Exhibit: 10.1
STOCK PURCHASE AGREEMENT
AGREEMENT dated as of July 31, 2002, between Distinctive
Devices, Inc., a New York corporation, having an address at Xxx Xxxxxx Xxxxx,
Xxxxx 000, Xxxx Xxx, XX 00000 (the "Company"), and Xxxxxxxx X. Xxxxx, having his
office address at 000 Xxxxxxx Xxxxx, Xxxx XX 00000 (the "Purchaser").
BACKGROUND
The Company has designated 250,000 shares of its Preferred
Stock, $1.00 par value, as Series D Convertible Preferred Stock, (the "Series D
Preferred Stock"). The Purchaser desires to purchase 173,333 shares (the
"Purchased Shares?) of the authorized Series D Preferred Stock from the Company,
and the Company desires to sell the Purchased Shares to the Purchaser, on the
terms and conditions set forth below.
NOW, THEREFORE, the parties hereto for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged hereby, agree as
follows:
1. Sale of Series D Preferred Stock: Purchase Price.
1.1 Sale. Subject to the terms and conditions set forth herein, the
Purchaser hereby purchases 173,333 shares of Series D Preferred Stock from the
Company constituting the Purchased Shares, and the Company hereby sells the
Purchased Shares to the Purchaser for the aggregate purchase price of $650,000
(the "Purchase Price"). Pursuant to ?912(c)(1) of the New York Business
Corporation Law, the Board of Directors of the Company approves of the purchase
of the Purchased Shares by the Purchaser
1.2 Closing. The closing (the "Closing?) of the transaction
contemplated hereby is taking place simultaneously with the execution and
delivery of this Agreement. At the Closing, the parties are making the following
deliveries to each other:
(a) The Company is delivering to the Purchaser a certificate
registered in the name of the Purchaser representing all of the Purchased
Shares, receipt of which Is acknowledged by the Purchaser; and
(b) The Purchaser is delivering the Purchase Price to the
Company by check or wire transfer to an account designated by the Company,
receipt of which is acknowledged by the Company.
2. Representations. Warranties and Covenants of the Company. The Company
represents and warrants to the Purchaser that:
2.1 Organization: Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York. The Company is duly qualified or licensed to do business as a foreign
corporation in good standing in every jurisdiction where the character of its
properties, owned or leased, or the nature of its activities make such
qualification necessary.
2.2 Corporate Power The Company has all requisite corporate power to enter
into this Agreement, to sell the Purchased Shares and to carry out and perform
its obligations under the terms of this Agreement. All corporate action on the
part of the Company necessary for the authorization, execution, delivery and
performance by the Company of this Agreement and for the authorization, issuance
and delivery of the Purchased Shares issuable upon payment therefore has been
taken. This Agreement constitutes a valid and binding agreement of the Company
enforceable in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and general principles of equity.
2.3 No Restrictive Agreements. The issuance and delivery of the Purchased
Shares to the Purchaser is not subject to any preemptive rights. Upon the
delivery of the Purchased Shares, the Purchaser will acquire the beneficial and
legal, valid and indefeasible title to the Purchased Shares, free and clear of
all pledges, liens, charges, claims or options of any kind, except for
restrictions on transfer under the Securities Act of 1933, as amended (the?
Securities Act?), and applicable state securities laws.
2.4 Capitalization The Company's authorized capital stock consists of
20,000,000 shares of Common Stock, $.05 par value (the "Common Stock"), of which
19,134,824 shares are issued and outstanding, and 1,000,000 shares of Preferred
Stock, 60,000 shares of which have been designated as Series C Preferred Stock,
of which 10,000 shares are issued and outstanding, and 250,000 shares of which
have been designated as Series D, none of which is outstanding. All of the
issued and outstanding shares of Common Stock and Series C Preferred Stock are
validly issued, fully paid and non-assessable. The Purchased Shares being issued
to the Purchaser pursuant to this Agreement upon issuance will be validly
issued, fully paid and non-assessable shares of Series D Preferred Stock. The
shares of Common Stock underlying the conversion rights of the Purchased Shares
upon conversion in accordance with the terms of the Series D Preferred Stock and
after a recapitalization (the "Recapitalization") of the Common Stock increasing
the number of authorized shares and reducing the par value to $.00l per share,
upon issuance will be validly issued, fully paid and non-assessable shares of
Common Stock.
2.5 SEC Reports. The Company is subject to filing reports with the
Securities and Exchange Commission pursuant to Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The information in the
Company's annual report on Form l0-KSB for the fiscal year ended December 31,
2001 and Form 10-QSB for the fiscal quarter ended March 31, 2002 is in all
material respects complete and correct.
2.6 Stockholders Meeting. The Company shall use its best efforts to promptly
call and hold a Special Meeting of Shareholder in accordance with the New York
Business Corporation Law and the Exchange Act, at which Meeting the shareholders
will vote upon the Recapitalization as described in Section 2.4, a proposed
reverse stock split of the Common Stock, a proposed corporate migration to the
State of Delaware, and such other matters as the Company's Board of Directors
may propose.
3 Representations and Warranties of the Purchaser. The Purchaser represents
and warrants to the Company that:
3.1 Knowledge. As a member of the Board of Directors of the Company, the
Purchaser is aware of the current business, prospects and financial condition of
the Company and the market for its Common Stock, has reviewed the reports
recently filed by the Company under the Exchange Act, and has had the
opportunity to discuss the Company's prospects with its management. In addition,
the Purchaser understands the restrictions on resale or other transfer of the
Series D Shares (and any underlying shares of Common Stock), as they have not
been registered under the Securities Act.
3.2 Authority. The Purchaser has the power and authority to enter into
this Agreement and to purchase the Series D Preferred Stock, and the purchase is
consistent with his investment objectives.
4. Preemptive Rights.
4.1 Right. If at any time and from time to time, for a period of eighteen
(18) months from the date of this Agreement, the Board of Directors authorizes
the Company to sell (the "Sale"), solely for cash, shares of Common Stock (the
"Shares"), or shares of Preferred Stock or other securities (the "Derivative
Securities") that are exercisable for, convertible into or exchangeable for
shares of Common Stock in a private placement transaction pursuant to the
exemption from registration under Regulation D of the Securities Act, the
Company shall send a written notice to the Purchaser of such authorization (the
?Notice of Preemptive Rights") offering the Purchaser the right to participate
in such Sale. For purposes of this Section, a "Sale" shall not include (a) an
issuance of Shares directly or underlying options or other rights granted to
employees, officers, consultants or directors under an agreement or an employee
benefit plan or otherwise as incentive or compensation, (b) an issuance of
Shares either directly or underlying Derivative Securities in whole or in part
in consideration for services, (c) the issuance as part of an acquisition
transaction, (d) an issuance to a party who the Board of Directors determines
would be a strategically important shareholder, or (e) upon the exercise of any
Derivative Securities which were outstanding on the date of this Agreement. Any
Shares not purchased by the Purchaser pursuant to this Section 4 may be sold,
issued or granted within ninety (90) days after deliver of the Notice of
Preemptive Rights, at the same price and terms as offered for sale to the
Purchaser hereunder.
4.2 Notice of Preemptive Right. The Notice of Preemptive Rights shall
specify the total aggregate number of Shares to be issued, the price and other
terms of the proposed Sale, the amount of Shares or Derivative Securities to
which the Purchaser is entitled to purchase and the period during which the
Purchaser may elect to participate in the purchase. The Notice of Preemptive
Rights shall be sent to the Purchaser at least ten (10) days prior to the
anticipated closing date of the Sale. If the Purchaser desires to participate in
the Sale, the Purchaser shall notify the Company by sending a notice of
acceptance, which must be received by the Company within the time period
specified in the applicable Notice of Preemptive Rights.
4.3 Effectiveness. The purpose of the preemptive right in this Section 4 is
to accommodate the Purchaser?s desire to have the opportunity to maintain his
beneficial percentage interest (on a fully diluted basis) in the Company's
Common Stock upon certain issuances by the Company. If (i) the Purchaser fails
to purchase at least fifty percent (50%) of the Shares or Derivative Securities
offered in the Notice of Preemptive Rights in any Sale which closes, or (ii) the
Purchaser sells or otherwise disposes of fifty percent (50%) of the securities
beneficially owned by him upon the closing of the Purchase herein, the
Purchaser?s rights under this Section 4 shall terminate with respect to any
subsequent Sale.
5 Miscellaneous
5.1 Survival. All representations and warranties and other agreements made
by the Company and the Purchaser in this Agreement shall survive the Closing for
a period of one (1) year.
5.2 Additional Action. Each of the Purchaser and the Company shall, upon the
request of the other, from time to time, execute and deliver promptly to the
other party all instruments and documents of further assurances or otherwise and
will do any and all such acts and things as may be reasonably required to carry
out the obligations of such party hereunder and to consummate the transactions
contemplated hereby
5.3 Successor and Assigns. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective estates, heirs,
executors, successors and assigns.
5.4 Governing Law. The laws of the State of New York shall in all respects
govern this Agreement, without giving effect to the principles of conflicts of
law thereof
5.5 Entire Agreement. This Agreement constitutes the entire arrangement
between the parties with respect to the subject matter herein and cannot be
changed, modified, discharged or terminated except by a writing signed by the
party against whom enforcement of any change, modification, discharge or
termination is sought.
5.6 Waiver. No waiver shall be deemed to be made by any party of any of his
rights hereunder unless the same shall be in writing, and each waiver, if any,
shall be a waiver only with respect to the specific instance involved and shall
in no way impair the rights of the waiving party of the obligations of the other
party in any other respect at any other time.
5.7 Notices. Any notice, demand or other communication to be given hereunder
by either party to the other shall be in writing and shall be mailed by
certified mail, return receipt requested, sent by recognized overnight courier
or delivered against receipt to the party to whom it is to be given to the
address of such party set forth in the preamble to this Agreement (or to such
other address as the party shall have furnished in accordance with the
provisions of this Section 5.7).
5.8 Captions. The captions used in this Agreement are for convenience only
and shall not be deemed as, or construed as, a part of this Agreement.
5.9 Counterparts, Facsimile Execution. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, and all of
which shall constitute one and the Same instrument. Facisimile execution and
delivery of this Agreement is legal, valid and binding execution and delivery
for all purposes.
IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement as of the date first above written
Distincitive Devices, Inc.
/s/ Xxxxxx X. Xxxx
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By: Xxxxxx X. Xxxx
Title: President & CEO
/s/ Xxxxxxxx X. Xxxxx
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