Item 1.01
Entry Into A Material Definitive Agreement
Reference is made to our Current Report on Form 8-K dated January 29, 2014 in which the Company announced the execution of an Agreement and Plan of Reorganization dated January 29, 2014, pursuant to which the Company had agreed to acquire all a majority (50.01%) of the equity interests in Cherubim Builders Group, LLC ("CBG") from PDX Partners, Inc. for 40,000,000 post split shares of Common Stock of the Company (the "Common Stock") at the Closing of the Agreement, which is expected to take place on February 28, 2014.
On February 19, shortly after the filing of the Form 8-K disclosing the proposed transaction, the Company received a request for additional information regarding the proposed transaction from attorneys representing Zachary Tsambis, a purported shareholder of the Company, and other unnamed shareholders represented by him. The Board of Directors of the Company became aware that an individual by that name had made numerous postings on a message board regarding the Company sponsored by Investorshub. The Company believed that Mr. Tsambis intended to either personally utilize any information which might be provided to him, or selectively disseminate portions of that information to other participants of the message board.
The Company’s response to Mr. Tsambis, and his legal counsel, was that, pursuant to Regulation FD, it would be unable to disclose any material information to Mr. Tsambis unless that information was concurrently included in a Current Report on Form 8-K. The Company invited Mr. Tsambis, through his counsel, to provide a request for the specific additional disclosure which Mr. Tsambis thought to be material to investors, and the Company would endeavor to disclose all matters in an amendment to the January 29, 2014 8-K.
The Company did not receive any request for specific disclosure from counsel to Mr. Tsambis. On February 27, 2014, the Company was informed via email of a lawsuit which was intended to be filed the following day, in connection with an ex parte application for a temporary restraining order enjoining the closing of the Agreement. The Company has not been served with any documents, and did not attend the hearing. According to court records, the lawsuit, styled
Zachary Tsambis vs. Exobox Technologies Corp., Shaun Irvine, Jacob P. Cukjati III and Lori Cukjati
, case number 2014-10471, was filed on February 28, 2014. The proceeding purports to be a direct and shareholder derivative action and seeks to enjoin the closing of the Agreement. The Company has not been served with any temporary restraining order or any further documents.
The complaint in the matter accuses the defendants of self dealing, breaches of their fiduciary duties, wrongful enrichment and dilution, wrongful deprivation of legitimate shareholder interests, improper dividends, abuse of control, gross mismanagement, breach of contract, fraud, statutory fraud, negligent misrepresentation, unjust enrichment, conspiracy, minority shareholder oppression, and also seeks for a declaratory judgment with respect to certain corporate actions.
The Company has not undertaken an exhaustive review of the complaint, but believes it is completely without merit and in large part fails to state cognizable causes of action. PBX Partners, Inc. notified the Company on March 11, 2014 that it is unwilling to close on the Agreement while this litigation is pending, and has rescinded the Agreement. Therefore, the proposed transaction will not go forward and the Company is evaluating its course of action at this time.
Item 1.02
Termination of a Material Definitive Agreement.
See disclosure in Item 1.01.
