STOCK PURCHASE AGREEMENT BY AND BETWEEN LOCATION BASED TECHNOLOGIES, INC. AND __AARON TAYLOR__
EXHIBIT 10.41
BY
AND BETWEEN
AND
__AARON
TAYLOR__
Dated
May 15, 2009
TABLE
OF CONTENTS
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Page
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1.
Agreement to Sell and Agreement to Purchase
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1
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1.1
Purchase of Shares
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1
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1.2
Closing
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1
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2.
Consideration to be Paid by Buyer
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1
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2.1
Purchase Price for Shares
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1
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2.2
Payment of Purchase Price
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1
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3.
Representations and Warranties of the Company
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2
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3.1
Organization and Good Standing
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2
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3.2
Authorization of Agreement
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2
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3.3
Capitalization
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2
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3.4
Financial Condition
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2
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3.5
Assets of the Company
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2
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3.6
Material Contracts
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3
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3.7
Labor and Employment Matters
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3
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3.8
Litigation
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3
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3.9
No Undisclosed Liabilities
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4
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3.10
Compliance with Law
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4
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4.
Representations and Warranties of Buyer
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4
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4.1
Investment Intent
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4
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4.2
Review of SEC Filings
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4
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5.
Covenants
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4
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5.1
Form D
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4
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5.2
Reporting Status
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4
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5.3
Schedule 13D
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5
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5.4
Use of Proceeds
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5
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5.5
Financial Information
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5
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5.6
Disclosure of Transaction
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5
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5.7
Conduct of the Business of the Company
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5
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6.
Indemnification
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5
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6.1
Claims for Indemnification
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5
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6.2
Manner of Indemnification
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6
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6.3
Limitations on Indemnification
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6
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6.4
Sole Basis for Recovery
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6
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6.5
Insurance
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6
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7.
Miscellaneous
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6
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7.1
Notices
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6
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7.2
Governing Law
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7
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7.3
Counterparts
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7
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7.4
Indemnification for Brokerage
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7
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7.5
Complete Agreement
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7
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7.6
Interpretation
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7
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7.7
Severability
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7
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7.8
Knowledge; Due Diligence Investigation
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7
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7.9
Expenses of Transactions
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8
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7.10
Amendment
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8
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7.11
Counterparts
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8
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SCHEDULES
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Schedule
2.2
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Instructions
for Payment of Purchase Price
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Schedule
3.3
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Obligations
of the Company
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Schedule
3.4.1.1
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Financial
Statements Delivered to Buyer
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Schedule
3.4.2
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Changes
in Financial Condition of the Company
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Schedule
3.4.3
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Defaults
of the Company
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Schedule
3.5
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Liens
of the Company
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Schedule
3.8
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Current
Litigation
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Schedule
3.9
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Undisclosed
Liabilities
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Schedule
4.1
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Stock
Certificate Legend
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Schedule
5.4
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Use
of Proceeds
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ii
This
STOCK PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of this
15th day of May, 2009 by and between the Location Based Technologies, Inc., a
Nevada corporation (the “Company”) and Mr. ▇▇▇▇▇ ▇▇▇▇▇▇ (“Buyer”).
R E C I T A L
S
A. The
Company is in the business of developing, marketing and selling high quality
personal location devices through its Anaheim, California facility (the
“Business”).
B. The
Company desires to sell to Buyer 80,645 shares of its common restricted stock
(the “Shares”), and Buyer desires to acquire the Shares on the terms and
conditions hereinafter set forth.
AGREEMENT
NOW,
THEREFORE, in consideration of the mutual covenants, agreements, representations
and warranties and subject to the conditions contained herein, the parties
hereto covenant and agree as follows:
1. Agreement to Sell and
Agreement to Purchase.
1.1 Purchase of Shares.
Simultaneously with the execution of this Agreement, on the terms and subject to
the conditions set forth herein, the Company shall issue and sell to Buyer and
Buyer shall purchase, acquire and accept from the Company, all the
Shares. The Company shall deliver to Buyer certificates representing
the Shares against receipt of the Purchase Price (hereafter
defined).
1.2 Closing. The closing
of the transactions herein contemplated (the “Closing”) shall take place at the
offices of the Company in Anaheim, California, and be effective as of 5:00 p.m.,
local time, on the date hereof (the “Closing Date”). All actions
taken and all documents delivered at the Closing shall be deemed to have
occurred simultaneously.
2. Consideration to be Paid by
Buyer.
2.1 Purchase Price for
Shares. The purchase price for the Shares (“Purchase Price”) shall be
$1.55 per share for an aggregate of $125,000.00. Warrant coverage
will cover 25% of the aggregate value of the Purchase Price based on the closing
day’s value of the market on the day good funds are received ($ per share) with
a three (3) year term.
2.2 Payment of Purchase
Price. At the Closing, Buyer shall pay to the Company in immediately
available funds by wire transfer (pursuant to the instructions set forth on
Schedule 2.2) the Purchase Price against receipt of the Shares.
1
3. Representations and
Warranties of the Company. The Company represents and warrants to Buyer
that:
3.1 Organization and Good
Standing. The Company is duly organized, validly existing and in good
standing under the laws of Nevada (the jurisdiction in which it was formed) with
full power to carry on its business as it is now and has since its organization
been conducted, and to own, lease or operate its assets. The Company
is duly authorized to do business and is in good standing in such other
jurisdictions in which the Company is required to be so authorized.
3.2 Authorization of
Agreement. The Company has all requisite power and authority to enter
into this Agreement and to consummate the transactions contemplated
hereby. This Agreement and all other agreements and instruments to be
executed by the Company has been duly executed and delivered by the Company, has
been effectively authorized by all necessary action, corporate or otherwise, and
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
3.3 Capitalization. The
authorized capital stock of the Company consists solely of (i) 300,000,000
shares of voting common stock, $0.001 par value, of which 88,244,270 shares are
issued and outstanding and (ii) 30,000,000 shares of preferred stock, $0.001 par
value, none of which shares are issued and outstanding. All of the
outstanding shares have been duly authorized, validly issued (free of all
preemptive rights), are fully paid and nonassessable. Any outstanding
or authorized options, warrants, subscriptions, calls, puts, conversion or other
rights, contracts, agreements, commitments or understandings of any kind
obligating the Company to issue, sell, purchase, return, redeem or pay any
distribution or dividend with respect to any shares of capital stock of the
Company or any other securities convertible into, exchangeable for or evidencing
the right to subscribe for any shares of capital stock of or other ownership
interest in the Company are listed on Schedule 3.3 hereof.
3.4 Financial
Condition.
3.4.1
Financial
Statements.
3.4.1.1
The Company has made available (see ▇▇▇.▇▇▇.▇▇▇) to Buyer
the financial statements (collectively, the “Financial Statements”) listed on
Schedule 3.4.1.1, together with the report thereon of the Company’s independent
certified public accountants where applicable.
3.4.1.2
To the Company’s best knowledge, the Financial Statements fairly present in all
respects the financial condition and the results of operations of the Company as
at the respective dates of and for the periods referred to in such financial
statements and reflect the consistent application of accounting principles
throughout the periods involved in accordance with generally accepted accounting
principles.
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3.4.2
Absence of Certain
Changes. Except as disclosed on Schedule 3.4.2, since November 30, 2008
(the “Balance Sheet Date”) there has not been (i) any change in the financial
condition, results of operations, assets, business, or prospects of the Company
as described in its filings with the Securities and Exchange Commission (“SEC
Filings”) or otherwise
that could have a material adverse effect on the assets, results (financial or
otherwise), business or prospects of the Company (a “Material Adverse Effect”);
(ii) any damage, destruction or loss, whether or not covered by insurance, that
could have a Material Adverse Effect; (iii) any sale or transfer of any of the
assets of the Company, except sales in the ordinary course of the business of
inventory or immaterial amounts of other tangible personal property;
(iv) any
commitment by the Company to any capital expenditure to be paid after the
Closing in excess of $100,000 for any individual commitment or $500,000 in the
aggregate; (v) any incurrence of additional indebtedness for borrowed money or
entering into long term contracts or commitments by the Company to be performed
after the Closing Date; (vi) any alteration in any respect of the Company’s
practices and policies relating to the payment and collection of accounts
receivable; (vii) any failure to operate the Company in the ordinary course of
business consistent with past practice; (viii) any increase in, or commitment to
increase, the compensation payable or to become payable to any of the Company’s
executive employees or any bonus payment (other than as included as an accrued
liability on the Company’s balance sheet) or similar arrangement made to or with
any of the Company’s executive employees; (ix) any adoption of a plan or
agreement or amendment to any plan or agreement providing any new or additional
fringe benefits; (x) any material alteration in the manner of keeping the
Company’s books, accounts or records, (xi) any transaction with any affiliate of
the Company; (xii) any material tax election or establishment or increase in a
reserve for taxes or other liabilities on its books or otherwise provided
therefore, except for taxes or other liabilities relating to the ordinary course
operations of the Company since the Balance Sheet Date; (xiii) any liens claims
or encumbrances placed upon the Company’s assets; or (xiv) any material
transaction entered into by the Company not in the ordinary course of
business.
3.4.3
No Default.
Except as disclosed in the Company’s balance sheet as of the Balance Sheet Date,
or on Schedule 3.4.3, the Company is not in default with respect to any
liabilities or obligations, and all such liabilities or obligations shown and
reflected in such balance sheet and such liabilities incurred or accrued
subsequent to such Balance Sheet Date have been, or are being, paid or
discharged as they become due, and all such liabilities and obligations were
incurred in the ordinary course of business.
3.5 Assets of the
Company. The Company owns, or has valid leasehold interests in, or
licenses to, all of the assets required or necessary to operate the Business of
the Company as it is now being conducted. Except for liens reflected
on the May 31, 2008 balance sheet, or on Schedule 3.5 hereof, the Company’s
assets are free and clear of all liens.
3.6 Material Contracts.
The Company’s SEC Filings contain copies of all material contracts to which the
Company is a party, and the Company has made copies of such contracts available
to Buyer as requested by Buyer.
3.7 Labor and Employment
Matters. No collective bargaining agreement exists that is binding on the
Company and no proceedings have been instituted by an employee or group of
employees seeking recognition of a bargaining representative. No
organizational effort currently is being made or threatened by or on behalf of
any labor union to organize any employees of the Company. The
employment arrangements for executive management of the Company are set forth in
the material contracts included with the Company’s SEC Filings.
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3.8 Litigation. Except as
set forth in the Company’s SEC Filings or on Schedule 3.8 hereof, there are no
material claims or litigation pending against the company.
3.9 No Undisclosed
Liabilities. Except as and to the extent specifically reflected or
reserved against in the Company’s balance sheet as of the Balance Sheet Date or
on Schedule 3.9 hereof, the Company has no liabilities or obligations of any
kind, including, without limitation, environmental, employment, ERISA or income
tax obligations, whether absolute, accrued, contingent or
otherwise.
3.10
Compliance with
Law. To the Company’s knowledge it has not violated and its business as
presently conducted does not violate, in any material respect any Federal,
state, local or foreign laws, regulations, permits, licenses, governmental
authorizations or orders, and the Company has not received any notice of any
such violation.
4. Representations and
Warranties of Buyer. Buyer represents and warrants to the Company
that:
4.1 Investment Intent.
Buyer is acquiring the Shares with the intention as of the date hereof of
holding the Shares for purposes of investment. Buyer acknowledges
that the Shares have not been, and will not be, registered under the Securities
Act of 1933, as amended (the “Act”), or any state securities laws, and Buyer has
no intention as of the date hereof of selling the Shares in a public
distribution in violation of Federal securities laws or any applicable state
securities laws. Buyer is an Accredited Investor (as defined in Rule 501
promulgated under the Act) and is able to bear the risk of an investment in the
Shares including risks associated with holding the Shares for an extended period
of time. Buyer understands that the certificates representing the
Shares will bear the legend set forth on Schedule 4.1 hereof.
4.2 Investigation. Buyer,
or its representatives, have reviewed the Company’s SEC Filings and other
business records or information deemed necessary and have had an opportunity to
ask questions of, and receive answers or requested documentation from, such
officers of the Company as it deems necessary to undertake the investment in the
Company contemplated by this Agreement.
5. Covenants.
5.1 Form D. The Company
shall make its best efforts to timely file a Form D to the Shares as required
under Regulation D promulgated by the Securities and Exchange Commission (“SEC”)
and provide a copy thereof to Buyer. The Company shall also make all
filings and reports relating to the offer and sale of the Shares acquired under
applicable securities laws of the United States following the Closing
Date.
5.2 Reporting Status. The
Company shall use its commercially reasonable best efforts to timely file all
reports required to be filed by the SEC pursuant to the Securities Exchange Act
of 1934, as amended (“34 Act”), and the Company shall not terminate its status
as an issuer required to file reports under the 34 Act even if the 34 Act or the
rules and regulations thereunder would otherwise permit such
termination.
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5.3 Schedule 13D. Buyer
agrees to file a Schedule 13D, if applicable, with the SEC in a timely manner,
and agrees to keep it current.
5.4 Use of Proceeds. The
Company will use the proceeds from the sale of the Shares for working capital
purposes as more particularly described and in the amounts indicated in Schedule
5.4 attached hereto and incorporated herein by this reference.
5.5 Disclosure of
Transaction. As soon as reasonably possible following the Closing Date,
the Company shall file a Form 8-K with the SEC describing the terms of the
transactions contemplated herein.
5.6 Conduct of the Business of
the Company. After the Closing Date, the Company will continue to conduct
the operations of the business of the Company in the ordinary course and will
maintain the assets, properties and rights of the Company in at least as good
order and condition as exists on the date hereof, subject to ordinary wear and
tear.
6. Indemnification. In
consideration of Buyer’s execution and delivery of this Agreement and acquiring
the Shares thereunder, and in addition to all of the Company’s other obligations
under the Agreement, the Company shall defend, protect, indemnify and hold
harmless Buyer from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether Buyer is a party to the action for
which indemnification hereunder is sought), and including reasonable attorneys’
fees and disbursements (the “Indemnified Liabilities”), incurred by Buyer as a
result of, or arising out of or relating to (a) any misrepresentation or breach
of any representation or warranty made by the Company in the Agreement or any
other certificate, instrument or document contemplated hereby, (b) any breach of
any covenant, agreement or obligation of the Company contained in this Agreement
or any other certificate, instrument or document contemplated hereby, (c) any
cause of action, suit or claim brought or made against Buyer and arising out of
or resulting from the execution, delivery, performance or enforcement of the
Agreement in accordance with the terms hereof or any other certificate,
instrument or document contemplated hereby, or (d) any transaction financed or
to be financed in whole or in part, directly or indirectly, with the proceeds of
the issuance of the Shares. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities that is permissible under applicable
law.
6.1 Claims for
Indemnification. Whenever any claim shall arise for indemnification
hereunder, Buyer shall promptly notify the Company of the claim and, when known,
the facts constituting the basis for such claim; provided however, that a
failure to provide such notice will not reduce the indemnification obligation
hereunder unless, and only to the extent that, such failure to deliver notice
materially prejudices the Company. In the event of any claim for
indemnification hereunder resulting from or in connection with any claim or
legal proceedings by a third party, the notice to the Company shall specify, if
known, the amount or an estimate of the amount of the liability potentially
arising therefrom. The Buyer shall not settle or compromise any claim by a third
party for which it is entitled to indemnification hereunder, without the prior
written consent of the Company, which will not be unreasonably
withheld.
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6.2 Manner of
Indemnification. Any indemnification by the Company of the Buyer shall be
effected by payment of cash, wire transfer or delivery of a certified or
official bank check in immediately available funds in the amount of the
Indemnification Liability.
6.3 Limitations on
Indemnification. All representations and warranties made by the Company
herein or in any instrument or document furnished in connection herewith shall
survive the Closing only for a period of 12 months, except for the
representations and warranties contained in Sections 3.2 and 3.3, which shall
not expire. Buyer shall not be entitled to assert a claim for
indemnification under this Section 6 unless (i) such claim is asserted in
writing prior to 12 months following the Closing Date, or (ii) such claim
relates to any of the matters set forth in the first sentence of this Section
6.3, which may be asserted at any time prior to the expiration of such
representations.
6.4 Sole Basis for
Recovery. The parties intend Article 6 to be the exclusive method for
compensating Buyer for claims relating to the Company and the transactions
contemplated by this Agreement.
6.5 Insurance. With
respect to any matter covered by this Article 6, the Company shall use
reasonable efforts to assert a claim under any applicable insurance policy and
any indemnification claim shall be net of any insurance proceeds received by the
Buyer.
7. Miscellaneous.
7.1 Notices. All notices,
requests, demands, and other communications hereunder shall be in writing and
shall be deemed given if delivered personally or sent by fax during normal
business hours of the recipient, the next business day if sent by a national
overnight delivery service, charges prepaid, or three days after mailed by
certified or registered mail, postage prepaid, return receipt requested, to the
parties, their successors in interest or their assignees at the following
addresses, or at such other addresses as the parties may designate by written
notice in the manner aforesaid:
6
7.2 Governing Law. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN THAT STATE.
7.3 Counterparts. This
Agreement may be executed simultaneously in one or more counterparts, each of
which shall be deemed an original, but all of which shall constitute but one and
the same instrument.
7.4 Indemnification for
Brokerage. Buyer and the Company each represent and warrant that no
broker or finder has acted on its behalf in connection with this Agreement or
the transactions contemplated hereby. In addition to the
indemnification obligations contained in Section 6, each party hereto agrees to
indemnify and hold harmless the others from any claim or demand for commissions
or other compensation by any broker, finder or similar agent who is or claims to
have been employed by or on behalf of such ply.
7.5 Complete Agreement.
This Agreement, the Schedules hereto and the documents delivered pursuant to
this Agreement form or will form the entire agreement between the parties hereto
with respect to the transactions contemplated herein and shall supersede all
previous oral and written and all contemporaneous oral negotiations,
commitments, and understandings.
7.6 Interpretation. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
Agreement.
7.7 Severability. Any
provision of this Agreement which is invalid, illegal, or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity, illegality, or unenforceability, without affecting in any way
the remaining provisions hereof in such jurisdiction or rendering that or any
other provision of this Agreement invalid, illegal, or unenforceable in any
other jurisdiction.
7.8 Knowledge; Due Diligence
Investigation. All representations and warranties contained herein which
are made to the knowledge of the Company shall mean to the knowledge of ▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ (“Executive Officers”). The
Executive Officers shall be deemed to have “knowledge” of a matter for purposes
of the warranties and representations contained herein if such matter has come,
or should reasonably be expected to have come, to the attention of the Executive
Officers of the Company after conducting a reasonable
investigation.
7
7.9 Expenses of
Transactions. All fees, costs and expenses incurred by Buyer or the
Company in connection with the transactions contemplated by this Agreement shall
be borne by the party incurring the same.
7.10
Amendment. The
terms of this Agreement can be amended only by a written agreement of the Buyer
and the Company.
7.11
Counterparts.
This Agreement may be executed in two or more identical counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to each other
party; provided that a facsimile signature shall be considered due execution and
shall be binding upon the signatory thereto with the same force and effect as if
the signature were an original, not a facsimile signature.
IN
WITNESS WHEREOF, the undersigned duly execute this Agreement as of the date
first written above.
COMPANY:
LOCATION
BASED TECHNOLOGIES, INC. a Nevada corporation
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/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇
▇. ▇▇▇▇▇
Chief Executive Officer
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/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇
▇▇▇▇▇
Secretary
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/s/
▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇
▇▇▇▇▇▇
Buyer
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8