STOCK PURCHASE AGREEMENT
EXHIBIT
10.24
This Stock Purchase Agreement (this
“Agreement”) is
entered into as of May 13, 2010, by and among SSGI, Inc., a Florida corporation
(“Buyer”), and
each of the individuals identified as “Sellers” on the signature page to this
Agreement (each, a “Seller” and
collectively, the “Sellers”).
RECITALS:
WHEREAS, Sellers are the record and
beneficial owners, collectively, of 133 shares of common stock, par value
$1.00 per share
(the “B&M Common
Stock”), of B & M Construction Co., Inc., a Florida corporation (the “Company”),
representing approximately 26.85% of the issued and outstanding shares of
capital stock of the Company;
WHEREAS, Sellers desire to sell, and
Buyer desires to purchase, certain of the shares of B&M Common Stock owned
by the Sellers; and
WHEREAS, Sellers and Buyer desire to
make certain representations, warranties and agreements in connection with the
sale and acquisition of such shares and to set forth various conditions
precedent thereto.
NOW, THEREFORE, in consideration of the
mutual covenants, representations, warranties and agreements contained herein,
the parties hereto agree as follows:
ARTICLE
1
AGREEMENT OF PURCHASE AND
SALE
1.1 Purchase and Sale of
Purchased Shares. On the terms and subject to the conditions
hereof, at the Closing (as hereinafter defined), each Seller will sell, assign,
transfer and convey to Buyer, and Buyer will purchase and acquire from such
Seller, all right, title and interest of such Seller in and to the number of
shares of B&M Common Stock set forth opposite such Seller’s name on Schedule
I attached hereto under the heading “Number of Purchased Shares to be
Sold” (the “Purchased
Shares”), free and clear of any liens, restrictions, security interests,
claims, rights of another or other encumbrances (collectively, “Liens”), for an
aggregate purchase price set forth in and payable in accordance with the terms
of Section 1.3 hereof.
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1.2 Closing. The
closing of the transactions contemplated by this Agreement (the “Closing”) shall take
place at the offices of Buyer, 0000 Xxxxxxxxx Xxxx, Xxxxx 0, Xxxx Xxxx Xxxxx,
Xxxxxxx 00000, at 9:00 a.m., local time, on May 13, 2010, or at such
other time and place and on such other earlier date as Buyer and Sellers may
agree upon in writing. The date on which the Closing occurs is
hereinafter referred to as the “Closing
Date”.
1.3 Purchase Price and Form of
Payment.
(a) The
aggregate purchase price to be paid to each Seller for all of his Purchased
Shares shall be (i) that number of shares of common stock, par value $0.001 per
share, of Buyer (the “Buyer Common Stock”)
as is set forth opposite such Seller’s name on Schedule
I attached hereto under the heading “Number of SSGI Shares”, plus (ii) warrants (the
“Warrants”) to
purchase that number of shares of Buyer Common Stock as is set forth opposite
such Seller’s name on Schedule
I attached hereto under the heading “Number of Warrant
Shares”. Each Warrant shall be in the form attached hereto as Exhibit
A. The shares of Buyer Common Stock described in subsection
(i) above are hereinafter referred to as the “SSGI
Shares”. The shares of Buyer Common Stock issuable upon
exercise of the Warrants are hereinafter referred to as the “Warrant
Shares”. The SSGI Shares, the Warrants and the Warrant Shares
are hereinafter referred to collectively as the “SSGI
Securities”.
(b) At
the Closing, each Seller shall deliver, or cause to be delivered, to Buyer the
stock certificate or certificates evidencing his Purchased Shares, and Buyer
shall deliver or cause to be delivered to such Seller (i) a certificate
evidencing the SSGI Shares to which such Seller is entitled, registered in the
name of such Seller, and (ii) a Warrant evidencing the Warrant Shares to which
he is entitled, registered in the name of such Seller.
1.4 Redemption of B&M Common
Stock and Cancellation of Promissory Notes. At Closing, each
Seller shall surrender to the Company that number of shares of B&M Common
Stock as is set forth opposite such Seller’s name on Schedule
II attached hereto under the heading “Number of Shares to be Redeemed”
(“Redeemed
Shares”), and Buyer shall cause the Company or its successor to cancel
each promissory note (and all remaining indebtedness evidenced thereby) executed
by any Seller and made payable to the Company, including, but not limited to,
the Promissory Notes given by Xxxxxxx X. Denmark and Xxxxxxx X. Xxx to the
Company on May 1, 2007, and by Xxxx X. Xxxxx to the Company on January 1, 2005
(the “Notes”).
ARTICLE
2
REPRESENTATIONS AND
WARRANTIES OF BUYER
Buyer represents and warrants to each
Seller as follows (with the understanding that each Seller is relying materially
on such representations and warranties in entering into and performing this
Agreement):
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2.1 Due
Organization. Buyer is a corporation, validly existing and in
good standing under the laws of the State of Florida, and has the requisite
corporate power and authority to own, lease or otherwise hold its properties and
assets and to carry on its business as presently conducted.
2.2 Authorization and Effect of
Agreement. Buyer has the requisite corporate power to execute
and deliver this Agreement and to perform the transactions contemplated hereby
to be performed by it. The execution and delivery by Buyer of this
Agreement and the performance by it of the transactions contemplated hereby to
be performed by it have been duly authorized by all necessary corporate action
on the part of Buyer. This Agreement has been duly executed and
delivered by Buyer and, assuming the due execution and delivery of this
Agreement by each Seller, constitutes a valid and binding obligation of Buyer
enforceable against Buyer in accordance with its terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors’ rights in general and subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
2.3 No Restrictions Against
Purchase of the Purchased Shares. The execution and delivery
of this Agreement by Buyer does not and will not, and the performance by Buyer
of the transactions contemplated hereby to be performed by it does not and will
not (a) conflict with the articles of incorporation or by-laws of Buyer,
(b) conflict with, or result in any violation of, or constitute a default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to loss
of a benefit under, any material contract or permit, order, judgment or decree
to which Buyer is a party or by which it is bound, or (c) constitute a
violation of any law or regulation applicable to Buyer. Except for
any filings under any applicable state and federal securities laws, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any domestic or foreign court, government, governmental agency, authority,
entity or instrumentality (each a “Governmental Entity”)
is required to be obtained or made by or with respect to Buyer in connection
with the execution and delivery of this Agreement by Buyer or the performance by
it of the transactions contemplated hereby to be performed by it.
2.4 Investment
Representation. Buyer is acquiring the Purchased Shares for
its own account, for investment and not with a view to, or for resale in
connection with, any distribution thereof. Buyer is an “accredited
investor” as such term is defined in Regulation D promulgated under the
Securities Act of 1933, as amended (the “Securities
Act”). The Buyer has made its own inquiry and
investigation into and based thereon has formed an independent judgment
concerning the Company’s business and the value of the Purchased
Shares. The Buyer is relying solely on its own knowledge and
investigation regarding the Purchased Shares in entering into this
Agreement. The Buyer has requested and received and has carefully
reviewed all information about the Company which the Buyer deems prudent with
regard to this purchase, including, but not limited to, information regarding
the business of the Company, present and future competition and the industry in
which the Company will do business. The Buyer agrees that all
documents and records pertaining to the Company have been made available for
inspection by it, its attorneys and its accountants and that it has had the
opportunity to ask questions of and receive information and answers from Sellers
and the Company. The Buyer has freely entered into this Agreement and
has been subject to neither pressure to make a xxxxx or uninformed decision to
enter into this Agreement nor solicitation to receive the Purchased
Shares.
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ARTICLE
3
REPRESENTATIONS AND
WARRANTIES OF THE SELLERS
Each Seller, severally but not jointly,
represents and warrants to Buyer as follows (with the understanding that Buyer
is relying materially on each such representation and warranty in entering into
and performing this Agreement):
3.1 Authorization and Effect of
Agreement. Such Seller has full legal capacity to execute and
deliver this Agreement and to perform his obligations hereunder. This
Agreement has been duly executed and delivered by such Seller and, assuming the
due execution and delivery of this Agreement by Buyer, constitutes a valid and
binding obligation of such Seller enforceable against him in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors’ rights
in general and subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law).
3.2 No Restrictions Against Sale
of the Purchased Shares. The execution and delivery of this
Agreement by such Seller does not, and the performance by such Seller of the
transactions contemplated hereby to be performed by it will not
(a) conflict with, or result in any violation of, or constitute a default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to loss
of a benefit under, any material contract or permit, order, judgment or decree
to which such Seller is a party or by which such Seller or his properties are
bound, or (b) constitute a violation of any federal, state, county or local
law, rule or regulation applicable to such Seller or any order, writ or
injunction of any Governmental Entity. Except for any filings under
any applicable state and federal securities laws, no consent, approval, order or
authorization of, or registration, declaration or filing with any Governmental
Entity is required to be obtained or made by or with respect to such Seller in
connection with the execution and delivery of this Agreement by such Seller or
the performance by him of the transactions contemplated hereby to be performed
by him.
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3.3 Ownership of Purchased
Shares and Redeemed Shares; No Liens. Such Seller owns of
record and beneficially (a) the Purchased Shares set forth opposite his name on
Schedule
I attached hereto under the heading “Number of Purchased Shares to be
Sold”, and (b) the Redeemed Shares set forth opposite his name on Schedule
II attached hereto under the heading “Number of Shares to be
Redeemed”. The Purchased Shares and Redeemed Shares are subject to a
Stockholders’ Agreement by and between the Sellers and Xxxxx X. Xxxxx, Xx.
(“Stockholders’
Agreement”), and have been pledged as security for the
Notes. Except for restrictions on transfer imposed by federal and
state securities laws, the Stockholders’ Agreement and the pledge of the
Purchased Shares for the Notes, such Seller is the true and lawful owner, of
record and beneficially, of his Purchased Shares, free and clear of any Liens;
none of the Purchased Shares owned by such Seller are subject to any outstanding
options, warrants, calls or similar rights of any individual, business,
corporation, partnership, limited liability company, association, joint venture,
trust or other entity (“Person”) to acquire
the same; none of the Purchased Shares owned by such Seller are subject to any
restrictions on transfer thereof; and such Seller has the full power and
authority to convey, and will convey to Buyer at Closing, good and marketable
title to his Purchased Shares, free and clear of any Liens.
3.4 Tax Status of
Seller. Such Seller is not a foreign Person, and no tax is
required to be withheld from such Seller pursuant to Section 1445 of the
Internal Revenue Code of 1986, as amended, as a result of any of the
transactions contemplated by this Agreement.
3.5 Representations
Regarding the Acquisition of the SSGI Securities.
(a) Purchase Entirely for Own
Account. This Agreement is made with such Seller in reliance upon his
representation to Buyer, which by such Seller’s execution of this Agreement he
hereby confirms, that the SSGI Securities to be acquired by such Seller
hereunder will be acquired for investment for such Seller’s own account, not as
a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and that such Seller has no present intention of selling, granting
any participation in or otherwise distributing the same. Such Seller further
represents that he does not have any contract, undertaking, agreement or
arrangement with any Person to sell, transfer or grant participations to such
Person or to any third Person with respect to the SSGI Securities.
(b) Sophistication. Such
Seller is a Person who either alone or with his purchaser representative(s) has
sufficient knowledge and experience in financial and business matters to be
capable of evaluating the merits and risks of an investment in
Buyer.
(c) Speculative
Investment. Such Seller understands the speculative nature and risk of an
investment in Buyer and confirms that he is able to bear the risk of the
investment, and that there may not be any viable public market for the SSGI
Securities acquired hereunder.
(d) No Coercion or
Solicitation. Such Seller has freely entered into this Agreement and has
been subject to neither pressure to make a xxxxx or uninformed decision to enter
into this Agreement nor solicitation to receive the SSGI
Securities.
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(e) Transfer
Restrictions. Buyer is not under an obligation to register or seek an
exemption under any federal and/or state securities laws for any sale or
transfer of the SSGI Securities by such Seller, and such Seller hereby
acknowledges that the SSGI Securities constitute restricted securities as that
term is defined in Rule 144 under the Securities Act and that the SSGI
Securities may not be sold, transferred, assigned or hypothecated unless there
is an effective registration statement under the Securities Act covering the
SSGI Securities, the sale is made in accordance with Rule 144 under the
Securities Act, or Buyer receives an opinion of counsel of such Seller
reasonably satisfactory to Buyer, stating that such sale, transfer, assignment
or hypothecation is exempt from the registration and prospectus delivery
requirements of the Securities Act. Without limiting the generality
of the foregoing, such Seller acknowledges that Buyer is a “former shell
company”. As such, sales of the SSGI Securities cannot be made under
Rule 144 unless certain conditions are met, including, without limitation, the
following: (i) Buyer has filed all reports and other materials
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, as applicable, during the 12 months preceding the sale (other
than Form 8-K reports); and (ii) one year has elapsed since Buyer has filed
current “Form 10 information” with the Securities and Exchange Commission
reflecting its status as an entity that is no longer a shell
company. Buyer filed such Form 10 information with the Securities and
Exchange Commission on December 9, 2009. In addition, Buyer did not
timely file with the Securities and Exchange Commission its Form 10-K for the
period ended December 31, 2009. Therefore, sales under Rule 144
cannot be made until at
least 12 months following the date that Buyer files such Form 10-K with
the Securities and Exchange Commission.
(f) Disclosure of
Information. Such Seller has received all the information he
considers necessary or appropriate for deciding whether to acquire the SSGI
Securities hereunder. Such Seller further represents that he has had the
opportunity to ask questions of Buyer and receive answers from Buyer, to the
extent that Buyer possessed such information or could acquire it without
unreasonable effort or expense, necessary to evaluate the merits and risks of
any investment in Buyer. Further, such Seller has been given an
opportunity to question the appropriate executive officers of
Buyer.
(g) Legends. It is
understood that the certificates evidencing the SSGI Securities will bear the
legend set forth below (or a similar legend):
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY OTHER
JURISDICTION. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE
AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH
THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
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The
legend set forth above shall be removed by Buyer from any certificate evidencing
the SSGI Securities upon delivery to Buyer of an opinion by counsel, reasonably
satisfactory to Buyer, that a registration statement under the Securities Act is
at that time in effect with respect to the legended security or that such
security can be freely transferred in a public sale without such a registration
statement being in effect and that such transfer will not jeopardize the
exemption or exemptions from registration pursuant to which Buyer issued the
SSGI Securities.
ARTICLE
4
COVENANTS
4.1 Compliance by the
Sellers. From the date hereof to the Closing, no Seller shall
take or fail to take any action, which action or failure to take such action
would intentionally cause the representations and warranties made by such Seller
herein to be untrue or incorrect as of the Closing.
4.2 Satisfaction of All
Conditions Precedent to the Obligations of Buyer. From the
date hereof to the Closing, each Seller shall use his best efforts to cause all
conditions precedent to the obligations of Buyer hereunder to be satisfied by
the Closing.
4.3 No
Solicitation. From the date hereof to the Closing, no Seller
shall offer any of his Purchased Shares for sale, or solicit offers to buy the
Purchased Shares, or hold discussions with or provide any information to any
party (other than Buyer) looking toward such an offer or solicitation.
4.4 Licenses. Each
Seller shall, during the period beginning on the Closing Date and ending on the
first anniversary of the Closing Date, (a) keep active, and in good standing and
in full force and effect, all licenses, certificates and permits held by such
Seller that relate or are beneficial to the business of the Company or any of
its subsidiaries, (b) comply in all material respects with the terms and
conditions of all such licenses, certificates and permits, and (c) not violate
or cause any violation of any such licenses, certificates or permits or the laws
or rules governing the issuance or continued validity
thereof. Notwithstanding the foregoing or any other provision in this
Agreement to the contrary (including, without limitation, the provisions of
Article 7 hereof), no Seller shall have any liability (monetary or otherwise)
hereunder for any breach of this Section 4.4 unless (i) neither the Company nor
Buyer has another qualified person within its organization to timely replace
such Seller as the relevant licensee or certificate or permit holder, and
(ii) (A) such Seller willfully and knowingly violates the provisions of this
Section 4.4 (it being understood and agreed that any breach of this Section 4.4
caused by factors or circumstances beyond the reasonable control of such Seller
shall not constitute a willful and knowing violation by such Seller of the
provisions of this Section 4.4), or (B) Seller’s employment with Surge Solutions
Group, Inc., a wholly-owned subsidiary of Buyer (“Surge”), or one of
Buyer’s other affiliates, is terminated for “cause” or voluntarily by such
Seller, and such termination gives rise to a breach of this Section
4.4.
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ARTICLE
5
CONDITIONS TO
CLOSING
5.1 Conditions to Obligations of
Buyer. The obligations of Buyer to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, or written waiver
by Buyer, of each of the following conditions:
(a) The
representations and warranties of each Seller contained in this Agreement shall
be true and correct in all material respects at and as of the Closing Date with
the same effect as though such representations and warranties had been made on
and as of the Closing Date; each Seller shall have performed and complied in all
material respects with all agreements required by this Agreement to be performed
or complied with by such Seller at or prior to the Closing Date; and Buyer shall
have received a certificate, dated as of the Closing Date, signed by each Seller
to the foregoing effects;
(b) No
action or proceeding shall have been instituted or threatened for the purpose or
with the probable or reasonably likely effect of enjoining or preventing the
consummation of this Agreement or seeking damages on account
thereof;
(c) Each
Seller shall have executed and delivered to Surge an Employment Agreement
(herein so called) in the form attached hereto as Exhibit
B;
(d) All
consents and approvals required in connection with the execution, delivery and
performance of this Agreement shall have been obtained;
(e) Buyer
shall have received from each Seller or his duly appointed agent and
attorney-in-fact the stock certificate or certificates representing all of the
Purchased Shares owned by such Seller accompanied by stock powers duly executed
in blank;
(f) Buyer
shall have acquired all of the shares of capital stock of the Company owned by
Xxxxx X. Xxxxx, Xx., on terms and conditions satisfactory to Buyer in its sole
and absolute discretion; and
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(g) Each
Seller shall have executed and delivered each agreement, instrument and document
required to be executed by such Seller and is attached hereto as an
Exhibit.
The
decision of Buyer to consummate the transactions contemplated by this Agreement
without the satisfaction of any of the preceding conditions shall not constitute
a waiver of any representations, warranties, covenants or indemnities of any
Seller herein.
5.2 Conditions to Obligations of
Sellers. The respective obligations of each Seller to
consummate the transactions contemplated by this Agreement are subject to the
fulfillment, or written waiver by such Seller, of each of the following
conditions:
(a) Buyer’s
representations and warranties contained in this Agreement shall be true and
correct in all material respects at and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
the Closing Date; all agreements to be performed hereunder by Buyer at or prior
to the Closing Date shall have been performed in all material respects; and each
Seller shall have received a certificate, dated as of the Closing Date, signed
by the Chief Executive Officer of Buyer to the foregoing effects;
(b) Buyer
shall have delivered to each Seller a certificate evidencing the number of SSGI
Shares set forth opposite his name on Schedule
I attached hereto under the heading “Number of SSGI Shares”, registered
in the name of such Seller;
(c) All
consents and approvals required in connection with the execution, delivery and
performance of this Agreement shall have been obtained;
(d) All
necessary action (corporate or otherwise) shall have been taken by Buyer to
authorize, approve and adopt this Agreement and the consummation and performance
of the transactions contemplated hereby, and each Seller shall have received a
certificate, dated as of the Closing Date, of the Chief Executive Officer of
Buyer to the foregoing effect;
(e) Buyer
shall have executed and delivered to each Seller a Warrant in the form attached
hereto as Exhibit
A, representing the number of Warrant Shares set forth opposite his name
on Schedule
I attached hereto under the heading “Number of Warrant
Shares”;
(f) Surge
shall have executed and delivered to each Seller an Employment Agreement in the
form attached hereto as Exhibit
B;
(g) Buyer
shall have executed and delivered each other agreement, instrument and document
required to be executed by Buyer and is attached hereto as an Exhibit;
and
(h) Buyer
shall have acquired all of the shares of capital stock of the Company owned by
Xxxxx X. Xxxxx, Xx.
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ARTICLE
6
TERMINATION
6.1 Termination. Notwithstanding
anything contained in this Agreement to the contrary, this Agreement may be
terminated prior to the Closing, if the party seeking to terminate is not then
in material default or breach of this Agreement, as follows:
(a) By
the mutual written consent of Buyer and the Sellers;
(b) By
either Buyer or any Seller if the Closing shall not have occurred on or before
May 28, 2010;
(c) By
either Buyer or any Seller if, prior to the Closing Date, in the case of Buyer,
any Seller, or in the case of any Seller, Buyer, is in material breach of any
representation, warranty, covenant or agreement herein contained and such breach
shall not be cured within fifteen (15) days of the date of notice of default
delivered by the party claiming such material default, provided that such
terminating party shall not also be in material breach of this Agreement at the
time such notice of default is delivered; or
(d) By
either Buyer or any Seller if there shall have been entered a final,
nonappealable order or injunction of any Governmental Entity restraining or
prohibiting the consummation of the transactions contemplated hereby or any
material part thereof.
6.2 Effect of
Termination. If this Agreement is terminated pursuant to the
provisions of Section 6.1, all further obligations of each party under this
Agreement shall terminate without further liability of such party; provided, however, that such
termination shall not constitute a waiver by any party of any claim it may have
for specific performance or for damages caused by reason of a breach by any
other party of a representation, warranty, covenant, or agreement contained
herein; and provided further, that, anything herein to the contrary
notwithstanding, the respective rights and obligations of the parties pursuant
to Article 8 hereof shall survive the termination of this
Agreement.
6.3 Waiver. If
any condition specified in Section 5.1 or Section 5.2 of Buyer, on the one hand,
and any Seller, on the other, has not been satisfied, each party, in addition to
any other rights which may be available to he or it, shall have the right to
waive any condition that is for his or its benefit and to require the other
party to proceed with the Closing.
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ARTICLE
7
INDEMNIFICATION AND
REIMBURSEMENT
7.1 Indemnification of
Buyer. Each Seller, severally but not jointly, agrees to
indemnify and hold harmless Buyer, and its representatives, agents, employees,
affiliates, successors and assigns, from and against any and all damages,
losses, claims, liabilities, demands, charges, suits, penalties, costs and
expenses (including court costs and reasonable attorneys’ fees and expenses
incurred in investigating and preparing for any litigation or proceeding) which
any of them may sustain, or to which any of them may be subjected, arising out
of any breach or default by such Seller of or under any of the representations,
warranties, covenants, agreements or other provisions of this Agreement or any
agreement or document executed in connection herewith.
7.2 Indemnification of
Sellers. Buyer agrees to indemnify and hold harmless each
Seller, and his representatives, agents, employees, affiliates, successors and
assigns, from and against any and all damages, losses, claims, liabilities,
demands, charges, suits, penalties, costs and expenses (including court costs
and reasonable attorneys’ fees and expenses incurred in investigating and
preparing for any litigation or proceeding) which any of them may sustain, or to
which any of them may be subjected, arising out of any breach or default by
Buyer of or under any of the representations, warranties, covenants, agreements
or other provisions of this Agreement or any agreement or document executed in
connection herewith.
7.3 Reimbursement for
Taxes. Upon the issuance of the Forms K-1 from the Company to
Sellers, Buyer shall pay, as a distribution, to each Seller the amount necessary
to satisfy each Seller’s federal income tax liability resulting from the imputed
but not received income (“Imputed Income”)
reported on the Form K-1 issued to the Sellers by the Company for tax year 2010
(including any short year return for the Company). In the event of any audit
adjustments by the Internal Revenue Service (“IRS”) to the Company,
Buyer shall pay or distribute, within ten (10) days of the IRS report, including
but not limited to, a revenue agent’s report (Form 4549), notice of deficiency
or other adjustment report (a “Report”), reflecting
an increase in income to the Company which will flow-through to the Sellers,
sufficient proceeds to the Sellers to satisfy the resulting income tax liability
(tax, penalties, and interest) caused by the IRS audit. Further,
Buyer shall pay to each Seller the amount necessary to satisfy his federal
and/or state income tax liability resulting from any and all tax resulting from
the issuance of the SSGI Shares as contemplated under Section 1.3(a) within ten
(10) days of such Seller presenting a copy of his federal and state income tax
return (e.g., Form 1040) to Buyer. Also, in the event that the
Internal Revenue Service determines that tax is due on the issuance of shares in
accordance with Section 1.3(a)(i) and/or the cancellation of the promissory
notes in accordance with Section 1.4 (“Adjusted Items”) and
issues a Report reflecting tax due by any Seller, Buyer shall pay to such
Seller, within ten (10) days of Buyer receiving a copy of the Report, one
hundred forty-two and eighty-fifth percent (142.85%) of the tax, penalty and
interest listed on the Report for the Adjusted Items. The purpose of
multiplying the tax, penalty, and interest by 142.85% is to satisfy the tax
liability resulting from or caused by the payment from the Buyer to any Seller
under this Section 7.3. Solely for purposes of this Section 7.3,
notwithstanding any provision under this Agreement, the parties waive any
statute of limitations provision under Florida law or any other restriction on
claims. Notwithstanding the foregoing provisions of this Section 7.3,
Buyer shall not be obligated to make reimbursements or other payments to the
Sellers under this Section 7.3 in excess of $205,822.00 in the aggregate to all
Sellers.
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ARTICLE
8
MISCELLANEOUS
8.1 Collateral Agreements,
Amendments and Waivers. This Agreement (together with the
documents delivered pursuant hereto) supersedes all prior documents,
understandings and agreements, oral or written, relating to this transaction,
and constitutes the entire understanding among the parties with respect to the
subject matter hereof. Any modification or amendment to, or waiver
of, any provision of this Agreement (or any document delivered pursuant to this
Agreement unless otherwise expressly provided therein) may be made only by an
instrument in writing executed by the party against whom enforcement thereof is
sought.
8.2 Successors and
Assigns. Neither the rights or obligations of Buyer or any
Seller under this Agreement may be assigned without the prior written consent of
the other parties hereto (except that Buyer may assign its rights and
obligations to any affiliate thereof without the prior written consent of any
Seller; provided, however, that any
such assignment shall not relieve Buyer from its obligations
hereunder). Any assignment in violation of the foregoing shall be
null and void. Subject to the preceding sentences of this Section
8.2, the provisions of this Agreement (and, unless otherwise expressly provided
therein, of any document delivered pursuant to this Agreement) shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns.
8.3 Expenses. Each
party hereto shall be solely responsible for the legal, accounting and other
fees and expenses incurred by such party in connection with the transactions
contemplated by this Agreement, other than as provided under Section
7.3. Notwithstanding the foregoing, Buyer shall reimburse Sellers for
up to $10,000 (in the aggregate) in legal fees and expenses incurred by Sellers
in connection with the transactions contemplated by this Agreement, subject to
the presentment of appropriate invoices evidencing such fees and
expenses.
8.4 Invalid
Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws, such provision
shall be fully severable, this Agreement shall be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part of
this Agreement and the remaining provisions of this Agreement shall remain in
full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement.
12
8.5 Information and
Confidentiality. Each party hereto agrees that such party
shall hold in strict confidence all information and documents received from any
other party hereto, and if the Closing does not occur each such party shall
return to the other parties hereto all such documents then in such receiving
party’s possession without retaining copies; provided, however, that each
party’s obligations under this Section 8.5 shall not apply to (a) any
information or document required to be disclosed by law, or (b) any information
or document in the public domain other than because of the wrongful actions of
the disclosing party. In addition, and without limiting the
generality of the foregoing, the parties further agree that, from the date
hereof and until the Closing Date, neither they nor any of their respective
representatives shall disclose to any third party or publicly announce the
proposed acquisition of the Purchased Shares or the existence or terms of this
Agreement without the prior joint consent of Buyer and all Sellers, which such
consent shall not be unreasonably withheld, conditioned or delayed.
8.6 Waiver. No
failure or delay on the part of any party in exercising any right, power or
privilege hereunder or under any of the documents delivered in connection with
this Agreement shall operate as a waiver of such right, power or privilege; nor
shall any single or partial exercise of any such right, power or privilege
preclude any other or future exercise thereof or the exercise of any other
right, power or privilege.
8.7 Notices. Any
notices required or permitted to be given under this Agreement (and, unless
otherwise expressly provided therein, under any document delivered pursuant to
this Agreement) shall be given in writing and shall be deemed received (a) when
personally delivered to the relevant party at such party’s address as set forth
below, (b) if sent by mail (which must be certified or registered mail, postage
prepaid), when received or rejected by the relevant party at such party’s
address indicated below, or (c) if sent by facsimile or email transmission, when
confirmation of delivery is received by the sending party:
|
Buyer:
|
0000 Xxxxxxxxx Xxxx, Xxxxx
0,
Xxxx Xxxx Xxxxx,
Xxxxxxx 00000
Attn: Xxxxx X.
Xxxxxxxxx
Fax: (000) 000-0000
xxxxx.xxxxxxxxx@xxx.xxx
|
With
a copy to:
|
Block
& Garden, LLP
|
0000 Xxxxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Garden,
Esq.
Fax: (000) 000-0000
xxxxxx@xxxxxx.xxx
|
|
any
Seller:
|
to
the address set forth under such Seller’s name on Schedule
I attached hereto.
|
13
|
|
With
copy to:
|
Clark,
Campbell, Xxxxxxxxx, & Lancaster,
P.A.
|
|
|
000
Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000
|
|
|
Xxxxxxxx,
Xxxxxxx 00000
|
|
|
Attn: Xxxx
X. Xxxxxxxxx, LL.M.
|
|
|
Fax: (000)
000-0000
|
|
|
Xxxxxxxxxx@xxxxxxxxxxxx.xxx
|
Each
party may change his or its address for purposes of this Section 8.7 by proper
notice to the other parties.
8.8 Specific
Performance. Each Seller recognizes that if he refuses to
perform under the provisions of this Agreement, monetary damages alone will not
be adequate to compensate Buyer for its injury. Buyer shall therefore
be entitled, in addition to any other remedies that may be available, to obtain
specific performance of the terms of this Agreement. If any action is
brought by Buyer to enforce this Agreement, each Seller shall waive the defense
that there is an adequate remedy at law. In the event of a default by
any Seller that results in the filing of a lawsuit for damages, specific
performances, or other remedies, Buyer shall be entitled to reimbursement by
such Seller of reasonable legal fees and expenses incurred by
Buyer.
8.9 Waiver of Certain
Rights. Each Seller hereby waives any rights of first refusal,
preemptive rights or other rights of any nature whatsoever which such Seller may
have to purchase any of the Purchased Shares or other capital stock or equity
securities of any nature of the Company.
8.10 Further
Assurances. At and from time to time after the Closing, at the
request of Buyer but without further consideration, each Seller shall execute
and deliver such other instruments of conveyance, assignment, transfer and
delivery and take such other action as Buyer may reasonably request in order
more effectively to consummate the transactions contemplated
hereby.
8.11 No Third-Party
Beneficiaries. Other than the indemnitees under Article 7 not
a party hereto and any lender of Buyer, no Person not a party to this Agreement
shall be deemed to be a third-party beneficiary hereunder or entitled to any
rights hereunder.
8.12 Governing Law; Exclusive Jurisdiction and
Venue. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF FLORIDA AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF SAID STATE APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED WITHIN SAID STATE. Each of the Company and each Seller (a) hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court for the Southern District of Florida and the courts of the State of
Florida located in Palm Beach County, Florida, for the purposes of any suit,
action or proceeding arising out of or relating to this Agreement, and (b)
hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that he or it is not personally subject to the jurisdiction of any
such court, that the suit, action or proceeding is brought in an inconvenient
forum or that the venue of the suit, action or proceeding is
improper.
14
8.13 Remedies Not
Exclusive. Except to the extent expressly provided otherwise
herein, the rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law or equity.
8.14 Attorney’s
Fees. In the event any action or litigation is instituted to
enforce or interpret any of the provisions of this Agreement, the prevailing
party or parties as determined by the court having jurisdiction thereof shall be
entitled to recover, in addition to all other relief, all costs and expenses
incurred in connection with such action or litigation, including reasonable
attorney’s fees at the pretrial and trial level, and in all appellate
proceedings.
8.15 Execution in
Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.
8.16 Titles and
Headings. Titles and headings to sections herein are inserted
for convenience of reference only, and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.
8.17 Certain Interpretive Matters
and Definitions.
(a) Unless
the context otherwise requires, (i) all references to Sections, Articles or
Schedules are to Sections, Articles or Schedules of or to this Agreement,
(ii) each term defined in this Agreement has the meaning assigned to it,
(iii) each accounting term not otherwise defined in this Agreement has the
meaning assigned to it in accordance with generally accepted accounting
principles, (iv) ”or” is disjunctive but not necessarily exclusive,
(v) words in the singular include the plural and vice versa, and
(viii) the terms “subsidiary“ and “affiliate“ have the meanings given to
those terms in Rule 12b-2 of Regulation 12B under the Securities Exchange Act of
1934, as amended. All references to “$” or dollar amounts will be to
lawful currency of the United States of America.
(b) No
provision of this Agreement will be interpreted in favor of, or against, any of
the parties hereto by reason of the extent to which such party or its counsel
participated in the drafting hereof or by reason of the extent to which any such
provision is inconsistent with any prior draft hereof or thereof.
[Remainder
of page intentionally left blank; signature page to follow.]
15
IN WITNESS WHEREOF, the parties hereto
have duly executed this Agreement as of the day and year first above
written.
|
By:
|
/s/
Xxxxx X. Xxxxxxxxx
|
|
|
Xxxxx
X. Xxxxxxxxx, President & CEO
|
||
|
/s/ Xxxxxxx X. Xxx
|
||
|
XXXXXXX X. XXX,
individually
|
||
|
/s/ Xxxxxxx X. Denmark
|
||
|
XXXXXXX X. DENMARK,
individually
|
||
|
XXXX X. XXXXX,
individually
|
||
16
Schedule
I
List
of Sellers
|
Names and Addresses
of the Sellers
|
Number of Purchased
Shares to be Sold
|
Number
of
SSGI Shares
|
Number
of
Warrant Shares
|
|||||||||
|
Xxxxxxx
X. Xxx
0000
Xxxxxxxxxxx Xxxxx Xxxxxx
Xxxxxxx
Xxxxx, Xxxxxxx 00000
Fax: (000)
000-0000
Email: xxxxxxx.xxx@xxxxxxxxxxxxxx.xxx
|
56.99 | 1,052,632 | 131,578 | |||||||||
|
Xxxxxxx
X. Denmark
0000
Xxxxxxx Xxxxxx Xxx
Xxxxxx,
Xxxxxxx 00000
Fax: (000)
000-0000
Email:
xxxxx.xxxxxxx@xxxxxxxxxxxxxx.xxx
|
18.79 | 473,684 | 59,211 | |||||||||
|
Xxxx
X. Xxxxx
000
Xxx Xxxxx
Xxxxxxxx,
Xxxxxxx 00000
Fax: (000)
000-0000
Email:
xxxx.xxxxx@xxxxxxxxxxxxxx.xxx
|
22.85 | 473,684 | 59,211 | |||||||||
|
Totals
|
98.63 | 2,000,000 | 250,000 | |||||||||
I-1
Schedule
II
|
Name of Seller
|
Number
of Shares
to be Redeemed
|
|||
|
Xxxxxxx
X. Xxx
|
13.01 | |||
|
Xxxxxxx
X. Denmark
|
12.71 | |||
|
Xxxx
X. Xxxxx
|
8.65 | |||
|
Totals
|
34.37 | |||
I-2
EXHIBITS
A – Form
of Warrant
B – Form
of Employment Agreement
1
