx Xxxxxxxxx
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Name:
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Xxxxxx
Xxxxxxxxx
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Title:
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President
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Stock
Purchased:
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Address:
000 Xxxxx Xx.
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Xxxxxxx
Xxxxx, XX 00000
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7
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SEVILLE
CONSULTING, INC.
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By:
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/s/
Xxxxx X. Xxxxx
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Name:
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Xxxxx
X. Xxxxx
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Title:
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President
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Stock
Purchased:
|
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Address:
0000 Xxxxxxxxxx Xxx., Xxx. 00
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Xxxxxxx
Xxxxx, XX 00000
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By:
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/s/
Xxxxxx Xxxxxxx
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Name:
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Xxxxxx
Xxxxxxx
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Title:
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President
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Stock
Purchased:
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Address:
0000 X. Xxxxxxxxxx Xx. #000
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Xxxxxxx,
XX 00000
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YT2K,
INC.
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By:
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/s/
Xxxxxxx Xxxxxx
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Name:
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Xxxxxxx
Xxxxxx
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Title:
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President
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Stock
Purchased:
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Address:
0000 X. Xxxxxxxxxx Xx. #000
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Xxxxxxx,
XX 00000
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ACTIVE
STEALTH, LLC
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By:
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/s/
Xxxxxxx Xxxxxx
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Name:
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Xxxxxxx
Xxxxxx
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Title:
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Manager
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Stock
Purchased:
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Xxxxxxx,
XX 00000
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