FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
EXECUTION
VERSION
FIRST
AMENDMENT TO STOCK PURCHASE AGREEMENT
THIS
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
(this
"Amendment"),
dated
as of December 28, 2006 to be effective as of December 2, 2006 (the
"Effective
Date"),
by
and among Manchester Indiana Operations, Inc., a Delaware corporation
("Indiana
Operations")
and
Manchester Indiana Acceptance, Inc., a Delaware corporation ("Indiana
Acceptance",
and,
together with Indiana Operations, each a "Purchaser,"
and
collectively, the "Purchasers"),
Manchester Inc., a Nevada corporation ("Parent"),
each
of the persons identified on Schedule
4.2.1
to the
Stock Purchase Agreement (each a "Seller,"
and
collectively, "Sellers"),
and
on behalf of himself and each Seller, Xxxx Xxxxxxx ("Sellers'
Representative").
WITNESSETH:
WHEREAS,
the
Purchasers, Parent, and Sellers, (collectively, the "Parties")
previously entered into that certain Stock Purchase Agreement, dated December
2,
2006, whereby the Purchasers agreed to purchase, and the Sellers agreed to
sell,
all of the issued and outstanding capital stock of each of F.S. English,
Inc.,
an Indiana corporation, and GNAC, Inc., an Indiana corporation, on the terms
and
conditions set forth therein (the "Stock
Purchase Agreement");
WHEREAS,
the
Parties desire to amend certain provisions in the Stock Purchase Agreement
as
set forth herein;
WHEREAS,
all
capitalized terms used but not otherwise defined herein shall have the
respective meanings set forth in the Stock Purchase Agreement;
NOW,
THEREFORE,
in
consideration of the foregoing and the mutual covenants and promises contained
herein and in the Stock Purchase Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties hereto intending to be legally bound,
hereby agree as follows:
AGREEMENT
Section
1.01.
Amendments.
(a) Section
2.2
of the
Stock Purchase Agreement is hereby deleted in its entirety and replaced with
the
following:
"
2.2
Purchase
Price.
The aggregate consideration paid to the Sellers in exchange for the Shares
shall
be as follows:
(a)
Three
Million U.S. Dollars ($3,000,000.00) in the form of a promissory note in
favor
of Sellers substantially in the form attached hereto as Schedule 2.2(a) (the
"Seller
Note");
and
(b) Such
number of shares of common stock of Parent, par value $.001 per share,
representing an aggregate amount equal to Three Million U. S. Dollars
($3,000,000.00) as determined by reference to the average of the closing
prices
of the common stock of Parent on the five (5) business days immediately
preceding the Closing (the "Manchester
Shares"
and
referred to collectively together with the Seller Note as the "Acquisition
Consideration")."
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(b) Section
2.4(a)
of the
Stock Purchase Agreement is hereby deleted in its entirety and replaced with
the
following:
"(a) Except
as
provided in Section 2.4(b), at the Closing, the Purchasers shall (i) on behalf
of the Acquired Companies, cause the Net Indebtedness to be repaid in full
to
the party or parties entitled thereto pursuant to the Payoff Letters, (ii)
on
behalf of Sellers, pay the Selling Expenses to the parties entitled thereto
as
set forth on a statement delivered by Sellers’ Representative to the Purchasers
at Closing, and (iii) cause each personal guarantee of any Seller of any
Indebtedness to be released. Notwithstanding the foregoing, the furniture
and
fixtures line of credit with First Indiana Bank in the outstanding amount
of
$775,705.34 (as of December 27, 2006) will not be paid off at
Closing."
(c) Section
2.4(b)
of the
Stock Purchase Agreement is hereby deleted in its entirety and replaced with
the
following:
"(b) Notwithstanding
Section
2.4(a)
above,
certain Indebtedness held by Sellers' Representative in the amount of $500,000
(the "Subordinated
Debt")
shall
not be repaid in full; instead, $300,000 of such Subordinated Debt shall
be paid
at Closing and $150,000 of such Subordinated Debt shall be refinanced with
the
issuance of a promissory note in favor of Sellers' Representative with an
aggregate principal amount of One Hundred Fifty Thousand U.S. Dollars
($150,000.00) in the form attached hereto as Schedule
2.4(b)
(the
"Subordinated
Note")."
(d) Section
6.1
of the
Stock Purchase Agreement is hereby amended as follows:
(i) The
delivery in Section
6.1(h)
is
hereby waived.
(ii)
The
delivery in Section
6.1(k)
is
hereby waived. As a condition of such waiver, Purchasers and Sellers'
Representative shall negotiate in good faith to deliver executed lease
agreements for the Leased Real Property on or before thirty (30) days after
the
Closing and such lease agreements shall be acceptable in form and substance
to
Purchasers and the landlord thereof and shall contain, among other things,
the
following terms: (a) the monthly rent under each lease agreement shall be
comprised only of landlord's carrying costs on each Leased Real Property,
including taxes, insurance and maintenance expenses, and an amount sufficient
to
cover any and all income tax liability of landlord relative to rental income
on
the Leased Real Property; provided, however, that the final monthly rent
complies with any loan document covenants with First Indiana Bank applicable
to
the Lease Real Property; and (b) in the event that Sellers' Representative
does
not receive the salary payments under his employment agreement with Indiana
Operations and Sellers' Representative is not in breach thereof, the monthly
rent due under the lease agreements shall be increased by the amount of such
salary payments owed to Sellers' Representative under the employment
agreement;
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(iii) The
delivery in Section
6.1(l)
is
hereby waived. Sellers acknowledge that Ice Xxxxxx LLP is the only service
provider participating in the negotiation, preparation and/or consummation
of
this transaction and Sellers shall be solely responsible for payment of the
fees
of Ice Xxxxxx LLP.
(iv) The
delivery in Section
6.1(o)
is
hereby waived.
(v) The
delivery in Section
6.1(q)
is
hereby waived.
(e) Section
6.2(m)
of the
Stock Purchase Agreement is hereby waived.
(f)
The date
"December 8, 2006" in Section
6.3
and
Section
6.4
is
hereby deleted and replaced with "December 29, 2006".
(g) Section
6.6
is
deleted in its entirety and is hereby amended as follows:
“(a)
Seller's Representative shall deliver to Purchasers on or prior to the Closing
Date, written notice of supplemental information updating the information
set
forth in the representations and warranties of Sellers set forth in Article
IV
of this Agreement so that such representations and warranties of Sellers,
as
supplemented by such information, will be true and correct as of the Closing
Date (the "Sellers
Disclosure Schedule Updates").
(b) Purchasers
and Parent may deliver to Seller's Representative, on or prior to the Closing
Date, written notice of supplemental information updating the information
set
forth in the representations and warranties of Purchasers and Parent, set
forth
in Article V of this Agreement so that such representations and warranties
of
Sellers, as supplemented by such information, will be true and correct as
of the
Closing Date (the "Manchester
Disclosure Schedule Updates"
and
referred to herein with the Sellers Disclosure Schedule Updates, each as
"Disclosure
Schedule Updates").
(c)
If any Disclosure Schedule Updates reflect an occurrence which could reasonably
be expected to cause the delivering party to recognize or accrue previously
undisclosed liabilities which individually or in the aggregate are more than
$50,000.00, the other party shall have the right to terminate this Agreement
pursuant to and in accordance with Section 6.4 of this Agreement by delivering
a
written notice of such termination to the other party prior to the Closing
in
accordance with Section 11.1."
Section
1.02. No
Other Amendment.
Other
than as specifically amended herein, the Stock Purchase Agreement shall remain
in full force and effect hereafter without modification.
Section
1.03. Counterparts;
Facsimile Signature.
This
Amendment may be executed in multiple counterparts, each of which will be
considered an original, but all of which shall constitute one and the same
Amendment. Facsimile signatures of original signatures shall be deemed original
signatures. Only one counterpart of this Amendment executed by the party
against
which it will be enforced need be provided to evidence this
Amendment.
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Section
1.04. Notices.
All
notices to be delivered relating to this Amendment shall be made in the manner
set forth in Section
11.1
of the
Stock Purchase Agreement.
Section
1.05. Drafting.
No
party shall be deemed to be the drafter of this Amendment and in the event
this
Amendment is ever construed by a court of law, such court of law shall not
construe this Amendment or any provision thereof against any of the parties
as
the drafter of this Agreement. The Purchasers, the Sellers, the Parent, and
the
Shareholder acknowledge and agree that all of the parties have contributed
substantially and materially to the preparation of this Amendment.
Section
1.06. Entire
Agreement.
This
Amendment constitutes the entire understanding between the parties hereto
with
respect to the subject matter contained herein and supersedes all prior
agreements, promises, understanding, communications, whether oral or written,
by
any party hereto; provided, however, the Stock Purchase Agreement shall remain
in full force and effect without modification except as modified by this
Amendment.
[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF,
the
parties hereto have duly executed this Amendment as of December 28, 2006,
to be
effective as of the Effective Date.
| MANCHESTER INDIANA OPERATIONS, INC. | |||
| By: | |||
| Name: Xxxxxxx X. Xxxxxx | |||
|
Title:
President
|
|||
| MANCHESTER INDIANA ACCEPTANCE, INC. | |||
| By: | |||
| Name: Xxxxxxx X. Xxxxxx | |||
|
Title:
President
|
|||
| MANCHESTER INC. | |||
| By: | |||
| Name: Xxxxxxx X. Xxxxxx | |||
|
Title:
Corporate Secretary
|
|||
| F.S. ENGLISH, INC. | |||
| By: | |||
| Name: | |||
|
Title:
|
|||
| GNAC, INC. | |||
| By: | |||
| Name: | |||
|
Title:
|
|||
|
SELLERS’
REPRESENTATIVE
|
|||
| Xxxx Xxxxxxx | |||
|
|
|||
S-1
|
SELLERS:
|
|||
| Xxxx Xxxxxxx | |||
|
|
|||
| Xxxxx X. Xxxxxxx | |||
| Xxxxxx X. Xxxxxxx | |||
| Xxxx X. Xxxxxxx | |||
| Xxx Xxxxxxx | |||
| Xxxxxxx X. Xxxxxx | |||
| Xxxxxxx Xxxxx | |||
| Xxxx Poor | |||
| Xxxx X. Xxxxxxxx | |||
| EJJ6900 LLC | ||||
| By: | ||||
| Name: | ||||
|
Title:
|
||||
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