EXHIBIT 10.40
STOCK REDEMPTION AGREEMENT
THIS STOCK REDEMPTION AGREEMENT (this "Agreement"), made as of this
31st day of May, 2006 (the "Closing Date"), is by and between BigString
Corporation, a Delaware corporation (the "Corporation"), and June X. Xxxxxxx, an
individual residing in the State of Oklahoma (the "Redeeming Shareholder").
W I T N E S S E T H:
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WHEREAS, the Redeeming Shareholder owns 4,000,000 shares of the
Corporation's common stock, par value $.0001 per share ("Common Stock");
WHEREAS, the Redeeming Shareholder has agreed to sell, and the
Corporation has agreed to purchase, 2,000,000 shares of Common Stock held by the
Redeeming Shareholder (the "Subject Shares"), upon the terms and subject to the
conditions set forth in this Agreement (the "Redemption"); and
WHEREAS, as an inducement for the Corporation to effect the Redemption,
the Redeeming Shareholder has agreed, as provided herein, to certain
restrictions with regard to the sale, assignment, transfer, encumbrance or other
disposition of the shares of Common Stock held by the Redeeming Shareholder that
are not part of the Subject Shares (the "Remaining Shares").
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and undertakings made by the parties hereto, and intending to be
legally bound, it is hereby mutually agreed:
1. Mutual Agreement to Redeem. The Redeeming Shareholder hereby agrees
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to surrender for redemption to the Corporation, and the Corporation hereby
agrees to redeem from the Redeeming Shareholder, the Subject Shares upon the
terms and subject to the conditions set forth in this Agreement.
2. Surrender of Subject Shares. Contemporaneously with the execution of
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this Agreement by both parties, the Redeeming Shareholder shall surrender to the
Corporation Certificates 0000149, 0000150, 0000151 and 0000152 (each Certificate
represents 500,000 shares of Common Stock), which, in the aggregate, represent
the Subject Shares, endorsed in blank for transfer, and upon receipt of such
Stock Certificates the Corporation shall tender to the Redeeming Shareholder
payment of the Redemption Price (as defined below).
3. Payment of Redemption Price. The redemption price for the Subject
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Shares shall be 5/100 Dollars ($0.05) per share or an aggregate of One Hundred
Thousand Dollars ($100,000) (the "Redemption Price"). The Redemption Price shall
be immediately sent by the Corporation to the Redeeming Shareholder upon receipt
of this Stock Redemption Agreement, executed by the Redeeming Shareholder, and
the endorsed Stock Certificates. Payment shall be made by wire transfer, or by
corporate check via overnight shipment with concurrent notification by email to
the Redeeming Shareholder of the tracking number.
4. Lockup of Securities.
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(a) Lockup of Securities. Except as set forth in Section 4(b), the
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Redeeming Shareholder shall not, at any time prior to the conclusion of the
twenty-six month period following the Closing Date (such period expires on July
31, 2008 and shall be referred to herein as the "Restricted Period"), directly
or indirectly, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend or otherwise transfer or dispose of any of
the Remaining Shares, or (ii) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of any of the Remaining Shares, whether any such transaction described
in clause (i) or (ii) above is to be settled by delivery of the Remaining
Shares, in cash or otherwise (any such transaction, whether or not for
consideration, being referred to herein as a "Transfer," and each Person to whom
a Transfer is made, regardless of the method of Transfer, is referred to herein
as a "Transferee").
(b) Permitted Transfers. The Redeeming Shareholder is permitted to,
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at any time after the conclusion of the 14 month period following the Closing
Date (i.e., after July 31, 2007), sell 100,000 shares of Common Stock at the
prevailing market price into the public market. In addition, after the
conclusion of the 14 month period following the Closing Date (i.e., after July
31, 2007), the Redeeming Shareholder may sell, every 3 months for a 12 month
period, an additional 50,000 shares of Common Stock at the prevailing market
price into the public market. Accordingly, after the 14 month period following
the Closing Date (i.e., after July 31, 2007), the Redeeming Shareholder may sell
150,000 of the Remaining Shares. The Redeeming Shareholder may sell an
additional 50,000 of the Remaining Shares after the conclusion of each of the 17
month period following the Closing Date (i.e., after October 31, 2007), the 20
month period following the Closing Date (i.e., after January 31, 2008) and the
23 month period following the Closing Date (i.e., after April 30, 2008). At the
conclusion of the 26 month period following the Closing Date (i.e., after July
31, 2008), the Redeeming Shareholder may sell or transfer any of the Remaining
Shares at her own discretion without any limitations on the number of the
Remaining Shares she may sell; provided, that she comply with all applicable
federal and state securities laws.
5. Representations and Warranties of the Redeeming Shareholder. The
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Redeeming Shareholder represents and warrants to the Corporation that:
(a) Ownership. The Redeeming Shareholder is the sole owner of the
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Subject Shares; the Subject Shares are a portion of the shares of capital stock
in the Corporation owned by the Redeeming Shareholder; and the Subject Shares
are free and clear of all claims, liens, and encumbrances of any kind
whatsoever, whether legal or equitable.
(b) Authority. The Redeeming Shareholder has full power and
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authority to deliver the Subject Shares to the Corporation.
(c) Binding Obligation. This Agreement, when executed and delivered
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by the Redeeming Shareholder, will constitute a valid and binding obligation of
the Redeeming Shareholder, enforceable against the Redeeming Shareholder in
accordance with its terms, except as may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium,
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fraudulent conveyance or similar laws relating to or affecting the rights and
remedies of creditors and debtors, and (ii) equitable principles generally,
regardless of whether such principles are considered in a proceeding at equity
or at law.
(d) No Breach or Termination. The Redeeming Shareholder's execution
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and performance of this Agreement will not result in the breach or termination
of any term or provision of, or constitute a default under, any indenture,
mortgage, deed of trust or other agreement or instrument to which the Redeeming
Shareholder is a party or by which the Redeeming Shareholder's property may be
bound.
(e) Advice of Counsel. In connection with the execution and delivery
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of this Agreement, the Redeeming Shareholder acknowledges that (i) the
Corporation has advised her to seek the advice of counsel and other advisors in
connection with the execution and delivery of this Agreement, (ii) the Redeeming
Shareholder has carefully read and fully understands all of the provisions of
this Agreement, and (iii) the Redeeming Shareholder is entering into this
Agreement knowingly, freely and voluntarily in exchange for good and valuable
consideration.
(f) Access to Information. As the spouse of Xxxxxxx X. Xxxxxxx, Xx.,
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a member of the Corporation's board of directors and an officer of the
Corporation, the Redeeming Shareholder has been provided access to all relevant
information necessary to make a fully informed investment decision and is fully
aware of all disclosed and undisclosed developments with respect to the
Corporation and its operations. In addition, the Corporation has made available
to the Redeeming Shareholder the opportunity to ask questions of, and receive
answers from, the other officers of the Corporation concerning the Corporation
and its business.
(g) Non-Disparagement. The Redeeming Shareholder agrees that she
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shall not make or publish statements or representations, or otherwise
communicate, directly or indirectly, in writing, orally, or otherwise, or take
any action which may, directly or indirectly, disparage or be damaging or
critical of the Corporation or any entity affiliated with the Corporation, or in
any way adversely affecting or otherwise maligning the Corporation's reputation
or that of any of the Corporation's entities. In the event of a violation of the
terms and conditions of this Section 5(g), the Redeeming Shareholder agrees that
the Corporation shall have the right to seek any injunctive, equitable and other
legal relief available to it.
6. Representations and Warranties of the Corporation. The Corporation
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represents and warrants to the Redeeming Shareholder that:
(a) Organization and Authority. The Corporation is duly organized,
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validly existing and in good standing under the laws of the State of Delaware,
and has all requisite power and authority (corporate and other) to own its
properties, to carry on its business as now being conducted, to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
(b) Authorization. The execution and delivery by the Corporation of
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this Agreement and the consummation by the Corporation of all transactions
contemplated hereby have been duly authorized by all proper and requisite
corporate action.
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(c) Binding Obligation. This Agreement, when executed and delivered
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by the Corporation, will constitute a valid and binding obligation, enforceable
against the Corporation in accordance with its terms, except as may be limited
by (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws relating to or affecting the rights and remedies of
creditors and debtors, and (ii) equitable principles generally, regardless of
whether such principles are considered in a proceeding at equity or at law.
(d) No Violations, Conflicts, Breaches or Defaults. The execution,
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delivery and performance by the Corporation of this Agreement, and the
consummation by the Corporation of the transactions contemplated hereby, will
not, with or without the giving of notice or the passage of time or both, (i)
violate the provisions of any law, rule or regulation applicable to the
Corporation; (ii) violate the provisions of the Certificate of Incorporation, as
amended, or the Amended and Restated By-laws of the Corporation; (iii) violate
any judgment, decree, order or award of any court, governmental body or
arbitrator; or (iv) conflict with or result in the breach or termination of any
term or provision of, or constitute a default under, or cause any acceleration
under, or cause the creation of any lien, charge or encumbrance upon the
properties or assets of the Corporation pursuant to, any indenture, mortgage,
deed of trust or other instrument or agreement to which the Corporation is a
party or by which the Corporation or its properties is or may be bound.
(e) SEC Reports. The Corporation has previously delivered to the
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Redeeming Shareholder its Annual Report on Form 10-KSB for the year ended
December 31, 2005 and its quarterly report on Form 10-QSB for the three months
ended March 31, 2006 (the "Reports"). The financial statements contained in the
Reports fairly present, as of their respective dates, the financial condition,
retained earnings, assets and liabilities of the Corporation and the results of
operations of the Corporation's business for the periods indicated.
7. Survival of Covenants, Representations and Warranties. All
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covenants, undertakings, representations and warranties made hereunder shall
survive the sale of the Subject Shares.
8. Miscellaneous.
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(a) Governing Law. This Agreement shall be governed by and construed
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in accordance with the laws of the State of New Jersey, without giving effect to
conflicts of laws principles.
(b) Counterparts. This Agreement may be executed simultaneously in
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two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(c) Successors and Assigns. This Agreement shall be binding upon and
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inure to the benefit of the parties and their respective heirs, legal
representatives, executors, successors and assigns.
(d) Headings. The headings contained in this Agreement are for
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reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
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(e) Amendment. No change, amendment, modification or revocation of
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this Agreement or waiver of any of the terms or conditions contained herein
shall be valid unless the same shall be adopted, waived or consented to, in
writing, by all of the parties hereto.
(f) Waiver. The failure of any party to require performance under or
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compliance with any provision of this Agreement shall not affect that party's
right to enforce the same or any provision at a later time.
(g) Notices. All communications to a party required or permitted
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under this Agreement shall be in writing and (i) delivered personally, (ii) sent
by Federal Express or another nationally-recognized overnight courier, or (iii)
mailed by first class United States mail, postage pre-paid, at the address of
the party set forth below:
If to the Corporation:
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BigString Corporation
0 Xxxxxxx Xxxx, Xxxxx X
Xxx Xxxx, Xxx Xxxxxx 00000
Attn: Xxxxx X. Xxxxx, President
and Chief Executive Officer
If to the Redeeming Shareholder:
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June X. Xxxxxxx
X.X. Xxx 000
Xxxxxxx, Xxxxxxxx 00000
Any communication delivered in accordance with the provisions of this
Agreement shall be deemed to have been delivered (i) on the date of personal
delivery, (ii) on the business day following the date sent by overnight courier,
or (iii) on the fifth day following the date on which it was so mailed, as the
case may be.
(h) Validity. The invalidity or illegality of any provision of this
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Agreement at any time shall not affect the validity or legality of the same at
any other time or of any other provision of this Agreement.
(i) Entire Agreement. This Agreement contains the entire
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understandings between the parties relating to the Redemption of the Subject
Shares, and no agreements or understandings, oral or written, express or
implied, relating to the same have been made by the parties which are not set
forth in this Agreement.
(j) Further Action. The parties agree to execute and deliver such
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further instruments and documents and to take such further actions as are
necessary or desirable to further the transactions contemplated by this
Agreement.
(k) Third Party Rights. Nothing in this Agreement is intended to or
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shall be deemed to create, any claim or right on the part of any third party
other than the parties hereto and their respective heirs, legal representatives,
executors, successors and assigns; and no such
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third party shall be entitled to assert any claim or right under this Agreement;
provided, however, that, notwithstanding the foregoing, the directors, officers,
employees, agents, and representatives of the Corporation shall be the
beneficiary of the Redeeming Shareholder's covenants, agreements and
undertakings herein.
(l) Legal Representation. Each party to this Agreement acknowledges
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that she or it is represented by her or its own legal counsel. This Agreement
accordingly shall not be construed against either party by reason of drafting or
preparation thereof. Each of the parties will bear her or its own legal and
other expenses in connection with the negotiation and performance of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BIGSTRING CORPORATION,
A Delaware corporation
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: President and Chief Executive Officer
REDEEMING SHAREHOLDER
/s/ June X. Xxxxxxx
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(Signature)
June X. Xxxxxxx
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(Name)
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