SECURITIES PURCHASE AGREEMENT
Exhibit
10.1
This Securities Purchase Agreement
("Agreement"), is made
and entered into as of the 24th day
of September 2009 by and between VENSURE EMPLOYER SERVICES,
INC., a corporation organized under the laws of the State of Arizona (“Vensure”); XXXX.XXX, INC., a corporation
organized under the laws of the State of Delaware ("Fund”); and the Persons who
have executed this Agreement on the signature page hereof under the heading
“VENSURE STOCKHOLDERS”
(individually a “Vensure
Stockholder” and collectively, the “Vensure Stockholders”).
Vensure, Fund and the Vensure Stockholders are hereinafter sometimes referred to
individually as a “Party” and collectively as the
“Parties.”
RECITALS:
A. Vensure desires to sell to
Fund, and Fund is willing, upon the
terms and subject to the conditions hereinafter set forth, to purchase from
Vensure all of the
218,883.33 shares of Series A
Preferred Stock authorized for issuance pursuant to the Certificate of
Incorporation.
B. It
is the intention of the Parties hereto that the purchase of the Series A
Preferred Stock shall qualify as a transaction in securities exempt from
registration or qualification under the Securities Act of 1933, as amended, and
under the applicable securities laws of each state or jurisdiction where Fund
resides.
C. As
a material inducement to cause Fund to enter into this Agreement and purchase
the Series A Preferred Stock, Vensure has agreed to execute and deliver to Fund
and its Affiliate the License Agreement, all as hereinafter
described.
D. The
board of directors of each of Vensure and Fund and the Vensure Stockholders each deem
it to be in the best interests of Vensure and
Fund and their
respective Affiliates to consummate the sale and purchase of the shares of
Series A Preferred Stock upon the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in
consideration of the mutual covenants, agreements, representations and
warranties contained in this Agreement, the Parties hereto agree as
follows:
DEFINITIONS
As used
in this Agreement, the following terms shall have the meanings set forth
below:
“Applicable Law” means any
domestic or foreign law, statute, regulation, rule, policy, guideline or
ordinance applicable to the businesses of the Parties, the Share Exchange and/or
the Parties.
“Affiliate” means any one or
more Person controlling, controlled by or under common control with any other
Person or their affiliate.
“Business Day” shall mean any
day, excluding Saturday, Sunday and any other day on which national banks
located in New York, New York shall be closed for business.
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“Certificate of Deposit” means
the restricted certificate of deposit issued by the CD Issuer in original Twenty
Million Dollar ($20,000,000) amount that matures in November 2010 (the “CD Maturity Date”) and which
(together with accrued interest) will be in the amount of Twenty One Million
Eight Hundred and Eighty Eight Thousand Three Hundred and Thirty Three Dollars
($21,888,333) as at the Closing Date.
“CD Issuer” shall mean Global Bank of Commerce, a
bank chartered under the laws of Antigua and Barbuda.
“Certificate of Incorporation”
shall mean the restated articles of incorporation of Vensure in the form of
Exhibit A annexed hereto
and made a part hereof that includes the designations of the relative rights,
privileges and preferences of the 218,883.33 shares of Series A Preferred
Stock.
“Closing Date” shall mean the
date upon which the transactions contemplated by this Agreement and the purchase
and sale of the Series A Preferred Stock shall be consummated.
“Dollar” and “$” means lawful money of the
United States of America.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended.
“Existing Vensure Stockholders”
means as at date of this Agreement and as at the Closing Date, the collective
reference to (a) the Vensure Stockholders, and (b) the other Persons set forth
in Section 3.2
of the Investment Agreement.
“Financial Statements” shall
have the meaning as is defined in Section 2.4 of this
Agreement.
“GAAP” means generally accepted
accounting principles in the United States of America as promulgated by the
American Institute of Certified Public Accountants and the Financial Accounting
Standards Board or any successor Institutes concerning the treatment of any
accounting matter.
“Fund” means Xxxx.xxx, Inc., a Delaware
corporation.
“Investment Agreement” mean the
investment agreement, dated August _, 2009, among the Persons designated as the
“Investors” therein, Vensure, the Vensure Stockholders and Fund.
“Knowledge” means the knowledge
after reasonable inquiry.
“License Agreement” means that
certain letter agreement, dated the Closing Date, among Fund, Vensure and Xxxxx Xxxx Socratic, Inc., a
Delaware corporation, d/b/a “The Money School” (“TMS”), pursuant to which FNDM
and TMS have agreed to provide certain educational content and courses to
employees of Vensure, and which is in the form of Exhibit
B annexed hereto and made a part hereof.
“Material Adverse Effect” with
respect to any entity or group of entities means any event, change or effect
that has or would have a materially adverse effect on the financial condition,
business or results of operations of such entity or group of entities, taken as
a consolidated whole.
“National Securities Exchange”
means the collective reference to the New York Stock Exchange, the NYSE Amex
Exchange, the Nadaq Stock Exchange, the FINRA OTC Bulletin Board or any other
recognized national securities exchange in the United States.
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“Person” means any individual,
corporation, partnership, trust or unincorporated organization or a government
or any agency or political subdivision thereof.
“Purchase Price” shall mean
Certificate of Deposit in the original face amount of $20,000,000.
“Sale of Control” means the
sale or transfer of all or substantially all of the shares of capital stock or
assets of Vensure and its consolidated Subsidiaries, whether through merger,
consolidation, asset sale, tender offer or like combination or consolidation, to
any Person who is not an
Affiliate of Vensure immediately prior to such Sale of Control; provided,
however, that the term “Sale of Control” shall not mean or include a
transaction that constitutes a “Reverse Merger” (as that term is defined in the
Long-Term Note).
“Series A Preferred Stock”
shall mean the 218,883.33 shares of Series A convertible preferred stock of
Vensure, $100 stated value per share, authorized for issuance pursuant to the
Certificate of Incorporation.
“Stockholders Agreement” shall
mean shall mean the stockholders agreement among Vensure, the Investors and the
Existing Vensure Stockholders in the form of Exhibit
F annexed to the Investment Agreement.
“Subsidiary” of any Person
means another Person, an amount of the voting securities, other voting ownership
or voting partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if there are no
such voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first Person.
“Tax” (and, with correlative
meaning, “Taxes” and
“Taxable”)
means:
(i) any
income, alternative or add-on minimum tax, gross receipts tax, sales tax, use
tax, ad valorem tax, transfer tax, franchise tax, profits tax, license tax,
withholding tax, payroll tax, employment tax, excise tax, severance tax, stamp
tax, occupation tax, property tax, environmental or windfall profit tax, custom,
duty or other tax, impost, levy, governmental fee or other like assessment or
charge of any kind whatsoever together with any interest or any penalty,
addition to tax or additional amount imposed with respect thereto by any
governmental or Tax authority responsible for the imposition of any such tax
(domestic or foreign), and
(ii) any
liability for the payment of any amounts of the type described in clause (i)
above as a result of being a member of an affiliated, consolidated, combined or
unitary group for any Taxable period, and
(iii) any
liability for the payment of any amounts of the type described in clauses (i) or
(ii) above as a result of any express or implied obligation to indemnify any
other person.
“Tax Return” means any return,
declaration, form, claim for refund or information return or statement relating
to Taxes, including any schedule or attachment thereto, and including any
amendment thereof.
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“Transaction Documents” shall
have the meaning as is defined in the Investment Agreement.
“Vensure” shall mean Vensure
Employer Services, Inc., an Arizona corporation.
“Vensure Common Stock” shall
mean the 5,000,000 shares of common stock of Vensure, $0.001 par value per
share, that are authorized for issuance pursuant to the Vensure Certificate of
Incorporation.
“Vensure Group” shall mean
Vensure and each of the Vensure Subsidiaries.
“Vensure Preferred Stock” means
the 1,000,000 shares of preferred stock of Vensure, $0.001 par value per share,
that are authorized for issuance pursuant to the Certificate of incorporation of
Vensure, and containing such rights, privileges and designations as the board of
directors of Vensure may, from time to time determine.
“Vensure Subsidiaries” shall
have the meaning defined in the Investment Agreement.
“VRA” means Vensure Retirement Administration,
Inc., a Delaware corporation and a 100% owned subsidiary of
Vensure.
“VRA Common Stock” shall mean
shall mean the 1,000,000 shares of common stock of Vensure, $0.001 par value per
share, that are authorized for issuance pursuant to the VRA certificate of
incorporation.
SECTION
1. PURCHASE AND SALE OF SERIES
A PREFERRED STOCK AND PAYMENT OF PURCHASE PRICE
1.1 The Series A Preferred
Stock.
(a) On
the Closing Date and subject to and upon the terms and conditions of this
Agreement, Vensure shall sell, assign, transfer and exchange (collectively,
“Transfer”) to Fund,
all, and not less than all, of the 218,883.33 shares of the Series A Preferred
Stock authorized for issuance pursuant to the Certificate of
Incorporation.
(b) As
set forth in the Certificate of Incorporation, the 218,883.33 shares of Series A
Preferred Stock:
(i)
shall have a par value of $0.001 per share;
(ii)
shall have a stated or liquidation value of one hundred dollars ($100.00) per
share (the “Stated
Value”);
(iii) shall
be senior upon liquidation or a Sale of Control to all other classes of
preferred stock of Vensure Common Stock now existing or hereafter
created;
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(iv) in
the event of any Sale of Control, in addition to the right of the holder(s) of
the Series A Preferred Stock to receive, prior to any payments or distributions
in respect of outstanding shares of Vensure Common Stock, a preferential payment
in respect of such Series A Preferred Stock equal to product of (A) the $100.00
per share Stated Value, and (B) the number of Series A Preferred Stock then
owned, the holder(s) of the Series A Preferred Stock shall be entitled to
participate with the holders of Vensure Common Stock in the receipt of any
additional consideration payable upon such Sale of Control to the extent of
0.00011421609% of such additional consideration for each one (1) share of Series
A Preferred Stock then owned by the holder(s), or as to all 218,883.33 shares of
Series A Preferred Stock, an aggregate of twenty-five percent (25%) of all such
additional consideration payable upon such Sale of Control;
(v) shall
not pay a fixed dividend, but shall entitle the holder(s) to participate equally
with the holders of Vensure Common Stock in connection with any cash or stock
dividends or distributions;
(vi) at
any time or from time to time from and after a date which shall be three (3)
years following the Closing Date, shall be convertible at the option of the
holder(s) upon not less than sixty one (61) days prior written notice to Vensure
(the “Conversion
Notice”) into either:
(A) that
number of shares of Vensure Common Stock (the “Vensure Conversion Option”) as
shall represent 0.00011421609% of the issued and outstanding shares of Vensure
Common Stock as at the Closing Date for each one (1) share of Series A Preferred
Stock then owned by the holder(s), or as to all 218,883.33 shares of Series A
Preferred Stock, an aggregate of twenty-five percent (25%) of the issued and
outstanding shares of Vensure Common Stock as at the Closing Date (the “Vensure Conversion Shares”);
or
(B) securities
of VRA that shall have an agreed upon value of not less than Twenty-Five Million
($25,000,000) Dollars (the “VRA
Conversion Option”), represented by the sum of (x) that number of shares
of VRA Common Stock as shall represent 0.00022614787% of the issued and
outstanding shares of VRA Common Stock as at the Conversion Date set forth in
the Conversion Notice for each one (1) share of Series A Preferred Stock then
owned by the holder(s), or as to all 218,883.33 shares of Series A Preferred
Stock, an aggregate of forty-nine and one-half percent (49.5%) of the issued and
outstanding shares of VRA Common Stock as at the Conversion Date (the “VRA Conversion Shares”); plus (y)
that number of shares of VRA non-voting, non-convertible preferred stock, $0.001
par value per share, which when multiplied by its $1,000 stated or liquidation
value, and added to the fair market value of the VRA Conversion Shares shall
equal Twenty-Five Million ($25,000,000) Dollars;
provided,
however, that if the holder(s) of Series A Preferred Stock elect the
Vensure Conversion Option, Vensure shall have the right (but not the
obligation), exercisable within thirty (30) days after receipt of the Conversion
Notice, to terminate the Vensure Conversion Option, in which event the holder(s)
of Series A Preferred Stock may either: (x)elect not to convert any of their
Series A Preferred Stock, or (y) elect the VRA Conversion Option described in
Section 1.1(vi)(B) above; and
(vii) shall
not be subject to mandatory or optional redemption without the prior written
consent or approval of both Vensure and the holder(s) of the Series A Preferred
Stock.
The
foregoing summary description of the Series A Preferred Stock is for
informational purposes only and is qualified in its entirety by the terms and
conditions of the Certificate of Incorporation annexed as Exhibit
A hereto; which shall govern in all respects the relative rights,
preferences and privileges of the Series A Preferred Stock.
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1.2 The Purchase
Price.
(a) On
the Closing Date, and in exchange for the Transfer to it of the aforesaid shares
of Series A Preferred Stock, Fund shall pay to Vensure the Purchase
Price.
(b) Such
Purchase Price shall be paid by either (i) Fund’s transfer and assignment to
Vensure of all of Fund’s right, title and interest in and to the Certificate of
Deposit together with the written consent of the CD Issuer to such assignment,
or (ii) if the consent of the CD Issuer is not obtained on the Closing Date,
Fund shall transfer and assign to Vensure all of Fund’s right, title and
interest in an to all proceeds of the Certificate of Deposit, whether upon the
CD Maturity Date or prior thereto; in each case, pursuant to an assignment and
transfer agreement in form and content acceptable to Vensure and its legal
counsel.
1.3 Exemption from
Registration. The Parties intend that the Series A Preferred
Stock to be issued by Vensure to Fund shall be exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) of the Securities
Act and the rules and regulations promulgated thereunder.
1.4 Closing and Closing
Date.
(a) The
closing of the Share Exchange (the “Closing”) will take place at
the offices of Xxxxxxx Xxxx LLP, counsel to the Investors under the Investment
Agreement, at its office in New York, New York, within ten (10) days following
the delivery of satisfaction or waiver of the conditions precedent set forth in
Section 4 or at such other date as Vensure and Fund shall agree (the “Closing Date”), but in no
event shall the Closing Date occur later than 5:00 p.m. on September 29, 2009,
unless such date shall be extended by mutual agreement of Vensure and
Fund.
(b) Notwithstanding anything to the
contrary, express or implied contained in this Agreement or in any other
Transaction Document, in the event and to the extent that any documents or other
closing instruments otherwise required to be delivered by September 29, 2009
under any of the Transaction Documents shall not have been so delivered, and the
Parties hereto and pursuant to any such Transaction Document shall have agreed
to waive delivery of any such document(s) or instrument(s) or defer such
delivery to a later date, all of the transactions contemplated by this Agreement
and all other Transaction Documents shall, for all purposes, be deemed to have
been consummated as at 5:00 p.m. on September 29, 2009.
1.5 Conditions to
Closing. On or prior to the Closing Date, unless waived
or deferred in writing by the Parties, all of the following conditions or
transactions shall have been fulfilled and consummated:
(a) The
Certificate of Incorporation of Vensure shall have been filed with Secretary of
State of the State of Arizona and approved for filing by the Arizona Corporation
Commission (the “ACC”). In addition,
(i) not later than five (5) Business Days after the Closing Date, the
Certificate of Incorporation, as filed with and approved by the ACC, shall be
published in a newspaper of general circulation in Maricopa County, Arizona for
three consecutive publications, and (ii) Vensure shall deliver an affidavit from
the newspaper evidencing such publication within ninety (90) days from the date
such Certificate of Incorporation was approved for filing by the
ACC.
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(b) The
Stockholders Agreement shall have been executed and delivered by the parties
thereto.
(c) Persons
designated by the Investors and approved by the board of directors of Fund (the
“Investor
Representatives”) shall constitute not less than 40% of all of the
members of the board of directors of Vensure and each member of the Vensure
Group.
(d) The
License Agreement shall have been executed and delivered by the parties
thereto.
(e) All
of the other transactions contemplated by the Investment Agreement shall have
been consummated.
(f) One
or more stock certificates evidencing the shares of Series A Preferred Stock
shall be registered in the name of FNDM and delivered to FNDM.
(g) FNDM
shall have completed a satisfactory business and financial due diligence review
of Vensure.
(h) FNDM
shall have received an opinion from an investment banking firm reasonably
acceptable to the board of directors of FNDM to the effect that this Agreement
and the transactions contemplated hereby are fair and reasonable to FNDM and the
stockholders of FNDM from a financial point of view (the “Fairness
Option”).
1.6
Restrictions On
Resale
The
Series A Preferred Stock and the shares of Vensure Common Stock or VRA Common
Stock issuable upon conversion of the Series A Preferred Stock will not be
registered under the Securities Act, or the securities laws of any state, and
cannot be transferred, hypothecated, sold or otherwise disposed of until: (i) a
registration statement with respect to such securities is declared effective
under the Securities Act, or (ii) Vensure receives an opinion of counsel of the
stockholder, reasonably satisfactory to counsel for Vensure, that an exemption
from the registration requirements of the Securities Act is
available.
The
certificates representing the Series A Preferred Stock shall contain a legend
substantially as follows:
“THE
SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL A REGISTRATION STATEMENT WITH
RESPECT THERETO IS DECLARED EFFECTIVE UNDER SUCH ACT, OR XXXX.XXX, INC. RECEIVES
AN OPINION OF COUNSEL FOR THE HOLDER REASONABLY SATISFACTORY TO COUNSEL FOR SUCH
CORPORATION THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT IS
AVAILABLE.”
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SECTION
2. REPRESENTATIONS AND WARRANTIES OF FUND.
Fund hereby represents and
warrants to Vensure as
follows:
2.1 Organization and Good
Standing. Fund is a corporation duly organized and validly
existing under the laws of the British Virgin Islands.
2.2 Authority. Fund
has the corporate power to enter into this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement
and the consummation of the transaction contemplated hereby have been duly
authorized by the Board of Directors of Fund, including the payment of the
Purchase Price for the Series A Preferred Stock. The execution and
performance of this Agreement will not constitute a material breach of any
agreement, indenture, mortgage, license or other instrument or document to which
Fund is a Party
and will not violate any judgment, decree, order, writ, rule, statute, or
regulation applicable to Fund or its
properties. The execution and performance of this Agreement will not
violate or conflict with any provision of the Articles of Incorporation or
by-laws of Fund.
2.3 Investment
Purpose. As of the date hereof and the Closing Date Fund is
purchasing the Series A Preferred Stock and the shares of Vensure Common Stock
or VRA Common Stock issuable upon conversion of the Series A Preferred Stock
(the “Conversion Shares”
and collectively with the Series A Preferred Stock, the “Securities”) for its own
account and not with a present view towards the public sale or distribution
thereof, except pursuant to sales registered or exempted from registration under
the Securities Act; provided,
however, that by making the representations herein, Fund does not agree
to hold any of the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in accordance with
or pursuant to a registration statement or an exemption under the Securities
Act.
2.4 Accredited
Investor. Fund is an “accredited investor” as that term is
defined in Rule 501(a) of Regulation D under the Securities Act (an “Accredited
Investor”). Further, Fund represents that it is a
sophisticated investor, can bear the economic risk of this Investment for an
indefinite period of time, and has such knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and risks of
this Investment.
2.5 Reliance on
Exemptions. Fund understands that the Securities are being
offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and Fund’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of Fund set forth herein in order to determine the
availability of such exemptions and the eligibility of Fund to acquire the
Securities.
2.6 Information. Fund
and its advisors, if any, have had the opportunity to ask questions of
management of Vensure and have been furnished with all information relating to
the business, finances and operations of the Vensure Group and information
relating to the offer and sale of the Securities which have been requested by
Fund or its advisors. Neither such inquiries nor any other due
diligence investigation conducted by Fund or any of its advisors or
representatives shall modify, amend or affect Fund’s right to rely on the
representations and warranties of Vensure contained in the Investment
Agreement. Fund understands that its investment in the Securities
involves a significant degree of risk. Fund further represents to the
Vensure that Fund’s decision to enter into this Agreement has been based solely
on the independent evaluation of Fund and the representations and warranties of
Vensure contained in this Agreement and in the Investment
Agreement.
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2.7 Governmental
Review. Fund understands that no United States federal or
state agency or any other government or governmental agency has passed upon or
made any recommendation or endorsement of the Securities.
2.8 Transfer or
Resale. Fund understands the sale or re-sale of the Securities
has not been and is not being registered under the Securities Act or any
applicable state securities laws, and the Securities may not be transferred
unless (i) the Securities are sold pursuant to an effective registration
statement under the Securities Act, (ii) Fund shall have delivered to the
Company an opinion of counsel that shall be in form, substance and scope
customary for opinions of counsel in comparable transactions to the effect that
the Securities to be sold or transferred may be sold or transferred pursuant to
an exemption from such registration, which opinion shall be reasonably
acceptable to the Company, (iii) the Securities are sold or transferred to
an “Affiliate” (as defined in Rule 144 promulgated under the Securities Act (or
a successor rule) (“Rule
144”) of Fund who agrees to sell or otherwise transfer the Securities
only in accordance with this Section 2.8 and who is an Accredited Investor,
(iv) the Securities are sold pursuant to Rule 144, or (v) the
Securities are sold pursuant to Regulation D under the Securities Act (or a
successor rule) (“Regulation
D”). Fund acknowledges that hedging transactions involving the
Securities may not be conducted unless in compliance with the Securities
Act. Notwithstanding the foregoing or anything else contained herein
to the contrary, the Securities may be pledged as collateral in connection with
a bona fide margin account or other lending arrangement.
2.9 Full
Disclosure. No representation or warranty by Fund in this
Agreement or in any document or schedule to be delivered by them pursuant
hereto, and no written statement, certificate or instrument furnished or to be
furnished by Fund pursuant hereto or in connection with the negotiation,
execution or performance of this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state any fact necessary
to make any statement herein or therein not materially misleading or necessary
to a complete and correct presentation of all material aspects of the business
of Fund.
SECTION 3. REPRESENTATIONS AND
WARRANTIES OF VENSURE.
3.1 Organization and Good
Standing. Vensure is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Arizona. Vensure has the corporate power to own its own property and
to carry on its business as now being conducted and is duly qualified to do
business in any jurisdiction where so required except where the failure to so
qualify would have no material negative impact.
3.2 Authority. The
Vensure Stockholders has approved the execution delivery and performance of this
Agreement by Vensure. The Vensure Stockholders individually has the
power and authority, and Vensure has the corporate power to enter into this
Agreement and to perform its obligations hereunder, including the issuance of
the Series A Preferred Stock. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by the Board of Directors and stockholders of Vensure as
required by Arizona law. The execution and performance of this
Agreement will not constitute a material breach of any agreement, indenture,
mortgage, license or other instrument or document to which Vensure is a Party
and will not violate any judgment, decree, order, writ, rule, statute, or
regulation applicable to Vensure or its properties. The execution and
performance of this Agreement will not violate or conflict with any provision of
the respective Certificate of Incorporation or by-laws of Vensure.
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3.3 Vensure
Capitalization.
(a) On
or immediately following the Closing Date, Vensure will be authorized to issue
(i) 5,000,000 shares of Vensure Common Stock, $0.001 par value per share, and
(ii) 1,000,000 shares of Vensure Preferred Stock. An aggregate of 820,000 shares
of Vensure Common Stock and no shares of Vensure Preferred Stock are or will be
issued and outstanding as at the Closing Date. All 820,000 shares of
Vensure Common Stock will be owned by the Vensure Stockholders, and an
additional 180,000 shares of Vensure Common Stock will be issued or reserved for
issuance to certain key employees of Vensure, including certain of the Vensure
Stockholders.
(b) Except
for the 218,883.33 shares of Series A Preferred Stock or as contemplated by this
Agreement, no shares of Vensure Common Stock or Vensure Preferred Stock are
reserved for issuance pursuant to any agreement, convertible securities, options
or warrants.
(c) The
Vensure Stockholders own as at the Execution Date an aggregate of 10,000 of the
10,000 authorized shares of Vensure Common Stock, and will own at the Closing
Date an aggregate of 1,000,000 of the 1,000,000 shares of Vensure Common Stock
that as at the Closing Date are issued and outstanding. Such shares
of Vensure Common Stock are owned and will be owned by the Vensure Stockholders,
as follows:
|
Name
|
Number of Shares Owned
at the Execution Date
|
Number of Shares to be Owned
at the Closing Date
|
||
|
Xxxxxx
X. Xxxxxxxx
|
1,041.7
shares
|
104,170 shares
|
||
|
Xxxxxx
Xxxxxxx
|
4,513.9
shares
|
451,390 shares
|
||
|
Xxxxxx
X. Xxxxxx
|
1,736.1
shares
|
173,610 shares
|
||
|
Xxxx
Xxxxx
|
312.5 shares
|
32,500 shares
|
||
|
Xxxxxxx
Xxxxxxx
|
312.5 shares
|
32,500 shares
|
||
|
Xxxx
Xxxxxxx
|
1,736.1
shares
|
173,610 shares
|
||
|
Xxx
Xxxxxxxxxx
|
347.2
shares
|
34,720 shares
|
||
|
Total
|
8,200 shares
|
1,000,000
shares
|
||
3.4 Vensure Financial
Statements.
Vensure
has furnished to Fund the unaudited consolidated balance sheet and consolidated
statement of operations of the Vensure Group as at December 31, 2008 and the
unaudited consolidated balance sheet and unaudited consolidated statement of
operations of the Vensure Group as at June 30, 2009 and for the six months then
ended (collectively, the “Vensure Financial
Statements”). Except as set forth on the balance sheet dated
March 31, 2009 or otherwise disclosed on Schedule 3.4, as at
June 30, 2009, Vensure has no other assets and has incurred no other
liabilities, debts or obligations, whether fixed, contingent or otherwise
required to be set forth on a balance sheet prepared in accordance with
GAAP. The books of account and other financial records of Vensure are in all
respects complete and correct in all material respects and are maintained in
accordance with good business and accounting practices.
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3.5 No Material Adverse
Changes. Since June 30, 2009:
(a) there
has not been any material adverse changes in the financial position of the
Vensure Group except changes arising in the ordinary course of business, which
changes will in no event materially and adversely affect the financial position
of the Vensure Group, and will be consistent with the representations made by
Vensure hereunder.
(b) there
has not been any damage, destruction or loss materially affecting the assets,
prospective business, operations or condition (financial or otherwise) of the
Vensure Group whether or not covered by insurance;
(c) there
has not been any declaration setting aside or payment of any dividend or
distribution with respect to any redemption or repurchase of Vensure capital
stock;
(d) there
has not been any sale of an asset (other than in the ordinary course of
business) or any mortgage pledge by the Vensure Group of any properties or
assets; or
(e) there
has not been adoption or modification of any pension, profit sharing,
retirement, stock bonus, stock option or similar plan or
arrangement.
(f) except
as contemplated by the Investment Agreement, there has not been any loan or
advance to any shareholder, officer, director, employee, consultant, agent or
other representative or made any other loan or advance otherwise than in the
ordinary course of business;
(g) except
in the ordinary course of business, there has not been any increase in the
annual level of compensation of any executive employee of the Vensure
Group;
(h) except
in the ordinary course of business, the Vensure Group has not entered into or
modified any contract, agreement or transaction; and
(i) the
Vensure Group has not issued any equity securities or rights to acquire equity
securities.
3.6 Taxes. The
Vensure Group has timely filed all material tax, governmental and/or related
forms and reports (or extensions thereof) due or required to be filed and has
paid or made adequate provisions for all taxes or assessments which have become
due as of the Closing Date, and there are no deficiencies
outstanding.
3.7 Compliance with
Laws. Vensure has complied
with all federal, state, county and local laws, ordinances, regulations,
inspections, orders, judgments, injunctions, awards or decrees applicable to it
or its business, which, if not complied with, would materially and adversely
affect the business of Vensure or the trading
market for the Vensure Shares and
specifically, and Vensure has complied
with provisions for registration under the Securities Act of 1933 and all
applicable blue sky laws in connection with its public stock offering and there
are no outstanding, pending or threatened stop orders or other actions or
investigations relating thereto.
3.8 Actions and
Proceedings. The Vensure Group is not a Party to any material
pending litigation or, to its knowledge, any governmental proceedings are
threatened against the Vensure Group.
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3.9 Disclosure. Vensure
has (and at the Closing it will have) disclosed in writing to Fund all events,
conditions and facts materially affecting the business, financial conditions or
results of operation of Vensure all of which
have been set forth herein. Vensure has not now and
will not have, at the Closing, withheld disclosure of any such events,
conditions, and facts which they have knowledge of or have reasonable grounds to
know may exist.
3.10 Access to
Records. The corporate financial records, minute books, and
other documents and records of Vensure have been made
available to Fund prior to the Closing hereof.
3.11 No
Breach. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will
not:
(a) violate
any provision of the Articles of Incorporation or By-Laws of
Vensure;
(b) violate,
conflict with or result in the breach of any of the terms of, result in a
material modification of, otherwise give any other contracting Party the right
to terminate, or constitute (or with notice or lapse of time or both constitute)
a default under, any contract or other agreement to which the Vensure Group is a
Party or by or to which it or any of its assets or properties may be bound or
subject;
(c) violate
any order, judgment, injunction, award or decree of any court, arbitrator or
governmental or regulatory body against, or binding upon, the Vensure Group or
upon the securities, properties or business of the Vensure Group;
or
(d) violate
any statute, law or regulation of any jurisdiction applicable to the
transactions contemplated herein.
3.12 Brokers or
Finders. No broker's or finder's fee will be payable by
Vensure in connection with the transactions contemplated by this Agreement, nor
will any such fee be incurred as a result of any actions of
Vensure.
3.13 Investment
Agreement. Vensure and the Vensure Stockholders have duly
executed and delivered the Investment Agreement.
3.14 Authority to Execute and
Perform Agreements. Vensure has the full
legal right and power and all authority and approval required to enter into,
execute and deliver this Agreement and to perform fully its obligations
hereunder. This Agreement has been duly executed and delivered and is
the valid and binding obligation of Vensure enforceable in
accordance with its terms, except as may be limited by bankruptcy, moratorium,
insolvency or other similar laws generally affecting the enforcement of
creditors' rights. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby and the performance by
Vensure of this
Agreement, in accordance with its respective terms and conditions will
not:
(a) require
the approval or consent of any governmental or regulatory body or the approval
or consent of any other person;
(b) conflict
with or result in any breach or violation of any of the terms and conditions of,
or constitute (or with any notice or lapse of time or both would constitute) a
default under, any order, judgment or decree applicable to Vensure, or any
instrument, contract or other agreement to which Vensure is a Party or
by or to which Vensure is bound or
subject; or
(c) result
in the creation of any lien or other encumbrance on the assets or properties of
Vensure.
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3.15 Full
Disclosure. No representation or warranty by Vensure in this
Agreement or in any document or schedule to be delivered by them pursuant
hereto, and no written statement, certificate or instrument furnished or to be
furnished by Vensure pursuant hereto
or in connection with the negotiation, execution or performance of this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state any fact necessary to make any statement herein or
therein not materially misleading or necessary to complete and correct
presentation of all material aspects of the business of Vensure.
SECTION
4. COVENANTS
4.1 Corporate Examinations and
Investigations. Prior to the Closing Date, the Parties
acknowledge that they have been entitled, through their employees and
representatives, to make such investigation of the assets, properties, business
and operations, books, records and financial condition of the other as they each
may reasonably require. No investigations, by a Party hereto shall,
however, diminish or waive any of the representations, warranties, covenants or
agreements of the Party under this Agreement.
4.2 Further
Assurances. The Parties shall execute such documents and other
papers and take such further actions as may be reasonably required or desirable
to carry out the provisions hereof and the transactions contemplated
hereby. Each such Party shall use its best efforts to fulfill or
obtain the fulfillment of the conditions to the Closing, including, without
limitation, the execution and delivery of any documents or other papers, the
execution and delivery of which are necessary or appropriate to the
Closing.
4.3 Confidentiality. In
the event the transactions contemplated by this Agreement are not consummated,
Vensure and
Fund agree to keep confidential any information disclosed to each other in
connection therewith for a period of three (3) years from the date hereof;
provided, however, such obligation shall not apply to information
which:
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(i)
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at
the time of the disclosure was public
knowledge;
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(ii)
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is
required to be disclosed publicly pursuant to any applicable federal or
state securities laws;
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(iii)
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after
the time of disclosure becomes public knowledge (except due to the action
of the receiving Party);
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(iv)
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the
receiving Party had within its possession at the time of disclosure;
or
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(v) is
ordered disclosed by a Court of proper jurisdiction.
4.4 Stock
Certificates. At the Closing, Vensure shall have delivered to
Fund the certificates representing the 218,883.33 shares of Series A Preferred
Stock registered in the name of Fund so as to make Fund the sole owner
thereof.
4.5 Use of
Proceeds. Vensure shall use the entire Certificate of Deposit
received upon the sale of the Series A Preferred Stock only to capitalize VRA
and enable VRA to purchase the annuity contemplated by the Investment
Agreement.
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4.6 Expenses.
It is understood and agreed that following the execution of this
Agreement, any and all legal or other fees and expenses with respect to any
filings, documentation and related matters with respect to the consummation of
the transactions contemplated hereby shall be the sole responsibility of
Vensure, and that Fund shall not be responsible for any such expenses or legal
or other fees associated with such filings; provided,
however, that Fund shall fully cooperate and execute all required
documents as may be legally required.
SECTION
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Notwithstanding any right of either
Party to investigate the affairs of the other Party and its Shareholders, each
Party has the right to rely fully upon representations, warranties, covenants
and agreements of the other Party and its Shareholders contained in this
Agreement or in any document delivered to one by the other or any of their
representatives, in connection with the transactions contemplated by this
Agreement. All such representations, warranties, covenants and
agreements shall survive the execution and delivery hereof and the closing
hereunder for eighteen (18) months following the Closing.
SECTION 6.
INDEMNIFICATION; DISPUTE RESOLUTION.
6.1 Indemnification by
Fund.
(a) From
and after the Closing, Fund shall indemnify and hold harmless Vensure, the
Vensure Stockholders and their Affiliates, directors, officers and employees
(collectively, the “Vensure
Parties”) from and against any and all direct Damages finally awarded
arising out of, resulting from or in any way related to:
(i) a
breach by Fund of its representations and warranties contained herein,
or
(ii) the
failure to perform or satisfy, when due, any of the covenants and agreements
made by Fund in this Agreement or in any other document or certificate delivered
by Fund at the Closing pursuant hereto.
(b) Notwithstanding
the foregoing, the indemnification obligations of Fund under Section 6.1(a)(i)
above shall (i) only arise if a claim for Damages shall be made in writing by
Vensure to Fund by December 31, 2009, (ii) only be applicable to Damages
incurred by Vensure Parties in excess of $150,000 (the “Indemnity Floor”),
and (iii) not be applicable to Damages incurred by Vensure Parties which shall
be in excess of $5.0 million (the “Indemnity
Cap”). There shall be no Indemnity Cap with respect to the
matters contemplated by Section 6.1(a)(ii) above, and such indemnity obligations
shall survive indefinitely. Any payment made to any of Vensure
Parties pursuant to the indemnification obligations under this Section 6.1 shall
constitute a reduction in value of the Series A Preferred Stock issued pursuant
to this Agreement.
(c) In
the event that any claim for Damages shall be asserted against any of the
Vensure Parties for which Fund is liable to indemnify against pursuant to this
Section 6.1, Fund shall have the sole right to conduct, at its or their expense,
the defense of any and all such claims with counsel of their choosing, and shall
have the sole right to effect any financial settlement of any such claims for
Damages; provided,
however, that if any such settlement would result in any injunction or
restrictions on the Vensure Parties, or otherwise require any of the Vensure
Parties to pay any ongoing royalties or other payments to any Person, no such
settlement may be effected by Fund without the prior written consent of
Venure.
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6.2 Indemnification by
Vensure.
(a) From
and after the Closing, Vensure shall indemnify and hold harmless the Fund, its
affiliates, directors, officers and employees (collectively, the “Fund Parties”) from and
against any and all direct Damages finally awarded arising out of, resulting
from or in any way related to:
(i) a
breach by Vensure of its representations and warranties contained herein,
or
(ii) the
failure to perform or satisfy, when due, any of the covenants and agreements
made by Vensure or the Vensure Stockholders in this Agreement or in any other
document or certificate delivered by Vensure at the Closing pursuant
hereto.
(b) Notwithstanding
the foregoing, the indemnification obligations of Vensure under Section
6.2(a)(i) above shall (i) only arise if a claim for Damages shall be made in
writing by Fund to Vensure by December 31, 2009, (ii) only be applicable to
Damages incurred by Fund Parties in excess of $150,000 (the “Indemnity Floor”),
and (iii) not be applicable to Damages incurred by the Fund Parties which shall
be in excess of $5.0 million (the “Indemnity
Cap”). There shall be no Indemnity Cap with respect to the
matters contemplated by Section 6.2(a)(ii) above, and such indemnity obligations
shall survive indefinitely. Any payment made to any of Fund Parties
pursuant to the indemnification obligations under this Section 6.2 shall
constitute a reduction in value of the Certificate of Deposit paid pursuant to
this Agreement.
(c) In
the event that any claim for Damages shall be asserted against any of the Fund
Parties for which Vensure is liable to indemnify against pursuant to this
Section 6.2, Vensure shall have the sole right to conduct, at its or their
expense, the defense of any and all such claims with counsel of their choosing,
and shall have the sole right to effect any financial settlement of any such
claims for Damages; provided,
however, that if any such settlement would result in any injunction or
restrictions on the Fund Parties, or otherwise require any of the Fund Parties
to pay any ongoing royalties or other payments to any Person, no such settlement
may be effected by Vensure without the prior written consent of
Fund.
6.3 Resolution of
Disputes. Any
dispute arising under this Agreement which cannot be resolved among the Parties
shall be submitted to final and binding arbitration in accordance with the then
prevailing rules and regulations of the American Arbitration Association (the
“AAA”), located in New
York, New York. There shall be three arbitrators, one selected by the
claimant, one selected by the respondent and the third arbitrator selected by
the AAA. The decision and award of the arbitrators shall be final and
binding upon all Parties and may be enforced in any federal or state court of
competent jurisdiction. Service of process on any one or more
Parties in connection with any such arbitration may be made by registered or
certified mail, return receipt requested or by email or facsimile
transmission.
SECTION
7. MISCELLANEOUS
7.1 Waivers. The
waiver of a breach of this Agreement or the failure of any Party hereto to
exercise any right under this Agreement shall in no way constitute waiver as to
future breach whether similar or dissimilar in nature or as to the exercise of
any further right under this Agreement.
7.2 Amendment. This
Agreement may be amended or modified only by an instrument of equal formality
signed by the Parties or the duly authorized representatives of the respective
Parties.
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7.3 Assignment. This
Agreement is not assignable except by operation of law.
7.4 Notice. Until
otherwise specified in writing, the mailing addresses and fax numbers of the
Parties of this Agreement shall be as follows:
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To:
Vensure
Employer Services, Inc.:
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Vensure Employer Services,
Inc.
0000 Xxxxx Xxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxxx Xxxxxxx 00000
Attn: Xxxxxx Xxxxxxx, CEO
email: xxx.xxxxxxx@xxxxxxxxxx.xxx
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To:
Fund:
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Xxxx.xxx, Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxxx,
President
Email: xxxxxxxx@xxxx.xxx
Any
notice or statement given under this Agreement shall be deemed to have been
given if sent by registered mail addressed to the other Party at the address
indicated above or at such other address which shall have been furnished in
writing to the addressor.
7.5 Governing
Law. This Agreement shall be construed, and the legal
relations between the Parties determined, in accordance with the laws of the
State of New York, thereby precluding any choice of law rules which may direct
the application of the laws of any other jurisdiction.
7.6 Publicity. No
publicity release or announcement concerning this Agreement or the transactions
contemplated hereby shall be issued by either Party hereto at any time from the
signing hereof without advance approval in writing of the form and substance by
the other Party.
7.7 Entire
Agreement. This Agreement (including the Schedules to be
attached hereto) and the collateral agreements executed in connection with the
consummation of the transactions contemplated herein contain the entire
agreement among the Parties with respect to the transactions contemplated
hereby, and supersedes all prior agreements, written or oral, with respect
hereof.
7.8 Headings. The
headings in this Agreement are for reference purposes only and shall not in any
way affect the meaning or interpretation of this Agreement.
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7.9 Severability of
Provisions. The invalidity or unenforceability of any term,
phrase, clause, paragraph, restriction, covenant, agreement or provision of this
Agreement shall in no way affect the validity or enforcement of any other
provision or any part thereof.
7.10 Counterparts. This
Agreement may be executed in any number of counterparts, each of which when so
executed, shall constitute an original copy hereof, but all of which together
shall consider but one and the same document.
7.11 Binding
Effect. This Agreement shall be binding upon the Parties
hereto and inure to the benefit of the Parties, their respective heirs,
administrators, executors,
successors
and assigns.
7.12 Press
Releases. The Parties will mutually agree as to the wording
and timing of any informational releases concerning this transaction prior to
and through Closing.
[the
balance of this page intentionally left blank – signature pages
follow]
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IN WITNESS WHEREOF, the
Parties have executed this Agreement on the date first above
written.
ATTEST:
XXXX.XXX, INC.
(a Delaware corporation)
/s/
Xxxxxxx
Xxxxxx
By:
/s/
Xxxxxxx
Xxxxxxx
Secretary
Xxxxxxx Xxxxxxx,
President
VENSURE EMPLOYER SERVICES,
INC.
(an Arizona corporation)
By: /s/
Xxxxxx
Xxxxxxx
Xxxxxx Xxxxxxx, President and CEO
VENSURE STOCKHOLDER:
/s/
Xxxxxx X.
Xxxxxxxx
Xxxxxx X.
Xxxxxxxx
/s/
Xxxxxx
Xxxxxxx
Xxxxxx
Xxxxxxx
/s/ Xxxx
Xxxxxxx
Xxxx
Xxxxxxx
/s/
Xxxxxx X.
Xxxxxx
Xxxxxx X.
Xxxxxx
/s/ Xxx
Xxxxxxxxxx
Xxx
Xxxxxxxxxx
/s/ Xxxx
Xxxxx
Xxxx
Xxxxx
/s/
Xxxxxxx
Xxxxxxx
Xxxxxxx
Xxxxxxx
-18-
