STOCK PURCHASE AGREEMENT
Dated as of March 7, 2008
between
TOTAL LUXURY GROUP, INC., as Purchaser
and
THE SELLERS LISTED ON EXHIBIT A
TABLE OF CONTENTS
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Page
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ARTICLE I Purchase and Sale
Section 1.1 Purchase and Sale of the Shares 1
Section 1.2 Private Offering Exemption 1
Section 1.3 Intention of the Parties 1
Section 1.4 Purchase Price and Closing 1
ARTICLE II Representations and Warranties
Section 2.1 Representations and Warranties of the Company 3
Section 2.2 Representations and Warranties of the Sellers 5
ARTICLE III Covenants
Section 3.1 Securities Compliance 7
Section 3.2 Registration and Listing 7
Section 3.3 Compliance with Laws 7
Section 3.4 Furnishing of Information 7
Section 3.5 Amendments 7
Section 3.6 Reservation of Shares 7
Section 3.7 Reporting Status 7
ARTICLE IV Conditions
Section 4.1 Conditions Precedent to the Obligation 8
of the Company to Purchase the Shares
Section 4.2 Conditions Precedent to the Obligation 8
of the Sellers to Sell the Shares
ARTICLE V Stock Certificate Legend
Section 5.1 Legend 9
ARTICLE VI Indemnification
Section 6.1 General Indemnity 10
Section 6.2 Indemnification Procedure 10
ARTICLE VII Miscellaneous
Section 7.1 Fees and Expenses 11
Section 7.2 Specific Enforcement 11
Section 7.3 Entire Agreement; Amendment 11
Section 7.4 Notices 11
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Section 7.5 Waivers 12
Section 7.6 Headings 12
Section 7.7 Successors and Assigns 12
Section 7.8 No Third Party Beneficiaries 12
Section 7.9 Governing Law; Consent to Jurisdiction 12
Section 7.10 Survival 12
Section 7.11 Counterparts 13
Section 7.12 Publicity 13
Section 7.13 Severability 13
Section 7.14 Further Assurances 13
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TABLE OF CONTENTS
(continued)
EXHIBITS
Exhibit A List of Sellers
Exhibit B Form of Junior Unsecured 9% Convertible Promissory Note
Exhibit C Series B Warrant
Exhibit D Intercreditor Agreement
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is dated as of March 7,
2008 by and between Total Luxury Group, Inc., an Indiana corporation (the
"Company"), and each of the Sellers whose names are set forth on Exhibit A
hereto (individually, a "Seller" and collectively, the "Sellers").
Recitals
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A. The Sellers collectively own of record and beneficially all of the
issued and outstanding shares (the "Shares") of Petals Decorative Accents Inc.
("Petals") Series C Preferred Stock.
B. The Company desires to purchase the Shares, and each of the Sellers,
severally and not jointly, desires to sell such Shares, upon the terms and
subject to the conditions set forth herein.
The parties hereto agree as follows:
ARTICLE I
Purchase and Sale
Section 1.1 Purchase and Sale of the Shares. (a) Upon the terms and subject
to the conditions of this Agreement, at the Closing referred to in Section 1.4
hereof, each of the Sellers shall sell, convey, assign, transfer, and deliver to
the Company, and the Company shall purchase, acquire, and accept delivery of,
the Shares, free and clear of any and all liens, mortgages, adverse claims,
charges, security interests, encumbrances, other restrictions or limitations, or
rights of any third persons whatsoever other than liens arising from acts of the
Company.
(b) To effect the transfers contemplated by Section 1.1(a), at the
Closing, each of the Sellers shall deliver or cause to be delivered to the
Company, against payment therefor in accordance with Section 1.4 hereof,
stock certificates representing the Shares owned by it, accompanied by
stock powers duly executed in blank and otherwise in form acceptable to the
Company for transfer on the books of Petals.
Section 1.2 Private Offering Exemption. Each of the Company and each
of the Sellers is executing and delivering this Agreement in accordance
with and in reliance upon the exemption from securities registration
afforded by Rule 506 of Regulation D ("Regulation D") as promulgated by the
United States Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Securities Act") or Section
4(2) of the Securities Act.
Section 1.3 Intention of the Parties. It is the intention of the
parties hereto that this purchase and sale receive installment sale
treatment under Section 453 of the Internal Revenue Code of 1986, as
amended (the "Code"). Each of the parties shall take all lawful actions
necessary to insure that this transaction is accorded such tax treatment
under the Code and applicable state law.
Section 1.4 Purchase Price and Closing. (a) Subject to the terms and
conditions hereof, each of the Sellers agrees to sell to the Company, and
the Company agrees to purchase the Shares at the Closing for an aggregate
sum of One Million Twelve Thousand Five Hundred Dollars ($1,012,500) and
warrants to purchase an aggregate of 7,593,750 shares of the Common Stock
with an initial exercise price of $0.10 (the "Purchase Price").
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(b) On the Closing Date, against delivery to the Company of stock
certificates evidencing the Shares, the Company shall:
(i) pay to each of the Sellers the sum set forth
opposite its name on Exhibit A, which payment shall be
evidenced by the Company's Junior Unsecured 9% Convertible
Promissory Note (collectively, the "Note") substantially in
the form of Exhibit B attached hereto, and
(ii) issue to each of the Sellers a warrant to purchase
the number of shares of the Company's common stock, par
value $0.00 per share, (the "Common Stock") set forth
opposite its name on Exhibit A (collectively, the "Series B
Warrant") substantially in the form of Exhibit C attached
hereto.
(c) At the Closing, each of the Sellers shall deliver:
(i) to the pledgee, certificates representing the Shares
owned by it, duly endorsed in blank for transfer, or with
appropriate stock powers in blank attached, which certificates
shall be held pursuant to the terms of a pledge agreement entered
into by and between the Company and Accelerant Partners LLC (the
"Pledge Agreement");
(ii) to the Company, a certificate executed by an authorized
officer of each of the Sellers, on behalf of the applicable
Seller, to the effect that the conditions set forth in Section
4.1 have been satisfied;
(iii) to Accelerant Partners LLC, a, intercreditor agreement
(the "Intercreditor Agreement") substantially in the form of
Exhibit D attached hereto; and
(iv) such other agreements, certificates, and writings as
the Company may reasonably require.
(d) At the Closing, the Company shall deliver:
(i) to each of the Sellers, a Note;
(ii) to each of the Sellers, a Warrant;
(iii) to each of the Sellers and to Accelerant Partners LLC, the
Intercreditor Agreement;
(iv) to Sellers, a certificate executed by an authorized officer
of the Company, on behalf of the Company, to the effect that the
conditions set forth in Section 4.2 have been satisfied; and
(v) such other agreements, certificates, and writings as the
Company may reasonably require.
(e) The consummation of the sale of the Shares, payment of the
Purchase Price comprised of the Note and Warrant and the other transactions
contemplated by this Agreement shall take place at the offices of ▇▇▇▇▇▇▇
▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the
"Closing") at 10:00 a.m., New York time on such date as a Majority in
Interest (herein defined) of the Sellers and the Company may agree upon;
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provided, that all of the conditions set forth in Article IV hereof and
applicable to the Closing shall have been fulfilled or waived in accordance
herewith (the "Closing Date").
(f) It is the intention of the parties that the closing of the
transactions contemplated by this Agreement take place simultaneously with
the Company's purchase of 38,000,000 issued and outstanding shares of
Petals' common stock, par value $0.00001(the "Common Stock Purchase"), the
execution and delivery of a services agreement by and between the Company
and ▇▇▇▇▇▇ ▇▇▇▇▇ and the issuance of a Series B Warrant to ▇▇. ▇▇▇▇▇
pursuant thereto (the "▇▇▇▇▇ Transaction") , the issuance of the Company's
Common Stock to Accelerant, and the execution and delivery of a placement
agent agreement by and between the Company and Southridge Investment Group
LLC. To this end, the closing the Series C Preferred Purchase and the
closing of the ▇▇▇▇▇ Transaction and the other referenced transactions are
each preconditions to the closing of the contemplated by this Agreement.
ARTICLE II
Representations and Warranties
Section 2.1 Representations and Warranties of the Company. The Company
hereby represents and warrants to each of the Sellers, as of the date hereof and
Closing Date (except as set forth on the Schedule of Exceptions attached hereto
with each numbered Schedule corresponding to the section number herein), as
follows:
(a) Organization, Good Standing and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Indiana and has the requisite corporate power to
own, lease and operate its properties and assets and to conduct its
business as it is now being conducted. Except as set forth in Schedule
2.1(g) hereto, the Company does not have any Subsidiaries. Except as set
forth on Schedule 2.1(a), each of the Company and each such Subsidiary is
duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary except
for any jurisdiction(s) (alone or in the aggregate) in which the failure to
be so qualified will not have a Material Adverse Effect (as defined in
Section 2.1(c) hereof) on the Company's financial condition.
(b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and perform this Agreement, the
Note, the Warrant, the Intercreditor Agreement, and the Pledge Agreement
(collectively, the "Transaction Documents"). The execution, delivery and
performance of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action, and
except as set forth on Schedule 2.1(b), no further consent or authorization
of the Company or its Board of Directors or stockholders is required. This
Agreement has been duly executed and delivered by the Company. The other
Transaction Documents will have been duly executed and delivered by the
Company at the Closing. Each of the Transaction Documents constitutes, or
shall constitute when executed and delivered, a valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor's rights and remedies or by other
equitable principles of general application.
(c) Issuance of Securities. The Note and the Warrant to be issued at
the Closing have been duly authorized by all necessary corporate action and
when issued in accordance with the terms hereof, the Note and Warrant shall
be validly issued and outstanding, free and clear of all liens,
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encumbrances and rights of refusal of any kind. Upon the adoption and
filing of the Amended Certificate, the additional shares of Common Stock,
when issued in accordance hereof, shall be validly issued and outstanding,
free and clear of all liens, encumbrances and rights of refusal of any
kind. When the shares subject to conversion under the Note (the "Conversion
Shares"), the PIK Shares, and the shares subject to purchase under the
Warrant (the "Warrant Shares") are issued in accordance with the terms of
this Agreement, the Note and the Warrant, such shares will be duly
authorized by all necessary corporate action and validly issued and
outstanding, fully paid and nonassessable, free and clear of all liens,
encumbrances and rights of refusal of any kind and the holders shall be
entitled to all rights accorded to a holder of Common Stock. The Note, the
Warrant, the Conversion Shares and the Warrant Shares are sometimes
collectively referred to as the "Securities."
(d) [reserved]
(e) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company, the performance by the Company of its
respective obligations thereunder and the consummation by the Company of
the transactions contemplated herein and therein do not and will not (i)
violate any provision of the Company's Certificate, Amended Certificate or
Bylaws, (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation
of, any agreement, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which the Company is a party
or by which it or its properties or assets are bound, (iii) create or
impose a lien, mortgage, security interest, charge or encumbrance of any
nature on any property of the Company under any agreement or any commitment
to which the Company is a party or by which the Company is bound or by
which any of its respective properties or assets are bound, or (iv) result
in a violation of any federal, state, local or foreign statute, rule,
regulation, order, judgment or decree (including Federal and state
securities laws and regulations) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries are bound or affected. The business of the Company and its
Subsidiaries is not being conducted in violation of any laws, ordinances or
regulations of any governmental entity, except for possible violations
which singularly or in the aggregate do not and will not have a Material
Adverse Effect. The Company is not required under Federal, state or local
law, rule or regulation to obtain any consent, authorization or order of,
or make any filing or registration with, any court or governmental agency
in order for it to execute, deliver or perform any of its obligations under
the Transaction Documents, or issue the Note, the Warrant, the Conversion
Shares and the Warrant Shares in accordance with the terms hereof or
thereof (other than (x) any consent, authorization or order that has been
obtained as of the date hereof, (y) any filing or registration that has
been made as of the date hereof or (z) any filings which may be required to
be made by the Company with the Commission or state securities
administrators subsequent to the Closing, provided, that for purposes of
the representation made in this sentence, the Company is assuming and
relying upon the accuracy of the relevant representations and agreements
each of the Sellers herein.
(f) Actions Pending. There is no action, suit, claim, investigation,
arbitration, alternate dispute resolution proceeding or any other
proceeding pending or, to the knowledge of the Company, threatened against
the Company or any Subsidiary which questions the validity of this
Agreement or any of the other Transaction Documents or the transactions
contemplated hereby or thereby or any action taken or to be taken pursuant
hereto or thereto. There is no action, suit, claim, investigation,
arbitration, alternate dispute resolution proceeding or any other
proceeding pending or, to the knowledge of the Company, threatened, against
or involving the Company, any Subsidiary or any of their respective
properties or assets. There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, arbitrator or governmental or
regulatory body against the Company or any Subsidiary or any officers or
directors of the Company or Subsidiary in their capacities as such.
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(g) Governmental Approvals. Except for the filing of any notice prior
or subsequent to the Closing Date that may be required under applicable
state and/or Federal securities laws (which if required, shall be filed on
a timely basis), including the filing of a Form D and the filing of the
Amended Certificate with the Secretary of State for the State of Indiana,
no authorization, consent, approval, license, exemption of, filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is or will be
necessary for, or in connection with, the execution or delivery of the Note
and the Warrant, or for the performance by the Company of its obligations
under the other Transaction Documents.
Section 2.2 Representations and Warranties of the Sellers. Each of Sellers,
severally and not jointly hereby makes the following representations and
warranties to the Company with respect solely to itself and not with respect to
any other Seller:
(a) Organization and Standing of the Sellers. If the Seller is an
entity, such Seller is a corporation, partnership, or limited liability
company duly incorporated or organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization.
(b) Authorization and Power. Each of the Sellers has the requisite
power and authority to enter into and perform this Agreement and to sell
the Shares being purchased by the Company hereunder. The execution,
delivery, and performance of this Agreement and the Intercreditor
Agreement, by such Seller and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate or partnership action, and no further consent or authorization of
such Seller or its Board of Directors, stockholders or partners, as the
case may be, is required. Each of this Agreement and the Intercreditor
Agreement has been duly authorized, executed, and delivered by such Seller
and constitutes, or shall constitute when executed and delivered, a valid,
and binding obligation of such Seller enforceable against such Seller in
accordance with the terms thereof, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditor's rights and remedies or
by other equitable principles of general application.
(c) No Conflicts. The execution, delivery and performance of this
Agreement and the Intercreditor Agreement and the consummation by such
Seller of the transactions contemplated hereby and thereby or relating
hereto do not and will not (i) result in a violation of such Seller's
charter documents or bylaws or other organizational documents or (ii)
conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of any
agreement, indenture or instrument or obligation to which such Seller is a
party or by which its properties or assets are bound, or result in a
violation of any law, rule, or regulation, or any order, judgment or decree
of any court or governmental agency applicable to such Seller or its
properties (except for such conflicts, defaults and violations as would
not, individually or in the aggregate, have a material adverse effect on
such Seller). Such Seller is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or perform
any of its obligations under this Agreement or the Intercreditor Agreement
or to sell the Shares in accordance with the terms hereof; provided that
for purposes of the representation made in this sentence, such Seller is
assuming and relying upon the accuracy of the relevant representations and
agreements of the Company herein.
(d) Acquisition for Investment. Such Seller is acquiring the
Securities solely for its own account for the purpose of investment and not
with a view to or for sale in connection with distribution. Such Seller
does not have a present intention to sell the Securities, nor a present
arrangement (whether or not legally binding) or intention to effect any
distribution of the Securities to or through any person or entity;
provided, however, that by making the representations herein, such Seller
does not agree to hold the Securities for
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any minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with Federal and state securities laws
applicable to such disposition.
(e) Status of Seller. Such Seller is an "accredited investor" as
defined in Regulation D promulgated under the Securities Act. Such Seller
is not required to be registered as a broker-dealer under Section 15 of the
Exchange Act and Sellers is not a broker-dealer.
(f) Opportunities for Additional Information. Such Seller acknowledges
that such Seller has had the opportunity to ask questions of and receive
answers from, or obtain additional information from, the executive officers
of the Company concerning the financial and other affairs of the Company,
and to the extent deemed necessary in light of such Seller's personal
knowledge of the Company's affairs, such Seller has asked such questions
and received answers to the full satisfaction of such Seller, and such
Seller desires to invest in the Company.
(g) No General Solicitation. Such Seller acknowledges that the
Securities were not offered to such Seller by means of any form of general
or public solicitation or general advertising, or publicly disseminated
advertisements or sales literature, including (i) any advertisement,
article, notice or other communication published in any newspaper,
magazine, or similar media, or broadcast over television or radio, or (ii)
any seminar or meeting to which such Seller was invited by any of the
foregoing means of communications.
(h) Rule 144. Such Seller understands that the Securities must be held
indefinitely unless such Securities are registered under the Securities Act
or an exemption from registration is available. Such Seller acknowledges
that such Seller is familiar with Rule 144 of the rules and regulations of
the Commission, as amended, promulgated pursuant to the Securities Act
("Rule 144"), and that such Seller has been advised that Rule 144 permits
resales only under certain circumstances. Such Seller understands that to
the extent that Rule 144 is not available, such Seller will be unable to
sell any Securities without either registration under the Securities Act or
the existence of another exemption from such registration requirement.
(i) General. Such Seller understands that the Securities are being
offered and sold in reliance on a transactional exemption from the
registration requirement of Federal and state securities laws and the
Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of such Seller
set forth herein in order to determine the applicability of such exemptions
and the suitability of Sellers to acquire the Securities.
(j) Independent Investment. Except as may be disclosed in any filings
with the Commission by any Seller under Section 13 and/or Section 16 of the
Exchange Act, such Seller has not agreed to act with any other Seller for
the purpose of acquiring, holding, voting or disposing of the Securities
issued hereunder for purposes of Section 13(d) under the Exchange Act, and
such Seller is acting independently with respect to its investment in the
Securities.
(k) No Liens. Against payment of the Purchase Price, the Company shall
purchase, acquire, and accept delivery of, the Shares, free and clear of
any and all liens, mortgages, adverse claims, charges, security interests,
encumbrances, other restrictions or limitations, or rights of any third
persons whatsoever, in all cases based on the acts or omissions of Sellers
and other than liens arising from acts of the Company.
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ARTICLE III
Covenants
The Company covenants with Sellers as follows, which covenants are for the
benefit of Sellers and its permitted assignees (as defined herein):
Section 3.1 Securities Compliance. The Company shall notify the Commission
in accordance with their rules and regulations, of the transactions contemplated
by any of the Transaction Documents, including filing a Form D with respect to
the Note, the Warrant, Conversion Shares and the Warrant Shares as required
under Regulation D and applicable "blue sky" laws, and shall take all other
necessary action and proceedings as may be required and permitted by applicable
law, rule and regulation, for the legal and valid issuance of the Note, the
Warrant, the Conversion Shares and the Warrant Shares to Sellers or subsequent
holders.
Section 3.2 Registration and Listing. The Company shall (a) comply in all
respects with its reporting and filing obligations under the Exchange Act, and
(b) not take any action or file any document (whether or not permitted by the
Securities Act or the rules promulgated thereunder) to terminate or suspend such
registration or to terminate or suspend its reporting and filing obligations
under the Exchange Act or Securities Act, except as permitted herein. The
Company will take all action necessary to cause the relisting of its Common
Stock and thereafter continue the listing or trading of its Common Stock on the
OTC Bulletin Board or other exchange or market on which the Common Stock is
trading or may be traded in the future.
Section 3.3 Compliance with Laws. The Company shall comply, and cause each
Subsidiary, whether such Subsidiary is in existence as of the date of this
agreement or formed or acquired subsequent to the date of this agreement, to
comply, with all applicable laws, rules, regulations and orders, noncompliance
with which could have a Material Adverse Effect.
Section 3.4 Furnishing of Information. Until all of the Securities are
eligible for sale without restriction under Rule 144 promulgated under the
Securities Act, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. Until all of the Securities are eligible for sale without
restriction under Rule 144 promulgated under the Securities Act, if the Company
is not required to file reports pursuant to such laws, it will prepare and
furnish to each of the Sellers and make publicly available in accordance with
Rule 144(c) such information as is required for the Sellers to sell the
Securities under Rule 144.
Section 3.5 Amendments. Other than the filing of the Amended Certificate,
the Company shall not amend or waive any provision of the Certificate or Bylaws
of the Company in any way that would adversely affect the rights of Sellers
under any of the Transaction Documents.
Section 3.6 Reservation of Shares. The Company undertakes to use its best
efforts under applicable state and federal law to increase the number of
authorized shares of Common Stock to enable each of the Sellers to exercise its
conversion rights provided in the Note and its purchase rights provided in the
Warrant.
Section 3.7 Reporting Status. The Company undertakes to use its best
efforts to become reporting under the federal securities laws and seek to be
re-listed for quotation on the OTC Bulletin Board as soon as practical. Subject
to the foregoing, so long as any of the Sellers beneficially owns any of the
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Securities, the Company shall timely file all reports required to be filed with
the Commission pursuant to the Exchange Act, and the Company shall not cease
filing reports under the Exchange Act even if the Exchange Act or the rules and
regulations thereunder would permit such termination.
ARTICLE IV
Conditions
Section 4.1 Conditions Precedent to the Obligation of the Company to
Purchase the Shares. The obligation hereunder of the Company to purchase the
Shares from each of the Sellers is subject to the satisfaction or waiver, at or
before the Closing, of each of the conditions set forth below. These conditions
are for the Company's sole benefit and may be waived by the Company at any time
in its sole discretion.
(a) Accuracy of each of the Sellers' Representations and Warranties.
The representations and warranties of each of the Sellers shall be true and
correct in all material respects as of the date when made and as of the
Closing Date as though made at that time, except for representations and
warranties that are expressly made as of a particular date, which shall be
true and correct in all material respects as of such date.
(b) Performance by each of the Sellers. Each of the Sellers shall have
performed, satisfied and complied in all respects with all covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by each such Seller at or prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.
(d) Simultaneous Closing. The closing the Common Stock Purchase, the
closing of the ▇▇▇▇▇ Transaction, the issuance of the Company's Common
Stock to Accelerant, and the execution and delivery of a placement agent
agreement by and between the Company and Southridge Investment Group LLC
have taken place.
(e) Delivery of Transaction Documents. The Transaction Documents have
been duly executed and delivered by each of the Sellers to the Company.
Section 4.2 Conditions Precedent to the Obligation of the Sellers to Sell
the Shares. The obligation hereunder of each of the Sellers to sell and deliver
the Shares owned by it is subject to the satisfaction or waiver, at or before
the Closing, of each of the conditions set forth below. These conditions are for
the Sellers' sole benefit and may be waived by such Sellers at any time in its
sole discretion.
(a) Accuracy of the Company's Representations and Warranties. Each of
the representations and warranties of the Company in the Transaction
Documents shall be true and correct in all respects as of the date when
made and as of the Closing Date as though made at that time (except for
representations and warranties that are expressly made as of a particular
date), which shall be true and correct in all respects as of such date.
(b) Performance by the Company. The Company shall have performed,
satisfied and complied in all respects with all covenants, agreements and
conditions required by the Transaction Documents to be performed, satisfied
or complied with by the Company at or prior to the Closing.
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(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.
(d) No Proceedings or Litigation. No action, suit or proceeding before
any arbitrator or any governmental authority shall have been commenced, and
no investigation by any governmental authority shall have been threatened,
against the Company or any Subsidiary, or any of the officers, directors or
affiliates of the Company or any Subsidiary seeking to restrain, prevent or
change the transactions contemplated by this Agreement, or seeking damages
in connection with such transactions.
(e) Simultaneous Closing. The closing the Common Stock Purchase and
the closing of the ▇▇▇▇▇ Transaction have taken place.
(f) Delivery of Transaction Documents. The Transaction Documents have
been duly executed and delivered by each of the Sellers to the Company.
(g) Reservation of Shares. So long as any of the Note or Warrant
remain outstanding, the Company shall take all action necessary to at all
times have authorized, and reserved for the purpose of issuance, no less
than (i) a number of shares of Common Stock as shall from time to time be
sufficient to effect the conversion of the Note and (ii) as of the date
hereof, such number of shares of Common Stock as shall from time to time be
sufficient to effect the exercise of the Warrant.
(h) Institutional Lender. The Transaction Documents and the agreements
contemplated thereby have been approved by Accelerant Partners LLC's
lender.
ARTICLE V
Stock Certificate Legend
Section 5.1 Legend. Each certificate representing the Note and the Warrant,
and, if appropriate, securities issued upon conversion or exercise thereof (or
securities issued in connection with Section 1.4, shall be stamped or otherwise
imprinted with a legend substantially in the following form (in addition to any
legend required by applicable state securities or "blue sky" laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE
"SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES
ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE
CORPORATION SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT
REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND
UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS
NOT REQUIRED.
The Company agrees to reissue the certificates representing any of the
Conversion Shares and the Warrant Shares, without the legend set forth above if
at such time, prior to making any transfer of any such securities, such holder
thereof shall give written notice to the Company describing the manner and terms
of such transfer and removal as the Company may reasonably request. Such
9
proposed transfer and removal will not be effected until: (a) either (i) the
Company has received an opinion of counsel reasonably satisfactory to the
Company, to the effect that the registration of the Conversion Shares or the
Warrant Shares under the Securities Act is not required in connection with such
proposed transfer, (ii) a registration statement under the Securities Act
covering such proposed disposition has been filed by the Company with the
Commission and has become effective under the Securities Act, (iii) the Company
has received other evidence reasonably satisfactory to the Company that such
registration and qualification under the Securities Act and state securities
laws are not required, or (iv) the holder provides the Company with reasonable
assurances that such security can be sold pursuant to Rule 144 under the
Securities Act; and (b) either (i) the Company has received an opinion of
counsel reasonably satisfactory to the Company, to the effect that registration
or qualification under the securities or "blue sky" laws of any state is not
required in connection with such proposed disposition, or (ii) compliance with
applicable state securities or "blue sky" laws has been effected or a valid
exemption exists with respect thereto. The restrictions on transfer contained in
this Section 5.1 shall be in addition to, and not by way of limitation of, any
other restrictions on transfer contained in any other section of this Agreement.
ARTICLE VI
Indemnification
Section 6.1 General Indemnity. The Company agrees to indemnify and hold
harmless each of the Sellers (and their respective directors, officers,
managers, partners, members, shareholders, affiliates, agents, successors and
assigns, as applicable) from and against any and all losses, liabilities,
deficiencies, costs, damages and expenses (including, without limitation,
reasonable attorneys' fees, charges and disbursements) incurred by each of the
Sellers as a result of any inaccuracy in or breach of the representations,
warranties or covenants made by the Company herein.
Section 6.2 Indemnification Procedure. Any party entitled to
indemnification under this Article VI (an "indemnified party") will give written
notice to the indemnifying party of any matters giving rise to a claim for
indemnification; provided that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Article VI except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any action, proceeding or claim is brought against an
indemnified party in respect of which indemnification is sought hereunder, the
indemnifying party shall be entitled to participate in and, unless in the
reasonable judgment of the indemnified party a conflict of interest between it
and the indemnifying party may exist with respect of such action, proceeding or
claim, to assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. In the event that the indemnifying party advises an
indemnified party that it will contest such a claim for indemnification
hereunder, or fails, within thirty (30) days of receipt of any indemnification
notice to notify, in writing, such person of its election to defend, settle or
compromise, at its sole cost and expense, any action, proceeding or claim (or
discontinues its defense at any time after it commences such defense), then the
indemnified party may, at its option, defend, settle or otherwise compromise or
pay such action or claim. In any event, unless and until the indemnifying party
elects in writing to assume and does so assume the defense of any such claim,
proceeding or action, the indemnified party's costs and expenses arising out of
the defense, settlement or compromise of any such action, claim or proceeding
shall be losses subject to indemnification hereunder. The indemnified party
shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the indemnified party which relates to such action or claim. The indemnifying
party shall keep the indemnified party fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. If
the indemnifying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense. The indemnifying party shall not be
liable for any settlement of any action, claim or proceeding effected without
10
its prior written consent. Notwithstanding anything in this Article VI to the
contrary, the indemnifying party shall not, without the indemnified party's
prior written consent, settle or compromise any claim or consent to entry of any
judgment in respect thereof which imposes any future obligation on the
indemnified party or which does not include, as an unconditional term thereof,
the giving by the claimant or the plaintiff to the indemnified party of a
release from all liability in respect of such claim. The indemnification
required by this Article VI shall be made by periodic payments of the amount
thereof during the course of investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred, so long as the
indemnified party irrevocably agrees to refund such moneys if it is ultimately
determined by a court of competent jurisdiction that such party was not entitled
to indemnification. The indemnity agreements contained herein shall be in
addition to (a) any cause of action or similar rights of the indemnified party
against the indemnifying party or others, and (b) any liabilities the
indemnifying party may be subject to pursuant to the law.
ARTICLE VII
Miscellaneous
Section 7.1 Fees and Expenses. Except as otherwise set forth in this
Agreement and the other Transaction Documents, each party shall pay the fees and
expenses of its advisors, counsel, accountants and other experts, if any, and
all other expenses, incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all reasonable fees and expenses incurred by each of the Sellers in
connection with the enforcement of this Agreement or any of the other
Transaction Documents after the occurrence of an uncured event of default,
including, without limitation, all reasonable attorneys' fees and expenses but
only if the applicable Seller is successful in any litigation or arbitration
relating to such enforcement.
Section 7.2 Specific Enforcement. The Company and each of the Sellers
acknowledge and agree that irreparable damage would occur in the event that any
of the provisions of this Agreement or the other Transaction Documents 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
injunctions to prevent or cure breaches of the provisions of this Agreement, the
Intercreditor Agreement, or any of the other Transaction Documents and to
enforce specifically the terms and provisions hereof or thereof, this being in
addition to any other remedy to which any of them may be entitled by law or
equity.
Section 7.3 Entire Agreement; Amendment. This Agreement and the Transaction
Documents contains the entire understanding and agreement of the parties with
respect to the matters covered hereby and, except as specifically set forth
herein or in the Transaction Documents, neither the Company nor the Sellers
makes any representations, warranty, covenant or undertaking with respect to
such matters and they supersede all prior understandings and agreements with
respect to said subject matter, all of which are merged herein. No provision of
this Agreement may be waived or amended other than by a instrument signed by the
Company and the holders of a majority of the principal sum of the Note (a
"Majority in Interest"), and no provision hereof may be waived other than by an
a instrument signed by the party against whom enforcement of any such amendment
or waiver is sought.
Section 7.4 Notices. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery by telex (with correct answer back
received), telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
11
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to Sellers:
As set forth on Exhibit A hereto
If to the Company:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇. #▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Any party hereto may from time to time change its address for notices by
giving at least ten (10) days written notice of such changed address to the
other parties hereto.
Section 7.5 Waivers. No waiver by either party of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any other provisions,
condition or requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter.
Section 7.6 Headings. The article, section and subsection headings in this
Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any
of the provisions hereof.
Section 7.7 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and assigns.
Section 7.8 No Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
Section 7.9 Governing Law; Consent to Jurisdiction. The parties acknowledge
and agree that any claim, controversy, dispute or action relating in any way to
this agreement or the subject matter of this agreement shall be governed solely
by the laws of the State of Delaware, without regard to any conflict of laws
doctrines. The parties irrevocably consent to being served with legal process
issued from the state and federal courts located in New York and irrevocably
consent to the exclusive personal jurisdiction of the federal and state courts
situated in the State of New York. The parties irrevocably waive any objections
to the personal jurisdiction of these courts. Said courts shall have sole and
exclusive jurisdiction over any and all claims, controversies, disputes and
actions which in any way relate to this agreement or the subject matter of this
agreement. The parties also irrevocably waive any objections that these courts
constitute an oppressive, unfair, or inconvenient forum and agree not to seek to
change venue on these grounds or any other grounds.
TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO
WAIVES TRIAL BY JURY WITH RESPECT TO ANY CLAIM, CONTROVERSY, DISPUTE OR ACTION
RELATING IN ANY WAY TO THIS AGREEMENT OR THE SUBJECT MATTER OF THIS AGREEMENT.
Section 7.10 Survival. The representations and warranties of the Company
and each of the Sellers shall survive the execution and delivery hereof and the
Closing hereunder.
12
Section 7.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement, and
shall become effective when counterparts have been signed by each party and
delivered to the other parties hereto, it being understood that all parties need
not sign the same counterpart. In the event that any signature is delivered by
facsimile or electronic mail transmission, such signature shall create a valid
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.
Section 7.12 Publicity. The Company agrees that it will not disclose, and
will not include in any public announcement, the names of Sellers without the
consent of the applicable Seller unless and until such disclosure is required by
law or applicable regulation, and then only to the extent of such requirement.
Section 7.13 Severability. The provisions of this Agreement and the
Transaction Documents are severable and, in the event that any court of
competent jurisdiction shall determine that any one or more of the provisions or
part of the provisions contained in this Agreement or the Transaction Documents
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision or part of a provision of this Agreement or the Transaction
Documents and such provision shall be reformed and construed as if such invalid
or illegal or unenforceable provision, or part of such provision, had never been
contained herein, so that such provisions would be valid, legal and enforceable
to the maximum extent possible.
Section 7.14 Further Assurances. From and after the date of this Agreement,
upon the request of a Majority in Interest of the Sellers or the Company, each
of the Company and the Sellers shall execute and deliver such instrument,
documents, and other writings as may be reasonably necessary or desirable to
confirm and carry out and to effectuate fully the intent and purposes of this
Agreement and the transactions contemplated hereby.
[remainder of page intentionally left blank]
13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.
TOTAL LUXURY GROUP, INC.
By: ___________________________
Name:
Title:
SELLERS:
By: ___________________________
Name:
Title:
By: ___________________________
Name:
Title:
By: ___________________________
Name:
Title:
By: ___________________________
Name:
Title:
14
By: ___________________________
Name:
Title:
By: ___________________________
Name:
Title:
By: ___________________________
Name:
Title:
By: ___________________________
Name:
Title:
By: ___________________________
Name:
Title:
15
EXHIBIT A
---------
to the
STOCK PURCHASE AGREEMENT FOR
TOTAL LUXURY GROUP, INC.
Names and Addresses of the Sellers Face Amount of Note Number of Warrants
---------------------------------- ------------------- ------------------
16
EXHIBIT B
---------
to the
STOCK PURCHASE AGREEMENT FOR
TOTAL LUXURY GROUP, INC.
FORM OF JUNIOR UNSECURED 9% CONVERTIBLE PROMISSORY NOTE
i
EXHIBIT C
---------
to the
STOCK PURCHASE AGREEMENT FOR
TOTAL LUXURY GROUP, INC.
SERIES B WARRANT
ii
EXHIBIT D
---------
to the
STOCK PURCHASE AGREEMENT FOR
TOTAL LUXURY GROUP, INC.
INTERCREDITOR AGREEMENT
iii
STOCK PURCHASE AGREEMENT SCHEDULES
Schedule 2.1(a) Organization; Good Standing
Schedule 2.1(b) Authorization
Schedule 2.1(g) Subsidiaries
iv
Schedule 2.1(a)
---------------
Organization and Good Standing
v
Schedule 2.1(b)
---------------
Authorization
vi
Schedule 2.1(g)
---------------
Subsidiaries
vii