Exhibit 10.42
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of the
28th day of October, 1997 by and between Xxxx Company, a Delaware corporation
("Purchaser"), and Xxxxx Xxxxxx ("Cherry") and Xxxxxxx Xxxxx ("Xxxxx"), the two
individuals who own all of the issued and outstanding capital stock of
Metalcraft Air Filtration, Inc. a North Carolina corporation (the "Company").
WHEREAS, Cherry and Skocz (collectively referred herein to as the
"Shareholders") desire to sell, and Purchaser desires to purchase, all of the
issued and outstanding capital stock of the Company (the "Shares");
NOW, THEREFORE, in consideration of and in reliance upon the respective
representations, warranties, covenants and agreements contained in this
Agreement, Purchaser and the Shareholders hereby agree as follows:
SECTION I
SALE AND PURCHASE OF THE SHARES
1.1. The Transaction. On the terms and conditions set forth herein,
Shareholders agree to sell and deliver the shares to Purchaser, and Purchaser
agrees to acquire and pay for the Shares.
l.2. Purchase Price. The total consideration to be paid by Purchaser for
the Shares will be an aggregate of 12,500 shares of the common stock of
Purchaser issued and delivered to the Shareholders at the closing described in
Section l.3 below. The said 12,500 shares are referred to herein as the "Xxxx
Stock." 10,000 shares of Xxxx Stock will be issued and delivered to Cherry, and
2,500 shares of Xxxx Stock will be issued and delivered to Skocz.
1.3. Closing Date. Unless changed by mutual agreement of the parties, the
closing of the purchase and sale at the Shares and issuance and delivery of the
Xxxx Stock will be consummated on the date of signing of this Agreement on
October 28, 1997.
SECTION II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
The Shareholders hereby represent and warrant to Purchaser as follows:
2.1. Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing
under the laws of the state of North Carolina and has full corporate power and
authority to own and operate its assets and properties and to carry on its
business as presently being conducted.
2.2. Power and Authorization. The Shareholders have all requisite legal
power and authority to execute and deliver this Agreement and to take all of the
actions contemplated by this Agreement to enable them to sell and transfer the
Shares hereunder. This Agreement constitutes a valid and binding obligation of
the Shareholders and is enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or limiting the rights of creditors
general1y.
2.3. Title to Shares. Upon payment for the Shares pursuant to this
Agreement, Purchaser will acquire the Shares .free and clear of all claims,
liens, charges, encumbrances and rights of-third parties.
2.4. Consents and Approvals. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, including the sale
and delivery of the Shares to Purchaser, will not conflict with or result in a
breach of the provisions of (a) any agreement or other instrument to which
either the Shareholders or the Company is a party or by which the Shareholders
or the Company is bound; (b) the Articles of Incorporation or Bylaws of the
Company; (c) any judgment, decree, order or award of-any court, governmental
body or arbitrator applicable to the Company or the Shareholders, or (d) any
law, rule or regulation applicable to the Company or the Shareholders. No
consent, approval, authorization or filing with, any governmental or regulatory
authority or any other person (either governmental or private) is required in
connection with the execution and delivery of this Agreement by the Shareholders
and the consummation of the transactions contemplated hereby, including the sale
of the Shares to Purchaser.
2.5. Capitalization. The authorized capitalization of the Company consists
solely of 100 shares of capital stock, (the "Company Stock"). The Company
presently has issued and outstanding all 100 shares of Company Common Stock, 80
shares of which are owned by Cherry and 20 shares of which are owned by Skocz.
All of the Shares are duly and validly authorized and issued, fully paid and
non-assessable. There are no options, warrants or rights to purchase or
subscribe for any equity securities of the Company, nor are there outstanding
any indebtedness or securities directly or indirectly convertible into any
equity securities of the Company.
2.6. Agreements. Schedule A sets forth a list of all of the agreements,
leases, notes, and commitments of the Company as of the date of this Agreement
("Agreements"), true and correct
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copies of all of which have been furnished to or made available for inspection
by Purchaser. All of the Agreements are enforceable and in full force and
effect, and, to the best knowledge of the Shareholders, there are no liabilities
of any party to any Agreement arising from any breach or default thereunder, and
no event has occurred which with the passage of time or the giving of notice or
both would constitute a material breach or default by any party hereto.
2.7. Compliance with Laws. To the best knowledge of the Shareholders, the
business of the Company is being conducted in compliance with all current
federal, state and local laws, rules, regulations and ordinances and all
judgments and orders of any court applicable to it.
2.8. Litigation. There is no legal, administrative, arbitration or other
proceeding, or any governmental investigation, pending or, to the best knowledge
of the Shareholders, threatened against the Company or any of its assets.
2.9. Taxes. The Company has duly filed or caused to be filed all tax
returns Federal, state, local and foreign) required to be filed, and paid all
amounts of taxes shown or required to be shown thereon to be due, including
interest and penalties, if any. The Shareholders do not possess knowledge of any
actual or proposed additional tax assessments which, singly or in the aggregate,
could have a material adverse effect on the business, property, financial
condition or operations of the Company.
2.10. Charter Documents. True and correct copies of (i) the Articles of
Incorporation, and all amendments thereto, of the Company and (ii) the Bylaws,
and all amendments thereto, of the Company have been furnished to or made
available for inspection by Purchaser.
2.11 Absence of Undisclosed Liabilities. There are no liabilities or
obligations of the Company, whether absolute, accrued, contingent or otherwise
and whether due or to become due which have not been disclosed to Purchaser
during the course of its due diligence examination of the Company. All of the
liabilities, loans and obligations of the Company for which Purchaser will
become responsible by virtue of its purchase of the Shares are set forth on
Schedule B to this Agreement.
2.12. No Brokerage Fees. No broker or finder has acted for the Shareholders
or the Company in connection with this Agreement or the transactions
contemplated hereby, and no broker or finder is entitled to any brokerage or
finder's fee or other commission from the Company with respect to this Agreement
or any such transactions.
2.13. Nature of Investment. The Shareholders are capable of evaluating the
merits and risks of their investment in
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Purchaser and have the capacity to protect their own interests. The Shareholders
are acquiring the Xxxx Stock for investment for their own respective accounts,
not as nominees or agents, and not with the view to, or for resale in connection
with, any distribution thereof. They understand that the Xxxx Stock has not been
registered under the Securities Act of 1933 in reliance upon a specific
exemption from the registration provisions thereunder, the availability of which
depends upon, among other things, the bona fide nature of the investment intent
and the accuracy of the Shareholders' representations as expressed herein. The
Shareholders understand and agree that the stock certificates they receive
evidencing the Xxxx Stock will bear a legend prohibiting their sale or transfer
for a period of five years without the express written consent of Purchaser.
SECTION III
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser hereby represents and warrants to the Shareholders as follows:
3.1. Organization and Good Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware and has full corporate power and authority to own its assets and
properties and to carry on its business as presently being conducted.
3.2. Power, Authorization and Validity of Agreement. Purchaser has all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the performance by Purchaser of its obligations hereunder
including issuance and delivery of the Xxxx Stock to the Shareholders, have been
duly authorized by all requisite corporate action of Purchaser. This Agreement
(a) constitutes a valid and binding obligation of Purchaser enforceable against
it in accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or limiting the rights of creditors generally and (b) does not
conflict with or result in a breach of any agreement, instrument or
understanding to which Purchaser is a party or by which it is bound.
3.3. The Xxxx Stock. Upon delivery to the Shareholders in accordance with
the provisions of this Agreement, the Xxxx Stock will be duly authorized and
validly issued, fully paid and nonassessable and will not have been issued by
Purchaser in violation of or subject to any preemptive rights of any person.
3.4. No Brokerage Fees. No .broker or finder has acted for Purchaser in
connection with this Agreement or the transactions contemplated hereby, and no
broker or finder is entitled to any
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brokerage or finder's fee or other commission from Purchaser in respect of this
Agreement or any such transactions.
3.5. Nature of Investment. Purchaser is capable of evaluating the merits
and risks of its investment in the Company and has the capacity to protect its
own interests. Purchaser is acquiring the Shares for investment for its own
account, not as a nominee or agent, and not with the view to, or for resale in
connection with, any distribution thereof. It understands that the Shares have
not been registered under the Securities Act of 1933 in reliance upon a specific
exemption from the registration provisions thereunder, the availability of which
depends upon, among other things, the bona fide nature of the investment intent
and the accuracy of the Purchaser's representation as expressed herein.
SECTION IV
CONDUCT OF BUSINESS
4.1. Reasonable Access. The Shareholders and the Company shall afford
Purchaser and its counsel, accountants, and other authorized representatives,
during reasonable business hours, full access to the business, properties, books
and records of the Company in order that Purchaser may have -full opportunity to
make such investigations as it shall reasonably desire to make of the Company,
and the Shareholders and the Company shall furnish such financial and operating
data and other information as Purchaser shall reasonably request for such
purposes.
4.2. Confidentiality. Purchaser shall maintain the confidentiality of (and
not use or disclose to third xxxxxxx for any purpose) and return to the Company
at the Company's request, all confidential, proprietary or trade secret
information of the Company which is obtained by Purchaser at any time. The
Company shall use reasonable efforts to designate information as confidential,
proprietary or trade secret. Notwithstanding the foregoing, (i) Purchaser may
disclose such information (a) at the request of any applicable regulatory
authority or in connection with an examination of the Company by such authority,
(b) pursuant to subpoena or other court process, (c) when required to do so in
accordance with the provisions of any applicable law, (d) at the express
direction of any other agency or regulatory authority having jurisdiction over
the Company or Purchaser, provided that in each of the other cases identified in
(a) through (d) Purchaser has promptly notified the Company in writing prior to
such disclosure and cooperated with the Company, at the Company's expense, in
any proceeding to maintain such information under seal or to otherwise prevent
the public disclosure thereof; and (ii) the obligations of this paragraph shall
not apply to information that has entered the public domain through no fault of
the Purchaser or which Purchaser has rightfully acquired from third persons not
known by Purchaser to be under an obligation of confidence to the Company.
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4.3. Public Announcements. Purchaser and the Shareholders agree to consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby and will not issue any such press release or make any such public
statement prior to such consultation and reaching agreement of the parties as to
the content and timing of any public announcements. Notwithstanding the
foregoing, Purchaser and the Shareholders and the Company shall not be
prohibited from issuing any press release or making any public statement as may
be required under applicable law, but in-any such event, Purchaser and the
Shareholders or the Company, as the case may be, shall notify the other party
and provide to the other party a copy thereof prior to taking such action.
SECTION V
POST-CLOSING COMMITMENTS OF INTENTION OF PURCHASER
Following the Closing, Purchaser agrees to use its best efforts to
accomplish the following:
5.1. Growth Capital. Purchaser will provide capital for growth of the
Company's business (as it is operated as a division or subsidiary of Purchaser)
to the extent that the Shareholders are able to reasonably forecast and to
produce a level of profit compatible with Purchaser's other businesses.
5.2. Executive Positions. Cherry will be the president of the MCF division
of Purchaser and report to the President of Purchaser. Skocz will be the
division Vice President of Sales of the MCF division of Purchaser and report to
the MCF division president.
5.3 Nondisturbance. Purchaser will not cause the transfer of the Company's
operations so as to create the need for the then current employees to move their
places of residence. Purchaser will not, either regularly or normally, have
other personnel from its engineering, sales, marketing or manufacturing
departments involved in the Company's business operations with respect to
product designs, methods of manufacture or product specification, leaving those
matters generally to the Company's management. Purchaser will generally retain
the Company's employees in their respective positions.
5.4. Accounting Procedures. Purchaser will establish financial, accounting
and operating procedures, systems and policies to be employed by the Company's
division.
5.5. Benefits. Purchaser will extend its health and life insurance benefits
program to all qualified Company employees, and Purchaser will extend its
investment and retirement programs to all qualified employees of the Company.
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SECTION VI
POST-CLOSING COMMITMENTS OF INTENTION OF THE
SHAREHOLDERS
Following the Closing, Shareholders agree to use their best efforts to
accomplish the following:
6.1. Continuation of Employment. The Shareholders will remain indefinitely
in their respective positions at the MCF division of Purchaser land work
diligently to expand the business of the MCF division at Purchaser to a
satisfactory profit level.
6.2. Cooperation. The Shareholders will cooperate with Purchaser's
management toward the goal of smoothly integrating the MCF division into the
procedures, practices and policies of the Purchaser's overall business so as to
create an efficient and harmonious business environment for all operations.
SECTION IX
MISCELLANEOUS
7.1. Governing Law. This Agreement shall be governed in all respects by the
internal lawn at the State of North Carolina.
7.2. Survival. The representations, warranties, covenants and agreements
made herein shall survive the Closing Date.
7.3. Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
7.4. Entire Agreement Amendment. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject hereof, and it expressly supersedes any and all prior understandings and
agreements between- the parties. No party shall be liable or bound to any other
party in any manner by any warranties, representations or covenants except as
specifically set forth herein. Except as expressly provided herein, neither this
Agreement nor any term hereof maybe amended, waived, discharged or terminated
other than by a written instrument signed by the party against whom enforcement
of any such amendment, waiver, discharge or termination is sought.
7.5. Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand, recognized
express courier, or by messenger with a receipt of delivery, addressed (a) if to
the Purchaser, to 0000 Xxxx Xxxxx, Xx Xxxxxxx, Xxxxxxxxxx 00000, or (b) if to
Shareholders, to attention: Xxxxx X. Xxxxx, Esq.,
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Xxxxxxxxx, Xxxxx & Xxxxx, X.X. Xxx Xxxxxx 000, Xxxxxxx, Xxxxx Xxxxxxxx 00000.
7.6. Expenses. Purchaser and the Shareholders shall each bear the
respective expenses incurred on its respective behalf with respect to this
Agreement and the transactions contemplated hereby and any amendments or waivers
hereto.
7.7. Attorneys' Fees. In the event of any arbitration or litigation arising
in connection with this Agreement and the transactions contemplated hereby, the
prevailing party in judgment shall be-entitled to recover reasonable legal fees
and costs in connection with such action.
7.8. Counterparts. This Agreement: may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
7.9. Severability. Whenever possible, each provision of this Agreement will
be interpreted in such a manner as to be effective and valid under applicable
law, but in the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illega1, unenforceable or
void, this Agreement shall continue in full force and effect without said
provisions; provided that no such severability shall be effective if it
materially changes the economic benefit of this Agreement to any party.
7.10. Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not considered in construing or
interpreting this Agreement.
7.11 Indemnification Agreement. As a condition for, and as an inducement
to, Purchaser to enter into this Stock Purchase Agreement and consummate the
transactions contemplated hereby, Cherry is executing and delivering to
Purchaser at the closing the Indemnification Agreement in the form attached
hereto as Schedule C.
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IN WITNESS WHEREOF, the foregoing agreement is hereby executed as of the
date first above written.
"PURCASER"
XXXX COMPANY
By: /s/ Xxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
Title: President Title: SRVP & CFO
"SHAREHOLDERS"
By: /s/ Xxxx Xxxxx Xxxxxx By: /s/ Xxxxxxx Xxxxx
Title: President Title: Vice President
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SCHEDULE A
(SECTION 2.6
METALCRAFT AIR FILTRATION, INC.
AGREEMENTS, LEASES, NOTES, AND COMMITMENTS)
1. Lease of 1997 Mercury Village Automobile between Metalcraft Air
Filtration, Inc., and East Carolina Auto and Truck Center dated
January 11, 1997 requiring monthly payments for twenty (24) months of
$465.32.
2. All notes owing are shown on Schedule B.
SCHEDULE B
(SECTION 2.11
METALCRAFT AIR FILTRATION, INC.
LIABILITIES, LOANS, AND OBLIGATIONS AS OF
THE DATE OF THE STOCK PURCHASE AGREEMENT)
DATE OF NOTE AMOUNT OWED CREDITOR DATE DUE
------------ ----------- -------- --------
Feb. 3, 1997 $ 20,000.00 Xxxx X. Xxxxxxxx Feb. 3, 1999
Aug. 14, 1997 $ 25,000.00 Xxxxxxx X. Xxxxxx, Xx. Oct. 14, 1997
and Xxxxxxx X. Xxxxxx
April 3, 1997 $ 50,000.00 Xxxxxxx X. Xxxxxx, Xx. April 3, 2000
and Xxxx X. Xxxxxxxx
Aug. 12, 1996 $ 10,000.00 Xxxxxxx X. Xxxxxx Sept. 1, 1998
June 25, 1996 $ 25,000.00 Xxxxxxx X. Xxxxxx July 1, 1998
Feb. 26, 1996 $ 50,000.00 Xxxxxxx X. Xxxxxx March 1, 1997
June 4, 1996 $ 5,000.00 Xxxxxxx X. Xxxxxx June 4, 1998
June 12, 1996 $ 25,000.00 Xxxxxxx X. Xxxxxx June 12, 1998
June 11, 1996 $ 10,000.00 Xxxxxxx X. Xxxxxx June 11, 1998
June 19, 1996 $ 2,000.00 Xxxxxxx X. Xxxxxx June 19, 1998
July 19, 1996 $ 2,000.00 Xxxxxxx X. Xxxxxx July 19, 1998
July 25, 1996 $ 3,000.00 Xxxxxxx X. Xxxxxx July 25, 1998
Aug. 6, 1996 $ 7,000.00 Xxxxxxx X. Xxxxxx Aug. 6, 1998
Oct. 6, 1996 $ 5,000.00 Xxxxxxx X. Xxxxxx Oct. 6, 1998
Nov. 15, 1996 $ 4,000.00 Xxxxxxx X. Xxxxxx Nov. 15, 1998
March 17, 1997 $ 7,000.00 Xxxxxxx X. Xxxxxx March 17, 1999
April 17, 1997 $ 1,000.00 Xxxxxxx X. Xxxxxx April 17, 1999
May 15, 1997 $ 10,000.00 Xxxxxxx X. Xxxxxx May 15, 1999
July 3, 1997 $ 1,000.00 Xxxxxxx X. Xxxxxx July 3, 1999
Nov. 21, 1996 $ 25,000.00 Xxxxxxx X. Xxxxxx Dec. 5, 1999
Sept. 25, 1997 $ 6,000.00 Xxxxxxx X. Xxxxxx Oct. 25, 1997
Sept. 11, 1997 $ 1,500.00 Xxxxxxx X. Xxxxxx Nov. 11, 1997
-----------
Subtotal $294,500.00
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Personal Credit Card on personal loans ( *no notes)
*Sept. 13, 1996 $ 3,000.00 Xxxxxxx X. Xxxxxx
*Sept. 13, 1996 1,200.00 Xxxxxxx X. Xxxxxx
*Oct. 3, 1996 2,000.00 Xxxxxxx X. Xxxxxx
*Dec. 12, 1996 550.00 Xxxxxxx X. Xxxxxx
*July 3, 1997 2,000.00 Xxxxxxx X. Xxxxxx
*July 1, 1997 20,000.00 Xxxxxxx X. Xxxxxx
BankLine 14,250.00 Xxxxxxx X. Xxxxxx owing to
--------- Wachovia Bank & Trust Co.
Subtotal $ 43,000.00
Accounts Payable as shown
on attached two pages 250,000.00
----------
GRAND TOTAL $587,500.00
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ACCOUNTS PAYABLE OF
METALCRAFT AIR FILTRATION, INC.
AC PARTS $ 83.41
ALL THINGS DIG. $ 53.79
AMETCO $ 249.44
AIR CHAIN $ 167.43
AIM SUPPLY $ 4,069.77
ACTION $ 281.96
ALL SECURE $ 111.56
APPLIED IND. $ 112.44
AMERICA XXXXX $ 197.67
AAA XXXXXX $ 253.83
BISCO $ 2,122.45
AAL INT. $ 506.96
XXXXXXXXXX $ 669.62
BAX $ 4,079.51
CAROLINA FILTER $ 18.64
CF FREIGHT $ 11,717.97
XXXX XXXXXX $ 182.67
ANCIENTS FANS $ 13,966.00
CROSS $ 162.35
DP SYS $ 700.00
XXXX & XXXX $ 136.74
DYNATORQUE $ 1,758.40
ESSEX $ 220.40
EAST GROUP $ 1,087.50
EMORY $ 395.67
XXXXXX $ 950.00
FRISCKORN $ 1,614.31
FASTNEL $ 7,420.50
XXXX $ 24,327.75
FED-EX $ 776.63
GLOBAL ENG. $ 179.11
GRONDYKE $ 4,034.51
XXXXXXXX $ 601.00
HOBART $ 192.88
XXXXXXX $ 57.60
KABOR $ 1,013.16
ICE $ 1,450.86
LOWE'S $ 5,704.52
XXXXXXX'X $ 3,132.50
MCMASTER $ 2,110.58
XXXXXX $ 4,575.42
NATIONAL WELD. $ 5,266.94
NORTHWEST $ 2,875.18
NATIONAL AIR $ 8,237.84
NEW SOUTH VISA $ 3,772.52
OFFICE DEPOT $ 1,010.78
OVERNITE $ 2,400.84
ACCOUNTS PAYABLE OF
METALCRAFT AIR FILTRATION, INC.
PAMILICO $ 5,757.00
XXXX XXXXX $ 546.15
PIEDMONT $ 911.01
LAPCON $ 40.00
XXXXXXX $ 646.50
PHOENIX $ 16,374.42
XXXX $ 2,195.23
PACER $ 2,500.00
P&G $ 5,983.60
PACOR $ 363.10
QULITY $ 197.09
MIDATLA $ 270.00
QUALITY PARTS $ 160.73
QUEENSBORO $ 683.67
R&L $ 199.88
XXXXXX $ 1,616.14
ROADWAY $ 5,551.13
XX XXXX $ 6,835.20
RALIGH $ 1,458.28
RUBATEX $ 981.46
SAM'S $ 380.00
SERVICE AIR $ 1,083.25
STA $ 773.28
SUMMER $ 96.95
TAB ELEC $ 6,408.12
TOUCH TRANS $ 243.24
THARR. $ 3,383.70
THYPIN STEEL $ 15,462.60
UPS $ 4,322.34
XXXXXXX ME $ 7,123.18
US IND. CUT $ 219.00
ULINE $ 50.49
WENZLE META $ 1,937.96
WACH. VISA $ 9,965.97
BANK LINE XXXX $ 7,450.96
XXXXX ASS. $ 80.00
SPECIALTY $ 669.62
IND. RUBBER $ 129.75
MID. TOOL $ 270.00
WAS. SPECIALTY $ 1,724.67
ECEMC $ 475.21
SPRINT $ 610.72
CHAMBER $ 200.00
NS BANK NOTE INT. $ 4,180.39
PAGE EAST $ 90.00
PAY. TAXES $ 4,386.71
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$250,000.00
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