Contract of the Week

This week’s contract chosen for review is a Stock Purchase Agreement between Siebert Financial Corp. and Kakaopay Corporation dated April 27, 2023.

CrossCheck 365 found a number of interesting mistakes in this document.

The Missing “Thousand”

Subject to the terms and conditions of this Agreement, Purchaser agrees to purchase at the Closing, and the Company agrees to issue and sell to Purchaser the Second Tranche Shares at a per share purchase price of Two Dollars Thirty Five Cents ($2.35) aggregating Sixty Million, Five Hundred Twenty-Seven, Seven Hundred Five Dollars ($60,527,705)

Looks like “Five Hundred Twenty-Seven” should have been “Five Hundred Twenty-Seven Thousand”. Oops.

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Which section?

6.1 Representations and Warranties. The representations and warranties of Purchaser contained in Section 3.1 (Organization, Good Standing Corporate Power and Qualification), Section 3.2 (Authorization; Enforceability) and Section 3.12 (Finders’ Fees)…

The problem here is that Section 3.12 is actually captioned “Sanctions Laws”, not “Finders’ Fees”. Section 3.13 is captioned “Finders’ Fees”. So which section was intended?

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Those Pesky Defined Term Indices

“Disqualification Event” has the meaning set forth in Section 3.10….
“Insurance Contracts” has the meaning set forth in Section 2.24(b)….
“Insurance License” has the meaning set forth in Section 2.24(c)….

The most common type of error we see, the index error. The three above are only representative. For the record, “Disqualification Event” is defined in 3.11, not 3.10, “Insurance Contracts” is defined in 2.23(b), not 2.24(b), and “Insurance License” is defined in 2.23(c), not 2.24(c).

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Picky, Picky, Picky

Here’s a defined term we don’t see every day: “Approval of a Majority-of-the-Minority of the Company’s Stockholders”. Maybe a more concise term was available, but we don’t judge. However, Recital J refers to the “Approval by a Majority-of-the-Minority of the Company’s Stockholders”. By, of, what’s the difference?

Also, the definition of “Requisite Stockholder Approval” refers to “Approval of the Majority of the Minority of the Company Stockholders”. Note that this reference reads “Approval of the” instead of “Approval of a”. Also, “Majority of the Minority is not hyphenated, and there is no apostrophe/s after “Company”. Picky, yes. Maybe it’s just us, but we like things to be consistent.

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And a Few Undefined Terms

The following bolded phrases are used with capital letters as though they are defined, but no definitions were found:

5.12 Purchaser’s Designee. The Purchaser’s Designees shall have been appointed to the Board….

…”Intellectual Property Rights” means… (x) copies and tangible embodiments of any of the foregoing, in whatever form or medium, including Software and Technology…

… Each of the Company and its Subsidiaries is, and during the past three (3) years has been in compliance, in all material respects, with all applicable Laws governing the employment of labor, including all Contractual commitments

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Lawyers and Law Firms Listed in the Contract

Mitchell Silberberg & Knupp, LLP (Mark Hiraide)
O’Melveny & Myers LLP (Brad Finkelstein, Viq Shariff)
Greenberg Traurig, LLP (Michael D. Helsel, Jang H. Yeo, Adam Namoury)
Shin & Kim LLC (Young Joon Park, Hae Seong Ahn, James Kang)