STOCK PURCHASE AGREEMENT by and among SOUTHPEAK INTERACTIVE CORPORATION, AND THE PURCHASER INDENTIFIED HEREIN As of May 5, 2010
by
and among
SOUTHPEAK
INTERACTIVE CORPORATION,
AND
THE
PURCHASER INDENTIFIED HEREIN
As
of May 5, 2010
This
Stock Purchase Agreement (the “Agreement”) dated as
of May 5, 2010, by and among SouthPeak Interactive Corporation, a Delaware
corporation (“Company”), and the
purchasers whose names appear on the signature pages attached hereto (each an
“Purchaser”,
and collectively, the “Purchasers”).
Whereas,
each Purchaser is a holder of one or more of the Company’s Class W warrants (the
“Class W
Warrants”) and/or Class Z warrants (the “Class Z Warrants,”
and with the Class W Warrants, the “Warrants”);
Whereas,
the Warrants are exercisable at various strike prices that exceed the current
trading price of the Company’s common stock (the “Common Stock”);
and
Whereas,
in order to enhance the liquidity of the Purchasers’ holdings and reduce the
number of Warrants outstanding, the Company and the Purchasers wish to cause the
Warrants to be converted into shares of Common Stock.
Now,
Therefore, in consideration of the foregoing, and the representations,
warranties, and conditions set forth below, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. Subscription. Subject
to the terms and conditions hereof, the Company and each Purchaser, severally
and not jointly, agree as follows:
(a) Stock Purchase; Warrant
Conversion. Each Purchaser hereby subscribes for the aggregate
number of shares of Common Stock set forth on the applicable signature page
attached hereto (the “Conversion
Shares”). Each Conversion Share shall be issued in exchange
for that number and class of Warrants and amount of cash in accordance with the
following:
(i) one
Conversion Share for six Class Z Warrants and $0.15;
(ii) one
Conversion Share for twenty-five Class Z Warrants; or
(iii) one
Conversion Share for one hundred Class W Warrants and $0.25.
(b) Delivery. The
Conversion Shares shall be issued in exchange for Warrants and cash at one or
more closings (each, a “Closing”) to be held
at such place and time as Company and the Purchasers participating in such
Closing may determine (the “Closing
Date”). At each such Closing, the Company shall issue to each
of the Purchasers participating in such Closing a stock certificate representing
the number of Conversion Shares subscribed for by such Purchaser, against such
Purchaser’s tender of that number and class of Warrants held by such Purchaser
and payment of cash necessary to satisfy such Purchaser’s subscription for
Conversion Shares. The tender of Warrants by any Purchaser may be
accomplished through (a) the delivery of physical certificates representing
Warrants, (b) electronic delivery using the Depository Trust Company’s DWAC
(Deposit/Withdrawal At Custodian) System in accordance with the instructions set
forth on Exhibit
A, or (c) a combination of the delivery methods set forth in items (a)
and (b) above.
(c) Termination of Obligations
under Warrants. Each Purchaser understands and agrees that all
obligations of the Company pursuant such Purchaser’s Warrants shall terminate
and shall be without any further force of effect upon the applicable
Closing. Such obligations of the Company terminated, cancelled and
released upon the Closing include, without limitation, (i) any and all
obligations to issue shares of Common Stock upon exercise or conversion of such
Warrants, and (ii) any claims, obligations or other liabilities of the Company
which may have accrued or which may in the future have accrued, pursuant to such
Warrants.
(d) Lost
Warrants. In the event that any Purchaser is unable to locate
or retrieve any Warrant and tender such Warrant at the Closing, such Purchaser
shall execute and deliver a lost instrument affidavit in a form provided by the
Company’s registrar and transfer agent certifying that such Warrant cannot be
located and indemnifying the Company and its registrar and transfer agent
against any claim or loss arising out of failure to tender such
Warrant.
(e) Company’s Right to Reject
Subscriptions and/or Terminate Offering. Notwithstanding
anything in this Agreement or in any document or instrument delivered pursuant
hereto, the Company shall have the right in it sole discretion, upon notice to
each applicable Purchaser, at any time prior to the applicable Closing, to: (i)
reject such Purchaser’s subscription in whole or in part, and (ii) to terminate
the offering of Conversion Shares effected pursuant hereto.
2. Representation and
Warranties of the Company. The Company hereby represents and
warrants to each Purchaser as of the Closing Date, the following:
(a) Organization and
Qualification. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power and authority to own, lease and operate
its assets and properties and to carry on its business as it is now being or
currently planned by the Company to be conducted. The Company is not
in violation of any of the provisions of its certificate of incorporation and
bylaws.
(b) Capitalization. The
Company’s periodic reports on Form 10-Q and Form 10-K and current reports on
Form 8-K filed with the Securities and Exchange Commission (“SEC”) accurately
reflect its capitalization as of the dates indicated in such
reports. The issued and outstanding capital stock of the Company
(i) has been duly and validly issued; (ii) is fully paid and
nonassessable; and (iii) was not issued in violation of any preemptive
rights or rights of first refusal or first offer.
(c) Authority Relative to this
Agreement. The Company has full corporate power and authority
to: (i) execute, deliver and perform this Agreement, (ii) issue and sell
the Conversion Shares to the Purchasers hereunder, and (iii) carry out the
Company’s obligations hereunder and thereunder and, to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation by the Company of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of the Company, and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery thereof by the other parties hereto,
constitutes the legal and binding obligation of the Company, enforceable against
it in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization or other similar Laws affecting the enforcement of
creditors’ rights generally and by general principles of
equity.
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(d) Valid Issuance of the
Conversion Shares. The Conversion Shares to be issued to the
Purchasers hereunder, when issued, sold and delivered in accordance with the
terms of this Agreement for the consideration expressed herein, will be duly and
validly issued, fully paid and non-assessable, free of restrictions on transfer
other than restrictions on transfer under this Agreement and applicable state
and federal securities laws, issued in compliance with applicable state and
federal securities laws, and will not be subject to any preemptive rights or
other similar rights.
(e) No Conflict; Required
Filings and Consents.
(i) The
execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company shall not (A) conflict with or
violate the Company’s certificate or incorporation or bylaws, (B) conflict with
or violate any law or any rule or regulation of the Over-the-Counter bulletin
board, (C) result in any breach of or constitute a default (or an event that
with notice or lapse of time or both would become a default) under, or
materially impair the Company’s rights or alter the rights or obligations of any
third party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien on any of
the properties or assets of the Company pursuant to, any contracts to which the
Company is a party or by or to which any of the properties or assets of the
Company may be bound, subject or affected, or (D) result in the triggering,
acceleration or increase of any payment to any person pursuant to any contracts
to which the Company is a party or by or to which any of the properties or
assets of the Company may be bound, subject or affected, including any “change
in control” or similar provision thereof, except, with respect to clauses (B),
(C) or (D), for any such conflicts, violations, breaches, defaults, triggers,
accelerations, increases or other occurrences that would not, individually or in
the aggregate, have a Material Adverse Effect on the Company.
(ii) The
execution and delivery of this Agreement by the Company do not, and the
performance of its respective obligations hereunder will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any government or political subdivision or any agency, authority, bureau,
central bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic,
except (A) for applicable requirements, if any, of the Securities Act of
1933, as amended (the “Securities Act”), the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), state
securities and blue sky laws, and the rules and regulations thereunder, and
appropriate documents with the relevant authorities of other jurisdictions in
which the Company is qualified to do business, and (B) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company, or
prevent consummation of the transaction contemplated hereby or otherwise prevent
the parties hereto from performing their obligations under this
Agreement.
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(iii) “Material Adverse
Effect” means any change, event, violation, inaccuracy, circumstance or
effect, individually or when aggregated with other changes, events, violations,
inaccuracies, circumstances or effects, that is materially adverse to the
business, assets, revenues, financial condition, results of operations or
business prospects of an entity and its subsidiaries, taken as a whole, except
to the extent resulting from: (A) changes in general industry or economic
conditions, (B) adverse effects arising from the announcement or consummation of
the transactions contemplated hereby, or (C) changes to generally accepted
accounting principles that apply generally to the industry in which the entity
operates.
(f) Reporting Company
Status. The Company is subject to the reporting requirements
of the Exchange Act and the Company has taken no action designed to, or which to
its knowledge is likely to, have the effect of, terminating the registration of
the Common Stock under the Exchange Act nor has the Company received any
notification that the SEC is contemplating terminating such
registration. The Common Stock is traded on the Over-the-Counter
bulletin board and the Company has not received any notice regarding, and to the
Company’s knowledge there is no threat of, the termination or discontinuance of
the eligibility of the Common Stock for such trading.
(g) Exchange Act Filings;
Financial Statements. The Company has filed all reports, forms
or other information required to be filed by it under the Securities Act and the
Exchange Act (the foregoing materials being collectively referred to herein as
the “SEC
Reports”), except as otherwise disclosed in any SEC
Reports. Except as otherwise disclosed in any SEC Reports, as of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Securities Act and the Exchange Act and the rules and
regulations of the SEC promulgated thereunder, and none of the SEC Reports, when
filed, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of Company included in the
SEC Reports were prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved, except as
may be otherwise specified in such financial statements or the notes thereto,
and fairly present in all material respects the financial position of Company
and its consolidated subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit
adjustments.
(h) Offering
Exemption. Assuming the truth and accuracy of the
representations and warranties contained in Section 3, the offer
and sale of the Conversion Shares as contemplated hereby and the issuance and
delivery to the Purchasers of the Conversion Shares are exempt from registration
under the Securities Act, and will be registered or qualified (or exempt from
registration or qualification) under applicable state securities and blue sky
laws, as currently in effect.
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(i) Brokers or
Finders. Except for [____________], no person will have, as a
result of the transactions contemplated by this Agreement, any valid right,
interest or claim against or upon the Company for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of the Company.
3. Representation and
Warranties of the Purchasers. As of the Closing Date, each
Purchaser severally and not jointly hereby represents and warrants to the
Company that:
(a) Organization and
Qualification. Such Purchaser, if such person is not an
individual, is a validly existing corporation, limited partnership or limited
liability company and has all requisite corporate, partnership or limited
liability company power and authority to invest in the purchase the Conversion
Shares pursuant to this Agreement.
(b) Authorization. The
execution, delivery and performance by such Purchaser of this Agreement have
been duly authorized and each will constitute the legal, valid and binding
obligations of such Purchaser, enforceable against such Purchaser in accordance
with their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating
to or affecting creditors’ rights generally.
(c) No Transfer or Assignment of
Securities or Claims. Such Purchaser has not sold, assigned,
transferred or exercised any of the Warrants to be tendered by such Purchaser
hereunder, and has not transferred or assigned any claim, right or interest
associated therewith.
(d) Purchase Entirely for Own
Account. The Conversion Shares will be acquired for investment
for such Purchaser’s own account, not as a nominee or agent, and not with a view
to the resale or distribution of any part thereof. Such Purchaser’s
address is listed on the signature page executed by such Purchaser and attached
hereto. Such Purchaser is aware that the Company is issuing the Conversion
Shares pursuant to an exemption from registration under the Securities Act, and
will be qualified (or exempt from registration or qualification) under
applicable state securities and blue sky laws, as currently in
effect. Such Purchaser is also aware that the Company is relying
upon, among other things, the representations and warranties of such Purchaser
contained in this Agreement for purposes of qualifying for such exemption from
registration under the Securities Act.
(e) Disclosure of
Information. Such Purchaser has had an opportunity to receive
all information related to the Company requested by it and to ask questions of
and receive answers from the Company regarding its business and the terms and
conditions of the offering of the Conversion Shares. Neither such
inquiries nor any other due diligence investigation conducted by such Purchaser
shall modify, limit or otherwise affect such Purchaser’s right to rely on the
representations and warranties of the Company contained in this
Agreement.
(f) Investment
Experience. Such Purchaser acknowledges that it can bear the
economic risk and complete loss of its investment in the Conversion Shares and
has such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment contemplated
hereby.
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(g) Accredited
Investor. Such Purchaser is an accredited investor as defined
in Rule 501(a) of Regulation D, as amended, under the Securities
Act.
(h) Restricted Securities;
Legends. Such Purchaser understands that the Conversion Shares
are characterized as “restricted securities” under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act only
in certain limited circumstances. Such Purchaser acknowledges that the
Conversion Shares will bear the following legend or similar legend as
applicable:
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “ACT”). SUCH SECURITIES MAY
NOT BE TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS
TO SUCH TRANSFER OR IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE
COMPANY, SUCH TRANSFER MAY BE MADE PURSUANT TO RULE 144.
(i) No General
Solicitation. Such Purchaser did not learn of the investment
in the Conversion Shares as a result of any general solicitation or general
advertising.
(j) Prohibited
Transactions. During the last thirty days prior to the date
hereof, neither such Purchaser nor any affiliate of such Purchaser which (i) had
knowledge of the transactions contemplated hereby, (ii) has or shares discretion
relating to such Purchaser’s investments or trading or information concerning
such Purchaser’s investments, including in respect of the Conversion Shares, or
(A) is subject to such Purchaser’s review or input concerning such affiliate’s
investments or trading (collectively, “Trading Affiliates”)
has, directly or indirectly, effected or agreed to effect any short sale,
whether or not against the box, established any “put equivalent position” (as
defined in Rule 16a-1(h) under the Exchange Act) with respect to the Common
Stock, granted any other right (including, without limitation, any put or call
option) with respect to the Common Stock or with respect to any security that
includes, relates to or derived any significant part of its value from the
Common Stock or otherwise sought to hedge its position in the Common Stock
(each, a “Prohibited
Transaction”). Such Purchaser acknowledges that the
representations, warranties and covenants contained in this Section 3(j) are
being made for the benefit of the Purchasers as well as the Company and that
each of the other Purchasers shall have an independent right to assert any
claims against such Purchaser arising out of any breach or violation of the
provisions of this Section
3(j).
(k) Brokers or Finders.
Except for [____________], no person will have, as a result of the transactions
contemplated by this Agreement, any valid right, interest or claim against or
upon the Company or any Purchaser for any commission, fee or other compensation
pursuant to any agreement, arrangement or understanding entered into by or on
behalf of such Purchaser.
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4. General
Provisions.
(a) Notices. All
notices and other communications hereunder shall be in writing and shall be
deemed given if delivered personally or by commercial delivery service, or
mailed by registered or certified mail (return receipt requested) or sent via
facsimile (with confirmation of receipt), (i) if to a Purchaser, to such
Purchaser’s address set forth on the applicable signature page attached hereto,
or at such other address or facsimile number as such Purchaser shall have
furnished to the Company in writing; or (ii) if to the Company to SouthPeak
Interactive Corporation, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, with a copy (which shall not constitute notice)
to ▇▇▇▇▇▇▇▇▇ Traurig, LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq., or at such other address as the
Company shall have furnished in writing to the Purchasers.
(b) Counterparts. This
Agreement may be executed in one or more counterparts, including by facsimile
and/or PDF, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
(c) Entire Agreement;
Nonassignability; Parties in Interest. This Agreement and the
documents and instruments and other agreements specifically referred to herein
or delivered pursuant hereto, including the exhibits, (i) constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof, (ii) are not intended to
confer upon any other person any rights or remedies hereunder, and (iii) shall
not be assigned. No representations, warranties, inducements,
promises or agreements, oral or written, by or among the parties not contained
herein shall be of any force of effect.
(d) Successors and
Assigns. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
(e) Amendments and
Waivers. Any term of this Agreement may be amended, and the
observance of any term hereof may be waived (either generally or in a particular
instance), only with the written consent of the Company and the holders of a
majority of the Conversion Shares.
(f) Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia, without regard to the
laws that might otherwise govern under applicable principles of conflicts of
law. Each of the parties hereto irrevocably consents to the exclusive
jurisdiction of any state or federal court located in Chesterfield County,
Virginia in connection with any matter based upon or arising out of this
Agreement or the matters contemplated herein, agrees that process may be served
upon them in any manner authorized by the laws of the Commonwealth of Virginia
for such persons and waives and covenants not to assert or plead any objection
which they might otherwise have to such jurisdiction and such
process.
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(g) Rules of
Construction. The parties hereto agree that they have been
represented by counsel during the negotiation, preparation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document. References herein to “Dollars” or “$” shall refer to U.S.
dollars and all payments and all calculations of amount hereunder shall be made
in U.S. dollars.
(h) Separability of Agreements;
Severability of this Agreement. The Company’s agreement with
each of the Purchasers is a separate agreement and the sale of Conversion Shares
to each of the Purchasers is a separate sale. Unless otherwise
expressly provided herein, the rights of each Purchaser hereunder are several
rights, not rights jointly held with any of the other Purchasers. Any
invalidity, illegality or limitation on the enforceability of the Agreement or
any part thereof, by any Purchaser whether arising by reason of the law of the
respective Purchaser’s domicile or otherwise, shall in no way affect or impair
the validity, legality or enforceability of this Agreement with respect to other
Purchasers. If any provision of this Agreement shall be judicially
determined to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
[Signature
Pages to Follow]
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IN
WITNESS WHEREOF, the undersigned has caused this Stock Purchase Agreement to be
duly executed by an authorized signatory as of the date first indicated
above.
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SOUTHPEAK
INTERACTIVE CORPORATION
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By:
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Name:
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▇▇▇▇▇
▇▇▇▇▇▇▇▇
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Title:
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Chairman
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IN
WITNESS WHEREOF, the undersigned has caused this Stock Purchase Agreement to be
duly executed by an authorized signatory as of the date first indicated
above.
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Name
of Purchaser:
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Signature:
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||||
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Name
of Signatory:
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Title
of Signatory:
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SSN
or EIN of Purchaser:
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Address:
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Facsimile
Number for Notice:
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||||
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Email
Address for Notice:
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Check the
box and complete the corresponding subscription information for each applicable
method of payment:
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Conversion
Shares
Subscribed For
|
Class W
Warrants
Tendered
|
Class Z
Warrants
Tendered
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Cash
Payment
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||||||
| o |
one
Conversion Share for six Class Z Warrants and $0.15
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=
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Not applicable
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+
|
+
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||||
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(Number of
Conversion Shares
multiplied by six)
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(Number of
Conversion Shares
multiplied by $0.15)
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||||||||
| o |
one
Conversion Share for twenty-five Class Z Warrants
|
=
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Not applicable
|
+
|
+
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Not applicable
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|||
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(Number of
Conversion Shares
multiplied by twenty-
five)
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|||||||||
| o |
one
Conversion Share for one hundred Class W Warrants and
$0.25
|
=
|
+
|
Not applicable
|
+
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||||
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(Number of
Conversion Shares
multiplied by one
hundred)
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(Number of
Conversion Shares
multiplied by $0.25)
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||||||||
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Total Conversion
Shares
Subscribed For
|
Total Class W
Warrants
Tendered
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Total Class Z
Warrants
Tendered
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Total Cash
Payment
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||||||
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=
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+
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+
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[Purchaser
signature page to Stock Purchase Agreement]
EXHIBIT
A
DWAC Delivery
Instructions
Purchasers
may deliver some or all of the Warrants to be tendered pursuant to the Agreement
electronically using the Depository Trust Company’s DWAC
(Deposit/Withdrawal At Custodian) System. In order to transfer
Warrants to the Company using the DWAC System, a Purchaser must instruct its
broker to transfer uncertificated warrants to American Stock Transfer &
Trust Company, the Company’s registrar and transfer agent, via DWAC using
transfer agent code 2941. There is a nominal cost associated with the
act of delivering securities through the DWAC System. American Stock
Transfer & Trust Company typically charges the tendering broker $35, and the
broker may or may not pass this cost on to the transferring
Purchaser.
The
Company’s point of contact at American Stock Transfer & Trust Company is ▇▇.
▇▇▇▇▇ Deer-▇▇▇▇▇▇▇, (▇▇▇) ▇▇▇-▇▇▇▇.
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