TRICON HOLDINGS, L.L.C. Suite 401 Coral Gables, Florida 33134 February 26, 2007
TRICON
HOLDINGS, L.L.C.
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Suite
401
Coral
Gables, Florida 33134
February 26,
2007
Personal
and Confidential
▇▇▇▇▇
▇.
▇▇▇▇▇▇▇
President
Chairman
Pet
Ecology Brands, Inc.
14822
Venture Dr.
Dallas,
Texas 75234
Dear
▇▇.
▇▇▇▇▇▇▇:
This
letter confirms the terms of the Stock Purchase Agreement (“Purchase Agreement”)
by and between between Tricon Holdings, L.L.C. and Texas Atlantic Capital
Partners, L.L.C., or assigns, ("Purchaser") and Pet Ecology Brands,
Inc. ( “Company”) with respect to the terms and conditions under which Purchaser
will acquire shares of capital stock of the Company and warrants to purchase
shares of capital stock of the Company. Such transaction is
hereinafter referred to as the "Acquisition."
The
obligations of the parties to consummate the Acquisition are subject
to the terms, conditions and contingencies contained herein; however, in
the
event Purchaser elects to terminate this Purchase Agreement in accordance
with
Paragraph 13 below, the provsions of Paragraphs 9 and 10, shall survive the
termination hereof.
1.
Purchase of Stock. At the closing (the "Closing"), subject to the satisfaction
of all conditions precedent contained in the Purchase Agreement, Purchaser
will
purchase from Company, and Company will sell and issue to Purchaser, a
sufficient number of shares of Company’s common stock to consist of Fifty-One
Percent {51%) of all of the issued and outstanding common stock of the Company,
fully diluted, free and clear of any liens, charges, restrictions or
encumbrances thereon (collectively, the "Shares").
2.
Purchase Price. The purchase price for the Shares shall be the sum of One
Million Three Hundred Fifty Thousand Dollars {$1,350,000) payable at
Closing.
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3.
Warrants. In addition to the shares of stock referred to in Paragraph 1 above,
contingent upon the closing hereof, Company grants to Purchaser warrants
to
purchase for One Million Dollars ($1,000,000) so many shares of the Company’s
common stock as may be necessary at the time the warrants are exercised to
constitute an addition Fourteen Percent (14%) of the Company’s common stock. The
warrants shall be issued at Closing and shall contain normal
and customary provisions and provide that Purchaser may purchase all such
shares, but not less than all the shares, at any time for a period of
sixty (60)_months following the date of the Closing.
4.
Representations and Warranties. Company represents and warrants to Purchaser
the
following:
a.
Company’s financial statements provided Purchaser as of the date hereof and any
additional financial statements or financial information provided Purchaser
from
the date of this Agreement and the date of Closing, although not
audited, shall be true and correct to the best of Company’s knowledge
and belief;
b.
Company is the holder of the patents, tradenames, trademarks and service
marks,
if any, described on Exhibit “A” attached hereto and incorporated herein for all
purposes (“Intellectual Property”) and such Intellectual Property has not been
assigned, licensed or encumbered;
c.
Company is in good standing in the State of Texas and, subject to the approval
of the Company’s Board of Directors, the person executing this Purchase
Agreement, has the full authority and power to enter into this Purchase
Agreement; and,
d.
Company is the subject of only the lawsuits and judgments as described on
Exhibit “B” attached hereto and incorporated herein for all purposes and Company
is aware of no other litigation that has been filed or threatened other than
lawsuits threatened by trade creditors.
5.
Conditions Precedent To Closing. Either party’s obligation to close this
Purchase Agreement is conditioned upon the following:
a.
Company entering into a license agreement with Purchaser or such other party
as
Purchaser shall direct, which agreement shall provide for Company to grant
to
Purchaser or its assignee or transferee (“Licensee”) a license to manufacture
and sale domestically and internationally such products as are covered by
the
patents now or hereinafter owned by Company so long as such products are
sold by
Licensee via telephone,
internet or other manner devised by Licensee for direct (“home”) delivery to
consumers. Such License Agreement shall provide for Licensee to pay to Company
the total sum of One Hundred Fifty Thousand Dollars ($150,000) and pay to
Company a royalty in an amount equal to 12% of the direct cost to Licensee
of
manufacturing and packaging (but not shipping) any product sold pursuant
to the
terms of the License Agreement. The parties acknowledge and agree that the
condition described in this Paragraph 5a. has been satisfied as of the date
hereof.
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b.
Purchaser’s reaching agreements with its trade creditors, including those
holding judgments, with amounts outstanding in excess
of (90) days, in the total amount of approximately
$1,100,000 to accept a reduction of the amounts allegedly owed to an
aggregate balance of approximately $600,000, or such greater sum to which
Purchaser agrees;
c.
Purchaser reviewing and becoming satisfied as to (i) Seller’s compliance with
all required N.A.S.D. or other regulatory agencies; (ii) the status
and probable outcome of the pending lawsuit filed against the Company
by ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. and Ecology Technologies, a more specific
reference to which is set forth on Exhibit “B” attached hereto; and, (iii)
reviewing and becoming satisfied as to the nature, consequence and details
of
the Company’s prior relationship with ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (“▇▇▇▇▇▇▇▇”) and any and
all entities or individuals affiliated with ▇▇▇▇▇▇▇▇.
d.
Company reversing the number of Company’s issued and outstanding shares, options
and warrants to the extent mutually agreed by the parties but, at a minimum,
to
a degree and in amounts to enable the Company to perform its obligations
at
Closing to issue the shares and warrants as described in Paragraphs 1 and
3
above;
e.
On or before the Closing, with the exception of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Company
seeking and obtaining tenders of the written resignations of the current
members
of the Company’s Board of Directors and the number of the directors shall be
increased to five (5) with Purchaser being allowed to
designate a minimum of three (3) directors to be elected by a
shareholder or director vote, whichever shall be appropriate;
Company
agrees to take any and all steps reasonably necessary to ensure that Company
satisfies all conditions precedent to Purchaser’s obligation to close the
Agreement. Additionally, at Purchaser’s sole discretion, Purchaser may elect to
waive any or all of such conditions of closing and close the transaction,
the
parties agreeing that such conditions are for the benefit of
Purchaser.
6.
Access to Company Books and Records. Prior to closing, ▇▇▇▇▇▇ agrees to provide
Purchaser and/or its representatives full access to any personnel and all
properties, documents, contracts, books, records and operations of Company
relating to its business Seller agrees to furnish Purchaser with copies of
documents and such other information as the Purchaser may request.
7.
No Other Offers. Company will not solicit, encourage or entertain proposals
from
or enter into negotiations with or furnish any nonpublic information to any
other person or entity regarding the possible sale of the Company's business,
assets or stock. Seller shall promptly notify Purchaser of any proposals
by
third parties with respect to the acquisition of all or any portion of Company's
business, assets or stock and furnish the Purchaser the material terms
thereof.
8.
Conduct of Business. Company shall conduct its business in the ordinary course,
consistent with the present conduct of its business and previous practice,
with
no dividend or stock distributions.
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9.
Expenses. Each of the parties shall pay all of its expenses incident to this
Purchase Agreement and consummation of the transactions contemplated
hereby.
10.
Confidentiality. Other than to the extent required by law or regulation,
and
then only after prior written notice to the other party, the parties agree
that
they will not disclose the existence of this Purchase Agreement or use, or
permit the use of, any of the information provided pursuant to the terms
hereof
other than for purposes provided by the terms of this Purchase
Agreement.
11.
Disclosure. Without the prior written consent of the other party hereto,
neither
party hereto will, and each party hereto will cause its directors, officers,
employees, agents, other representatives and affiliates not to, disclose
to any
person the existence of this Purchase Agreement or the transactions contemplated
hereby, unless in the opinion of such party disclosure is required to be
made
under the Securities Act of 1933 or the Securities Exchange Act of 1934,
and
such disclosure is made after prior consultation with the other party. Neither
party will issue any public announcement concerning the transaction without
the
approval of the other party, except as may be required by law.
12.
Closing. Closing of this Agreement shall occur on or before June 30, 2007,
with
fifteen (15) days prior written notice from Purchaser.
At
the
closing, Company shall issue to Purchaser the following:
a..
Company’s common stock in an amount to ensure Purchaser owns 51%, undiluted, of
the Company’s issued and oustandin common stock; and,
b.
Warrants as herein described authorizing Purchaser to purchase an additional
14%, undiluted, of the Company’s common stock.
At
the closing, Purchaser shall deliver
to Company in immediately available funds the sum of One Million Five Hundred
Thousand Dollars ($1,500,000)
13.
Termination. Termination of this Purchase Agreement shall be without liability
and no party hereto shall be entitled to any form of relief whatsoever,
including, without limitation, injunctive relief or damages. Upon the earlier
of
(a) the mutual written agreement of the parties hereto or (b) the failure
by the
parties hereto to Close on or prior to June 30, 2007, this Purchase Agreement
shall terminate and the parties shall be released from all liabilities and
obligations with respect to the subject matter hereof, except as provided
in the
second paragraph of page 1 of this letter.
14.
Counterparts.
This
letter may be executed in one or more counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the
same
instrument.
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If
the
foregoing correctly sets forth our mutual understanding, please so indicate
by
signing two copies of this letter in the spaces provided below and returning
one
copy to us no later than 5:00 p.m. on February 26. 2007.
[
Intentionally Left Blank]
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Sincerely,
Tricom
Holdings, L.L.C.
By:
/s/
Emel
Yesil
Name: ▇▇▇▇
▇▇▇▇▇
Its: Managing
Director
Texas
Atlantic Capital Partners, L.L.C.
By:
/s/
▇.
▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇.
▇▇▇▇▇▇ ▇▇▇▇▇
Its: Manager
AGREED:
Pet
Ecology Brands, Inc.
By: /s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
President
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Individually
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