THIS
STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of January 15, 2010, is
made by and among Keating Investments, LLC, a Delaware limited liability company
(“KI”), Kevin R. Keating (“Keating”), Lionsridge Capital, LLC, an Illinois
limited liability company (“LC”), Garisch Financial, Inc., an Illinois
corporation (“GFI”), and Laurus Master Fund, Ltd., a Cayman Islands company
(“Laurus”), and Woodman Management Corporation, a California corporation (the
“Purchaser”). KI, Keating and LC are referred to herein collectively as the
“Primary Sellers” and individually as a “Primary Seller.” The Primary Sellers,
GFI and Laurus are referred to herein collectively as the “Sellers” and
individually as a “Seller.”
WHEREAS,
KI is the sole record and beneficial owner of 1,767,385 shares of the common
stock, par value $0.0001 per share (the “Common Stock”), of Catalyst Lighting
Group, Inc., a Delaware corporation (the “Company”);
WHEREAS,
the Purchaser desires to acquire from KI, and KI desires to sell to the
Purchaser, a total of 1,767,385 shares of the Company’s Common Stock (the “KI
Shares”), in the manner and on the terms and conditions hereinafter set forth;
and
WHEREAS,
Keating is the sole record and beneficial owner of 96,880 shares of the
Company’s Common Stock; and
WHEREAS,
the Purchaser desires to acquire from Keating, and Keating desires to sell to
the Purchaser, a total of 96,880 shares of the Company’s Common Stock (the
“Keating Shares”), in the manner and on the terms and conditions hereinafter set
forth; and
WHEREAS,
LC is the sole record and beneficial owner of 800,630 shares of the Company’s
Common Stock; and
WHEREAS,
the Purchaser desires to acquire from LC, and LC desires to sell to the
Purchaser, a total of 800,630 shares of the Company’s Common Stock (the “LC
Shares”), in the manner and on the terms and conditions hereinafter set forth;
and
WHEREAS,
Laurus is the sole record and beneficial owner of 1,108,172 shares of the
Company’s Common Stock; and
WHEREAS,
the Purchaser desires to acquire from Laurus, and Laurus desires to sell to the
Purchaser, a total of 1,108,172 shares of the Company’s Common Stock (the
“Laurus Shares”), in the manner and on the terms and conditions hereinafter set
forth; and
WHEREAS,
GFI is the sole record and beneficial owner of 88,654 shares of the Company’s
Common Stock; and
WHEREAS,
the Purchaser desires to acquire from GFI, and GFI desires to sell to the
Purchaser, a total of 88,654 shares of the Company’s Common Stock (the “GFI
Shares”), in the manner and on the terms and conditions hereinafter set forth;
and
WHEREAS,
the KI Shares, the Keating Shares, the LC Shares, the Laurus Shares and the GFI
Shares are referred to herein collectively as the “Shares;”
and
WHEREAS,
the Shares represent 89.16% of the outstanding shares of the Company’s Common
Stock; and
WHEREAS,
Keating Investments is willing to provide the indemnification under Section 5.7
hereof; and
WHEREAS,
in connection with the Purchaser’s purchase of the Shares, the parties hereto
desire to establish certain rights and obligations by and among
themselves.
NOW,
THEREFORE, in consideration of these premises, the mutual covenants and
agreements herein contained and for other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the parties hereto
agree as follows:
The
following terms when used in this Agreement have the following respective
meanings:
“1933
Act” means the Securities Act of 1933, as amended.
“1934
Act” means the Securities Exchange Act of 1934, as amended.
“Affiliate”
means with respect to any Person, any (i) officer, director, partner or holder
of more than 10% of the outstanding shares or equity interests of such Person,
(ii) any relative of such Person, or (iii) any other Person which directly or
indirectly controls, is controlled by, or is under common control with such
Person. A Person will be deemed to control another Person if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of the “Controlled” Person, whether through
ownership of voting securities, by contract, or otherwise.
“Acquisition
Proposal” means any offer or proposal for, or indication of interest in, any
acquisition of all or a portion of the Shares or any other assets or securities
of the Company, whether by way of a purchase, merger, consolidation or other
business combination.
“Business
Day” means a day other than Saturday, Sunday or statutory holiday in the State
of New York and in the event that any action to be taken hereunder falls on a
day which is not a Business Day, then such action shall be taken on the next
succeeding Business Day.
“Bylaws”
mean the Bylaws of the Company.
“Certificate
of Incorporation” means the Certificate of Incorporation of the Company, as
amended, and as on file with the Secretary of State of the State of Delaware on
the date of this Agreement.
“Closing Date” has the meaning set
forth in Section
3.1 hereof.
“Closing” has the meaning set forth in
Section
3.1 hereof.
“Common
Stock” has the meaning set forth in the recitals hereto.
“Company”
has the meaning set forth in the recitals hereto.
“Company
Closing Obligations” shall have the meaning as used in Section 4.2(j)
hereof.
“Corporate
Records” shall have the meaning as used in Section 4.2(n) hereof.
“Encumbrances”
shall have the meaning as used in Section 4.1(b) hereof.
“End Date” has the meaning set forth in
Section
7.1(b)(i) hereof.
“Fully-Diluted
Basis” shall mean the aggregate of all shares of outstanding Common Stock, all
shares of outstanding Preferred Stock on an as-converted basis, all outstanding
options on an as-exercised basis, and all convertible securities or other
conversion rights on an as-converted basis.
“GAAP”
means generally accepted accounting principles in the United
States.
“GFI
Shares” has the meaning set forth in the recitals hereto.
“Governmental
Authority” means the United States, any state or municipality, the government of
any foreign country, any subdivision of any of the foregoing, or any authority,
department, commission, board, bureau, agency, court, or instrumentality of any
of the foregoing.
“Indemnification”
shall have the meaning as used in Section 5.7 hereof.
“Information
Statement” means the information statement regarding a change in the majority of
directors of the Company pursuant to Rule 14f-1 as promulgated under the 1934
Act, together with any amendments or supplements thereof.
“Keating
Shares” has the meaning set forth in the recitals hereto.
“KI
Shares” has the meaning set forth in the recitals hereto.
“Knowledge”
means the actual knowledge of such Person or its Affiliates.
“Laurus
Shares” has the meaning set forth in the recitals hereto.
“LC
Shares” has the meaning set forth in the recitals hereto.
“Lien”
means any mortgage, lien, pledge, security interest, easement, conditional sale
or other title retention agreement, or other encumbrance of any
kind.
“Material
Adverse Effect” means a change or effect in the condition (financial or
otherwise), properties, assets, liabilities, rights or business of the Company
which change or effect, individually or in the aggregate, could reasonably be
expected to be materially adverse to such condition, properties, assets,
liabilities, rights, operations or business.
“Material
Changes” shall have the meaning as used in Section 4.2(g) hereof.
“Minute
Books” shall have the meaning as used in Section 4.2(n) hereof.
“OTCBB”
has the meaning set forth in Section 4.2(m) hereof.
“Person”
means an individual, corporation, limited liability company, partnership, joint
venture, trust, unincorporated organization, or Governmental
Authority.
“Purchase
Price” shall have the meaning as used in Section 2.1 hereof.
“Returns”
shall have the meaning as used in Section 4.2(l) hereof.
“SEC”
means the Securities and Exchange Commission.
“SEC
Filings” means the Company’s annual report, quarterly report and other
publicly-available filings made by the Company with the SEC under Section 13 or
Section 15(d) of the 1934 Act.
“Shares”
shall have the meaning set forth in the recitals hereto.
“Stockholders”
mean the record holders of shares of the Company’s Common Stock.
“Tax” or
“Taxes” means any and all federal, state, local and foreign taxes, including,
without limitation, gross receipts, income, profits, sales, use, occupation,
value added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes, assessments, governmental charges and
duties together with all interest, penalties and additions imposed with respect
to any such amounts and any obligations under any agreements or arrangements
with any other person with respect to any such amounts and including any
liability of a predecessor entity for any such amounts.
SECTION
II PURCHASE AND SALE OF COMMON
STOCK.
2.1
Purchase of Common
Stock. At the Closing, based upon the representations, warranties,
covenants and agreements of the parties set forth in this Agreement: (i) the
Purchaser shall acquire from KI, and KI shall sell to the Purchaser, the KI
Shares; (ii) the Purchaser shall acquire from Keating, and Keating shall sell to
the Purchaser, the Keating Shares; (iii) the Purchaser shall acquire from LC,
and LC shall sell to the Purchaser, the LC Shares; (iv) the Purchaser shall
acquire from Laurus, and Laurus shall sell to the Purchaser, the Laurus Shares;
and (v) the Purchaser shall acquire from GFI, and GFI shall sell to the
Purchaser, the GFI Shares, all for an aggregate purchase price of Two Hundred
Ten Thousand One Hundred Twenty-Nine U.S. Dollars and Fifty-One U.S. Cents
(US$210,129.51) (“Purchase Price”). The Purchase Price per Share is
approximately $0.05441.
2.2
Payment for Common
Stock. At the Closing Date, the Purchaser shall pay the Purchase Price to
the Sellers for their respective Shares as follows:
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$ |
US
96,169.49 |
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$ |
US 5,271.57 |
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$ |
US
43,565.03 |
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$ |
US
60,299.45 |
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$ |
US 4,823.97 |
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$ |
US 210,129.51 |
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2.3
Payment of Certain
Company Obligations. As further consideration for the purchase of the
Shares under this Agreement, the Purchaser agrees to assume, and at Closing
shall pay, certain obligations of the Company in an aggregate amount of $30,000
(“Assumed Obligations”), as more specifically set forth on Schedule 4.2(j)
hereto.
2.4
Manner of Payment. At
least one (1) business day prior the Closing, the Purchaser shall deposit by
wire transfer of immediately available funds in the Escrow Account (as defined
in Section 5.14) an amount equal to the sum of the Purchase Price and the
Assumed Obligations, less the amount of the Deposit (as defined in Section
5.14). On the Closing Date, pursuant to the joint written instructions of the
parties hereto, the Escrow Agent (as defined under Section 5.14 hereof) shall
disburse the Purchase Price to the Sellers as set forth in Section 2.2 hereof by
wire transfer of immediately available funds to the accounts designated by the
Sellers. On the Closing Date, pursuant to the joint written instructions of the
parties hereto, the Escrow Agent shall disburse the Assumed Obligations to the
designated payees by wire transfer of immediately available funds to the
accounts designated by the payees.
3.1
Closing. The closing
of the sale of the Shares pursuant to Section 2.1 hereof and certain of the
other transactions contemplated hereby (the “Closing”) shall take place at the
offices of the Purchaser’s counsel located at 15260 Ventura Boulevard 20th
Floor, Sherman Oaks, CA 91403 on the next Business Day (or such later date as
the parties hereto may agree) following the satisfaction or waiver of the
conditions set forth in Section VI hereof (the “Closing Date”), or at such other
time or place as the parties mutually agree.
3.2
Deliveries by the
Sellers. At the Closing, the Sellers shall deliver or cause to be
delivered to the Purchaser the following items (in addition to any other items
required to be delivered to the Purchaser pursuant to any other provision of
this Agreement):
(a)
original certificates representing the Shares being sold
by the Sellers to the Purchaser pursuant to Section 2.1 hereof, duly recorded on
the books of the Company, along with stock powers for such certificates executed
in blank;
(b)
a full and complete release by each Seller of the
Company from any and all liabilities, claims and obligations, arising prior to
the Closing, that such Seller may have against the Company, in a form reasonably
acceptable to the Purchaser, provided, however, that Keating shall retain any
statutory or other rights to indemnification provided to him as a result of his
service as an officer and director of the Company;
(c)
a full and complete release, executed by both KIG
Investors I, LLC (“KIG”) and GFI, of the Company’s obligations under that
certain Agreement, dated as of September 13, 2007, by and between Garisch, KIG
and the Company (“GFI Consulting Agreement”);
(d)
the termination of that certain Agreement,
dated as of October 1, 2007, by and between Vero Management, L.L.C. (“Vero”) and
the Company duly executed by Vero, which shall provide for a full and complete
release of any of the Company liabilities and obligations
thereunder;
(e)
the termination and waiver of Laurus’ right to consent
to any future issuance of the Company’s securities pursuant to Section 3 (second
paragraph) of that certain Settlement and Release Agreement, dated as of August
22, 2007, by and between Laurus and the Company, duly executed by
Laurus;
(f)
with respect to any Seller that is organized as a corporation
or limited liability company (other than Laurus), the minutes of a meeting of
the board of directors or managers of such Seller, as the case may be, or a
written consent or action in lieu thereof, authorizing such Seller’s entrance
into this Agreement and the transfer of such Seller’s Shares to the Purchaser as
contemplated herein; and
(g)
with respect to Laurus, the written approval of
the liquidation of Laurus authorizing the entrance into this Agreement by Laurus
Capital Management, LLC on behalf of Laurus and the transfer of the Laurus
Shares to the Purchaser as contemplated herein.
3.3
Deliveries by Primary
Sellers. At the Closing, the Primary Sellers shall deliver or cause to be
delivered to the Purchaser the following items (in addition to any other items
required to be delivered to the Purchaser pursuant to any other provision of
this Agreement):
(a) resignation
of Keating from his position as sole director and sole officer of the
Company;
(b)
duly executed corporate actions accepting the
resignation pursuant to Section 3.3(a), appointing Eric Stoppenhagen as the sole
director of the Company and as the President, Chief Financial Officer and
Secretary of the Company;
(c)
all records and documents relating to the Company,
wherever located, including, but not limited to, all books, records, government
filings, Tax Returns, consent decrees, orders, and correspondence, financial
information and records, electronic files containing any financial information
and records, and other documents used in or associated with the Company, to the
extent such records and documents have not been previously delivered to the
Purchaser; and
(d)
a joint instruction letter signed by the Primary
Sellers and addressed to the Escrow Agent directing, at the Closing, the
disbursement of the Purchase Price from the Escrow Account to the Sellers and
the payment of the Assumed Obligations from the Escrow Account to the designated
payees.
3.4
Deliveries by the
Purchaser. At the Closing, the Purchaser shall deliver or cause to be
delivered to the Sellers (in addition to any other items required to be
delivered to the Sellers pursuant to any other provision of this
Agreement):
(a)
a release by the Company of the Sellers from any and all
liabilities, claims and obligations arising prior to the Closing that the
Company may have against the Sellers (the “Company Release”);
provided, however, that the Company Release in favor of KI shall not cover any
claims for which the Purchaser or Company may be indemnified
hereunder;
(b)
the minutes of a meeting of the Board
of Directors of the Purchaser, or a written consent in lieu thereof, authorizing
the Purchaser’s entrance into this Agreement and the purchase of the Shares from
the Sellers as contemplated herein; and
(c)
a joint instruction letter signed by
the Purchaser and addressed to the Escrow Agent directing, at the Closing, the
disbursement of the Purchase Price from the Escrow Account to the Sellers and
the payment of the Assumed Obligations from the Escrow Account to the designated
payees.
SECTION
IV REPRESENTATIONS AND
WARRANTIES.
4.1
Representations and
Warranties of the Sellers. Each Seller, severally, and not jointly with
any other Seller, represents and warrants to the Purchaser, only with respect to
the Shares owned by such Seller, that:
(a)
Capacity of the Seller;
Authorization; Execution of Agreements. Each Seller has all requisite
power, authority and capacity to enter into this Agreement and to perform the
transactions and obligations to be performed by it hereunder. With respect to
any Seller that is organized as a limited liability company or corporation, the
execution and delivery of this Agreement by such Seller, and the performance by
such Seller of the transactions and obligations contemplated hereby, including,
without limitation, the sale of their respective Shares to the Purchaser
hereunder, have been duly authorized by all requisite action of such Seller.
This Agreement constitutes a valid and legally binding agreement of each Seller,
enforceable in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws of the United States (both state and federal), affecting the enforcement of
creditors’ rights or remedies in general from time to time in effect and the
exercise by courts of equity powers or their application of principles of public
policy. Except as set forth in Section 3.2(d) hereof, no corporate proceedings
or other action on the part of any Seller that is organized as a limited
liability company or corporation (including the approval of such Seller’s board
of directors, managers, shareholders or members) are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby.
(b)
Title to
Shares. KI is the sole record and beneficial owner of the KI Shares and
has sole managerial and dispositive authority with respect to the KI Shares.
Keating is the sole record and beneficial owner of the Keating Shares and has
sole managerial and dispositive authority with respect to the Keating Shares. LC
is the sole record and beneficial owner of the LC Shares and has sole managerial
and dispositive authority with respect to the LC Shares. Laurus is the sole
record and beneficial owner of the Laurus Shares and has sole managerial and
dispositive authority with respect to the Laurus Shares. GFI is the sole record
and beneficial owner of the GFI Shares and has sole managerial and dispositive
authority with respect to the GFI Shares. No Seller has granted any person a
proxy with respect to the Shares owned by such Seller that has not expired or
been validly withdrawn. The sale and delivery by the Sellers of the Shares to
the Purchaser pursuant to this Agreement will vest in the Purchaser legal and
valid title to the Shares, free and clear of all Liens, security interests,
adverse claims or other encumbrances of any character whatsoever, other than
encumbrances created by the Purchaser and restrictions on the resale of the
Shares under applicable securities laws (“Encumbrances”).
(c)
Brokers, Finders, and
Agents. No Seller is, directly or indirectly, obligated to anyone acting
as broker, finder or in any other similar capacity in connection with this
Agreement or the transactions contemplated hereby. No Person has or, immediately
following the consummation of the transactions contemplated by this Agreement,
will have, any right, interest or valid claim against the Company, the Sellers
or the Purchaser for any commission, fee or other compensation as a finder or
broker in connection with the transactions contemplated by this Agreement, nor
are there any brokers’ or finders’ fees or any payments or promises of payment
of similar nature, however characterized, that have been paid or that are or may
become payable in connection with the transactions contemplated by this
Agreement, as a result of any agreement or arrangement made by the
Sellers.
(d)
Disclosure. Each
Seller acknowledges and agrees that the Purchaser does not make and has not made
(i) any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 4.3, or
(ii) any statement, commitment or promise to the Sellers or any of their
representatives which is or was an inducement to the Sellers to enter into this
Agreement, other than as set forth in this Agreement.
4.2
Representations and
Warranties of the Primary Sellers. Subject to the limitations and
qualifications contained in Section 4.2(p) hereof, the Primary Sellers jointly
and severally represent and warrant to the Purchaser, with respect to the
Company, that:
(a)
Organization and
Standing. The Company is duly incorporated and validly existing under the
laws of the State of Delaware, and has all requisite corporate power and
authority to own or lease its properties and assets and to conduct its business
as it is presently being conducted. The Company does not own any equity
interest, directly or indirectly, in any other Person or business enterprise.
The Company is qualified to do business and is in good standing in each
jurisdiction in which the failure to so qualify could reasonably be expected to
have a Material Adverse Effect upon its assets, properties, financial condition,
results of operations or business. The Company has no subsidiaries. Except as
set forth in Section 3.3(b) hereof, no corporate proceedings on the part of the
Company (including the approval of the Company’s Board of Directors or
shareholders) are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby.
(b)
Capitalization. At
the date of this Agreement, the authorized capital stock of the Company consists
of (i) 200,000,000 shares of Common Stock, of which 4,331,131 shares are issued
and outstanding, and (ii) 10,000,000 shares of preferred stock, par value of
$0.0001 per share (“Preferred Stock”), of which no shares are issued and
outstanding. The Company has no other class or series of equity securities
authorized, issued, reserved for issuance or outstanding. There are (x) no
outstanding options, offers, warrants, conversion rights, contracts or other
rights to subscribe for or to purchase from the Company, or agreements
obligating the Company to issue, transfer, or sell (whether formal or informal,
written or oral, firm or contingent), shares of capital stock or other
securities of the Company (whether debt, equity, or a combination thereof) or
obligating the Company to grant, extend, or enter into any such agreement and
(y) no agreements or other understandings (whether formal or informal, written
or oral, firm or contingent) which require or may require the Company to
repurchase any of its Common Stock. There are no preemptive or similar rights
granted by the Company with respect to the Company’s capital stock. There are no
anti-dilution or price adjustment provisions contained in any security issued by
the Company. Except as set forth on Schedule 4.2(b) hereto, the Company is not a
party to, and, to the Knowledge of the Primary Sellers, without inquiry, no
Stockholder is a party to, any registration rights agreements, voting
agreements, voting trusts, proxies or any other agreements, instruments or
understandings with respect to the voting of any shares of the capital stock of
the Company, or any agreement with respect to the transferability, purchase or
redemption of any shares of the capital stock of the Company. The sale of the
Shares to the Purchaser does not obligate the Company to issue any shares of
capital stock or other securities to any Person (other than the Purchaser) and
will not result in a right of any holder of Company securities, by agreement
with the Company, to adjust the exercise, conversion, exchange or reset price
under such securities. The outstanding Common Stock is all duly and validly
authorized and issued, fully paid and nonassessable. The Primary Sellers will
cause the Company not to issue, or resolve or agree to issue, any securities to
any party, other than the Purchaser, prior to the Closing. The Shares represent
89.16% of the outstanding Common Stock of the Company, on a Fully-Diluted
Basis.
(c)
Status of Shares. The
Shares (i) have been duly authorized, validly issued, fully paid and are
nonassessable, and will be such at the Closing, (ii) were issued in compliance
with all applicable United States federal and state securities laws, and will be
in compliance with such laws at the Closing, (iii) subject to restrictions under
this Agreement, and applicable United States federal and state securities laws,
have the rights and preferences set forth in the Certificate of Incorporation,
as amended, and will have such rights and preferences at the Closing, and (iv)
are free and clear of all Encumbrances and will be free and clear of all
Encumbrances at the Closing (other than Encumbrances created by the Seller or
Purchaser and restrictions on the resale of the Shares under applicable
securities laws).
(d)
Conflicts; Defaults.
The execution and delivery of this Agreement by the Sellers and the performance
by the Sellers of the transactions and obligations contemplated hereby and
thereby to be performed by it do not (i) violate, conflict with, or constitute a
default under any of the terms or provisions of, the Certificate of
Incorporation, as amended, the Bylaws, or any provisions of, or result in the
acceleration of any obligation under, any contract, note, debt instrument,
security agreement or other instrument to which the Company is a party or by
which the Company, or any of the Company’s assets, is bound; (ii) result in the
creation or imposition of any Encumbrances or claims upon the Company’s assets
or upon any of the shares of capital stock of the Company; (iii) constitute a
violation of any law, statute, judgment, decree, order, rule, or regulation of a
Governmental Authority applicable to the Company; or (iv) constitute an event
which, after notice or lapse of time or both, would result in any of the
foregoing.
(e)
Securities Laws. The
Company has complied in all material respects with applicable federal securities
laws, rules and regulations, including the Sarbanes-Oxley Act of 2002, as
amended, as such laws, rules and regulations apply to the Company and its
securities. All shares of capital stock of the Company have been issued in
accordance with applicable federal securities laws, rules and regulations. There
are no stop orders in effect with respect to any securities of the Company that
have been communicated to the Company’s transfer agent.
(f)
SEC Filings. The SEC
Filings, when filed, complied in all material respects with the requirements of
Section 13 or Section 15(d) of the 1934 Act, as such sections were applicable as
of the dates when filed, and did not, as of the dates when filed, contain an
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
The financial statements of the Company included in the SEC Filings complied in
all material respects with the rules and regulations of the SEC with respect
thereto as in effect at the time of filing. Such financial statements were
prepared in accordance with GAAP applied on a consistent basis during the
periods covered by such financial statements, except as may be otherwise
specified in such financial statements or the notes thereto, and fairly present
in all material respects the financial position of the Company as of and for the
dates thereof and for the periods indicated, and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments. All material
agreements to which the Company is a party or to which the property or assets of
the Company are subject and which are required to be disclosed pursuant to the
1934 Act are included as part of or specifically identified in the SEC
Filings.
(g)
Material Changes.
Since the date of the latest audited financial statements included within the
SEC Filings, except as specifically disclosed in the SEC Filings, (i) there has
been no event that could result in a Material Adverse Effect, (ii) the Company
has not incurred any liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of the business of
a shell corporation consistent with past practice, and (B) liabilities not
required to be reflected in the Company’s financial statements pursuant to GAAP
as required to be disclosed in filings made with the SEC, (iii) the Company has
not altered its method of accounting or the identity of its auditors, except as
disclosed in its SEC Filings, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock, and (v) the Company has not issued any equity securities
(“Material Changes”).
(h)
Absence of
Litigation. There is no action, suit, claim, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or threatened in writing against or
affecting the Company.
(i)
Brokers, Finders, and
Agents. The Company is not, directly or indirectly, obligated to anyone
acting as broker, finder or in any other similar capacity in connection with
this Agreement or the transactions contemplated hereby. No Person has or,
immediately following the consummation of the transactions contemplated by this
Agreement, will have, any right, interest or valid claim against the Company,
the Sellers or the Purchaser for any commission, fee or other compensation as a
finder or broker in connection with the transactions contemplated by this
Agreement, nor are there any brokers’ or finders’ fees or any payments or
promises of payment of similar nature, however characterized, that have been
paid or that are or may become payable in connection with the transactions
contemplated by this Agreement, as a result of any agreement or arrangement made
by the Company. Notwithstanding the foregoing, the Assumed Obligations to be
paid by the Purchaser at Closing (as specifically set forth on Schedule 4.2(j)
hereof) are payable to certain payees that have provided consulting services to
the Company in connection with the transactions contemplated
hereunder.
(j)
Absence of Businesses and
Liabilities. The Company is not engaged in any business and is currently
a “shell company” as defined under SEC rules. The Company has no liabilities or
obligations of any kind or nature, except as set forth on: (i) Schedule 4.2(j)
hereto, as may be updated and supplemented by the Primary Sellers at any time
prior to the Closing (“Company Closing Obligations”), and (ii) the other
schedules to this Agreement. As of the date of this Agreement, the Company’s
only assets consist of cash and cash equivalents and, at Closing, the Company
shall have no assets.
(k)
No Agreements. Except
as set forth on Schedule 4.2(k) hereto, the Company is not a party to any
agreement, commitment or instrument, whether oral or written, which imposes any
obligations or liabilities on the Company after the Closing.
(i)
The Company has timely filed all
federal, state, local and foreign returns, estimates, information statements and
reports relating to Taxes (“Returns”) required to be filed by the Company with
any Tax authority prior to the date hereof, except such Returns which are not
material to the Company. All such Returns are true, correct and complete and the
Company has no basis to believe that any audit of the Returns would cause a
Material Adverse Effect upon the Company or its financial condition. The Company
has paid all Taxes shown to be due on such Returns.
(ii)
All Taxes that the Company is required by law to
withhold or collect have been duly withheld or collected, and have been timely
paid over to the proper governmental authorities to the extent due and
payable.
(iii) The
Company has no material Tax deficiency outstanding, proposed or assessed against
the Company, and the Company has not executed any unexpired waiver of any
statute of limitations on or extending the period for the assessment or
collection of any Tax.
(iv) No
audit or other examination of any Returns of the Company by any Tax authority is
known by the Company to be presently in progress, nor has the Company been
notified of any request for such an audit or other examination.
(v)
No adjustment relating to any Returns filed by the
Company has been proposed in writing, formally or informally, by any Tax
authority to the Company or any representative thereof.
(vi) The
Company has no liability for any Taxes for its current fiscal year, whether or
not such Taxes are currently due and payable.
(m) OTC Bulletin Board
Quotation. The Common Stock is quoted on the Over-the-Counter Bulletin
Board (the “OTCBB”). There is no known action or known proceeding pending or
threatened in writing against the Company by the Nasdaq or the Financial
Industry Regulatory Authority with respect to any intention by such entities to
prohibit or terminate the quotation of the Common Stock on the
OTCBB.
(n)
Corporate Records.
All records and documents relating to the Company known to the Primary Sellers,
including, but not limited to, the books, shareholder lists, government filings,
Tax Returns, consent decrees, orders, and correspondence, financial information
and records (including any electronic files containing any financial information
and records), and other documents used in or associated with the Company (the
“Corporate Records”) are true, complete and accurate in all material respects.
The minute books of the Company known to the Primary Sellers contain true,
complete and accurate records of all meetings and consents in lieu of meetings
of the Board of Directors of the Company (and any committees thereof), similar
governing bodies and shareholders (the “Minute Books”). Copies of such Corporate
Records of the Company and the Minute Books currently in the possession of the
Company, have been heretofore delivered to the Purchaser; the original Corporate
Records and Minute Books, to the extent such original Corporate Records and
Minute Books exist, will be delivered to the Purchaser at Closing pursuant to
Section 3.3(c).
(o)
Disclosure. Each
Primary Seller acknowledges and agrees that the representations and warranties
by such Primary Seller in this Section 4.2 are true and complete in all material
respects and do not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein not misleading, under the circumstance under which
they were made.
(p)
Knowledge
Qualification. All representations and warranties by the Primary Sellers
contained in this Section 4.2 are hereby qualified and limited by, and are
hereby made subject to, the Knowledge of the Primary Sellers to the extent such
representations and warranties cover or relate to liabilities, obligations,
claims, losses, expenses, damages, actions, liens and deficiencies of the
Company or its Affiliates due to or arising out of actions or inactions of the
Company or its Affiliates taken prior to August 23, 2007; provided, however, the
Primary Sellers had used commercially reasonable efforts in obtaining such
Knowledge.
4.3
Representations and
Warranties of the Purchaser. The Purchaser hereby represents and warrants
to the Sellers that:
(a)
Organization and
Standing. The Purchaser is duly incorporated and validly existing under
the laws of the State of California, and has all requisite corporate power and
authority to own or lease its properties and assets and to conduct its business
as it is presently being conducted. The Purchaser is qualified to do business
and is in good standing in each jurisdiction in which the failure to so qualify
could reasonably be expected to have a Material Adverse Effect upon its assets,
properties, financial condition, results of operations or business. Except as
set forth in Section 3.4(c) hereof, no corporate proceedings on the part of the
Purchaser (including the approval of the Purchaser’s Board of Directors or
shareholders) are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby.
(b)
Capacity of the Purchaser;
Authorization; Execution of Agreements. The Purchaser has all requisite
power, authority and capacity to enter into this Agreement and to perform the
transactions and obligations to be performed by it hereunder. The execution and
delivery of this Agreement by the Purchaser, and the performance by the
Purchaser of the transactions and obligations contemplated hereby, including,
without limitation, the purchase of the Shares from the Sellers hereunder, have
been duly authorized by all requisite corporate action of the Purchaser. This
Agreement constitutes a valid and legally binding agreement of the Purchaser,
enforceable in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws of the United States (both state and federal), affecting the enforcement of
creditors’ rights or remedies in general from time to time in effect and the
exercise by courts of equity powers or their application of principles of public
policy.
(c)
Investment Intent.
The Shares being purchased hereunder by the Purchaser are being purchased for
its own account and are not being purchased with the view to, or for resale in
connection with, any distribution or public offering thereof within the meaning
of the 1933 Act. The Purchaser understands that such Shares have not been
registered under the 1933 Act by reason of their issuance in a transaction
exempt from the registration and prospectus delivery requirements of the 1933
Act pursuant to Section 4(2) thereof, the provisions of Rule 506 of Regulation D
promulgated thereunder, and/or such other available exemption from registration,
and under the securities laws of applicable states and agrees to deliver to the
Sellers, if requested by the Sellers, an investment letter in customary form.
The Purchaser further understands that the certificates representing such Shares
shall bear a legend substantially similar to the following and agrees that it
will hold such Shares subject thereto:
| |
THE SHARES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY PORTION HEREOF OR INTEREST HEREIN MAY BE
SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS THE
SAME IS REGISTERED UNDER SAID ACTS AND APPLICABLE STATE SECURITIES LAWS OR
UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THE COMPANY
SHALL HAVE RECEIVED, AT THE EXPENSE OF THE HOLDER HEREOF, EVIDENCE OF SUCH
EXEMPTION REASONABLY SATISFACTORY TO THE COMPANY (WHICH MAY INCLUDE, AMONG
OTHER THINGS, AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY). |
|
(d)
Accredited
Investor. The Purchaser, and each of the stockholders of the Purchaser,
is an “accredited investor” as defined in Rule 501(a) of Regulation D
promulgated under the 1933 Act.
(e)
Suitability and
Sophistication. The Purchaser, and each of the stockholders of the
Purchaser, has (i) such knowledge and experience in financial and business
matters that it is capable of independently evaluating the risks and merits of
purchasing the Shares it is purchasing; (ii) independently evaluated the risks
and merits of purchasing such Shares and has independently determined that the
Shares are a suitable investment for it; and (iii) sufficient financial
resources to bear the loss of its entire investment in such Shares. The
Purchaser has had an opportunity to review the SEC Filings of the
Company.
(f)
Brokers, Finders, and
Agents. The Purchaser is not, directly or indirectly, obligated to anyone
acting as broker, finder, or in any other similar capacity in connection with
this Agreement or the transactions contemplated hereby. No Person has or,
immediately following the consummation of the transactions contemplated by this
Agreement, will have, any right, interest or valid claim against the Company,
the Sellers or the Purchaser for any commission, fee or other compensation as a
finder or broker in connection with the transactions contemplated by this
Agreement, nor are there any brokers’ or finders’ fees or any payments or
promises of payment of similar nature, however characterized, that have been
paid or that are or may become payable in connection with the transactions
contemplated by this Agreement, as a result of any agreement or arrangement made
by the Purchaser.
(g)
Disclosure. The
Purchaser acknowledges and agrees that the representations and warranties by the
Purchaser in this Section 4.3 are true and complete in all material respects and
do not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein not misleading, under the circumstance under which they were
made. The Purchaser acknowledges and agrees that the Sellers do not make and
have not made (i) any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Sections 4.1 and 4.2, or (ii) any statement, commitment or promise to the
Purchaser or any of its representatives which is or was an inducement to the
Purchaser to enter into this Agreement, other than as set forth in this
Agreement.
4.4
Rule 144. The
Purchaser acknowledges that the Shares it will be purchasing must be held
indefinitely unless subsequently registered under the 1933 Act or unless an
exemption from such registration is available. The Purchaser is aware of the
provisions of Rule 144 promulgated under the 1933 Act which permit limited
resale of shares purchased in a private placement subject to the satisfaction of
certain conditions, including, among other things, the availability of certain
current public information about the Company, the resale occurring not less than
six months after a party has purchased and paid for the security to be sold, the
sale being effected through a “broker’s transaction” or in transactions directly
with a “market maker” and the number of shares being sold during any three-month
period not exceeding specified limitations. The Purchaser further acknowledges
and agrees that: (i) the Company is currently a “shell company” as defined under
SEC rules, (ii) the Shares being acquired by the Purchaser were originally
issued by the Company to the Sellers when the Company was a “shell company,” and
(iii) the resale of the Shares are subject to the satisfaction of additional
conditions and requirements under Rule 144(i)(2) applicable to the shares of
“shell companies” and “former shell companies.”
SECTION
V COVENANTS OF THE
PARTIES.
5.1
Commercially Reasonable
Efforts. Subject to the terms and conditions hereof, each party shall use
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate the transactions contemplated by
this Agreement as promptly as practicable after the date hereof, including (i)
preparing and filing as promptly as practicable all documentation to effect all
necessary SEC filings and other documents and to obtain as promptly as
practicable all consents, waivers, licenses, orders, registrations, approvals,
permits and authorizations necessary or advisable to be obtained from any Person
and/or any Governmental Authority in order to consummate any of the transactions
contemplated by this Agreement, (ii) executing and delivering such other
documents, instruments and agreements as any party hereto shall reasonably
request, and (iii) taking all reasonable steps as may be necessary to obtain all
such material consents, waivers, licenses, orders, registrations, approvals,
permits and authorizations. Notwithstanding the foregoing, in no event shall any
party have any obligation, in order to consummate the transactions contemplated
hereby, to: (i) take any action(s) that would result in Material Adverse Changes
in the benefits to the Sellers on the one hand or to the Purchaser on the other
of this Agreement, or (ii) dispose of any material assets or make any material
change in its business other than as contemplated by this Agreement, or (iii)
expend any material amount of funds or otherwise incur any material burden other
than those contemplated by this Agreement.
5.2
Certain Filings; Cooperation
in Receipt of Consents.
(a)
The Primary Sellers and the Purchaser shall reasonably
cooperate with one another in (i) determining whether any other action by or in
respect of, or filing with, any Governmental Authority is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any material contracts, in connection with the consummation of the
transactions contemplated hereby, and (ii) taking or seeking any such other
actions, consents, approvals or waivers or making any such filings, furnishing
information required in connection therewith. Each party shall permit the other
party to review any communication given by it to, and shall consult with each
other in advance of any meeting or conference with, any Governmental Authority
or, in connection with any proceeding by a private party, with any other Person,
and to the extent permitted by the applicable Governmental Authority or other
Person, give the other party the opportunity to attend and participate in such
meetings and conferences, in each case in connection with the transactions
contemplated hereby.
(b)
The Primary Sellers shall use their commercially
reasonable efforts to cause the Company to timely file all reports required to
be filed by it pursuant to Section 13 of the 1934 Act and all other documents
required to be filed by it with the SEC under the 1933 Act or the 1934 Act from
the date of this Agreement to the Closing; provided, however, that the Purchaser
shall cause the Company to file the Post-Closing 8-K as set forth in Section
5.10 hereof.
5.3
Public
Announcements. The parties shall consult with each other before issuing,
and provide each other a reasonable opportunity to review and comment upon, any
press release or public statement with respect to this Agreement and the
transactions contemplated hereby and, except as may be required by applicable
law, shall not issue any such press release or make any such public statement
prior to such consultation.
5.4
Access to Information;
Notification of Certain Matters.
(a)
From the date hereof to the Closing
and subject to applicable law, the Primary Sellers shall (i) give to the
Purchaser or its counsel reasonable access to the books and records of the
Company, and (ii) furnish or make available to the Purchaser and its counsel
such financial and operating data and other information about the Company as
such Persons may reasonably request.
(b)
Each party hereto shall give notice to each other party
hereto, as promptly as practicable after the event giving rise to the
requirement of such notice, of:
(i)
any communication received by such party
from, or given by such party to, any Governmental Authority in connection with
any of the transactions contemplated hereby;
(ii)
any notice or other communication from any Person
alleging that the consent of such Person is or may be required in connection
with the transactions contemplated by this Agreement; and
(iii) any
actions, suits, claims, investigations or proceedings commenced or, to its
Knowledge, threatened against, relating to or involving or otherwise affecting
such party or any of its Affiliates that, if pending on the date of this
Agreement, would have been required to have been disclosed, or that relate to
the consummation of the transactions contemplated by this Agreement; provided,
however, that the delivery of any notice pursuant to this Section 5.4(b) shall
not limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
5.5
Board of Directors and
Officers. The Primary Sellers shall cause the Company to appoint Eric
Stoppenhagen as the sole director of the Company and as the President, Chief
Financial Officer and Secretary of the Company at the Closing and obtain any
necessary resignations from the Company’s current directors and officers
effective as of the Closing.
5.6
Interim Operations of the
Company. During the period from the date of this Agreement to the
Closing, the Primary Sellers shall cause the Company to conduct its business
only in the ordinary course of business consistent with past practice, except to
the extent otherwise necessary to comply with the provisions hereof and with
applicable laws and regulations. Additionally, during the period from the date
of this Agreement to the Closing, except as required hereby in connection with
this Agreement, the Primary Sellers shall not permit the Company to do any of
the following without the prior consent of the Purchaser: (i) amend or otherwise
change its Certificate of Incorporation or Bylaws, (ii) issue, sell or authorize
for issuance or sale (including, but not limited to, by way of stock split or
dividend), shares of any class of its securities or enter into any agreements or
commitments of any character obligating it to issue such securities, other than
in connection with the exercise of outstanding warrants or outstanding stock
options granted to directors, officers or employees of the Company prior to the
date of this Agreement; (iii) declare, set aside, make or pay any dividend or
other distribution (whether in cash, stock or property) with respect to its
common stock, (iv) redeem, purchase or otherwise acquire, directly or
indirectly, any of its capital stock, (v) enter into any material contract or
agreement or material transaction or make any material capital expenditure other
than those relating to the transactions contemplated by this Agreement, (vi)
create, incur, assume, maintain or permit to exist any indebtedness except as
otherwise incurred in the ordinary course of business, consistent with past
practice, or except for the Company Closing Obligations, (vii) pay, discharge or
satisfy claims or liabilities (absolute, accrued, contingent or otherwise) other
than in the ordinary course of business consistent with past practice, or except
for the Company Closing Obligations, (viii) cancel any material debts or waive
any material claims or rights, (ix) make any loans, advances or capital
contributions to, or investments in financial instruments of any Person, (x)
assume, guarantee, endorse or otherwise become responsible for the liabilities
or other commitments of any other Person, (xi) alter in any material way the
manner of keeping the books, accounts or records of the Company or the
accounting practices therein reflected other than alterations or changes
required by GAAP or applicable law, (xii) enter into any indemnification,
contribution or similar contract pursuant to which the Company may be required
to indemnify any other Person or make contributions to any other Person, (xiii)
amend or terminate any existing contracts in any manner that would result in any
material liability to the Company for or on account of such amendment or
termination, or (xiv) change any existing or adopt any new tax accounting
principle, method of accounting or tax election except as provided herein or
agreed to in writing by the Purchaser.
5.7
Indemnification. KI
hereby agrees to indemnify and hold harmless the Purchaser and the Company (the
“Indemnified Parties”) from and against any and all liabilities, obligations,
claims, losses, expenses, damages, actions, liens and deficiencies (including
reasonable attorneys’ fees) which exist, or which may be imposed on, incurred by
or asserted against the Indemnified Parties due to or arising out of any breach
or inaccuracy of any representation or warranty of any Primary Seller under
Section 4.2 hereof, or any covenant, agreement or obligation of any Primary
Seller hereunder or in any other certificate, instrument or document
contemplated hereby or thereby (“Damages”), for a period of six (6) months from
the Closing Date (the “Indemnification,” and the period herein is referred to as
the “Indemnification Period”). KI shall not be obligated to pay to the
Indemnified Parties any amounts for Indemnification for Damages in excess of
US$50,000 (“Cap”). KI shall not be obligated to make any payment for
Indemnification in respect of any claims for Damages that are made by the
Indemnified Parties after the expiration of the Indemnification Period;
provided, however, that the obligations of KI under the Indemnification shall
remain in full force and effect, subject to the Cap, in respect of any claims
for Damages which are made prior to, and remain pending at, the expiration of
the Indemnification Period. In addition, KI covenants that it shall have no
liquidation, dissolution, winding up or any other similar action of itself
within the Indemnification Period. For the abundance of clarity, Lionsridge,
Keating, Laurus and GFI are not responsible for any indemnification to the
Indemnified Parties for any Damages. The indemnification provided by this
Section 5.7 shall be the sole remedy of the Indemnified Parties for any Damages;
provided, however, that no remedies of the Indemnified Parties for any breach by
any of the Sellers of the representations and warranties contained in Section
4.1 shall be limited in any way by this Section 5.7.
5.8
Information
Statement. The Primary Sellers shall cause the Company to file the
Information Statement with the SEC, and to mail the Information Statement to its
Stockholders, within two (2) Business Days after the execution and delivery of
this Agreement by the parties. The Information Statement shall be prepared by
the Company, and prior to filing with the SEC, shall be subject to the
Purchaser’s review and comment.
5.9
Stockholder Filings.
The Purchaser and the Primary Sellers shall, at their own cost and expense, make
any stockholder filings with the SEC to the extent, and in the time period,
required by SEC rules as a result of the transactions contemplated by this
Agreement.
5.10 Post-Closing 8-K.
Following the Closing, the Purchaser shall, at its own cost and expense, cause
the Company to timely file a Current Report on Form 8-K with the SEC disclosing
the change of control of the Company and the purchase of the Shares contemplated
hereunder and any other information required in connection therewith
(“Post-Closing 8-K”).
5.11 Assignment of Registration
Rights. Effective as of the Closing, each of the Sellers hereby assigns
and transfers to the Purchaser all of its rights under those certain
Registration Rights Agreements to which each Seller is party as listed on
Schedule 4.2(b), with respect to the Shares being sold to the Purchaser
hereunder, and the Purchaser hereby accepts such assignment. The Purchaser shall
become, and is hereby made, a party to each such Registration Rights Agreement
as a Holder (as such term is defined in the Registration Rights Agreement) and
shall, and hereby agrees to, be bound by all of the terms and conditions set
forth in the Registration Rights Agreement applicable to it as a Holder, with
respect to the Shares being acquired by it hereunder.
5.12 Interim Actions of the
Parties.
(a)
Until the earlier of the Closing Date or the
termination of this Agreement pursuant to Section VII hereof, neither the
Sellers nor any of their respective Affiliates shall, directly or indirectly (i)
take any action to solicit or initiate any Acquisition Proposal, or (ii)
continue, initiate or engage in negotiations concerning any Acquisition Proposal
with, or disclose any non-public information relating to the Company, or afford
access to the properties, books or records of the Company to, any corporation,
partnership, person or other entity (except the Purchaser and its Affiliates)
that may be considering or has made an Acquisition Proposal.
(b)
Until the earlier of the Closing Date or the
termination of this Agreement pursuant to Section VII hereof, neither the
Purchaser nor any of its Affiliates shall, directly or indirectly, take any
action to solicit or pursue new offers or continue negotiations with or from any
person other than the Primary Sellers concerning the acquisition of a
controlling interest in a public shell company.
(c)
Until the earlier of the Closing Date or the termination of
this Agreement pursuant to Section VII hereof, neither the Sellers, the
Purchaser, nor any of their respective Affiliates shall engage directly or
indirectly in any transaction involving any of the securities of the Company
other than as contemplated by this Agreement.
5.13 Payment of
Liabilities. Prior to or at the Closing, KI shall pay, or shall cause the
Company to pay, in full each of the Company Closing Obligations, as well as any
additional liabilities or obligations incurred by the Company since the date of
this Agreement, including any and all liabilities or obligations incurred by the
Company in connection with the transactions contemplated by this Agreement;
provided, however, that the Assumed Obligations shall be paid by the Purchaser
at the Closing pursuant to Section 2.3 hereof.
5.14 Deposit. The
Purchaser and the Primary Sellers acknowledge that $25,000 (“Deposit”) was
deposited into an escrow account (“Escrow Account”) by the Purchaser pursuant to
an Escrow Agreement between the Purchaser, the Primary Sellers and Escrow, LLC
(“Escrow Agent”) dated December 18, 2009. The Deposit shall be disbursed from
the Escrow Account and paid: (i) to the Primary Sellers, if the transactions
contemplated by this Agreement fail to close due to a material breach of any
representation, warranty, covenant, agreement or obligation of the Purchaser
hereunder or in any other certificate, instrument or document contemplated
hereby or thereby by the Purchaser (“Purchaser’s Breach”), (ii) to the
Purchaser, if the transactions contemplated by this Agreement fail to close for
any reason other than the Purchaser’s Breach, or (iii) to the Sellers as partial
payment of the Purchase Price, if the transactions contemplated by this
Agreement close. The Deposit shall be held and disbursed pursuant to the terms
of the Escrow Agreement and this Agreement, and the Purchase Price shall be held
and disbursed pursuant to the terms of the Escrow Agreement, this Agreement and
the joint instruction letter delivered by the parties under Sections 3.3(e) and
3.4(d) hereof.
6.1
Conditions to the
Obligations of Each Party. The obligations of the Sellers and the
Purchaser to consummate the transactions contemplated by this Agreement are
subject to the satisfaction of the following conditions:
(a)
No Governmental
Authority of competent authority or jurisdiction shall have issued any order,
injunction or decree, or taken any other action, that is in effect and
restrains, enjoins or otherwise prohibits the consummation of the transactions
contemplated hereby; and
(b)
The parties shall have
obtained or made all consents, approvals, actions, orders, authorizations,
registrations, declarations, announcements and filings contemplated by this
Agreement.
6.2
Conditions to
the Obligations of the Sellers. The obligations of the Sellers to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction of the following further conditions:
(a)
The Purchaser shall
have performed in all material respects all of its obligations hereunder
required to be performed by it at or prior to the Closing;
(b)
The representations and
warranties of the Purchaser contained in this Agreement shall have been true and
correct when made and in all material respects at and as of the time of the
Closing as if made at and as of such time (except to the extent any such
representation or warranty expressly speaks as of an earlier date, in which case
it shall be true and correct as of such date);
(c)
The Sellers shall have received a
certificate signed by the Purchaser to the foregoing effect; and
(d)
The Purchaser shall have delivered to the
Primary Sellers written instruments, in forms reasonably satisfactory to the
Primary Sellers, evidencing the Purchaser’s deposit into the Escrow Account, by
wire transfer of immediately available funds at least one (1) business day prior
to the Closing, all funds necessary to satisfy the Purchaser’s obligations to
the Sellers under Section 2.2 hereof and to those certain payees under the
Assumed Obligations under Section 2.3.
6.3
Conditions to the
Obligations of the Purchaser. The obligations of the Purchaser to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction of the following further conditions:
(a)
The Sellers shall have performed in all material
respects all of their obligations hereunder required to be performed by them at
or prior to the Closing;
(b)
At least ten (10) days have expired since
the filing of the Information Statement with the SEC, and any comments received
from the SEC during such ten (10) day period have been responded to, or
otherwise handled, to the mutual satisfaction of the Primary Sellers and the
Purchaser.
(c)
The representations and warranties of each
Seller contained in this Agreement shall have been true and correct when made
and at and as of the time of the Closing as if made at and as of such time
(except to the extent any such representation or warranty expressly speaks as of
an earlier date, in which case it shall be true and correct as of such
date);
(d)
The Purchaser shall have received a
certificate signed by each Seller to the foregoing effect;
(e)
The Shares being sold to the Purchaser hereunder for the
Purchase Price shall represent 89.16% of the issued and outstanding shares of
the Company’s Common Stock on a Fully-Diluted Basis;
(f)
The Primary Sellers shall have delivered to the Purchaser
written instruments, in forms reasonably satisfactory to the Purchaser,
evidencing the payment of the Company Closing Obligations, subject to the
provisions of this Agreement, as well as any additional liabilities or
obligations incurred by the Company since the date of this Agreement, including
any and all liabilities or obligations incurred by the Company in connection
with the transactions contemplated by this Agreement (other than the Assumed
Obligations).
7.1
Termination. This
Agreement may be terminated at any time prior to the Closing by written notice
by the terminating party to the other party (except if such termination is
pursuant to Section 7.1(a)):
(a)
by mutual written agreement of the Purchaser and all of the
Sellers;
(b)
by either the Purchaser or by all of the Sellers, if
(i)
the transactions contemplated by this Agreement
shall not have been consummated by February 5, 2010 (the “End Date”); provided,
however, that this date will be automatically extended by the number of
days reasonably needed for the Company, the Purchaser and the Primary Sellers to review and respond
to any SEC comment letters sent to the Company in respect of the Information
Statement; provided further, however, that the right to terminate this Agreement
under this Section
7.1(b)(i) shall not be available to any party
whose breach of any provision of or whose failure to perform any obligation
under this Agreement has been the cause of, or has resulted in, the failure of
the transactions to occur on or before the End Date; or
(ii)
a judgment, injunction, order or decree of any
Governmental Authority having competent jurisdiction enjoining either a Seller
or the Purchaser from consummating the transactions contemplated by this
Agreement is entered and such judgment, injunction, judgment or order shall have
become final and nonappealable and, prior to such termination, the parties shall
have used their respective
commercially reasonable efforts to resist, resolve or lift, as applicable, such
judgment, injunction, order or decree; provided, however, that the right to
terminate this Agreement under this Section
7.1(b)(ii) shall not be available to any party
whose breach of any provision of or whose failure to perform any obligation under this
Agreement has been the cause of such judgment, injunction, order or
decree.
(c)
by all of the
Sellers:
(i)
if a breach of
or failure to perform any representation, warranty, covenant or agreement on the part of
the Purchaser set forth in this Agreement shall have occurred which would cause the conditions set forth in
Section
6.2(a) not to be satisfied, and any such
condition shall be incapable of being satisfied by the End Date or such breach
or failure to perform has not been cured within ten days after notice of such
breach or failure to perform has been given by the Sellers to the
Purchaser.
(i)
if a breach of or failure to perform any representation,
warranty, covenant or agreement on the part of either of the Sellers set forth
in this Agreement shall have occurred which would cause the conditions set forth
in Section 6.3 not to be satisfied, and any such condition is incapable of being
satisfied by the End Date or such breach or failure to perform has not been
cured within ten days after notice of such breach or failure to perform has been
given by the Purchaser to the Sellers.
7.2
Effect of
Termination. If this Agreement is terminated pursuant to Section 7.1,
except as set forth in Section 7.3 below, there shall be no liability or
obligation on the part of the Purchaser or the Sellers, or any of their
respective officers, directors, shareholders, agents or Affiliates, except that
the provisions of this Section 7.2, Section 7.3 and Section VIII of this
Agreement shall remain in full force and effect and survive any termination of
this Agreement and except that, notwithstanding anything to the contrary
contained in this Agreement, no parties shall be relieved of or released from
any liabilities or damages arising out of its material breach of or material
failure to perform its obligations under this Agreement. Upon termination of
this Agreement, the Deposit shall be disbursed pursuant to the terms of the
Escrow Agreement and Section 15.14 of this Agreement.
7.3
Expenses. Whether or
not the transactions contemplated by this Agreement are consummated, all fees
and expenses of any party hereto incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
fees and expenses.
SECTION
VIII MISCELLANEOUS.
8.1
Waivers and
Amendments. This Agreement may be amended or modified in whole or in part
only by a writing which makes reference to this Agreement executed by all of the
parties hereto. The obligations of any party hereunder may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of the party claimed to have given the waiver;
provided, however, that any waiver by any party of any violation of, breach of,
or default under any provision of this Agreement or any other agreement provided
for herein shall not be construed as, or constitute, a continuing waiver of such
provision, or waiver of any other violation of, breach of or default under any
other provision of this Agreement or any other agreement provided for
herein.
8.2
Entire
Agreement. This Agreement (together with any Schedules and/or any
Exhibits hereto) among the Sellers and the Purchaser, the Escrow Agreement and
the other agreements and instruments expressly provided for herein, together set
forth the entire understanding of the parties hereto and supersede in their
entirety all prior contracts, agreements, arrangements, communications,
discussions, representations, and warranties, whether oral or written, including
the Letter of Intent between the Primary Sellers and the Purchaser dated
December 18, 2009, among the parties with respect to the subject matter
hereof.
8.3
Governing Law and Submission
to Jurisdiction. This Agreement shall in all respects be governed by and
construed in accordance with the internal substantive laws of the State of
Delaware without giving effect to the principles of conflicts of law thereof.
Each of the parties irrevocably agrees that any legal action or proceeding
arising out of or relating to this Agreement brought by any other party or its
successors or assigns shall be brought and determined in any Delaware State or
federal court sitting in Delaware (or, if such court lacks subject matter
jurisdiction, in any appropriate Delaware State or federal court), and each of
the parties hereby irrevocably submits to the exclusive jurisdiction of the
aforesaid courts for itself and with respect to its property, generally and
unconditionally, with regard to any such action or proceeding arising out of or
relating to this Agreement and the transactions contemplated hereby. Each of the
parties agrees not to commence any action, suit or proceeding relating thereto
except in the courts described above in Delaware, other than actions in any
court of competent jurisdiction to enforce any judgment, decree or award
rendered by any such court in Delaware as described herein. Each of the parties
hereby irrevocably and unconditionally waives, and agrees not to assert, by way
of motion or as a defense, counterclaim or otherwise, in any action or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby, (a) any claim that it is not personally subject to the
jurisdiction of the courts in Delaware as described herein for any reason, (b)
that it or its property is exempt or immune from jurisdiction of any such court
or from any legal process commenced in such courts (whether through service of
notice, attachment prior to judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise) and (c) that (i) the suit, action
or proceeding in any such court is brought in an inconvenient forum, (ii) the
venue of such suit, action or proceeding is improper or (iii) this Agreement, or
the subject matter hereof, may not be enforced in or by such
courts.
8.4
Notices. Any notice,
request or other communication required or permitted hereunder shall be in
writing and be deemed to have been duly given (a) when personally delivered or
sent by facsimile transmission (the receipt of which is confirmed in writing),
(b) one Business Day after being sent by a nationally recognized overnight
courier service or (c) five Business Days after being sent by registered or
certified mail, return receipt requested, postage prepaid, to the parties at
their respective addresses set forth below.
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If
to the Sellers:
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Keating
Investments, LLC
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5251 DTC
Parkway, Suite 1000
Facsimile:
(720) 889-0135
Attn: Mr.
Timothy Keating, Manager
Mr. Kevin
R. Keating
190
Lakeview Way
Facsimile:
(772) 231-5947
Lionsridge
Capital, LLC
2395
Woodglen Drive
Attn:
Frederic M. Schweiger, Manager
Facsimile:
(630) 692-0647
Laurus
Master Fund, Ltd
335
Madison Avenue, 10th Floor
Attn:
David Grin
Facsimile:
(212) 541-4434
Garisch
Financial, Inc.
2395
Woodglen Drive
Attn:
Frederic M. Schweiger, President
Facsimile:
(630) 692-0647
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if
to the Purchaser
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Woodman
Management Corporation
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3940
Laurel Canyon Blvd., Suite 327
Facsimile:
(818) 474-7589
And
Any party
by written notice to the other may
change
the address or the persons to whom notices
or copies
thereof shall be directed.
8.5
Counterparts; Facsimile and
Electronic Signatures. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together will constitute one and the same instrument. The signature pages hereto
in facsimile copy or other electronic means, including e-mail attachment, shall
be deemed an original for all purposes.
8.6
Successors and
Assigns. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns, except that the Sellers may not assign or transfer their rights
hereunder without the prior written consent of the Purchaser, and the Purchaser
may not assign or transfer its rights under this Agreement without the consent
of the Sellers.
8.7
Third
Parties. Nothing expressed or implied in this Agreement is intended, or
shall be construed, to confer upon or give any Person other than the parties
hereto and their successors and assigns any rights or remedies under or by
reason of this Agreement.
8.8
Schedules. The
Schedules and Exhibits attached to this Agreement are incorporated herein and
shall be part of this Agreement for all purposes.
8.9
Headings. The
headings in this Agreement are solely for convenience of reference and shall not
be given any effect in the construction or interpretation of this
Agreement.
8.10
Interpretation.
Whenever the context may require, any pronoun used herein shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns, pronouns and verbs shall include the plural and vice versa.
SIGNATURE
PAGE TO STOCK PURCHASE AGREEMENT
BY
AND AMONG
THE
SELLERS AND THE PURCHASER
IN
WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of
the date first above written.
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THE
SELLERS:
Keating
Investments, LLC,
a
Delaware limited liability company
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Timothy
J. Keating, Manager
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an
Illinois limited liability company
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/s/ Frederic M.
Schweiger
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Frederic
M. Schweiger, Manager
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/s/ Frederic M.
Schweiger
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Frederic
M. Schweiger, President
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Laurus
Master Fund, Ltd.,
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Laurus
Capital Management, LLC
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Kevin
R. Keating, Individually
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Woodman
Management Corporation
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SCHEDULE
4.2(b)
Capitalization
The
Company has the following agreements with respect to its capital
stock:
Registration Rights
Agreements*
Registration
Rights Agreement dated 12th day
of September, 2007, by and among Catalyst Lighting Group, Inc. and KIG Investors
I, LLC, with said registration rights being assigned to Keating Investments, LLC
(1,761,385 shares of common stock) and Lionsridge Capital, LLC (800,630 shares
of common stock) under a certain Assignment of Registration Rights Agreement
dated as of December 29, 2008.
Registration
Rights Agreement dated 14th day of September, 2007, by and among Catalyst
Lighting Group, Inc. and Laurus Master Fund, Ltd. (1,083,172 shares of common
stock)
Registration
Rights Agreement dated 14th day of September, 2007, by and among Catalyst
Lighting Group, Inc. and Feldman Weinstein & Smith, LLP (21,267 shares of
common stock)
Registration
Rights Agreement dated 14th day of September, 2007, by and among Catalyst
Lighting Group, Inc. and Halliburton Investor Relations (49,819 shares of common
stock)
Registration
Rights Agreement dated 14th day of September, 2007, by and among Catalyst
Lighting Group, Inc. and Garisch Financial, Inc. (86,654 shares of common
stock)
Registration
Rights Agreement dated 14th day of September, 2007, by and among Catalyst
Lighting Group, Inc. and Dennis H. Depenbusch (20,000 shares of common
stock)
Registration
Rights Agreement dated 14th day of September, 2007, by and among Catalyst
Lighting Group, Inc. and Kevin R. Keating (86,654 shares of common
stock)
* All
shares are post-reverse stock split. The registration rights granted to Keating
Investments, LLC, Lionsridge Capital, LLC, Laurus Master Fund, Ltd., Garisch
Financial, Inc. and Kevin R. Keating with respect to their respective Shares
have been assigned to the Purchaser pursuant to Section 5.11 hereof. The
registration rights granted to Feldman Weinstein & Smith, LLP, Halliburton
Investor Relations and Dennis H. Depenbusch pursuant to the above-referenced
Registration Rights Agreements shall remain in full force and effect, and shall
be binding upon the Company, from and after the Closing.
Other
Agreements
Settlement
and Release Agreement, dated as of August 22, 2007, by and between Laurus and
Catalyst Lighting Group, Inc. As a condition of the Closing, Laurus shall
terminate and waive any rights to consent to any future issuance of the
Company’s securities pursuant to Section 3 (second paragraph) of that certain
Settlement and Release Agreement.
SCHEDULE
4.2(j)
Absence
of Businesses and Liabilities
The
Company Closing Obligations are as follows:
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Management
Fees (past due management fees of $12,000 for 2009 year under
certain
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$ |
5,000.00 |
* |
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$ |
5,000.00 |
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Consulting
Fee (for services rendered to the Company in connection with the
transactions under the Purchase Agreement)
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$ |
15,000.00 |
** |
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Expense
Reimbursement (for costs incurred in connection with mailing of Schedule
14f-1)
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$ |
100.00 |
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$ |
15,100.00 |
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Consulting
Fee (for services rendered to the Company in connection with the
transactions under the Purchase Agreement)
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$ |
15,000.00 |
** |
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Expense
Reimbursement - miscellaneous copying and delivery
expenses
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$ |
325.00 |
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Expense
Reimbursement - payment of 2009 DE franchise tax ($245.71) and annual fee
($25.00)
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$ |
270.71 |
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Expense
Reimbursement - DE certiifcate of good standing
($20.00)
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$ |
20.00 |
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$ |
15,615.71 |
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Final
billing for review of Q1 2010 financial statements for quarter ended
12/31/09
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$ |
1,000.00 |
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Invoice
for December 2009 services
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$ |
300.00 |
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Invoice
for stockholder list requests
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$ |
200.00 |
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Invoice
for January 2010 services
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$ |
300.00 |
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$ |
800.00 |
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Mitchell
Financial Printing
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Invoice
No. 100101-A dtd 1/13/10 for 10-Q for quarter ended
12/31/09
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$ |
292.00 |
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$ |
200.00 |
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Invoice
for Schedule 13Ds (KI and GFI) - Signing of Purchase
Agreement
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$ |
800.00 |
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Invoice
for Schedule 13Ds (KI and GFI) - Closing
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$ |
200.00 |
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Invoice
for Form 4s - KI, Kevin Keating and GFI
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$ |
300.00 |
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$ |
1,792.00 |
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$ |
39,307.71 |
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*
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Portion
not paid at Closing to be waived by
Vero
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**
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This
obligation is an Assumed Obligation as defined under Purchase Agreement to
be paid by the Purchaser at
Closing
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SCHEDULE
4.2(k)
No
Agreements
The
Company has obligations under the following agreements, commitments and
instruments:
Registration Rights
Agreements*
Registration
Rights Agreement dated 12th day
of September, 2007, by and among Catalyst Lighting Group, Inc. and KIG Investors
I, LLC, with said registration rights being assigned to Keating Investments, LLC
(1,761,385 shares of common stock) and Lionsridge Capital, LLC (800,630 shares
of common stock) under a certain Assignment of Registration Rights Agreement
dated as of December 29, 2008.
Registration
Rights Agreement dated 14th day of September, 2007, by and among Catalyst
Lighting Group, Inc. and Laurus Master Fund, Ltd. (1,083,172 shares of common
stock)
Registration
Rights Agreement dated 14th day of September, 2007, by and among Catalyst
Lighting Group, Inc. and Feldman Weinstein & Smith, LLP (21,267 shares of
common stock)
Registration
Rights Agreement dated 14th day of September, 2007, by and among Catalyst
Lighting Group, Inc. and Halliburton Investor Relations (49,819 shares of common
stock)
Registration
Rights Agreement dated 14th day of September, 2007, by and among Catalyst
Lighting Group, Inc. and Garisch Financial, Inc. (86,654 shares of common
stock)
Registration
Rights Agreement dated 14th day of September, 2007, by and among Catalyst
Lighting Group, Inc. and Dennis H. Depenbusch (20,000 shares of common
stock)
Registration
Rights Agreement dated 14th day of September, 2007, by and among Catalyst
Lighting Group, Inc. and Kevin R. Keating (86,654 shares of common
stock)
* All
shares are post-reverse stock split. The registration rights granted to Keating
Investments, LLC, Lionsridge Capital, LLC, Laurus Master Fund, Ltd., Garisch
Financial, Inc. and Kevin R. Keating with respect to their respective Shares
have been assigned to the Purchaser pursuant to Section 5.11 hereof. The
registration rights granted to Feldman Weinstein & Smith, LLP, Halliburton
Investor Relations and Dennis H. Depenbusch pursuant to the above-referenced
Registration Rights Agreements shall remain in full force and effect, and shall
be binding upon the Company from and after the Closing.
Other
Agreements
Transfer
Agency and Service Agreement between Catalyst Lighting Group, Inc. and
Computershare dated September 10, 2007, together with the Proposal to Provide
Stock Transfer Services for Keating Investments, LLC dated February 5, 2007
which sets forth the fee schedule for such services. Current base monthly fee of
$250 (monthly account service fee) and $50 (monthly unexchanged classes fee).
This Transfer Agency and Service Agreement shall remain in full force and
effect, and shall be binding upon the Company, from and after the
Closing.
Agreement,
dated as of September 13, 2007, by and between Garisch Financial, Inc., KIG
Investors I, LLC and Catalyst Lighting Group, Inc. As a condition of the
Closing, KIG Investors I, LLC (“KIG”) and Garisch Financial, Inc. shall release
the Company from any of its obligations under such
Agreement.
SCHEDULE
4.2(k) (continued)
No
Agreements
Agreement,
dated as of October 1, 2007, by and between Vero Management, L.L.C. and Catalyst
Lighting Group, Inc. As a condition of the Closing, Vero Management, L.L.C.
shall release the Company from any of its obligations under such
Agreement.
Settlement
and Release Agreement, dated as of August 22, 2007, by and between Laurus and
Catalyst Lighting Group, Inc. As a condition of the Closing, Laurus shall
terminate and waive any rights to consent to any future issuance of the
Company’s securities pursuant to Section 3 (second paragraph) of that certain
Settlement and Release Agreement.
4
