PURCHASE AND OPTION AGREEMENT
PURCHASE AND OPTION AGREEMENT, dated March 10, 2000, by and between XXXXXX
X. XXXXXXXXX ("Xxxxxxxxx") and XXXXXX X. XXXXXX ("Chrust").
WHEREAS, Chrust desires to purchase concurrently with the execution of this
Agreement certain shares of the common stock ("Common Stock") of Xxxxxx.xxx Inc.
("Company") owned by Xxxxxxxxx and Xxxxxxxxx desires to sell to Chrust such
shares; and
WHEREAS, Xxxxxxxxx also desires to xxxxx Xxxxxx an option to purchase
certain additional shares of the Common Stock owned by Xxxxxxxxx and Chrust
desires to acquire the option on the terms and conditions set forth in this
Agreement.
IT IS AGREED:
1. Stock Purchase. Chrust hereby purchases from Xxxxxxxxx and Xxxxxxxxx
hereby sells to Chrust 302,939 shares of the Common Stock owned by Xxxxxxxxx
("Purchased Shares") at a price of $3.301 per share. Accordingly, concurrently
with the execution of this Agreement, Chrust is wiring to an account designated
by Xxxxxxxxx the sum of $1,000,001.64 in immediately available funds in
consideration for the Purchased Shares, and Xxxxxxxxx is causing certificates
representing the Purchased Shares, together with stock powers, with signatures
guaranteed, to be delivered to Xxxxxxxx Xxxxxx & Xxxxxx ("GMM"). Promptly
thereafter, GMM shall arrange to have the Purchased Shares transferred into
Chrust's name and certificates representing such shares to be delivered to
Chrust.
2. Grant of Stock Option. Xxxxxxxxx hereby grants to Chrust the right and
option ("Option ") to purchase up to an aggregate of 1,363,342 additional shares
of the Common Stock owned by Xxxxxxxxx ("Option Shares"), all on the terms and
conditions set forth herein.
3. Exercise Price. The exercise price ("Exercise Price") of the Option
shall be $3.301 per share, subject to adjustment as hereinafter provided.
4. Exercisability. The Option shall be exercisable from time to time, in
whole or in part, during the "Option Period," which shall be the period
commencing on the date of this Agreement and ending on June 4, 2000, unless
extended until July 4, 2000 in accordance with Section 5(ii) hereof. The last
day of the Option Period, as it may be extended, is referred to as the
"Termination Date." Notwithstanding the foregoing, except as set forth in
Section 5(ii) hereof, the Option may not be exercised for less than an aggregate
of 605,877 Option Shares (inclusive of the 75,735 Option Shares which may be
purchased under Section 5(ii), below) (the "Minimum Option Exercise").
5. Consideration for the Option.
(i) Simultaneously with the execution of this Agreement, Chrust is
wiring to the account designated by Xxxxxxxxx pursuant to Section 1 above
the sum of $10,000 ("Option Purchase Price") as payment for the grant of
the Option by Xxxxxxxxx to Chrust.
(ii) If Chrust desires to extend the Option Period beyond June 4,
2000, then on or prior to the close of business on June 4, 2000, Chrust
must wire, or have wired, an additional $250,001.24 ("Extension Payment")
to the account designated pursuant to Section 5(i) in order to exercise the
Option with respect to 75,735 Option Shares ("Extension Exercise"). If the
Extension Exercise is made on or prior to June 4, 2000, the Termination
Date shall be extended to July 4, 2000, and (ii) the Escrow Agent shall
deliver a certificate for such 75,735 Option Shares as directed by Chrust.
(iii) If the Option is exercised in accordance with the terms hereof
and of the Escrow Agreement (as defined in Section 7 below), then the
Option Purchase Price (less $1) will be applied as a credit against the
aggregate amount payable to Xxxxxxxxx upon satisfaction of the Minimum
Option Exercise. If the Option is not so exercised, Xxxxxxxxx will be
entitled to retain the full amount of the Option Purchase Price.
6. Adjustments. In the event of any change in the number of outstanding
shares of the Common Stock occurring as the result of a stock split, reverse
stock split or stock dividend, combination or reclassification of the
outstanding Common Stock, or similar event after the date hereof, the number of
Option Shares and the Exercise Price of the Option shall each be proportionately
adjusted. Any right to acquire a fractional Option Share resulting from
adjustments will be rounded to the nearest whole Option Share.
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7. Method of Exercise. The Option may be exercised in whole or in part
(subject to the Minimum Option Exercise described in Section 4, above, and/or
the Extension Exercise described in Section 5(ii), above) by written notice
directed to Xxxxxxxxx and the Escrow Agent in accordance with the terms of the
Escrow Agreement among Xxxxxxxxx, Chrust and Continental Stock Transfer & Trust
Company ("Escrow Agent"), executed simultaneously herewith ("Escrow Agreement").
8. Voting Rights. Chrust hereby acknowledges and agrees that during the
Voting Proxy Period (as defined in this paragraph 8), Xxxxxxxxx shall have the
right to vote all of the Purchased Shares with respect to any matter put to a
vote of the stockholders of the Company. The "Voting Proxy Period" shall be the
period commencing on the date hereof and ending on the earlier of (i) September
10, 2001 or (ii) the date the Minimum Option Exercise is made. Notwithstanding
anything contained herein to the contrary, the foregoing shall not in any way
limit or otherwise modify Xxxxxxxxx'x obligations to vote his shares, including
the Purchased Shares, in accordance with the terms of the Consent (defined in
Section 11, below) and the letter, dated April 13, 1999, from Xxxxxxxxx, Xxxxxxx
Xxxxxx and Xxxxxx Xxxxxx to Chrust and the Company.
9. Xxxxxxxxx'x Representations. Xxxxxxxxx represents and warrants to Chrust
that:
(i) he owns the Purchased Shares and the Option Shares (together, the
"Shares") free of any lien, restriction or encumbrance of any kind, and he
has owned all of the Shares since December 31, 1997;
(ii) the sale by him of the Purchased Shares is, and the sale by him
of the Option Shares upon exercise of the Option will be, exempt from the
registration requirements of the Securities Act of 1933, as amended ("1933
Act");
(iii) he has not granted anyone an option, warrant, subscription or
other right with respect to the Shares or any right to vote the Shares;
(iv) his execution, delivery and performance of this Agreement and the
Escrow Agreement does not and will not conflict with or violate any law,
statute, ordinance, rule, regulation, order, judgment or decree applicable
to him, result in any breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, any
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note, bond, mortgage, indenture, contract, agreement or other instrument or
obligation to which he is a party or by which he is bound.
(v) he has received a copy of all reports and documents filed by the
Company with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended, within the last 24 months and
all reports issued by the Company to its stockholders; and
(vi) he has had both the opportunity to ask questions and receive
answers from the officers and directors of the Company and persons acting
on its behalf concerning the Company's operations and to obtain any
additional information he requested.
10. Chrust's Representations. Chrust represents and warrants to Xxxxxxxxx
that:
(i) he understands that he must bear the economic risk of the
investment in the Shares, which cannot be sold by him unless they are
registered under the 1933 Act or an exemption therefrom is available
thereunder; and
(ii) he is aware that the Company shall place stop transfer orders
with its transfer agent against the transfer of the Shares in the absence
of registration under the 1933 Act or an exemption therefrom as provided
herein;
(iii) he understands that the certificates evidencing the Shares shall
bear the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or under
the securities laws of any State. The shares may not be sold,
transferred or otherwise disposed of in the absence of such
registration or an exemption therefrom under said Act."
(iv) he understands that, during the Voting Proxy Period the Purchased
Shares shall bear the following additional legend:
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"The shares represented by this certificate are subject to
certain voting rights granted to a person other than the
registered holder hereof, in accordance with a certain Purchase
and Option Agreement, dated March 10, 2000, a copy of which is
on file at the principal offices of the Company."
(v) as Chairman of the Company's board of directors, he is aware of
all information regarding the Company's operations, including the Company's
proposed plans and business risks.
(vi) his execution, delivery and performance of this Agreement and the
Escrow Agreement does not and will not conflict with or violate any law,
statute, ordinance, rule, regulation, order, judgment or decree applicable
to him, result in any breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, any
note, bond, mortgage, indenture, contract, agreement or other instrument or
obligation to which he is a party or by which he is bound.
11. Releases; Consent. Simultaneously herewith, (i) each of Xxxxxxxxx and
the Company are executing mutual general releases in the other's favor
("Releases"), and (ii) Xxxxxxxxx is executing a shareholder consent with respect
to certain matters ("Consent").
12. Miscellaneous.
12.1 Notices. All notices, requests, deliveries, payments, demands and
other communications which are required or permitted to be given under this
Agreement shall be deemed given if given in writing, by hand, or delivered by
nationally recognized overnight courier, or by telecopier and confirmed by mail
(registered or certified mail, postage prepaid, return receipt requested) at
their respective addresses set forth herein, or to such other address as either
shall have specified by notice in writing to the other.
12.2 Survival of Representations. The representations and warranties
made by the parties shall survive the delivery of the Purchased Shares and the
partial, full or non-exercise of the Option (and the delivery of the Option
Shares).
12.3 Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach.
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12.4 Entire Agreement. This Agreement, the Escrow Agreement, the
Releases and the Consent constitute the entire agreement between the parties
with respect to the subject matter hereof. This Agreement may not be amended
except by writing executed by Xxxxxxxxx and Chrust.
12.5 Binding Effect; Successors. Chrust shall be entitled to designate
persons to purchase Option Shares along with him and such persons shall be
deemed to be assignees of his rights hereunder. If a portion of the Option is
exercised by such a designee, such designee must deliver to Xxxxxxxxx
simultaneously with such exercise a certificate containing representations and
warranties substantially similar to the representations and warranties made by
Chrust in Section 10 above. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and, to the extent not prohibited herein, their
respective heirs, successors, assigns and representatives. Nothing in this
Agreement, expressed or implied, is intended to confer any rights, remedies,
obligations or liabilities on any person other than the parties hereto and as
provided above, their respective heirs, successors, assigns and representatives.
12.6 Governing Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York (without
regard to choice of law provisions). Each party (i) agrees that any legal suit,
action or proceeding arising out of or relating to this Agreement shall be
instituted exclusively in New York State Supreme Court, County of New York, or
in the United States District Court for the Southern District of New York, (ii)
waives any objection to the venue of any such suit, action or proceeding and the
right to assert that such forum is not a convenient forum, and (iii) irrevocably
consents to the jurisdiction of the New York State Supreme Court, County of New
York, and the United States District Court for the Southern District of New York
in any such suit, action or proceeding. Each party further agrees to accept and
acknowledge service of any and all process which may be served in any such suit,
action or proceeding in the New York State Supreme Court, County of New York, or
in the United States District Court for the Southern District of New York and
agrees that service of process upon him mailed by registered mail to his address
shall be deemed in every respect effective service of process upon him in any
such suit, action or proceeding.
12.7 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
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injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the
parties hereto waives any right to trial by jury with respect to any claim or
proceeding related to or arising out of this Agreement or any of the
transactions contemplated hereby.
12.8 Headings. The headings contained herein are for the sole purpose
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Agreement.
12.9 SEC Filings. Each party agrees to provide the other with copies
of any filings they make with the Securities and Exchange Commission to reflect
the sale of the Purchased Shares and the grant and exercise of the Option prior
to the time the filing is required to be made and to give the other party
reasonable opportunity to comment on same.
12.10 Severability. The invalidity or unenforceability of any term or
provision of this Agreement in any situation or jurisdiction shall not affect
the validity or enforceability of the other terms or provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction and the remaining terms and provisions
shall remain in full force and effect, unless doing so would result in an
interpretation of this Agreement which is manifestly unjust.
12.11 Fees and Expenses. Except as otherwise expressly set forth
herein or in the Escrow Agreement, all costs and expenses (including, without
limitation, legal and financial advisory fees and expenses) incurred in
connection with, or in anticipation of, this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
12.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original instrument and all
of which together shall constitute a single agreement.
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement on the
day and year first above:
Address: 000 Xxxxx Xxxxxx-- 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: 000-000-0000
/s/ Xxxxxx X. Xxxxxxxxx
--------------------------
XXXXXX X. XXXXXXXXX
Address: SGC Advisory Services, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Telecopier No.: 000-000-0000
/s/ Xxxxxx X. Xxxxxx
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XXXXXX X. XXXXXX
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