Document:

Penthouse Int'l, Inc., Exhibit 10.1

 

Exhibit 10.1

AMERICAN PULP EXCHANGE, INC.
COMMON STOCK PURCHASE AGREEMENT

     This Common Stock Purchase Agreement (this “Agreement”) is made and
entered into as of November 1, 2002, by and between American Pulp Exchange,
Inc., a Florida corporation (the “Corporation”), and Vector Partners, LLC, a
Nevada limited liability company (the “Investor”).

     WHEREAS, the Corporation desires to sell to the Investor, and the Investor
desires to purchase from the Corporation, shares of the Corporation’s Common
Stock on the terms and conditions set forth in this Agreement;

     NOW, THEREFORE, the parties hereby agree as follows:

     1.     Agreement to Purchase and Sell Stock.

          1.1 Authorization. As of the Closing (as defined below), the Corporation
will have authorized the sale and issuance, pursuant to the terms and
conditions of this Agreement, of Nine Hundred Thirty Thousand (930,000) shares
of the Corporation’s Common Stock, $0.0025 par value per share
(the “Purchased
Shares”).

          1.2 Agreement to Purchase and Sell. The Corporation agrees to sell to the
Investor at the Closing, and the Investor agrees to purchase from the
Corporation at the Closing, the Purchased Shares, at a per share purchase price
of One Cent ($0.01), and at the aggregate purchase price of Nine Thousand Three
Hundred Dollars ($9,300.00), in consideration of past services rendered to the
Corporation in connection with its organization, valued at Nine Thousand Three
Hundred Dollars ($9,300.00).

     2.     Closing. The purchase and sale of the Purchased Shares will take place
at the offices of Pachulski, Stang, Ziehl, Young & Jones P.C., 10100 Santa
Monica Boulevard, Suite 1100, Los Angeles, California 90067, at 10:00 a.m.
Pacific Time, on November 4, 2002 or at such other time and place as the
Corporation and the Investor mutually agree upon (which time and place are
referred to in this Agreement as the “Closing”). At the Closing, the
Corporation will deliver to the Investor a share certificate representing the
Purchased Shares that the Investor has agreed to purchase against delivery to
the Corporation by such Investor of the full purchase price of such Purchased
Shares, paid in cash by wire transfer of funds to the Corporation.

     3.     Representations and Warranties of the Corporation. The Corporation
hereby represents and warrants to the Investor that the statements in the
following paragraphs of this Section 3 are all true and complete immediately
prior to the Closing:

          3.1 Organization, Good Standing, Corporate Power and Qualification. The
Corporation has been duly incorporated and organized, and is validly existing
in good standing, under the laws of the State of Florida. The Corporation has
the requisite corporate power and authority to enter into and perform this
Agreement, to own and operate its properties and assets, if any, and to carry
on its business as currently conducted and as presently proposed to be
conducted. The Corporation is not presently qualified to do business as a
foreign corporation in any jurisdiction and the failure to be so qualified will
not have a materially adverse affect on the Corporation’s business as now
conducted or as now proposed to be conducted.

          3.2 Capitalization. The capitalization of the Corporation immediately
prior to the Closing consists of the following:

 

 

               (a) Preferred Stock. A total of 20,000,000 authorized shares of preferred
stock, $0.0025 par value per share (the “Preferred Stock”), consisting of
shares designated as “Series A Preferred Stock,” none of which will be issued
and outstanding, and shares designated as “Series B Preferred Stock,” none of
which will be issued and outstanding.

               (b) Common Stock. A total of 250,000,000 authorized shares of Common
Stock, $ 0.0025 par value per share (the “Common Stock”), of which 4,345,000
shares will be issued and outstanding.

               (c) Options, Warrants, Reserved Shares. Except under this Agreement, the
Stock Purchase Agreement dated October 22, 2002, between Al Siegel and
Investor, and the Common Stock Purchase Agreement dated as of even date
herewith between the Corporation and PH Capital Holdings, LLC, to the
Corporation’s knowledge (a) there is no outstanding option, warrant, right
(including conversion or preemptive rights) or agreement for the purchase or
acquisition from the Corporation of any shares of its capital stock or any
securities convertible into or ultimately exchangeable or exercisable for any
shares of the Corporation’s capital stock and (b) no shares of the
Corporation’s outstanding capital stock are subject to any preemptive rights,
rights of first refusal or other rights to purchase such stock.

          3.3 Due Authorization. All corporate action on the part of the
Corporation’s director(s) and shareholders necessary for (i) the authorization,
execution, delivery of, and the performance of all obligations of the
Corporation under, this Agreement and (ii) the authorization, issuance,
reservation for issuance and delivery of all of the Purchased Shares being sold
under this Agreement has been taken or will be taken prior to the Closing.
This Agreement, when executed and delivered, will constitute, valid and legally
binding obligations of the Corporation, enforceable in accordance with their
respective terms, except as may be limited by (i) applicable bankruptcy,
insolvency, reorganization or others laws of general application relating to or
affecting the enforcement of creditors’ rights generally and (ii) the effect of
rules of law governing the availability of equitable remedies.

          3.4 Valid Issuance of Stock.

               (a) The Purchased Shares, when paid for and issued as provided in this
Agreement, will be duly authorized and validly issued, fully paid and
nonassessable.

               (b) Based in part on the representations made by the Investor in Section 4
hereof, the offer and sale of the Purchased Shares solely to the Investor in
accordance with this Agreement are exempt from the registration and prospectus
delivery requirements of the Securities Act of 1933, as amended (the
“Securities Act”) and the securities registration and qualification
requirements of the currently effective provisions of the securities laws of
the State in which the Investor is resident.

          3.5 Governmental Consents. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with,
any federal, state or local governmental authority is required on the part of
the Corporation in order to enable the Corporation to execute, deliver and
perform its obligations under this Agreement except for such qualifications or
filings under applicable securities laws as may be required in connection with
the transactions contemplated by this Agreement. All such qualifications and
filings will, in the case of qualifications, be effective on the Closing and
will, in the case of filings, be made within the time prescribed by law.

          3.6 Registration Rights. The Corporation is not under any obligation to
register under the Securities Act any of its currently outstanding securities
or any securities issuable upon exercise or conversion of its currently
outstanding securities nor is the Corporation obligated to register or qualify
any such securities under any state securities or blue sky laws.

     4.     Representations, Warranties and Certain Agreements of the Investor.
The Investor hereby represents and warrants to, and agrees with, the
Corporation that:

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          4.1 Authorization. This Agreement constitutes such Investor’s valid and
legally binding obligation, enforceable in accordance with its terms except as
may be limited by (i) applicable bankruptcy, insolvency, reorganization or
other laws of general application relating to or affecting the enforcement of
creditors’ rights generally and (ii) the effect of rules of law governing the
availability of equitable remedies. The Investor represents that such Investor
has full power and authority to enter into this Agreement.

          4.2 Purchase for Own Account. The Purchased Shares to be purchased by
such Investor hereunder will be acquired for investment for such Investor’s own
account, not as a nominee or agent, and not with a view to the public resale or
distribution thereof within the meaning of the Securities Act, and such
Investor has no present intention of selling, granting any participation in, or
otherwise distributing the same. The Investor also represents that it has not
been formed for the specific purpose of acquiring the Purchased Shares.

          4.3 Disclosure of Information. At no time was the Investor presented with
or solicited by any publicly issued or circulated newspaper, mail, radio,
television or other form of general advertising or solicitation in connection
with the offer, sale and purchase of the Purchased Shares. Such Investor has
received or has had full access to all the information it considers necessary
or appropriate to make an informed investment decision with respect to the
Purchased Shares to be purchased by such Investor under this Agreement. Such
Investor further has had an opportunity to ask questions and receive answers
from the Corporation regarding the terms and conditions of the offering of the
Purchased Shares and to obtain additional information (to the extent the
Corporation possessed such information or could acquire it without unreasonable
effort or expense) necessary to verify any information furnished to such
Investor or to which such Investor had access.

          4.4 Investment Experience. Such Investor understands that the purchase of
the Purchased Shares involves substantial risk. Such Investor: (i) has
experience as an investor in securities and acknowledges that such Investor is
able to fend for itself, can bear the economic risk of such Investor’s
investment in the Purchased Shares and has such knowledge and experience in
financial or business matters that such Investor is capable of evaluating the
merits and risks of this investment in the Purchased Shares and protecting its
own interests in connection with this investment and/or (ii) has a preexisting
personal or business relationship with the Corporation and certain of its
officers, directors or controlling persons of a nature and duration that
enables such Investor to be aware of the character, business acumen and
financial circumstances of such persons.

          4.5 Accredited Investor Status. Such Investor is an “accredited investor”
within the meaning of Regulation D promulgated under the Securities Act.

          4.6 Restricted Securities. Such Investor understands that the Purchased
Shares are characterized as “restricted securities” under the Securities Act
inasmuch as they are being acquired from the Corporation in a transaction not
involving a public offering and that under the Securities Act and applicable
regulations thereunder such securities may be resold without registration under
the Securities Act only in certain limited circumstances. In this connection,
such Investor represents that such Investor is familiar with Rule 144 of the
U.S. Securities and Exchange Commission (the “SEC”), as presently in effect,
and understands the resale limitations imposed thereby and by the Securities
Act. Such Investor understands that the Corporation is under no obligation to
register any of the securities sold hereunder except as provided in the
Registration Rights Agreement.

          4.7 Further Limitations on Disposition. Without in any way limiting the
representations set forth above, such Investor further agrees not to make any
disposition of all or any portion of the Purchased Shares unless and until:

               (a) there is then in effect a registration statement under the Securities
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or

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                (b) such Investor shall have notified the Corporation of the proposed
disposition and shall have furnished the Corporation with a statement of the
circumstances surrounding the proposed disposition, and, at the expense of such
Investor or its transferee, with an opinion of counsel, reasonably satisfactory
to the Corporation, that such disposition will not require registration of such
securities under the Securities Act.

     Notwithstanding the provisions of paragraphs (a) and (b) above, no such
registration statement or opinion of counsel shall be required for any transfer
of any Purchased Shares in compliance with SEC Rule 144.

          4.8 “Market Stand-Off” Agreement. The Investor hereby agrees that it
shall not, to the extent requested by the Corporation or an underwriter of
securities of the Corporation, sell or otherwise transfer or dispose of any
Purchased Shares or other shares of stock of the Corporation then owned by such
Investor (other than to donees or partners of the Investor who agree to be
similarly bound) for up to One Hundred Eighty (180) days following the
effective date of any registration statement of the Corporation filed under the
Securities Act; provided that, notwithstanding a request by the Corporation,
Investor shall not be restricted under this Section 4.8 from selling or
otherwise transferring or disposing of any Purchased Shares or other shares of
stock of the Corporation at any time prior to the effective date of any
registration statement.

     In order to enforce the foregoing covenant, the Corporation shall have the
right to place restrictive legends on the certificates representing the shares
subject to this Section and to impose stop transfer instructions with respect
to the Purchased Shares and such other shares of stock of the Investor (and the
shares or securities of every other person subject to the foregoing
restriction) until the end of such period. The Investor further agrees to
enter into any agreement reasonably required by the underwriters to implement
the foregoing within any reasonable timeframe so requested.

          4.9 Legends. It is understood that the certificates evidencing the
Purchased Shares will bear the legends substantially similar to those set forth
below:

          (a) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF
ANY OTHER JURISDICTIONS. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER
TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE
ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

     THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A 180 DAY MARKET
STAND-OFF RESTRICTION AS SET FORTH IN A CERTAIN AGREEMENT BETWEEN THE ISSUER
AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
PRINCIPAL OFFICE OF THE ISSUER. AS A RESULT OF SUCH AGREEMENT, THESE SHARES
MAY NOT BE TRADED PRIOR TO 180 DAYS AFTER THE EFFECTIVE DATE OF THE INITIAL
PUBLIC OFFERING OF THE COMMON STOCK OF THE ISSUER HEREOF. SUCH RESTRICTION IS
BINDING ON TRANSFEREES OF THESE SHARES.

               (b) Any legends required by applicable state securities laws.

               (c) Any legends required by any agreement(s) between the Corporation and
the Investor.

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     The first legend set forth in (a) above shall be removed by the
Corporation from any certificate evidencing Purchased Shares upon delivery to
the Corporation of an opinion by counsel, reasonably satisfactory to the
Corporation, that a registration statement under the Securities Act is at that
time in effect with respect to the legended security or that such security can
be freely transferred in a public sale without such a registration statement
being in effect and that such transfer will not jeopardize the exemption or
exemptions from registration pursuant to which the Corporation issued the
Purchased Shares.

     5.     Conditions to Investor’s Obligations at Closing. The obligations of
the Investor under Section 2 of this Agreement are subject to the fulfillment
or waiver, on or before the Closing, of each of the following conditions, the
waiver of which shall not be effective unless the Investor consents to such
waiver, which consent may be given by written, oral or telephone communication
to the Corporation:

          5.1 Representations and Warranties True. Each of the representations and
warranties of the Corporation contained in Section 3 hereof shall be true and
complete on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of the
Closing.

          5.2 Performance. The Corporation shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing and
shall have obtained all approvals, consents and qualifications necessary to
complete the purchase and sale described herein.

          5.3 Securities Exemptions. The offer and sale of the Purchased Shares to
the Investor pursuant to this Agreement shall be exempt from the registration
requirements of the Securities Act and the registration and/or qualification
requirements of all other applicable state securities laws.

          5.4 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Investor and to the Investor’s counsel, and they shall each have received all
such counterpart originals and certified or other copies of such documents as
they may reasonably request.

     6.     Conditions to the Corporation’s Obligations at Closing. The
obligations of the Corporation to the Investor under this Agreement are subject
to the fulfillment or waiver on or before the Closing of each of the following
conditions by such Investor:

          6.1 Representations and Warranties. The representations and warranties of
such Investor contained in Section 4 shall be true and complete on the date of
the Closing with the same effect as though such representations and warranties
had been made on and as of the Closing.

          6.2 Payment of Purchase Price. The Investor shall have delivered to the
Corporation the purchase price specified in Section 2.

          6.3 Securities Exemptions. The offer and sale of the Purchased Shares to
the Investor pursuant to this Agreement shall be exempt from the registration
requirements of the Securities Act and the registration and/or qualification
requirements of all other applicable state securities laws.

          6.4 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Corporation and to the Corporation’s legal counsel, and the Corporation shall
have received all such counterpart originals and certified or other copies of
such documents as it may reasonably request.

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     7.     General Provisions.

          7.1 Survival of Warranties. The representations, warranties and covenants
of the Corporation and the Investor contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investor, their counsel or the
Corporation, as the case may be.

          7.2 Successors and Assigns. Except as otherwise provided in this
Agreement, this Agreement, and the rights and obligations of the parties
hereunder, will be binding upon and inure to the benefit of their respective
successors, assigns, heirs, executors, administrators and legal
representatives.

          7.3 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of California, without giving effect to
that body of laws pertaining to conflict of laws.

          7.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an
original, and all of which together shall constitute one and the same
agreement.

          7.5 Titles and Headings. The titles, captions and headings of this
Agreement are included for ease of reference only and will be disregarded in
interpreting or construing this Agreement. Unless otherwise specifically
stated, all references herein to “sections” will mean “sections” to this
Agreement.

          7.6 Notices. All notices, requests, demands and other communications
which are required to be given under this Agreement shall be in writing and
shall be deemed to have been duly given, made and received only when
transmitted if: (a) transmitted by facsimile, upon printed confirmation of
complete transmission by facsimile; (b) delivered (personally, by courier
service or by other messenger; or (c) when deposited in the United States
mails, registered or certified mail, postage prepaid, return receipt requested,
addressed as set forth below:

	 	(a)	 	if to the Investor:
	 
	 	 	 	Vector Partners, LLC

Attention: Jason W. Galanis

1518 North Beverly Drive

Beverly Hills, California 90210
	 
	 	 	 	With a copy to:
	 
	 	 	 	Meltzer, Lippe, Goldstein & Schlissel, LLP

Attention: Richard Reichler, Esq.

190 Willis Avenue

Mineola, New York 11501
	 
	 	(b)	 	if to the Corporation:
	 
	 	 	 	American Pulp Exchange, Inc.

Attention: President

1518 North Beverly Drive

Beverly Hills, California 90210
	 
	 	 	 	With a copy to:
	 
	 	 	 	Robert J. Feinstein, Esq.

Pachulski, Stang, Ziehl, Young & Jones P.C.

6

 

	 	 	 	461 Fifth Ave

25th Floor

New York, NY 10017

          7.7 No Finder’s Fees. Each party represents that it neither is nor will
be obligated for any finder’s or broker’s fee or commission in connection with
this transaction. The Investor agrees to indemnify and to hold harmless the
Corporation from any liability for any commission or compensation in the nature
of a finders’ or broker’s fee (and any asserted liability) for which the
Investor or any of its officers, partners, employees, or representatives is
responsible. The Corporation agrees to indemnify and hold harmless the
Investor from any liability for any commission or compensation in the nature of
a finder’s or broker’s fee (and any asserted liability) for which the
Corporation or any of its officers, employees or representatives is
responsible.

          7.8 Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Corporation and the Investor. Any amendment or
waiver effected in accordance with this Section shall be binding upon the
Investor, each future holder of the Purchased Shares, and the Corporation. No
delay or failure to require performance of any provision of this Agreement
shall constitute a waiver of that provision as to that or any other instance.
No waiver granted under this Agreement as to any one provision herein shall
constitute a subsequent waiver of such provision or of any other provision
herein, nor shall it constitute the waiver of any performance other than the
actual performance specifically waived.

          7.9 Severability. If any provision of this Agreement is determined by any
court or arbitrator of competent jurisdiction to be invalid, illegal or
unenforceable in any respect, such provision will be enforced to the maximum
extent possible given the intent of the parties hereto. If such clause or
provision cannot be so enforced, such provision shall be stricken from this
Agreement and the remainder of this Agreement shall be enforced as if such
invalid, illegal or unenforceable clause or provision had (to the extent not
enforceable) never been contained in this Agreement. Notwithstanding the
forgoing, if the value of this Agreement based upon the substantial benefit of
the bargain for any party is materially impaired, which determination as made
by the presiding court or arbitrator of competent jurisdiction shall be
binding, then both parties agree to substitute such provision(s) through good
faith negotiations.

          7.10 Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement and understanding of the parties with
respect to the subject matter of this Agreement, and supersede any and all
prior understandings and agreements, whether oral or written, between or among
the parties hereto with respect to the specific subject matter hereof.

          7.11 Further Assurances. The parties agree to execute such further
documents and instruments and to take such further actions as may be reasonably
necessary to carry out the purposes and intent of this Agreement.

          7.12 Facsimile Signatures. This Agreement may be executed and delivered
by facsimile and upon such delivery the facsimile signature will be deemed to
have the same effect as if the original signature had been delivered to the
other party.

          7.13 Third Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any person, other than the parties hereto and their
successors and assigns, any rights or remedies under or by reason of this
Agreement

          7.14 Costs and Attorneys’ Fees. In the event that any action, suit or
other proceeding is instituted concerning or arising out of this Agreement or
any transaction contemplated hereunder, the prevailing party shall recover all
of such party’s costs and attorneys’ fees incurred in each such action, suit or
other proceeding, including any and all appeals or petitions therefrom.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.

	 
	THE CORPORATION:
	 
	 
	 
	AMERICAN PULP EXCHANGE, INC.,

a Florida corporation
	 
	 
	 
	By:  /s/ Jason Galanis

	Name:   Jason W. Galanis
	 
	Title:  Chairman, President, CFO and Secretary
	 
	 
	 
	INVESTOR:
	 
	 
	 
	VECTOR PARTNERS, LLC,

a Nevada limited liability company
	 
	By:  /s/ Jason Galanis

Jason W. Galanis, its Manager

[SIGNATURE PAGE TO COMMON STOCK PURCHASE AGREEMENT]Penthouse Int'l, Inc., Exhibit 10.2

 

Exhibit 10.2

AMERICAN PULP EXCHANGE, INC.

COMMON STOCK PURCHASE AGREEMENT

     This
Common Stock Purchase Agreement (this “Agreement”) is made and
entered into as of November 1, 2002, by and between American Pulp Exchange,
Inc., a Florida corporation (the “Corporation”), and PH Capital Holdings, LLC,
a California limited liability company (the “Investor”).

     WHEREAS, the Corporation desires to sell to the Investor, and the Investor
desires to purchase from the Corporation, shares of the Corporation’s Common
Stock on the terms and conditions set forth in this Agreement;

     NOW, THEREFORE, the parties hereby agree as follows:

     1.     Agreement to Purchase and Sell Stock.

          1.1 Authorization. As of the Closing (as defined below), the Corporation
will have authorized the sale and issuance, pursuant to the terms and
conditions of this Agreement, of Two Million Two Hundred Twenty-Five Thousand
(2,225,000) shares of the Corporation’s Common Stock, $0.0025 par value per
share (the “Purchased Shares”).

          1.2 Agreement to Purchase and Sell. The Corporation agrees to sell to the
Investor at the Closing, and the Investor agrees to purchase from the
Corporation at the Closing, the Purchased Shares, at a per share purchase price
of One Cent ($0.01), and at the aggregate purchase price of Twenty-Two
Thousand Two Hundred Fifty Dollars ($22,250.00).

     2.     Closing. The purchase and sale of the Purchased Shares will take place
at the offices of Pachulski, Stang, Ziehl, Young & Jones P.C., 10100 Santa
Monica Boulevard, Suite 1100, Los Angeles, California 90067, at 10:00 a.m.
Pacific Time, on November 4, 2002 or at such other time and place as the
Corporation and the Investor mutually agree upon (which time and place are
referred to in this Agreement as the “Closing”). At the Closing, the
Corporation will deliver to the Investor a share certificate representing the
Purchased Shares that the Investor has agreed to purchase against delivery to
the Corporation by such Investor of the full purchase price of such Purchased
Shares, paid in cash by wire transfer of funds to the Corporation.

     3.     Representations and Warranties of the Corporation. The Corporation
hereby represents and warrants to the Investor that the statements in the
following paragraphs of this Section 3 are all true and complete immediately
prior to the Closing:

          3.1 Organization, Good Standing, Corporate Power and Qualification. The
Corporation has been duly incorporated and organized, and is validly existing
in good standing, under the laws of the State of Florida. The Corporation has
the requisite corporate power and authority to enter into and perform this
Agreement, to own and operate its properties and assets, if any, and to carry
on its business as currently conducted and as presently proposed to be
conducted. The Corporation is not presently qualified to do business as a
foreign corporation in any jurisdiction and the failure to be so qualified will
not have a materially adverse affect on the Corporation’s business as now
conducted or as now proposed to be conducted.

 

 

          3.2 Capitalization. The capitalization of the Corporation immediately prior
to the Closing consists of the following:

               (a) Preferred Stock. A total of 20,000,000 authorized shares of preferred
stock, $0.0025 par value per share (the “Preferred Stock”), consisting of
shares designated as “Series A Preferred Stock”, none of which will be issued
and outstanding, and shares designated as “Series B Preferred Stock”, none of
which will be issued and outstanding.

               (b) Common Stock. A total of 250,000,000 authorized shares of Common
Stock, $ 0.0025 par value per share (the “Common Stock”), of which 4,345,000
shares will be issued and outstanding.

               (c) Options, Warrants, Reserved Shares. Except under this Agreement, the
Stock Purchase Agreement dated October 22, 2002 between Al Siegel and Vector
Partners, LLC, the Common Stock Purchase Agreement dated as of even date
herewith between the Corporation and Vector Partners, LLC, to the Corporation’s
knowledge (a) there is no outstanding option, warrant, right (including
conversion or preemptive rights) or agreement for the purchase or acquisition
from the Corporation of any shares of its capital stock or any securities
convertible into or ultimately exchangeable or exercisable for any shares of
the Corporation’s capital stock and (b) no shares of the Corporation’s
outstanding capital stock are subject to any preemptive rights, rights of first
refusal or other rights to purchase such stock.

          3.3 Due Authorization. All corporate action on the part of the
Corporation’s director(s) and shareholders necessary for (i) the authorization,
execution, delivery of, and the performance of all obligations of the
Corporation under, this Agreement and (ii) the authorization, issuance,
reservation for issuance and delivery of all of the Purchased Shares being sold
under this Agreement has been taken or will be taken prior to the Closing.
This Agreement, when executed and delivered, will constitute, valid and legally
binding obligations of the Corporation, enforceable in accordance with their
respective terms, except as may be limited by (i) applicable bankruptcy,
insolvency, reorganization or others laws of general application relating to or
affecting the enforcement of creditors’ rights generally and (ii) the effect of
rules of law governing the availability of equitable remedies.

          3.4 Valid Issuance of Stock.

               (a) The Purchased Shares, when paid for and issued as provided in this
Agreement, will be duly authorized and validly issued, fully paid and
nonassessable.

               (b) Based in part on the representations made by the Investor in Section 4
hereof, the offer and sale of the Purchased Shares solely to the Investor in
accordance with this Agreement are exempt from the registration and prospectus
delivery requirements of the Securities Act of 1933, as amended (the
“Securities Act”) and the securities registration and qualification
requirements of the currently effective provisions of the securities laws of
the State in which the Investor is resident.

          3.5 Governmental Consents. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with,
any federal, state or local governmental authority is required on the part of
the Corporation in order to enable the Corporation to execute, deliver and
perform its obligations under this Agreement except for such qualifications or
filings under applicable securities laws as may be required in connection with
the transactions contemplated by this Agreement. All such qualifications and
filings will, in the case of qualifications, be effective on the Closing and
will, in the case of filings, be made within the time prescribed by law.

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          3.6 Registration Rights. The Corporation is not under any obligation to
register under the Securities Act any of its currently outstanding securities
or any securities issuable upon exercise or conversion of its currently
outstanding securities nor is the Corporation obligated to register or qualify
any such securities under any state securities or blue sky laws.

     4.     Representations, Warranties and Certain Agreements of the Investor.
The Investor hereby represents and warrants to, and agrees with, the
Corporation that:

          4.1 Authorization. This Agreement constitutes such Investor’s valid and
legally binding obligation, enforceable in accordance with its terms except as
may be limited by (i) applicable bankruptcy, insolvency, reorganization or
other laws of general application relating to or affecting the enforcement of
creditors’ rights generally and (ii) the effect of rules of law governing the
availability of equitable remedies. The Investor represents that such Investor
has full power and authority to enter into this Agreement.

          4.2 Purchase for Own Account. The Purchased Shares to be purchased by
such Investor hereunder will be acquired for investment for such Investor’s own
account, not as a nominee or agent, and not with a view to the public resale or
distribution thereof within the meaning of the Securities Act, and such
Investor has no present intention of selling, granting any participation in, or
otherwise distributing the same. The Investor also represents that it has not
been formed for the specific purpose of acquiring the Purchased Shares.

          4.3 Disclosure of Information. At no time was the Investor presented with
or solicited by any publicly issued or circulated newspaper, mail, radio,
television or other form of general advertising or solicitation in connection
with the offer, sale and purchase of the Purchased Shares. Such Investor has
received or has had full access to all the information it considers necessary
or appropriate to make an informed investment decision with respect to the
Purchased Shares to be purchased by such Investor under this Agreement. Such
Investor further has had an opportunity to ask questions and receive answers
from the Corporation regarding the terms and conditions of the offering of the
Purchased Shares and to obtain additional information (to the extent the
Corporation possessed such information or could acquire it without unreasonable
effort or expense) necessary to verify any information furnished to such
Investor or to which such Investor had access.

          4.4 Investment Experience. Such Investor understands that the purchase of
the Purchased Shares involves substantial risk. Such Investor: (i) has
experience as an investor in securities of troubled and distressed companies
and acknowledges that such Investor is able to fend for itself, can bear the
economic risk of such Investor’s investment in the Purchased Shares and has
such knowledge and experience in financial or business matters that such
Investor is capable of evaluating the merits and risks of this investment in
the Purchased Shares and protecting its own interests in connection with this
investment and/or (ii) has a preexisting personal or business relationship with
the Corporation and certain of its officers, directors or controlling persons
of a nature and duration that enables such Investor to be aware of the
character, business acumen and financial circumstances of such persons.

          4.5 Accredited Investor Status. Such Investor is an “accredited investor”
within the meaning of Regulation D promulgated under the Securities Act.

          4.6 Restricted Securities. Such Investor understands that the Purchased
Shares are characterized as “restricted securities” under the Securities Act
inasmuch as they are being acquired from the Corporation in a transaction not
involving a public offering and that under the Securities Act and applicable
regulations thereunder such securities may be resold without registration under
the Securities Act only in certain limited circumstances. In this connection,
such Investor represents that such Investor is familiar with Rule 144 of the
U.S. Securities and Exchange Commission (the “SEC”), as presently in effect,
and understands the

3

 

resale limitations imposed thereby and by the Securities Act. Such
Investor understands that the Corporation is under no obligation to register
any of the securities sold hereunder except as provided in the Registration
Rights Agreement.

          4.7 Further Limitations on Disposition. Without in any way limiting the
representations set forth above, such Investor further agrees not to make any
disposition of all or any portion of the Purchased Shares unless and until:

               (a) there is then in effect a registration statement under the Securities
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or

               (b) such Investor shall have notified the Corporation of the proposed
disposition and shall have furnished the Corporation with a statement of the
circumstances surrounding the proposed disposition, and, at the expense of such
Investor or its transferee, with an opinion of counsel, reasonably satisfactory
to the Corporation, that such disposition will not require registration of such
securities under the Securities Act.

     Notwithstanding the provisions of paragraphs (a) and (b) above, no such
registration statement or opinion of counsel shall be required for any transfer
of any Purchased Shares in compliance with SEC Rule 144.

          4.8 “Market Stand-Off” Agreement. The Investor hereby agrees that it
shall not, to the extent requested by the Corporation or an underwriter of
securities of the Corporation, sell or otherwise transfer or dispose of any
Purchased Shares or other shares of stock of the Corporation then owned by such
Investor (other than to donees or partners of the Investor who agree to be
similarly bound) for up to One Hundred Eighty (180) days following the
effective date of any registration statement of the Corporation filed under the
Securities Act; provided that, notwithstanding a request by the Corporation,
Investor shall not be restricted under this Section 4.8 from selling or
otherwise transferring or disposing of any Purchased Shares or other shares of
stock of the Corporation at any time prior to the effective date of any
registration statement.

     In order to enforce the foregoing covenant, the Corporation shall have the
right to place restrictive legends on the certificates representing the shares
subject to this Section and to impose stop transfer instructions with respect
to the Purchased Shares and such other shares of stock of the Investor (and the
shares or securities of every other person subject to the foregoing
restriction) until the end of such period. The Investor further agrees to
enter into any agreement reasonably required by the underwriters to implement
the foregoing within any reasonable timeframe so requested.

          4.9 Legends. It is understood that the certificates evidencing the
Purchased Shares will bear the legends substantially similar to those set forth
below:

               (a) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF
ANY OTHER JURISDICTIONS. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER
TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE
ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

     THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A 180 DAY MARKET
STAND-OFF RESTRICTION AS SET FORTH IN A CERTAIN

4

 

AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A
COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. AS A
RESULT OF SUCH AGREEMENT, THESE SHARES MAY NOT BE TRADED PRIOR TO 180 DAYS
AFTER THE EFFECTIVE DATE OF THE INITIAL PUBLIC OFFERING OF THE COMMON STOCK OF
THE ISSUER HEREOF. SUCH RESTRICTION IS BINDING ON TRANSFEREES OF THESE SHARES.

               (b) Any legends required by applicable state securities laws.

               (c) Any legends required by any agreement(s) between the Corporation and
the Investor.

     The first legend set forth in (a) above shall be removed by the
Corporation from any certificate evidencing Purchased Shares upon delivery to
the Corporation of an opinion by counsel, reasonably satisfactory to the
Corporation, that a registration statement under the Securities Act is at that
time in effect with respect to the legended security or that such security can
be freely transferred in a public sale without such a registration statement
being in effect and that such transfer will not jeopardize the exemption or
exemptions from registration pursuant to which the Corporation issued the
Purchased Shares.

     5.     Conditions to Investor’s Obligations at Closing. The obligations of
the Investor under Section 2 of this Agreement are subject to the fulfillment
or waiver, on or before the Closing, of each of the following conditions, the
waiver of which shall not be effective unless the Investor consents to such
waiver, which consent may be given by written, oral or telephone communication
to the Corporation:

          5.1 Representations and Warranties True. Each of the representations and
warranties of the Corporation contained in Section 3 hereof shall be true and
complete on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of the
Closing.

          5.2 Performance. The Corporation shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing and
shall have obtained all approvals, consents and qualifications necessary to
complete the purchase and sale described herein.

          5.3 Securities Exemptions. The offer and sale of the Purchased Shares to
the Investor pursuant to this Agreement shall be exempt from the registration
requirements of the Securities Act and the registration and/or qualification
requirements of all other applicable state securities laws.

          5.4 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Investor and to the Investor’s counsel, and they shall each have received all
such counterpart originals and certified or other copies of such documents as
they may reasonably request.

     6.     Conditions to the Corporation’s Obligations at Closing. The
obligations of the Corporation to the Investor under this Agreement are subject
to the fulfillment or waiver on or before the Closing of each of the following
conditions by such Investor:

          6.1 Representations and Warranties. The representations and warranties of
such Investor contained in Section 4 shall be true and complete on the date of
the Closing with the same effect as though such representations and warranties
had been made on and as of the Closing.

          6.2 Payment of Purchase Price. The Investor shall have delivered to the
Corporation the purchase price specified in Section 2.

5

 

          6.3 Securities Exemptions. The offer and sale of the Purchased Shares to
the Investor pursuant to this Agreement shall be exempt from the registration
requirements of the Securities Act and the registration and/or qualification
requirements of all other applicable state securities laws.

          6.4 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Corporation and to the Corporation’s legal counsel, and the Corporation shall
have received all such counterpart originals and certified or other copies of
such documents as it may reasonably request.

     7.     General Provisions.

          7.1 Survival of Warranties. The representations, warranties and covenants
of the Corporation and the Investor contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investor, their counsel or the
Corporation, as the case may be.

          7.2 Successors and Assigns. Except as otherwise provided in this
Agreement, this Agreement, and the rights and obligations of the parties
hereunder, will be binding upon and inure to the benefit of their respective
successors, assigns, heirs, executors, administrators and legal
representatives.

          7.3 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of California, without giving effect to
that body of laws pertaining to conflict of laws.

          7.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an
original, and all of which together shall constitute one and the same
agreement.

          7.5 Titles and Headings. The titles, captions and headings of this
Agreement are included for ease of reference only and will be disregarded in
interpreting or construing this Agreement. Unless otherwise specifically
stated, all references herein to “sections” will mean “sections” to this
Agreement.

          7.6 Notices. All notices, requests, demands and other communications
which are required to be given under this Agreement shall be in writing and
shall be deemed to have been duly given, made and received only when
transmitted if: (a) transmitted by facsimile, upon printed confirmation of
complete transmission by facsimile; (b) delivered (personally, by courier
service or by other messenger; or (c) when deposited in the United States
mails, registered or certified mail, postage prepaid, return receipt requested,
addressed as set forth below:

	 	 	 
	(a)	 	
if to the Investor:
	 	 	 
	 	 	
PH Capital Holdings, LLC
	 	 	
Attention: Charles Samel
	 	 	
16 East 67th Street
	 	 	
New York, New York 10021
	 	 	 
	(b)	 	
if to the Corporation:
	 	 	 
	 	 	
American Pulp Exchange, Inc.
	 	 	
Attention: President
	 	 	
1518 North Beverly Drive
	 	 	
Beverly Hills, California 90210

6

 

	 	 	 
	 	 	
With a copy to:
	 	 	 
	 	 	
Robert J. Feinstein, Esq.
	 	 	
Pachulski, Stang, Ziehl, Young & Jones P.C.
	 	 	
461 Fifth Ave
	 	 	
25th Floor
	 	 	
New York, New York 10017

          7.7 No Finder’s Fees. Each party represents that it neither is nor will
be obligated for any finder’s or broker’s fee or commission in connection with
this transaction. The Investor agrees to indemnify and to hold harmless the
Corporation from any liability for any commission or compensation in the nature
of a finders’ or broker’s fee (and any asserted liability) for which the
Investor or any of its officers, partners, employees, or representatives is
responsible. The Corporation agrees to indemnify and hold harmless the
Investor from any liability for any commission or compensation in the nature of
a finder’s or broker’s fee (and any asserted liability) for which the
Corporation or any of its officers, employees or representatives is
responsible.

          7.8 Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Corporation and the Investor. Any amendment or
waiver effected in accordance with this Section shall be binding upon the
Investor, each future holder of the Purchased Shares, and the Corporation. No
delay or failure to require performance of any provision of this Agreement
shall constitute a waiver of that provision as to that or any other instance.
No waiver granted under this Agreement as to any one provision herein shall
constitute a subsequent waiver of such provision or of any other provision
herein, nor shall it constitute the waiver of any performance other than the
actual performance specifically waived.

          7.9 Severability. If any provision of this Agreement is determined by any
court or arbitrator of competent jurisdiction to be invalid, illegal or
unenforceable in any respect, such provision will be enforced to the maximum
extent possible given the intent of the parties hereto. If such clause or
provision cannot be so enforced, such provision shall be stricken from this
Agreement and the remainder of this Agreement shall be enforced as if such
invalid, illegal or unenforceable clause or provision had (to the extent not
enforceable) never been contained in this Agreement. Notwithstanding the
forgoing, if the value of this Agreement based upon the substantial benefit of
the bargain for any party is materially impaired, which determination as made
by the presiding court or arbitrator of competent jurisdiction shall be
binding, then both parties agree to substitute such provision(s) through good
faith negotiations.

          7.10 Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement and understanding of the parties with
respect to the subject matter of this Agreement, and supersede any and all
prior understandings and agreements, whether oral or written, between or among
the parties hereto with respect to the specific subject matter hereof.

          7.11 Further Assurances. The parties agree to execute such further
documents and instruments and to take such further actions as may be reasonably
necessary to carry out the purposes and intent of this Agreement.

          7.12 Facsimile Signatures. This Agreement may be executed and delivered
by facsimile and upon such delivery the facsimile signature will be deemed to
have the same effect as if the original signature had been delivered to the
other party.

          7.13 Third Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any person, other than the parties hereto and their
successors and assigns, any rights or remedies under or by reason of this
Agreement

7

 

          7.14 Costs and Attorneys’ Fees. In the event that any action, suit or
other proceeding is instituted concerning or arising out of this Agreement or
any transaction contemplated hereunder, the prevailing party shall recover all
of such party’s costs and attorneys’ fees incurred in each such action, suit or
other proceeding, including any and all appeals or petitions therefrom.

[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]

8

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.

	 	 	 
	THE CORPORATION:	 	 
	 	 	 
	AMERICAN PULP EXCHANGE, INC.,	 	 
	a Florida corporation	 	 
	 	 	 
	By: /s/ Jason Galanis	 	 
	
	 	
 
	Name: Jason Galanis	 	 
	Title:   Chairman, President, CFO and Secretary	 	 
	 	 	 
	 	 	 
	INVESTOR:	 	 
	 	 	 
	PH CAPITAL HOLDINGS, LLC,	 	 
	a California limited liability company	 	 
	 	 	 
	By: /s/ Charles Samel	 	 
	
	 	 
	Name: Charles Samel	 	 
	Title:   Manager	 	 

[SIGNATURE PAGE TO COMMON STOCK PURCHASE AGREEMENT]

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