FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
FIRST
AMENDMENT TO STOCK
PURCHASE AGREEMENT
This
First Amendment To Stock Purchase
Agreement (“Agreement”) is entered into by and between Pet Ecology Brands, Inc.
(“PEB”), a Texas corporation with its principal place of business located in
Dallas, Texas, and Tricon Holdings, L.L.C. (“Tricon”),a Florida limited
liability company with its principal place of business in Miami,
Florida, and Texas Atlantic Capital Partners, L.L.C. (“TexAtlantic”),
a Nevada limited liability company (Tricon and TexAtlantic are collectively
referred to as “Purchasers”), as follows:
R E C I T A L S:
WHEREAS,
PEB and Purchasers
are parties to a Stock Purchase Agreement (“SPA”) dated February 26, 2007 which
provides, among other provisions, and, subject to certain conditions, for
Purchasers to purchase for One Million Three Hundred Fifty Thousand
Dollars ($1,350,000) on or before June 30, 2007 the number of shares
of PEB’s common stock which will constitute at the time of closing 51% of the
issued and outstanding shares of PEB’s common stock ; and
WHEREAS,
pursuant to the terms
of the SPA and as one of the conditions of closing the transaction, PEB is
required to reverse the number of Company’s issued and outstanding shares,
options and warrants to the extent mutually agreed by the parties but, at a
minimum, to a degree and in amounts to enable the Company to perform its
obligations at Closing to issue the shares and warrants; and,
WHEREAS,
PEB’s shareholders,
at the annual meeting of PEB’s shareholders conducted on June 20, 2007 did
authorize PEB’s Board of Directors to effectuate, at the Board of Directors’
discretion to be exercised on or before October 1, 2007 a reverse split of
PEB’s
common stock in a ratio of 20:1; and,
WHEREAS,
Purchasers, pursuant
to the terms of a Loan Agreement and Promissory Note dated April 30, 2007 have
lent PEB the sum of Two Hundred Thousand Dollars ($200,000) which Note contains
provisions whereby the Note can be converted into shares of PEB’s common stock;
and,
WHEREAS,
Purchasers and PEB
were ready, willing and able to close the transaction on June 30, 2007 pursuant
to the terms of the SPA but are of the opinion that delaying an effectuation
of
the reverse split of PEB’s common stock until a date between now and October 1,
2007 (the “Stock Split”) when such action will coincide with positive news
regarding PEB’s financial and operational performance will be in the best
interest of the other PEB shareholders; and,
WHEREAS,
Purchasers are
prepared to close the first stage of the transaction through a conversion of
all, or a portion, of the Note to shares of PEB common stock and are prepared
to
purchase additional shares for an additional Five Hundred Thousand Dollars
($500,000) with the remaining purchase price set forth in the Stock Purchase
Agreement to be paid at the time of a final closing, which date shall be a
date
on or before October 1, 2007 mutually agreeable to the parties;
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Now
therefore, in consideration of the
promises, payments, covenants, representations and warranties hereinafter set
forth, and the preambles set forth above which the parties agree constitute
a
part of this Agreement, the parties agree as follows:
1.
Extension of Closing;
Interim
Closing. The parties agree to extend the closing date of the
Stock Purchase Agreement as provided in Paragraph 2 below, but agree
to an interim closing as of the date hereof with a capital contribution by
Purchasers through a conversion of the outstanding balance of principal and
accrued and unpaid interest owing as of this date on the Note ($203,333.33)
to
PEB common stock and an additional immediate capital contribution by Purchasers
of Five Hundred Thousand Dollars ($500,000), the receipt of which is hereby
acknowledged by PEB. The amount of the outstanding balance of
principal and accrued and unpaid interest on the Note
($203,333.33), plus the additional capital contribution of
Five Hundred Thousand Dollars ($500,000), or a total of Seven Hundred Thousand
Three Hundred Thirty Three and 33/100 Dollars ($703,333.33) shall constitute
a
credit against, and be attributed to, the amount of the purchase price for
PEB
stock and warrants ($1,350,000)as set forth in the Stock Purchase
Agreement. In consideration of Purchasers conversion of the Note and
additional capital contribution as described in this paragraph, PEB agrees
to
deliver to each of the Purchasers no later than seven (7) days from the date
of
this Agreement certificates representing 25,500,000 shares of PEB
common stock, or a total of 51,000,000 shares of PEB common stock (“First
Closing Shares”).
2.
Final Closing
Date. The parties agree that the terms of the Stock Purchase
Agreement not closed through the Interim Closing as described in Paragraph
1
above (“First Closing”), shall be extended to a mutually agreeable date no later
than October 1, 2007 (“Final Closing Date”), at which time, in consideration for
an additional capital contribution of Six Hundred Forty Six Thousand Six Hundred
Sixty Six and 68/100 Dollars ($646,666.68) PEB shall issue collectively to
the
Purchasers (with 50% being issued to each Purchaser) certificates representing
the number of shares of PEB’s common stock that will consist of, when added to
the First Closing Shares, 51% of the fully-diluted capitalization of PEB as
of
the Final Closing Date, after taking into account the Stock Split (the “Final
Closing Shares,”), and together with the First Closing Shares, the
“Shares). In addition, PEB shall issue collectively to the Purchasers
(with 50% being issued to each Purchaser individually) Warrants to purchase
14%
of the fully diluted capitalization of PEB as of the date the Warrants are
exercised.
3.
Anti-Dilution
Provisions. PEB acknowledges and agrees that, following the
Final Closing Date, unless both Purchasers otherwise agree in
writing, in the event PEB issues any additional shares of its common
stock (or securities convertible into its common stock), each of the Warrants
and the Shares held by Purchasers shall be increased through the
issuance of additional Shares and Warrants such that, the Shares will be equal
to 51% of the fully-diluted capitalization of PEB and the Warrants shall
continue to be exercisable for 14% of the fully-diluted capitalization of PEB
on
an as-converted basis.
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4.
Representations and
Warranties. PEB represents and warrants to Lender as follows,
which representations and warranties shall be deemed to be made at and as of
the
date hereof and in all instances shall be true and correct in all material
respects:
a.
PEB is a corporation, duly organized, validly existing and in good standing
under the laws of the State of Texas and has the power and authority to own
its
property and to carry on its business in the State of Texas and in each other
jurisdiction in which PEB does business;
b.
PEB has full power and authority to execute and deliver the documents to which
it is a party and to incur and perform the obligations provided for
therein.
c.
This Agreement and the other documents executed in connection with this
transaction by PEB and Purchasers constitute valid and legally binding
obligations of such party, enforceable in accordance with their
terms;
e.
There is no charter, bylaw, stock provision, partnership agreement or other
document pertaining to the power or authority of PEB and no provision of any
existing agreement, mortgage, indenture or contract binding on PEB or affecting
any of PEB’s property, which would conflict with or in any way prevent the
execution, delivery or carrying out of the terms of this Agreement and the
other
documents executed in connection with this transaction; and,
f.
PEB’s shareholders have duly approved PEB’s Board of Directors’
effectuating a reverse split of PEB’s common stock in a ration of
20:1 with such reverse split to occur as of a date determined by the Board
of
Directors but no later than October 1, 2007; and,
g.
The terms of this Agreement has been approved by PEB’s Board of Directors and
the person signing this Agreement has full authority to enter into this
Agreement on behalf of PEB.
5.
Binding
Effect. This Agreement shall be binding upon and inure to the
benefit of the parties, their successors, assigns and/or
affiliates.
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6.
Waiver
of Jury
Trial. PEB
AND LENDER IRREVOCABLY WAIVE ANY AND ALL RIGHT EITHER OF THEM MAY HAVE TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING TO
THIS
AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. PEB AND LENDER
ACKNOWLEDGE THAT THE FOREGOING WAIVER IS KNOWING AND
VOLUNTARY.
7.
Notices. All
notices
required by this Agreement shall be effective if provided in writing
and mailed to the other party by certified mail, return receipt requested to
the
following address or such other address as either party may provide to the
other
party in writing in the manner required by this paragraph:
A.
If to
Purchasers:
Emel
Yesil
Manager
Tricon
Holdings, L.L.C.
000
Xxxxxxxx Xxxxxx, Xxxxx
000
Xxxxx
Xxxxxx, XX 00000
Attn:
Engin Yesil
E.
Xxxxxx
Xxxxx
Manager
Texas
Atlantic Capital Partners, L.L.C.
0000
Xxxxxxxxxxxxx Xxxx.
Xxxxxx,
Xxxxxxxxx 00000
Attn:
Xxxxxxx Xxxxx
B.
If to PEB:
Xxxxx
X. Xxxxxxx
President
Pet
Ecology Brands, Inc.
00000
Xxxxxxx Xxxxx
Xxxxxx,
Xxxxx 00000
8.
Governing
Law;Jurisdiction. The parties agree that the law of the State
of Florida shall be applicable to this transaction, including the Note executed
pursuant to the terms hereof, and that jurisdiction of any
controversy shall be in a state district court in Dade County,
Florida.
9.
Multiple
Counterparts.
This Agreement
may be executed in multiple counterparts, any of which
shall be deemed an original.
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This
Agreement is entered into on July 13, 2007 but effective as of June
30, 2007.
PURCHASERS:
Tricon
Holdings, L.L.C.
A
Florida limited liability
company
By:_____________________
Emel
Yesil
Manager
Texas
Atlantic Capital Partners, L.L.C.
A
Nevada limited liability
company
By:_________________________
E.
Xxxxxx Xxxxx
Manager
PEB:
Pet
Ecology Brands, Inc.,
A
Texas corporation
By:___________________________
Xxxxx
X. Xxxxxxx
President
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