STOCK PURCHASE AGREEMENT BY AND AMONG WES CONSULTING, INC. WEB MERCHANTS INC. FYODOR PETRENKO AND DMITRII SPETETCHII January 27, 2011
BY
AND AMONG
▇▇▇
CONSULTING, INC.
WEB
MERCHANTS INC.
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
AND
DMITRII
SPETETCHII
January
27, 2011
STOCK PURCHASE AGREEMENT (this
“Agreement”), dated as of January 27, 2011, by and among ▇▇▇ Consulting, Inc., a
Florida corporation (the “Parent”); Web Merchants Inc., a Delaware corporation
(the “Company”); ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a resident of the State of New Jersey
(“Petrenko”); and Dmitrii Spetetchii, a resident of the Republic of Moldova
(“Spetetchii”). The Parent, Company, Petrenko and Spetetchii are each a
“Party” and referred to collectively herein as the “Parties.”
WHEREAS,
this Agreement contemplates an acquisition of all of the issued and outstanding
equity securities of the Company by the Parent, in exchange for common stock of
the Company, with the result that Company will become a wholly-owned subsidiary
of Parent; and
NOW,
THEREFORE, in consideration of the representations, warranties and covenants
herein contained, and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto, intending
legally to be bound, agree as follows:
ARTICLE
I
PURCHASE
AND SALE; CLOSING
1.1
Purchase and Sale of
Shares. Parent hereby agrees to purchase Four Hundred (400) shares
of the no par value common stock of Company (hereinafter the “Company Stock”)
from Petrenko, in exchange for the issuance of Twenty-Five Million Three Hundred
and Ninety-Four Thousand Four Hundred (25,394,400) shares of the $.01 par value
common stock of Parent (hereinafter the “Parent Common Stock”) to Petrenko.
Parent hereby further agrees to purchase Two Hundred and Sixteen (216) shares of
the Company Stock from Spetetchii, in exchange for the issuance of Three Million
(3,000,000) shares of Parent Common Stock to Spetetchii. The foregoing purchases
shall occur at the Closing as defined hereinbelow.
1.2
The Closing.
The closing of the transactions contemplated by this Agreement (the “Closing”)
shall take place at the offices of FSB FisherBroyles LLP in Atlanta, GA
commencing at 2:00 p.m. local time on January 27, 2011, or such other date as is
mutually agreeable to the Parties (the “Closing Date”).
1.3 Actions at the
Closing. At the Closing:
(a) Petrenko
and Spetetchii (the “Shareholders”) shall deliver to the Parent certificates
representing the shares of Company Stock specified in Section 1.1
hereinabove;
(b) the
Parent shall deliver to the Shareholders certificates representing the shares of
Parent Common Stock as specified in Section 1.1 hereinabove;
(c) The
outstanding loan previously made by Petrenko to the Company in the amount of
$283,016.50 (the “Petrenko Loan”) shall be converted into an additional equity
contribution to the Company, by reason of Petrenko’s execution of this Agreement
and without need for further actions, consents or other
documentation;
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(d) Spetetchii
shall be repaid, in immediately available funds, his outstanding loan to the
Company in the amount of $79,000 (the “Spetetchii Loan”);
(e) the
Parent will make the payment of Twenty-One Thousand Dollars ($21,000.00) to
Spetetchii, in immediately available funds, as required by the Non-Compete
Agreement; and
(f) the
following documents shall be duly executed and delivered by the respective
parties thereto (collectively, the “Transaction Documentation”):
(i) Escrow
Agreement, in substantially the form attached as Exhibit A to this
Agreement (the “Escrow Agreement”), by and among Petrenko, Spetechii, and
Transfer Online, Inc., an Oregon corporation, whereby One Million (1,000,000)
shares of the Parent Common Stock to be issued to Spetechii hereunder shall be
placed in escrow for four (4) years, during which time Spetechii will assign
voting rights on such shares to Petrenko, and pursuant to which Spetechii shall
grant a purchase option for such shares to Petrenko;
(ii) Contribution
Agreement, in substantially the form attached as Exhibit B to this
Agreement (the “Contribution Agreement”), by and between Petrenko and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, the Chief Executive Officer of the Parent (“▇▇▇▇▇▇▇▇”), and relating
to their several personal guarantees of various obligations of the Parent and
the Company;
(iii) Voting
Agreement, in substantially the form attached as Exhibit C to this
Agreement, by and between Petrenko and ▇▇▇▇▇▇▇▇, with respect to (A) the shares
of Parent Common Stock owned by ▇▇▇▇▇▇▇▇ as of Closing and shares of Parent
Preferred Stock (as defined hereinbelow) that are thereafter acquired by
▇▇▇▇▇▇▇▇, and (B) the shares of Parent Common Stock owned by
Petrenko;
(iv) Employment
Agreement, in substantially the form attached as Exhibit D to this
Agreement, by and between Petrenko and the Parent;
(v) Employment
Agreement, in substantially the form attached as Exhibit E to this
Agreement, by and between ▇▇▇▇▇▇▇▇ and the Parent;
(vi) Registration
Rights Agreement, in substantially the form attached as Exhibit F to this
Agreement, by and between the Parent and Spetetchii, providing for the granting
of certain registration rights to Spetetchii with respect to Two Million
(2,000,000) shares of the Parent Common Stock to be issued to Spetetchii
hereunder;
(vii) Non-Compete
Agreement, in substantially the form attached as Exhibit G to this
Agreement, by and between Spetetchii and the
Parent;
(viii) Warrant,
in substantially the form attached as Exhibit H to this
Agreement, issued by Spetetchii in favor of Petrenko, to purchase, for the
exercise price of $.20 per share, on the terms and conditions set forth therein,
from Spetetchii the shares placed in escrow pursuant to the term and conditions
of the Escrow Agreement; and
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(ix) a
duly executed resolution of the Company’s board of directors approving the
transactions contemplated by the Transaction Documentation and authorizing a
person or persons to execute the Transaction Documentation and any documents
required in connection therewith.
1.4
Exemption From
Registration. Parent and the Company intend that the shares of
Parent Common Stock to be issued pursuant to Section 1.1 hereof in
connection with the Closing will be issued in a transaction exempt from
registration under the Securities Act, by reason of Section 4(2) of the
Securities Act, Rule 506 of Regulation D promulgated by the Securities and
Exchange Commission (“SEC”), and/or Regulation S promulgated by the
SEC.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF
THE
COMPANY AND THE SHAREHOLDERS
The
Company and each Shareholder represent and warrant to the Parent that the
statements contained in this Article II are true and correct, except as set
forth in the disclosure schedule provided by the Company to the Parent on the
date hereof and accepted in writing by the Parent (the “Disclosure
Schedule”).
2.1 Organization, Qualification
and Corporate Power. The Company is a corporation duly organized,
validly existing and in corporate and tax good standing under the laws of the
State of Delaware. The Company is duly qualified to conduct business and
is in corporate and tax good standing under the laws of each jurisdiction in
which the nature of its businesses or the ownership or leasing of its properties
requires such qualification, except where the failure to be so qualified or in
good standing, individually or in the aggregate, has not had and would not
reasonably be expected to have a material adverse effect. The Company has
all requisite corporate power and authority to carry on the businesses in which
it is engaged and to own and use the properties owned and used by it. The
Company has furnished or made available to the Parent complete and accurate
copies of its certificate of incorporation and bylaws. The Company is not
in default under or in violation of any provision of its certificate of
incorporation or bylaws.
2.2 Capitalization.
The authorized capital stock of the Company consists of One Thousand (1,000)
shares of common stock, no par value per share (the “Company Shares”). As
of the date of this Agreement there are Six Hundred Sixteen (616) Company Shares
are issued and outstanding. Section 2.2 of the Disclosure Schedule sets forth a
complete and accurate list of all holders of Company Shares, indicating the
number of Company Shares held by each holder. All of the issued and
outstanding Company Shares are duly authorized, validly issued, fully paid,
nonassessable and free of all preemptive rights. There are no outstanding
or authorized stock appreciation, phantom stock or similar rights with respect
to the Company.
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2.3 Authorization of
Transaction. The Shareholders have all requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery by the Company of this Agreement and
the other Transaction Documentation, and the consummation by the Company of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of the Company.
This Agreement has been duly and validly executed and delivered by the Company
and the Shareholders and constitutes a valid and binding obligation of the
Company and the Shareholders, enforceable against the Company and the
Shareholders in accordance with its terms.
2.4 Noncontravention.
Neither the execution and delivery by the Company or the Shareholders of this
Agreement or the Transaction Documentation, nor the consummation by the Company
of the transactions contemplated hereby, will (a) conflict with or violate
any provision of the certificate of incorporation or bylaws of the Company,
(b) require on the part of the Company any filing with, or any permit,
authorization, consent or approval of, any court, arbitrational tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency (a “Governmental Entity”), (c) conflict with, result in
a breach of, constitute a default under, result in the acceleration of
obligations under, create in any Party the right to terminate, modify or cancel,
or require any notice, consent or waiver under, any contract or instrument to
which the Company is a party or by which the Company is bound or to which any of
its assets is subject, (d) result in the imposition of any Security
Interest (as defined below) upon any assets of the Company or (e) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
the Company or any of its properties or assets. For purposes of this
Agreement, “Security Interest” means any mortgage, pledge, security interest,
encumbrance, charge or other lien (whether arising by contract or by operation
of law), other than (i) mechanic’s, materialmen’s, and similar liens, and
(ii) liens arising under worker’s compensation, unemployment insurance,
social security, retirement, and similar legislation, in each case arising in
the ordinary course of business of the Company and not material to the
Company.
2.5 Subsidiaries.
The Company does not have any Subsidiaries. For purposes of this Agreement, a
“Subsidiary” shall mean any corporation, partnership, joint venture or other
entity in which a Party has, directly or indirectly, an equity interest
representing 5% or more of the equity securities thereof or other equity
interests therein (collectively, the “Subsidiaries”). The Company does not
control directly or indirectly or have any direct or indirect equity
participation or similar interest in any corporation, partnership, limited
liability company, joint venture, trust or other business
association.
2.6 Financial
Statements. The Company will provide or make available to the
Parent prior to the Closing: (a) the audited consolidated balance sheet of the
Company (the “Company Balance Sheet”) at December 31, 2008 and December 31, 2009
(December 31, 2009 hereinafter defined as the “Company Balance Sheet Date”), and
the related consolidated statements of operations and cash flows for the period
from January 1, 2008 through December 31, 2009 (the “Company Year-End Financial
Statements”); and (b) the reviewed balance sheet of the Company (the “Company
Interim Balance Sheet”) at September 30, 2010 (the “Company Interim Balance
Sheet Date”) and the related statement of operations and cash flows for the nine
months ended September 30, 2010 (the “Company Interim Financial Statements” and
together with the Year-End Financial Statements, the “Company Financial
Statements”). The Company Financial Statements have been prepared in
accordance with United States generally accepted accounting principles (“GAAP”)
applied on a consistent basis throughout the periods covered thereby, fairly
present in all material respects the financial condition, results of operations
and cash flows of the Company as of the respective dates thereof and for the
periods referred to therein and are consistent in all material respects with the
books and records of the Company.
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2.7 Absence of Certain
Changes. Since the Company Interim Balance Sheet Date, to the
knowledge of the Company and the Shareholders, there has occurred no event or
development which, individually or in the aggregate, has had, or could
reasonably be expected to have in the future, a material adverse
effect.
2.8 Undisclosed
Liabilities. The Company does not have any liability (whether known
or unknown, whether absolute or contingent, whether liquidated or unliquidated
and whether due or to become due), except for (a) liabilities shown on the
Company Interim Balance Sheet, (b) liabilities which have arisen since the
Company Interim Balance Sheet Date in the ordinary course of business and
(c) contractual and other liabilities incurred in the ordinary course of
business which are not required by GAAP to be reflected on a balance
sheet.
2.9 Tax Matters.
(a) For
purposes of this Agreement, the following terms shall have the following
meanings:
(i) “Taxes”
means all taxes, charges, fees, levies or other similar assessments or
liabilities, including without limitation income, gross receipts, ad valorem,
premium, value-added, excise, real property, personal property, sales, use,
transfer, withholding, employment, unemployment insurance, social security,
business license, business organization, environmental, workers compensation,
payroll, profits, license, lease, service, service use, severance, stamp,
occupation, windfall profits, customs, duties, franchise and other taxes imposed
by the United States of America or any state, local or foreign government, or
any agency thereof, or other political subdivision of the United States or any
such government, and any interest, fines, penalties, assessments or additions to
tax resulting from, attributable to or incurred in connection with any tax or
any contest or dispute thereof.
(ii) “Tax
Returns” means all reports, returns, declarations, statements or other
information required to be supplied to a taxing authority in connection with
Taxes.
(b) The
Company has filed on a timely basis all Tax Returns that it was required to
file, and all such Tax Returns were complete and accurate in all material
respects. The Company has not ever been a member of a group of
corporations with which it has filed (or been required to file) consolidated,
combined or unitary Tax Returns. The Company has paid on a timely basis
all Taxes that were due and payable. The Company has not had any actual or
potential liability for any Tax obligation of any taxpayer (including without
limitation any affiliated group of corporations or other entities that included
the Company during a prior period). All Taxes that the Company is or was
required by law to withhold or collect have been duly withheld or collected and,
to the extent required, have been paid to the proper Governmental
Entity.
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2.10 Assets. The
Company owns or leases all tangible assets reasonably necessary for the conduct
of its businesses as presently conducted and as presently proposed to be
conducted. Except as set forth in Section 2.10 of the Disclosure Schedule,
each such tangible asset is free from material defects, has been maintained in
accordance with normal industry practice, is in good operating condition and
repair (subject to normal wear and tear) and is suitable for the purposes for
which it presently is used. No asset of the Company (tangible or
intangible) is subject to any Security Interest.
2.11 Owned Real
Property. The Company does not own any real property.
2.12 Real Property
Leases. Section 2.12 of the Disclosure Schedule lists all real
property leased or subleased to or by the Company and lists the term of such
lease, and any extension and expansion options. With respect to each lease
and sublease listed in Section 2.12 of the Disclosure
Schedule:
(a) the
lease or sublease is legal, valid, binding, enforceable and in full force and
effect;
(b) the
lease or sublease will continue to be legal, valid, binding, enforceable and in
full force and effect immediately following the Closing in accordance with the
terms thereof as in effect immediately prior to the Closing;
(c) neither
the Company nor, to the knowledge of the Company, any other party, is in breach
or violation of, or default under, any such lease or sublease, and no event has
occurred, is pending or, to the knowledge of the Company, is threatened, which,
after the giving of notice, with lapse of time, or otherwise, would constitute a
breach or default by the Company or, to the knowledge of the Company, any other
party under such lease or sublease; and
(d) to
the knowledge of the Company, there is no Security Interest, easement, covenant
or other restriction applicable to the real property subject to such lease,
except for recorded easements, covenants and other restrictions which do not
materially impair the current uses or the occupancy by the Company of the
property subject thereto.
2.13 Litigation. As of the date of this
Agreement, there is no action, suit, proceeding, claim, arbitration or
investigation before any Governmental Entity or before any arbitrator (a “Legal
Proceeding”) which is pending or has been threatened in writing against the
Company which (a) seeks either damages in excess of $25,000 individually, or
(b) if determined adversely to the Company could have, individually or in
the aggregate, a material adverse effect.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE PARENT
The
Parent represents and warrants to the Company and to the Shareholders that the
statements contained in this Article III are true and correct, except as
set forth in the disclosure schedule provided by the Parent to the Company on
the date hereof and accepted in writing by the Company (the “Parent Disclosure
Schedule”).
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3.1 Organization, Qualification
and Corporate Power. The Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Florida. Each of the Parent and its Subsidiaries is duly qualified to
conduct business and is in corporate and tax good standing under the laws of
each jurisdiction in which the nature of its businesses or the ownership or
leasing of its properties requires such qualification, except where the failure
to be so qualified or in good standing would not have a material adverse
effect. Each of the Parent and its Subsidiaries has all requisite
corporate power and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it. The Parent has
furnished or made available to the Company complete and accurate copies of its
articles of incorporation and bylaws. Neither the Parent nor any of its
Subsidiaries are in default under or in violation of any provision of its
articles of incorporation or bylaws.
3.2 Capitalization.
Schedule 3.2 to this Agreement sets forth the authorized capital stock of the
Parent and all equity owners of the Parent that individually own more
than five percent (5%) (and their respective percentage ownership of the Parent
Common Stock), both before the Closing of the transactions contemplated
hereunder, on the one hand, and immediately after the Closing of the
transactions contemplated hereunder, on the other. In addition, Schedule
3.2 includes an anticipated amendment of the Parent’s articles of incorporation
to authorize the issuance of 10,000,000 shares of Series A Preferred (the
“Parent Preferred Stock”). All of the issued and outstanding shares of
Parent Common Stock are duly authorized, validly issued, fully paid,
nonassessable and free of all preemptive rights. The Shares to be issued
at the Closing pursuant to Section 1.1 hereof, when issued and delivered in
accordance with the terms hereof, shall be duly and validly issued, fully paid
and nonassessable and free of all preemptive rights and will be issued in
compliance with applicable federal and state securities laws.
3.3 Authorization of
Transaction. The Parent has all requisite power and authority to
execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery by the Parent of the Transaction
Documentation and the consummation by the Parent of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action on the part of the Parent. This Agreement has
been duly and validly executed and delivered by the Parent and constitutes a
valid and binding obligation of the Parent, enforceable against it in accordance
with its terms.
3.4 Noncontravention.
Neither the execution and delivery by the Parent of this Agreement or the
Transaction Documentation, nor the consummation by the Parent of the
transactions contemplated hereby or thereby, will (a) conflict with or
violate any provision of the articles or certificate of incorporation or bylaws
of the Parent, (b) require on the part of the Parent any filing with, or
permit, authorization, consent or approval of, any Governmental Entity,
(c) conflict with, result in breach of, constitute a default under, result
in the acceleration of obligations under, create in any Party any right to
terminate, modify or cancel, or require any notice, consent or waiver under, any
contract or instrument to which the Parent is a party or by which it is bound or
to which any of its assets are subject, (d) result in the imposition of any
Security Interest upon any assets of the Parent or (e) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the Parent
or any of their properties or assets.
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3.5 Exchange Act
Reports. The Parent has furnished or made available to the Company
complete and accurate copies, as amended or supplemented, of all reports filed
by the Parent under Section 13 or subsections (a) or (c) of Section 14 of the
Exchange Act of 1934, as amended (the “Exchange Act”) with the SEC since October
19, 2009 (such reports are collectively referred to herein as the “Parent
Reports”). The Parent Reports constitute all of the documents required to
be filed by the Parent with the SEC, including under Section 13 or subsections
(a) or (c) of Section 14 of the Exchange Act through the date of this
Agreement. The Parent Reports complied in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder when
filed. Except as set forth in Section 3.5 of the Parent Disclosure
Schedule, as of the date hereof, there are no outstanding or unresolved comments
in comment letters received from the staff of the SEC with respect to any of the
Parent Reports. As of their respective dates, the Parent Reports did 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 therein, in
light of the circumstances under which they were made, not misleading. The
Parent is and has been in compliance in all material respects with the
applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as amended, and the
rules and regulations promulgated thereunder. Neither the Parent nor
any of its subsidiaries is a party to any “off-balance sheet arrangements” (as
defined in Item 303(a) of Regulation S-K of the SEC)), where the result,
purpose or effect of such contract is to avoid disclosure of any material
transaction involving, or material liabilities of, the Parent’s or any of its
subsidiaries' audited financial statements.
3.6 Compliance with
Laws. Each of the Parent and its Subsidiaries has conducted and
operated their respective businesses in compliance with each applicable law
(including rules and regulations thereunder) of any federal, state, local or
foreign government, or any Governmental Entity, except for any violations or
defaults that, individually or in the aggregate, have not had and would not
reasonably be expected to have a material adverse effect.
3.7 Litigation.
Except as disclosed in the Parent Reports or in Section 3.7 of the Parent
Disclosure Schedule, as of the date of this Agreement, there is no Legal
Proceeding which is pending or, to the Parent’s knowledge, threatened against
the Parent or any Subsidiary of the Parent which, if determined adversely to the
Parent or such Subsidiary, (a) seeks either damages in excess of $25,000
individually, or (b) could have, individually or in the aggregate, a
material adverse effect or which in any manner challenges or seeks to prevent,
enjoin, alter or delay the transactions contemplated by this Agreement.
3.8 Financial Statements.
The audited financial statements of the Parent included in the 2010 Form 10-K as
well as the Parent Reports (collectively, the “Parent Financial Statements”),
(i) complied as to form in all material respects with applicable accounting
requirements and, as appropriate, the published rules and regulations of the SEC
with respect thereto when filed, (ii) were prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby (except as
may be indicated therein or in the notes thereto, and in the case of quarterly
financial statements, as permitted by Form 10-Q under the Exchange Act), (iii)
fairly present the consolidated financial condition, results of operations and
cash flows of the Parent as of the respective dates thereof and for the periods
referred to therein, and, to the knowledge of the Parent, there has occurred no
event or development subsequent to the Form 10-Q filed for the quarter ended
September 30, 2010 which, individually or in the aggregate, has had, or could
reasonably be expected to have in the future, a material adverse effect on the
financial condition of the Parent, except as disclosed in any Form 8-K filed by
the Parent, and (iv) are consistent with the books and records of the
Parent.
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3.9 Assets. The
Parent owns or leases all tangible assets reasonably necessary for the conduct
of its businesses as presently conducted and as presently proposed to be
conducted. Each such tangible asset is free from material defects, has
been maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear) and is suitable
for the purposes for which it presently is used.
3.10 Tax Matters.
The Parent has filed on a timely basis all Tax Returns that it was required to
file, and all such Tax Returns were complete and accurate in all material
respects. The Parent has paid on a timely basis all Taxes that were due
and payable. The Parent has not had any actual or potential liability for
any Tax obligation of any taxpayer (including without limitation any affiliated
group of corporations or other entities that included the Parent during a prior
period). All Taxes that the Parent is or was required by law to withhold
or collect have been duly withheld or collected and, to the extent required,
have been paid to the proper Governmental Entity.
ARTICLE
IV
COVENANTS
4.1 Closing
Efforts. Each of the Parties shall use reasonable efforts to take
all actions and to do all things necessary, proper or advisable to consummate
the transactions contemplated by this Agreement.
4.2 Current Report.
As soon as reasonably practicable after the execution of this Agreement, the
Parties shall prepare a current report on Form 8-K relating to this Agreement
and the transactions contemplated hereby (the “Current Report”). Each
Party shall use its reasonable efforts to cause the Current Report to be filed
with the SEC within four (4) business days of the execution of this Agreement
and to otherwise comply with all requirements of applicable federal and state
securities laws.
4.3 Operation of the Company’s
Business. During the period from the date of this Agreement to the
Closing Date, the Company shall conduct its operations in the ordinary course
business and in material compliance with all applicable laws and regulations
and, to the extent consistent therewith, use its reasonable efforts to preserve
intact its current business organization, keep its physical assets in good
working condition, keep available the services of its current officers and
employees and preserve its relationships with customers, suppliers and others
having business dealings with it to the end that its goodwill and ongoing
business shall not be impaired in any material adverse respect.
4.4 Registration
Statement. As soon as practicable following the Closing, but in no
event later than within ninety (90) days following the Closing, the Parent shall
use its best efforts to file with the SEC a registration statement (the
“Registration Statement”) registering the resale of the Parent Common Stock,
such Registration Statement to include Two Million (2,000,000) shares of the
Parent Common Stock to be received by Spetetchii at Closing, as provided in the
Registration Rights Agreement.
ARTICLE
V
CONDITIONS
TO CLOSING
5.1 Conditions to Each Party’s
Obligations. The respective obligations of each Party to proceed to
Closing are subject to the satisfaction of the following
conditions:
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(a) execution
and consummation of all required definitive instruments and agreements in forms
acceptable to the parties as set forth in Section 1.3 hereof; and
(b) that
there be no injunction or order in effect by any Governmental Entity prohibiting
the Closing.
5.2 Conditions to Obligations of
the Parent. The obligation of the Parent to proceed to Closing is
subject to the satisfaction of the following additional conditions:
(a) the
representations and warranties of the Company and the Shareholders set forth in
this Agreement shall be true and correct as of the date of this Agreement and
shall be true and correct as of the Closing as though made as of the Closing,
except for any untrue or incorrect representation and warranty that,
individually or in the aggregate, does not have a material adverse effect or a
material adverse effect on the Company, the Parent, or the ability of the
Parties to consummate the transactions contemplated by this Agreement;
and
(b) there
have been no material adverse changes to the Company’s business since the date
of this Agreement.
5.3 Conditions to Obligations of
the Shareholders. The obligation of the Shareholders to proceed to
Closing is subject to the satisfaction of the following additional
conditions:
(a) the
representations and warranties of the Parent set forth in this Agreement shall
be true and correct as of the date of this Agreement and shall be true and
correct as of the date of the Closing as though made as of the Closing, except
for any untrue or incorrect representation and warranty that, individually or in
the aggregate, does not have a material adverse effect or a material adverse
effect on the Parent or the ability of the Parties to consummate the
transactions contemplated by this Agreement; and
(b) there
have been no material adverse changes to the Parent’s business since the date of
this Agreement.
ARTICLE
VI
INDEMNIFICATION
6.1 Indemnification by the
Parent. Subject to Section 8.2 of this Agreement, the Parent shall
indemnify and hold harmless the Shareholders and their affiliates and their
respective successors (and their respective shareholders, officers, directors,
employees and agents) (collectively the “Company Indemnified
Parties”) from and against any and all damages, fines, fees, penalties,
deficiencies, liabilities, claims, losses, demands, judgments, settlements,
actions, obligations and costs and expenses (including interest, court costs and
fees and costs of attorneys, accountants and other experts or other expenses of
litigation or other proceedings or of any claim, default or assessment)
(collectively, “Losses”) that may be asserted against, or paid, suffered or
incurred by any Company Indemnified Party that, directly or indirectly, arise
out of, result from, are based upon or relate to (a) the inaccuracy, as of the
date of this Agreement or the Closing, of any representation or warranty made by
the Parent in this Agreement; and (b) any failure by the Parent to perform or
fulfill any of its covenants or agreements required to be performed by Parent
under this Agreement.
-11-
6.2 Indemnification by Petrenko
and Spetetchii. Subject to the provision of Section 8.2
below:
(a) Petrenko
and Spetetchii shall indemnify and hold harmless the Parent and its Subsidiaries
and their stockholders and their affiliates and their respective successors (and
their respective shareholders, officers, directors, employees and agents)
(collectively the “Parent Indemnified
Parties”) from and against any and all Losses that may be asserted
against, or paid, suffered or incurred by any Parent Indemnified Party that,
directly or indirectly, arise out of, result from, are based upon or relate to
(i) the inaccuracy, as of the date of this Agreement or the Closing Date, of any
representation or warranty made by the Company or the Shareholders in this
Agreement; and (ii) any failure by the Company or the Shareholders to perform or
fulfill any of its covenants or agreements required to be performed by Company
or the Shareholders under this Agreement; and
(b) Petrenko
and Spetetchii respective liabilities under this Agreement, whether arising out
of this Agreement or any of the transactions contemplated by the other
Transaction Documentation (and regardless whether in contract, tort or other
legal theory) shall not exceed the value of the shares received by each
Shareholder in the transactions contemplated hereby, and the Parent expressly
agrees that its sole recourse in any claim for indemnification shall be in form
of shares of the Parent Common Stock received by Petrenko and Spetetchii
hereunder. For all purposes of this Section 6.2, the value of a share of
the Parent Common Stock shall be the greater of either (i) the price of the
Parent Common Stock as quoted on the NASDAQ Over-the-Counter Bulletin Board
(“OTCBB”) under the symbol “WSCU” on the date a demand is made, or (ii) $0.30
per share. The Parent expressly agrees that it shall not have any claim to
any additional monetary damages from either Petrenko or Spetetchii, including,
without limitation, any special, consequential, punitive, or other indirect
damages.
(c) In
the event that the transactions contemplated hereby shall be successfully
challenged after the Closing Date by any party due to failure of the Parent to
obtain all necessary and required authorizations, as required by Section 3.3 of
this Agreement, the Parent shall make such payment and reimbursements to the
Company and each Shareholder in order to place each such Party in the same
financial position that such Party occupied prior to the consummation of the
transactions contemplated hereby, including, without limitation, such Party’s
actual court costs and attorneys’ fees incurred in connection with or in pursuit
of enforcing the rights and remedies provided hereunder.
6.3 Conditions of
Indemnity. As conditions for indemnification by this Article VI:
(a) an indemnified party shall promptly notify the indemnifying party in writing
of such claim; (b) the indemnifying party shall assume the sole control of the
defense or settlement of any claim subject to indemnity; and (c) the indemnified
party shall provide reasonable assistance to the indemnifying party at the sole
expense of the indemnified party.
-12-
6.4 Survival of Representations
and Warranties. All representations and warranties contained in
this Agreement shall survive the Closing, and shall expire on the date two (2)
years following the Closing Date.
6.5 General Release by
Petrenko. Petrenko, on behalf of himself and his successors, heirs,
assigns, attorneys, agents and representatives, and each of them, hereby
unconditionally and forever, releases, acquits and discharges the Company, as
well as any and all of its respective predecessors, successors, owners, parent
and subsidiary organizations, any and all of its affiliate entities together
with its former and current successors, agents, assigns, attorneys, employees,
officers, and directors and each of them, of and from any and all debts, claims,
liabilities, demands, and causes of action of every kind, nature and
description, ▇▇▇▇▇▇ or inchoate, known or unknown, including, without
limitation, any and all claims that could have been asserted as a result of any
claims arising from or relating to the transactions contemplated by the
Transaction Documentation or that arise from or in any way relate to the
relationship between Petrenko and the Company.
6.6 General Release by
Spetetchii. Spetetchii, on behalf of himself and his successors,
heirs, assigns, attorneys, agents and representatives, and each of them, hereby
unconditionally and forever, releases, acquits and discharges the Company, as
well as any and all of its respective predecessors, successors, owners, parent
and subsidiary organizations, any and all of its affiliate entities together
with its former and current successors, agents, assigns, attorneys, employees,
officers, and directors and each of them, of and from any and all debts, claims,
liabilities, demands, and causes of action of every kind, nature and
description, ▇▇▇▇▇▇ or inchoate, known or unknown, including, without
limitation, any and all claims that could have been asserted as a result of any
claims arising from or relating to the transactions contemplated by the
Transaction Documentation or that arise from or in any way relate to the
relationship between Spetetchii and the Company.
ARTICLE
VII
TERMINATION
7.1 Termination by Mutual
Agreement. This Agreement may be terminated at any time by mutual
written consent of the Parties.
7.2 Termination for Failure to
Close. This Agreement shall be automatically terminated if the
Closing Date shall not have occurred by March 31, 2011, unless such date is
extended by mutual written consent of the Parties.
7.3 Termination for Failure to
Perform Covenants or Conditions. This Agreement may be terminated
prior to the Closing Date:
(a) by
the Parent if: (i) any of the representations and warranties made in this
Agreement by the Company or the Shareholders shall not be materially true and
correct, when made or at any time prior to consummation of the contemplated
transactions as if made at and as of such time; (ii) any of the conditions
set forth in Section 5.2 hereof have not been fulfilled in all material respects
by the Closing Date; (iii) the Company shall have failed to observe or
perform any of its material obligations under this Agreement; or (iv) as
otherwise set forth herein; or
-13-
(b) by
the Company or the Shareholders if: (i) any of the representations and
warranties of the Parent shall not be materially true and correct when made or
at any time prior to consummation of the contemplated transactions as if made at
and as of such time; (ii) any of the conditions set forth in Section 5.3
hereof have not been fulfilled in all material respects by the Closing Date;
(iii) the Parent shall have failed to observe or perform any of its
material respective obligations under this Agreement; or (iv) as otherwise
set forth herein.
7.4 Remedies. In
the event that any Party shall fail or refuse to consummate the contemplated
transactions or if any default under or breach of any representation, warranty,
covenant or condition of this Agreement on the part of any Party shall have
occurred that results in the failure to consummate the Contemplated
Transactions, then in addition to the other remedies provided herein, the
non-defaulting Party shall be entitled to obtain from the defaulting party court
costs and reasonable attorneys’ fees incurred in connection with or in pursuit
of enforcing the rights and remedies provided hereunder.
ARTICLE
VIII
MISCELLANEOUS
8.1 Entire
Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements or representations by or among the Parties,
written or oral, with respect to the subject matter hereof.
8.2 No Joint and Several
Liability. The liability and obligations of the Shareholders hereunder
for any breach of this Agreement or any representations, warranties and
covenants contained herein and for indemnification pursuant to this Agreement
are several and not joint. In any action by the Parent against the
Shareholders, the Parent shall be expressly limited to pursue and recover not
more than sixty-five percent (65%) of any Losses from Petrenko and thirty-five
percent (35%) of any Losses from Spetetchii.
8.3 Succession and
Assignment. This Agreement shall be binding upon and inure to the
benefit of the Parties named herein and their respective successors and
permitted assigns. No Party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other Parties.
8.4 Further Actions. The
Parties hereto shall execute such additional instruments and take such further
action as may reasonably be necessary to carry out the intent of this
Agreement.
8.5 Expenses. Each
party shall be responsible for its own costs and expenses (including legal and
accounting fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.
8.6 Counterparts and Facsimile
Signature. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. This Agreement may
be executed by facsimile signature.
-14-
8.7 Headings. The
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement.
8.8 Notices. All
notices, requests, demands, claims, and other communications hereunder shall be
in writing. Any notice, request, demand, claim or other communication
hereunder shall be deemed duly delivered four business days after it is sent by
registered or certified mail, return receipt requested, postage prepaid, or one
(1) business day after it is sent for next business day delivery via a reputable
nationwide overnight courier service, in each case to the intended recipient as
set forth below:
|
If
to the Company:
|
Copy
to:
|
|
|
Web
Merchants Inc.
|
▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
|
|
|
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇
|
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
|
|
|
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
|
|
Attn: ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, President
|
Attn:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
|
|
|
If
to Petrenko:
|
Copy
to:
|
|
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
|
▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
|
|
|
▇▇▇
▇▇▇▇▇ ▇▇, ▇▇▇ ▇
|
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
|
|
|
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
|
|
Attn:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
|
||
|
If
to Spetetchii:
|
Copy
to:
|
|
|
Dmitrii
Spetetchii
|
▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
|
|
|
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇. 19
|
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
|
|
|
2002
Chisinau
|
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
|
|
Republic
of Moldova
|
Attn:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
|
|
|
If
to the Parent:
|
Copy
to:
|
|
|
▇▇▇
Consulting, Inc.
|
▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, Esq.
|
|
|
2745
Bankers Industrial Drive
|
FSB
FisherBroyles, LLP
|
|
|
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
▇▇▇▇
▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
|
|
|
Attn:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
|
|
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
Any Party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
-15-
8.9 Governing Law; Attorneys’
Fees. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Georgia without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Georgia or any other jurisdiction) that would cause the application of laws of
any jurisdictions other than those of the State of Georgia. The prevailing
party in any such claim shall be entitled to court expenses and any resulting
attorneys’ fees and costs. As used in this Agreement, attorneys’ fees shall be
deemed to mean the full and actual costs of any legal services actually
performed in connection with the matters involved calculated on the basis of the
usual fee charged by the attorney performing such services and shall not be
limited to “reasonable attorneys’ fees” as defined in any statute or rule of
court.
8.10 Amendments and
Waivers. No amendment of any provision of this Agreement shall be
valid unless the same shall be in writing and signed by all of the
Parties. No waiver of any right or remedy hereunder shall be valid
unless the same shall be in writing and signed by the Party giving such
waiver. No waiver by any Party with respect to any default,
misrepresentation or breach of warranty or covenant hereunder shall be deemed to
extend to any prior or subsequent default, misrepresentation or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
8.11 Severability. Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction.
8.12 Submission to
Jurisdiction. All disputes arising out of or relating to this
Agreement or termination thereof shall be submitted to the exclusive
jurisdiction of the state courts of DeKalb County, Georgia and the federal court
for the Northern District of Georgia, and each Party irrevocably consents to
such personal jurisdiction and waives all objections thereto. Any Party may make
service on another Party by sending or delivering a copy of the process to the
Party to be served at the address and in the manner provided for the giving of
notices in Section 8.8.
[SIGNATURE
PAGE FOLLOWS]
-16-
IN WITNESS WHEREOF, the
Parties have executed this Agreement as of the date first above
written.
|
PARENT:
|
||
|
▇▇▇
CONSULTING, INC.
|
||
|
By:
|
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
|
|
|
Name:
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
|
|
|
Title:
|
President
and Chief Executive Officer
|
|
|
COMPANY:
|
||
|
WEB
MERCHANTS INC.
|
||
|
By:
|
/s/
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
|
|
|
Name:
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
|
|
|
Title:
|
President
|
|
|
PETRENKO:
|
||
|
/s/
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
|
||
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, personally
|
||
|
SPETETCHII:
|
||
|
/s/
Dmitrii Spetetchii
|
||
|
DMITRII
SPETETCHII,
personally
|
||
[Signature
Page 1 of 1 to Stock Purchase Agreement]
Parent Disclosure
Schedule
Schedule 3.2 –
Capitalization
Common
Stock, $.01 par value:
Authorized shares –
175,000,000
Issued and outstanding, as of January
20, 2011 - 63,532,647 shares
Shareholders over 5% of
TSO:
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
|
28,394,376 | |||
|
▇▇▇
▇▇▇▇▇, Inc.
|
13,022,127 | |||
|
Hope
Capital, Inc.
|
5,150,001 | |||
|
All
other shareholders
|
16,966,143 | |||
|
Total
|
63,532,647 |
Preferred
Stock, $0.0001 par value:
Authorized shares – 0
Obligated to be issued – 4,300,000 to
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
On or about February 8, the Parent will
cause the following Articles of Amendment to the Amended and Restated Articles
of Incorporation of ▇▇▇ Consulting, Inc. to be filed with the Florida Secretary
of State, attached as Exhibit A.
Warrants
Outstanding:
|
Belmont
Partners LLC
|
250,000
shares @ $.25 per share, expires September 2, 2012
|
|
Brookville
Capital Partners
|
292,479
shares @ $.50 per share, expires June 26, 2014
|
|
Brookville
Capital Partners
|
292,479
shares @ $.75 per share, expires June 26, 2014
|
|
Brookville
Capital Partners
|
877,435
shares @ $1.00 per share, expires June 26, 2014
|
|
Hope
Capital
|
1,000,000
shares @ $1.00 per share, expires June 26,
2014
|
Options
Outstanding:
|
Non-qualified
options
|
438,456
shares @ $.228, expire October 1, 2012
|
|
Incentive
Stock Options
|
770,000
shares @ $.25, expire October 16, 2014
|
|
Incentive
Stock Options
|
994,000
shares @ $.15, expire December 15, 2015
|
|
Incentive
Stock Options
|
3,236,000
shares authorized to be issued under the 2009 ▇▇▇ Consulting Stock Option
Plan
|
Convertible
Notes:
|
Hope
Capital
|
$375,000
convertible into 1,500,000 shares until August 12, 2012
|
|
Hope
Capital
|
$250,000
convertible into 1,000,000 shares until September 2,
2012.
|
Schedule 3.5 – Exchange Act
Reports
There are
no outstanding or unresolved comments in comment letters received from the staff
of the SEC with respect to any of the Parent Reports or the predecessor company
Liberator, Inc. The most recent comments on the Parent company 14C information
were cleared on January 18, 2011. The comments related to the Liberator, Inc.
Form 8-K filed on July 2, 2009, the Form 10-K filed on April 15, 2009, and the
Registration Statement filed on December 3, 2008 were cleared on November 19,
2010.
Schedule 3.7 –
Litigation
On
September 1, 2010, ▇▇▇▇▇▇ ▇▇▇▇▇, a former officer, director and independent
sales representative of Liberator, Inc., commenced an action against the Company
and other defendants including certain current officers and directors, ▇▇▇▇▇ v. ▇▇▇ Consulting,
Inc., OneUp Innovations, Inc., OneUp Acquisitions, Inc., Liberator, Inc., f/k/a
Remark Enterprises, Inc., Remark Enterprises, Inc., Belmont Partners LLC, ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ , Civil Action File No.
100V10590-8. in the Superior Court of Dekalb County, Georgia. The plaintiff
seeks repayment of a shareholder loan in the amount of $29,948 and unspecified
amounts of compensatory, punitive, and statutorily trebled damages. The
plaintiff alleges breach of fiduciary duty, breach of contract, fraud, and
violation of the Georgia Securities Act, among other claims. The
Company intends to vigorously contest the case and has filed a motion to dismiss
the lawsuit. The court has not yet ruled on that motion.
EXHIBIT
A
ARTICLES
OF AMENDMENT TO THE AMENDED
AND
RESTATED ARTICLES OF INCORPORATION
OF
▇▇▇ CONSULTING, INC.
Pursuant
to Section 607.1006 of the Business Corporation Act of the State of Florida, the
undersigned, being a Director and the CEO of ▇▇▇ Consulting, Inc. (hereinafter
the “Corporation”), a Florida corporation, does hereby certify as
follows:
FIRST: The Articles of
Incorporation of the Corporation were filed with the Secretary of State of
Florida on February 25, 1999 (Document No. P99000018914), and Amended and
Restated as filed with the Secretary of State on September 6, 2006 (collectively
the “Amended and Restated Articles of Incorporation”).
SECOND: This amendment to the
Articles of Incorporation was approved and adopted by all of the Directors of
the Corporation on October 20, 2009 and by a majority of its shareholders on
October 20, 2009. To effect the foregoing, the text of Article I and Article III
of the Articles of Incorporation are hereby deleted and replaced in their
entirety as follows:
“ARTICLE
I
NAME
The name
of the corporation shall be Liberator, Inc. and shall be governed by Title XXXVI
Chapter 607 of the Florida Statutes.”
“ARTICLE
III
CAPITAL
STOCK
A. The
maximum number of shares that the Corporation shall be authorized to issue and
have outstanding at any one time shall be one hundred and eighty five million
(185,000,000) shares, of which:
(i) Ten
Million (10,000,000) shares shall be designated Preferred Stock, $0.0001 par
value. The Board of Directors of the Corporation, by resolution or resolutions,
at any time and from time to time, shall be authorized to divide and establish
any or all of the unissued shares of Preferred Stock into one or more series
and, without limiting the generality of the foregoing, to fix and determine the
designation of each such share, the number of shares which shall constitute such
series and certain preferences, limitations and relative rights of the shares of
each series so established.
(ii) One
Hundred Seventy Five Million (175,000,000) shares shall be designated Common
Stock, $0.01 par value. Each issued and outstanding share of Common Stock shall
be entitled to one vote on each matter submitted to a vote at a meeting of the
shareholders and shall be eligible for dividends when, and if, declared by the
Board of Directors;
B. The
Board of Directors has by resolution designated four million three hundred
thousand (4,300,000) shares of Preferred stock Series A Convertible Preferred
Stock and having such rights and preferences as set forth in the Designation of
Rights and Preferences of Series A Convertible Preferred Stock of ▇▇▇
Consulting, Inc. attached hereto as Exhibit B and made a part
hereof.”
THIRD: The foregoing
amendments were adopted by all of the Directors on October 20, 2009 and by the
majority holders of the Common stock of the Corporation pursuant to the Florida
Business Corporation Act on October 20, 2009. Therefore, the number of votes
cast for the amendment to the Corporation's Articles of Incorporation was
sufficient for approval.
IN WITNESS WHEREOF, the
undersigned has executed these Articles of Incorporation this ____ day of
_______, 2011.
|
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
|
|
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
|
|
|
President
& CEO
|
Exhibit
B
Designation
of Rights and Preferences
of
Series
A Convertible Preferred Stock
of
▇▇▇
Consulting, Inc.
▇▇▇
Consulting, Inc. (the “Corporation”) is authorized to issue ten million
(10,000,000) shares of $0.0001 par value preferred stock, none of which has been
issued or is currently outstanding. The preferred stock may be issued by the
Board of Directors at such times and with such rights, designations, preferences
and other terms, as may be determined by the Board of Directors in its sole
discretion, at the time of issuance. The Board of Directors of the Corporation
has determined to issue a class of preferred stock, $0.0001 par value and to
designate such class as “Series A Convertible Preferred Stock” (the “ Series A Convertible Preferred
Stock”) initially consisting of four million three hundred thousand
(4,300,000) shares which shall have the rights, preferences, privileges, and the
qualifications, limitations and restrictions as follows:
|
(A).
|
Liquidation
Rights.
|
|
|
(i)
|
Upon the voluntary or involuntary
dissolution, liquidation or winding up of the Company, the holders of the
shares of the Series A Convertible Preferred Stock then outstanding shall
be entitled to receive out of the assets of the Company (whether
representing capital or surplus), before any payment or distribution shall
be made on the Common Stock, or upon any other class or series of stock
ranking junior to the Series A Convertible Preferred Stock as to
liquidation rights or dividends, $0.232 for each share of Series A
Preferred Stock, subject to appropriate adjustment in the event of any
stock dividend, stock split, combination or other similar recapitalization
with respect to the Series A Preferred Stock, plus any dividends declared
but unpaid thereon.
|
|
(ii)
|
Upon the voluntary or involuntary
dissolution, liquidation or winding up of the Company, after the payment
of all preferential amounts required to be paid to the holders of shares
of Series A Convertible Preferred Stock in accordance with Section (A)(i)
above, the remaining assets of the Company available for distribution to
its shareholders shall be distributed among the holders of the shares of
Common Stock, pro rata based on the number of shares held by each such
holder.
|
|
(iii)
|
If the assets distributable on
any dissolution, liquidation or winding up of the Company, whether
voluntary or involuntary, shall be insufficient to permit the payment to
the holders of the Series A Convertible Preferred Stock of the full
preferential amounts attributable thereto, then the entire assets of the
Company shall be distributed among the holders of the Series A Convertible
Preferred Stock ratably, in proportion to the respective amounts the
holders of such shares of Series A Convertible Preferred Stock would be
entitled to receive if they were paid in full all preferential
amounts.
|
|
(iv)
|
Written notice of such
liquidation, dissolution or winding up, stating a payment date or dates,
the aggregate amount of all payments to be made, and the place where said
sums shall be payable shall be given by first class mail, postage prepaid,
not less than 30 days prior to the payment date stated therein, to the
holders of record of all shareholders of the Company, such notice to be
addressed to each holder at his post office address as shown by the
records of the Company. A consolidation or merger of the Company
with or into any other Company or Companies not owned or controlled by the
Company and in which the Company is not the surviving entity, or the sale
or transfer by the Company of all or substantially all of its assets,
shall be deemed to be a liquidation, dissolution or winding up of the
business of the Company for purposes
hereof.
|
|
(v)
|
In the event of a partial
liquidation, distribution of assets shall be made so as to give effect to
the foregoing provisions. In the event some or all of the proceeds from a
liquidation, dissolution or winding up consist of property other than
cash, then for purposes of making distributions, the fair value of such
non-cash property shall be determined in good faith by the Company’s Board
of Directors.
|
(B). Voting
Rights. Each issued and outstanding Series A Convertible Preferred Share
shall be entitled to the number of votes equal to the result of: (i) the number
of shares of common stock of the Company (the “Common Shares”) issued and
outstanding at the time of such vote multiplied by 1.01; divided by (ii) the
total number of Series A Convertible Preferred Shares issued and outstanding at
the time of such vote. At each meeting of shareholders of the Company with
respect to any and all matters presented to the shareholders of the Company for
their action or consideration, including the election of directors, holders of
Series A Convertible Preferred Shares shall vote together with the holders of
Common Shares as a single class.
(C). Conversion.
|
|
(i)
|
The
holder of shares of Series A Convertible Preferred Stock shall have the
right, subject to the terms and conditions set forth below, to convert
each such stock into one share of fully paid and non-assessable Common
Stock of the Corporation as hereinafter provided. Such
conversion right shall vest and shall first be available on July 1,
2011.
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(ii)
|
Any holder of one or more shares
of Series A Convertible Preferred Stock electing to convert any or all of
such shares into Common Stock shall surrender the certificate or
certificates evidencing such shares at the principal office of the
Corporation, at any time during its usual business hours, and shall
simultaneously with such surrender give written notice of his or its
intention to convert, stating therein the number of shares of Series A
Convertible Preferred Stock to be converted and the name or names (with
addresses) of the registered holders of the Series A Convertible Preferred
Stock in which the certificate or certificates for Common Stock shall be
issued. Each certificate evidencing shares so surrendered shall
be duly endorsed to the Corporation by means of signatures which shall be
guaranteed by either a national bank or a member of a national securities
exchange.
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(iii)
|
Such conversion shall be deemed
to have been made as of the date of receipt by the Corporation of the
certificate or certificates (endorsed as herein above provided)
representing the shares of Series A Convertible Preferred Stock to be
converted and receipt by the Corporation of written notice, as above
prescribed; and after such receipt, the person entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder of such shares of Common
Stock.
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(iv)
|
Upon receipt of evidence
reasonably satisfactory to the Corporation of the loss, theft, destruction
or mutilation of any certificate evidencing shares in the Corporation and,
in the case of such loss, theft or destruction, upon delivery of an
indemnity agreement reasonably satisfactory to the Corporation, or in the
case of any such mutilation, upon the surrender of such certificate for
cancellation, the Corporation, will execute and deliver, in lieu of such
lost, stolen, destroyed or mutilated certificate, a new certificate for
such shares.
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(v)
|
As promptly as practicable after
surrender and notice as herein above provided, the Corporation shall issue
and deliver, or cause to be issued and delivered, to the holder of the
shares of Series A Convertible Preferred Stock surrendered for conversion:
(a) a certificate or certificates for the number of shares of Common Stock
into which such Series A Convertible Preferred Stock has been converted;
and (b) if necessary in the case of a conversion of less than all of the
shares of Series A Convertible Preferred Stock held by such holder, a new
certificate or certificates representing the unconverted shares of Series
A Convertible Preferred Stock.
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(vi)
|
Cash dividends declared but
theretofore unpaid on the shares of Series A Convertible Preferred Stock
so converted after the record date for such dividend shall instead be paid
on the shares of Common Stock into which such Series A Convertible
Preferred Stock has been converted, pro rata, at such time as cash
dividends shall be paid to record holders of the Common Stock
generally.
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(vi)
|
All shares of Series A
Convertible Preferred Stock at any time converted as herein provided shall
be forthwith permanently retired and cancelled and shall under no
circumstances be reissued.
|
(E). Protective
Provisions. At any time when shares of Series A Convertible Preferred
Stock are outstanding, the Corporation shall not, either directly or indirectly
by amendment, merger, consolidation or otherwise, do any of the following
without (in addition to any other vote required by law or the Articles of
Incorporation) the written consent or affirmative vote of the holders of at
least a majority of the then outstanding shares of Series A Convertible
Preferred Stock, given in writing or by vote at a meeting, consenting or voting
(as the case may be) separately as a class:
|
(i)
|
liquidate, dissolve or wind-up
the business and affairs of the Corporation, effect any deemed liquidation
event, or consent to any of the
foregoing;
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|
|
(ii)
|
create, or authorize the creation
of, or issue or obligate itself to issue shares of, any additional class
or series of capital stock or increase the authorized number of
shares of Series A Convertible Preferred
Stock.
|
(F). Status of Reacquired Shares.
Shares of Series A Convertible Preferred Stock which have been issued and
reacquired in any manner shall (upon compliance with any applicable provisions
of the laws of the State of Florida) have the status of authorized and unissued
shares of Series A Convertible Preferred Stock issuable in series
undesignated as to series and may be re-designated and
re-issued.
DISCLOSURE
SCHEDULE TO THE
BY
AND AMONG
▇▇▇
CONSULTING, INC.
WEB
MERCHANTS INC.
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
AND
DMITRII
SPETETCHII
January
27, 2011
This
Disclosure Schedule has been prepared in connection with that certain Stock
Purchase Agreement, dated as of January 27, 2011 (the “Purchase
Agreement”), by and among ▇▇▇ Consulting, Inc., a Florida corporation
(the “Parent”),
Web Merchants Inc., a Delaware corporation (the “Company”),
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, an individual resident of the State of New Jersey (“Petrenko”),
and Dmitrii Spetetchii, an individual resident of the Republic of Moldova
(“Spetetchii,”
and collectively with Petrenko, the “Shareholders”),
and constitutes the schedules referred to in the Purchase
Agreement. All capitalized terms used herein and not otherwise
defined shall have the respective meanings ascribed to such terms in the
Purchase Agreement.
The
representations and warranties of the Company and the Shareholders in Article II of the
Purchase Agreement are made subject to the exceptions and qualifications set
forth herein. The schedules are qualified in their entirety by reference to
specific provisions of the Purchase Agreement, and are not intended to
constitute, and shall not be construed as constituting, separate representations
or warranties of the Company or the Shareholders.
The
section numbers used herein refer to the Sections in the Purchase
Agreement. Headings and subheadings have been inserted herein for
convenience of reference only and shall
not have
the effect of amending or changing the express description hereof as set forth
in the Purchase Agreement.
The
inclusion of any information (including dollar amounts) in any section of this
Disclosure Schedule shall not be deemed to be an admission or acknowledgment by
the Company or the Shareholders that such information is required to be listed
in such section or is material to or outside the ordinary course of the business
of the Company, nor shall such information be deemed to establish a standard of
materiality (and the actual standard of materiality may be higher or lower than
the matters disclosed by such information). The information contained
in this Disclosure Schedule is disclosed solely for purposes of the Purchase
Agreement, and no information contained herein or therein shall be deemed to be
an admission by any party hereto to any third party of any matter whatsoever
(including, without limitation, any violation of applicable law or breach of
contract).
The
information provided in this Disclosure Schedule is being provided solely for
the purpose of making the disclosures to the Parent under the Purchase
Agreement. Neither the Company nor either Shareholder assumes any
responsibility to any person that is not a party to the Purchase Agreement for
the accuracy of any information contained herein. The information was not
prepared or disclosed with a view to its potential disclosure to others. Subject
to applicable law, this information is disclosed in confidence for the purposes
contemplated in the Purchase Agreement and is subject to the confidentiality
provisions of any other agreements entered into by the parties.
In
disclosing this information, the Company and the Shareholders expressly do not
waive any attorney-client privilege associated with such information or any
protection afforded by the work-product doctrine with respect to any of the
matters disclosed or discussed herein.
Disclosure
Schedule 2.2
Capitalization
The
authorized capital stock of the Company consists of One Thousand (1,000) shares
of common stock, no par value per share (the “Company
Shares”). There are Six Hundred Sixteen (616) Company Shares
issued and outstanding as follows:
|
Shareholder
|
Number of
Shares Owned
|
Percentage
Owned
|
||||||
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
|
400 | 64.94 | % | |||||
|
Dmitrii
Spetetchii
|
216 | 35.06 | % | |||||
|
Total
|
616 | 100.00 | % | |||||
[Disclosure
Schedule 2.2 – Page 1 of 1]
Disclosure
Schedule 2.12
Leases
The
Company leases its principal office and a warehouse, located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇ ▇ and 7, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, pursuant to that certain
Forsgate Lease Agreement, dated as of February 23, 2006, as amended on May 14,
2007 (collectively, the “Lease
Agreement”), by and between the Company and Forsgate Industrial Complex,
a New Jersey LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. The Lease
Agreement will expire on March 31, 2011 in accordance with its terms and
conditions.
[Disclosure
Schedule 2.12 – Page 1 of 1]