STOCK PURCHASE AGREEMENT
BETWEEN
XXXXXXX X. XXXXXX,
SELLER,
AND
HEARTLAND, INC.,
BUYER
TABLE OF CONTENTS
Section 1. Sale of Shares..................................................1
Section 2. Purchase Price..................................................1
Section 3. Security Interest; Proxy........................................2
Section 4. Company Authority...............................................2
Section 5. Closing.........................................................2
Section 6. Representations and Warranties of Seller........................3
Section 7. Representations and Warranties of Buyer.........................4
Section 8. Employment Matters. ............................................6
Section 9. Confidentiality.................................................6
Section 10. Conditions to Closing; Abandonment of Transaction...............6
Section 11. Post-Closing Obligations........................................9
Section 12. Integration.....................................................9
Section 13. Indemnification................................................10
Section 14. Expenses.......................................................10
Section 15. Publicity......................................................10
Section 16. Knowledge......................................................11
Section 17. Cost of Litigation.............................................11
Section 18. Offset.........................................................11
Section 19. Plan of Acquisition............................................11
Section 20. Notices........................................................12
Section 21. Entire Agreement; Modification; Waivers........................12
Section 22. Headings.......................................................13
Section 23. Successors and Assigns.........................................13
Section 24. Governing Law..................................................13
Section 25. Parties in Interest............................................13
Section 26. Survival of Representations and Warranties.....................13
Section 27. Counterparts...................................................14
THIS AGREEMENT is made and entered into this 23rd day of December, 2004, by
and between Xxxxxxx X. Xxxxxx, a Minnesota resident, (hereinafter referred to as
"Seller") and Heartland, Inc., a Maryland corporation, (hereinafter referred to
as "Buyer").
WHEREAS, Seller is the owner of all outstanding shares of Monarch Homes,
Inc., a Minnesota corporation (the "Company"); and
WHEREAS, Buyer wishes to acquire the Company on the terms and conditions
contained herein.
NOW, THEREFORE, in consideration of the mutual promises, warranties,
conditions and mutual covenants contained in this Agreement, the parties agree
as follows:
Section 1. Sale of Shares.
Seller shall convey to Buyer one hundred (100) shares of common stock of
the Company (the "Purchased Shares") and shall endorse and deliver all
certificates representing said Purchased Shares to Buyer at Closing.
Section 2. Purchase Price.
The purchase price for the Purchased Shares shall be Five Million and
No/100 Dollars ($5,000,000.00), payable as follows:
A. Down Payment. One Hundred Thousand and No/100 Dollars ($100,000.00) in
certified funds, due at Closing.
B. Promissory Note. One Million Nine Hundred Thousand and No/100 Dollars
($1,900,000.00), in a promissory note due on or before February 15,
2005 (the "Note"). The Note shall be interest free, unless it is not
paid when due, at which time interest shall commence at the rate of
eight percent (8%) per annum. The Note shall be paid in certified or
other immediately available funds.
C Stock. Six hundred sixty-seven thousand (667,000) shares of common
stock of Buyer, issued by Buyer to Seller at Closing (the "New
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Stock"). Should the common stock of Buyer not be trading at a minimum
of Five Dollars ($5.00) per share twelve (12) months after Closing
(the "Adjustment Date"), then Seller shall be compensated for the
difference in additional stock. The amount of additional stock to be
issued shall be calculated as follows: the value of the New Stock
shall be calculated by multiplying 667,000 by the per share trading
price of Buyer's common stock on the Adjustment Date. The result shall
then be subtracted from $3,335,000. The result shall then be divided
by the per share trading price of Buyer's common stock on the
Adjustment Date. The result shall be the number of additional shares
to be issued to Seller. Said shares shall be issued within ten (10)
days of the Adjustment Date.
Section 3. Security Interest and Proxy.
Buyer shall execute and deliver to Seller a security agreement granting
Seller a first security interest in the Purchased Shares to secure the Note and
all other obligations of Buyer hereunder (the "Security Agreement"). The
Security Agreement shall contain a provision appointing Seller as proxy (which
appointment shall be coupled with Seller's security interest in the Purchased
Shares and shall thus be irrevocable by Buyer) with the unrestricted right to
vote the Purchased Shares until Buyer's obligations under the Note have been
satisfied.
Section 4. Company Authority.
The Company and Seller shall execute all documents necessary, including
without limitation, corporate resolutions, and deliver to Buyer all documents,
including Articles of Incorporation and Bylaws, necessary to establish the
Company's authority to enter into this Agreement and any other agreements
described herein.
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Section 5. Closing.
The closing of this Agreement (the "Closing") shall take place at the
offices of Xxxxx, Xxxx and Xxxxxxx, Ltd., 400 Northtown Financial Plaza, 000
Xxxx Xxxxxx Xxxxxxxxx, Xxxx Xxxxxx, Xxxxxxxxx, at 2:00p.m. on the 27th day of
December, 2004 (the "Closing Date"). At Closing, Seller shall deliver to Buyer
such certificates of shares and other instruments of transfer as may be
necessary to transfer ownership to Buyer of good and marketable title to the
Purchased Shares. All documents and papers to which the parties are entitled
under this Agreement, unless otherwise specified herein, shall be delivered at
Closing.
Section 6. Representations and Warranties of Seller.
Seller represents and warrants the following to Buyer with the intention
that Buyer may rely upon the same. The purpose and general import of these
representations and warranties are that Seller has made appropriate full
disclosure to Buyer, that no material information has been withheld, and that
the information exchanged is accurate, true and correct.
A. Organization and Qualification. The Company is duly organized, in good
standing, and duly qualified to conduct any business it may be
conducting, as required by law or local ordinance.
B. Corporate Authority. The Company has corporate authority, under the
laws of its jurisdiction and its constituent documents, to do each and
every element of performance to which it has agreed, and which is
reasonably necessary, appropriate and lawful, to carry out this
Agreement in good faith.
C. Ownership of Assets and Property. The Company has lawful title and
ownership of its property as reported to Buyer, and as disclosed in
its financial statements.
D. Absence of Certain Changes or Events. There have been no material
changes of circumstances or events regarding the Company which have
not been fully disclosed to Buyer.
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E. Absence of Undisclosed Liabilities. The Company does not have, and has
no reason to anticipate having, any material liabilities which have
not been disclosed to Buyer, in the financial statements or otherwise
in writing.
F. Legal Proceedings. There are no legal, administrative, or regulatory
proceedings, pending or suspected, regarding the Company which have
not been fully disclosed in writing to Buyer.
G. No Breach of Other Agreements. This Agreement, and the faithful
performance of this Agreement, will not cause any breach of any other
existing agreement, or any covenant, consent decree, or undertaking by
either Seller or the Company.
H. Capital Stock. The capital of the Company consists of 250 authorized
shares of common stock, $100 par value, of which 100 shares are issued
to Seller. The 100 shares issued to Seller are in fact issued and
outstanding, duly and validly issued, were issued as and are fully
paid and non-assessable shares and, other than as represented in
writing, there are no other securities, options, warrants or rights
outstanding, to acquire further shares of the Company.
Section 7. Representations and Warranties of Buyer.
Buyer represents and warrants the following to Seller with the intention
that Seller may rely upon the same. The purpose and general import of these
representations and warranties are Buyer has made appropriate full disclosure to
Seller, that no material information has been withheld, and that the information
exchanged is accurate, true and correct.
A. Organization and Qualification. Buyer is duly organized, in good
standing, and duly qualified to conduct any business it may be
conducting, as required by law or local ordinance.
B. Corporate Authority. Buyer has corporate authority, under the laws of
its jurisdiction and its constituent documents, to do each and every
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element of performance to which it has agreed, and which is reasonably
necessary, appropriate and lawful, to carry out this Agreement in good
faith.
C. Ownership of Assets and Property. Buyer has lawful title and ownership
of its property as reported to Seller, and as disclosed in its
financial statements.
D. Absence of Certain Changes or Events. There have been no material
changes of circumstances or events which have not been fully disclosed
to Seller.
E. Absence of Undisclosed Liabilities. Buyer does not have, and has no
reason to anticipate having, any material liabilities which have not
been disclosed to Seller, in the financial statements or otherwise in
writing.
F. Legal Proceedings. There are no legal, administrative, or regulatory
proceedings, pending or suspected, which have not been fully disclosed
in writing to Seller.
G. No Breach of Other Agreements. This Agreement, and the faithful
performance of this Agreement, will not cause any breach of any other
existing agreement, or any covenant, consent decree, or undertaking by
Buyer.
H. Capital Stock. The capital of Buyer consists of 100,000,000 authorized
shares of common stock, $.001 par value, of which 15,200,000 shares
are issued and outstanding as of the date of this Agreement and as of
Closing, except as otherwise disclosed in writing, and 5,000,000
shares of preferred stock, $.001 par value, of which none are issued
and outstanding as of the date of this Agreement and as of Closing,
except as otherwise disclosed in writing. Said 15,200,000 shares of
common stock are in fact issued and outstanding, duly and validly
issued, were issued as and are fully paid and non-assessable shares
and, other than as represented in writing, there are no other
securities, options, warrants or rights outstanding to acquire further
shares of Buyer.
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I. Broker's or Finder's Fees. There are no broker's or finder's fees due
to any party regarding this transaction.
Section 8. Employment Matters.
The Company has and will use its best efforts to keep available to Buyer
the services of its present key employees.
Section 9. Confidentiality.
"Confidential Information" means any information or compilation of
information not generally known, which is proprietary to the parties, and
includes, without limitation, trade secrets, inventions, and information
pertaining to development, marketing, sales, accounting and licensing of the
business products and services, customer information, customer lists, and any
customer information contained in customer records, working papers or
correspondence files and all financial information, including financial
statements, notes thereto and information contained in federal and state tax
returns. Information shall be treated as Confidential Information irrespective
of its source and all information which is identified as being "confidential",
"trade secret", or is identified or marked with any similar reference shall be
presumed to be Confidential Information. The Parties hereby agree to treat as
confidential all Confidential Information of any Party received or learned by
any other Party, whether or not Closing occurs. The obligations imposed by this
section shall survive Closing.
Section 10. Conditions to Closing; Abandonment of Transaction.
A. Conditions to Obligation of Buyer to Proceed on the Closing Date. The
obligations of Buyer to proceed on the Closing Date shall be subject
(at its discretion) to the satisfaction, on or prior to the Closing,
of all of the following conditions:
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(1) Truth of Representations and Warranties. The representations and
warranties of Seller herein shall be true in all material
respects on the Closing Date with the same effect as though made
at such time.
(2) Compliance with Obligations. Seller shall have performed all
material obligations and complied with all material covenants and
conditions prior to or as of the Closing Date.
(3) Review and Appraisal. Any appraisal obtained by Buyer at its
expense of the Company and any real estate owned by the Company
shall be satisfactory to Buyer. Buyer shall have reviewed the
Company's books and records and found the same satisfactory.
(4) Approval by Board. The Board of Directors of Buyer shall have
determined that it is advisable and in the best interests of
Buyer to proceed with the acquisition of the Company by Buyer, in
accordance with Internal Revenue Code Section 354(a) and 368(b).
B. Conditions to Obligations of Seller to Proceed on the Closing Date.
The obligations of Seller to proceed on the Closing Date shall be
subject (at its discretion) to the satisfaction, on or prior to the
Closing, of all of the following conditions:
(1) Truth of Representations and Warranties. The representations and
warranties of Buyer herein shall be true in all material respects
on the Closing Date with the same effect as though made at such
time.
(2) Compliance with Obligations. Buyer shall have performed all
material obligations and complied with all material covenants and
conditions prior to or as of the Closing Date.
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(3) Due Diligence. Seller shall be fully satisfied, in his sole
discretion, with his due diligence review of Buyer.
C. Conduct of Due Diligence. Buyer and Seller shall have furnished to
each other all corporate and financial information which is customary
and reasonable, to conduct their respective due diligence. If, as a
result of their due diligence examination, either party determines
that there is a reason to terminate this Agreement, they must give
written notice to the other party prior to the Closing Date.
D. Termination of Agreement. This Agreement and the transactions
contemplated herein may be terminated at or prior to the Closing Date
as follows:
(1) By mutual written consent of all parties.
(2) By Buyer pursuant to written notice delivered at or prior to the
Closing Date if Seller has failed in any material respect to
satisfy all of the conditions to Closing set forth in this
Agreement or any condition precedent to Buyer's obligation to
close has not been satisfied or waived.
(3) By Seller pursuant to written notice delivered at or prior to the
Closing Date if Buyer has failed in any material respect to
satisfy the conditions to Closing set forth in this Agreement or
any condition precedent to Seller's obligation to close has not
been satisfied or waived.
(4) By any party if the party shall have determined in its sole
discretion that because of the institution or threatened
institution of litigation, or for any other reason, it is
inadvisable to consummate the transaction provided for herein.
E. Consequences of Termination. In the event of termination of this
Agreement, each party will return to the other all documents and
materials obtained from the other in connection with the transaction
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contemplated by this Agreement and shall not use and will keep
confidential all Confidential Information about the other party
obtained pursuant to this Agreement. Upon termination of this
Agreement as provided herein, each party will pay all costs and
expenses of its performance of and compliance with all agreements and
conditions contained herein, including fees, expenses and
disbursements of its own accountants and lawyers.
Section 11. Post-Closing Obligations.
A. Further Actions. At any time and from time to time after the Closing
Date, each party shall, upon request of another party, execute,
acknowledge and deliver all such further and other assurances and
documents, and will take such action consistent with the terms of this
Agreement, as may be reasonably requested to carry out the
transactions contemplated herein and to permit each party to enjoy its
rights and benefits hereunder. If requested by Buyer, Seller further
agrees to prosecute or otherwise enforce in its own name for the
benefit of Buyer, any claim, right or benefit transferred by this
Agreement that may require prosecution or enforcement in Seller's
name. Any prosecution or enforcement of claims, rights, or benefits
under this provision shall be solely at Buyer's expense, unless the
prosecution or enforcement is made necessary by a breach of this
Agreement on the part of Seller.
B. Directors. Seller shall remain the sole director of the Company until
such time as the Note has been paid in full. After the Note has been
paid in full, Buyer may elect additional directors of the Company.
Section 12. Integration.
The parties acknowledge and agree that all agreements, documents,
obligations and transactions contemplated by this Agreement shall be integrated.
Accordingly, if there should be a material default, non-performance or breach of
any of said agreements, documents, obligations or transactions, which continues
after notice thereof and the expiration of any cure period, the same shall
constitute a material breach of all such agreements, documents, obligations and
transactions entitling the aggrieved party to pursue any or all available
remedies at law or in equity.
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Section 13. Indemnification.
A. Indemnification by Seller. Seller shall indemnify and hold Buyer
harmless at all times from and after the date of this Agreement
against and in respect of all damages, losses, costs and expenses
(including reasonable attorneys' fees) which Buyer may suffer or incur
in connection with the operation of the Company by Seller prior to
Closing or the breach by Seller of this Agreement or any
representation, warranty or covenant contained herein.
B. Indemnification by Buyer. Buyer shall indemnify and hold Seller
harmless at all times from and after the date of this Agreement
against and in respect of all losses, damages, costs and expenses
(including reasonable attorneys' fees) which Seller may suffer or
incur in connection with the operation of the Company by Buyer
following Closing or the breach by Buyer of this Agreement or any
representation, warranty or covenant contained herein.
C. Scope. All indemnity provisions in this Agreement are intended only to
benefit the specified party and shall not confer any rights upon any
third party.
Section 14. Expenses.
Except as otherwise provided herein, each party hereto shall bear and pay
for the costs and expenses incurred by it or on its behalf in connection with
the transactions contemplated hereby, including, without limitation, all fees
and disbursements of attorneys, accountants and financial consultants incurred
through the Closing Date.
Section 15. Publicity.
Seller and Buyer each represent and warrant that they will make no
announcement prior to Closing to public officials or the press in any way
relating to the transaction described herein without the prior written consent
of all parties, except for applications and other contacts necessary to satisfy
the terms of this Agreement.
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Section 16. Knowledge.
Knowledge, as used in this Agreement or the instruments, certificates or
other documents required under this Agreement, means actual knowledge of a fact
or constructive knowledge if a reasonably prudent person in a like position
would have known, or should have known, the fact.
Section 17. Cost of Litigation.
In the event that any party hereto is involved in litigation with any other
party to enforce the provisions hereof, the prevailing party in any such
litigation shall be reimbursed for its costs incurred therein, including
reasonable attorney fees, by the other party.
Section 18. Offset.
Each party shall have the right to offset all obligations under this
Agreement and the other agreements described herein against all obligations of
the other parties under this Agreement and the other agreements described
herein.
Section 19. Plan of Acquisition.
A. Reorganization and Acquisition. Buyer and the Company shall be
reorganized, such that Buyer shall acquire all the capital stock of
the Company with all of its current assets, liabilities and
businesses, and the Company shall become a wholly owned subsidiary of
Buyer.
B. Surviving Corporations. Both Buyer and the Company shall survive the
reorganization herein contemplated and shall continue to be governed
by the laws of their respective jurisdictions. The resulting parent
corporation is the entity responsible for the rights of dissenting
shareholders.
C. Surviving Articles of Incorporation. The Articles of Incorporation of
both Buyer and the Company shall remain in full force and effect,
unchanged.
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D. Surviving Bylaws. The Bylaws of both Buyer and the Company shall
remain in full force and effect, unchanged.
E. Tax-Free Exchange. The parties agree that the transfer of the
Company's shares from Seller to Buyer and the issuance of the Buyer's
shares to Seller contemplated by this transaction shall be treated as
a "tax-free" transaction under Section 351 of the Internal Revenue
Code.
Section 20. Notices.
Any notice required to be given hereunder or otherwise by law, shall be in
writing and be sent by United States certified or registered mail, postage
prepaid and deposited in a United States post office or branch thereof, and
addressed to the party intended at its address set forth below or such other
address as it may designate by notice given. Such notice shall be effective upon
the date of deposit into the mail as herein provided.
SELLER: Xxxxxxx X. Xxxxxx COPY TO: Xxxxx, Xxxx & Xxxxxxx, Ltd.
00000 Xxxxxxx Xxxx Attn: Xxxxxx X. Xxxxxx, Xx.
Xxx Xxxxx, XX 00000 000 Xxxx Xxxxxx Xxxx, #000
Xxxx Xxxxxx, XX 00000
BUYER: Heartland, Inc. COPY TO:
00 Xxxxx Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
COMPANY: Monarch Homes, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Section 21. Entire Agreement; Modification; Waivers.
This Agreement constitutes the entire agreement between the parties hereto
pertaining to the subject matter hereof and supercedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties. There are no warranties, representations or agreements among the
parties in connection with the subject matter hereof, except as set forth or
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referred to herein. No supplement, modification or waiver or termination of this
Agreement or any provision hereof shall be binding unless executed in writing by
the parties to be bound. No waiver of any of the provisions of this Agreement
shall constitute a waiver of any other provision, nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
Section 22. Headings.
Section and subsection headings are not to be considered part of this
Agreement and are included solely for convenience and not intended to be full or
accurate descriptions of the content thereof.
Section 23. Successors and Assigns.
Except as otherwise provided for herein, no party may assign this Agreement
without the consent of all other parties. All of the terms and provisions of
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective transferees, successors and assigns.
Section 24. Governing Law.
The parties hereby agree that this Agreement has been executed in the State
of Minnesota and shall be governed by the laws of said state.
Section 25. Parties in Interest.
Nothing in this Agreement is intended to confer upon any person other than
the parties hereto and their respective successors and assigns any rights or
remedies under or by reason of this Agreement, nor is anything in this Agreement
intended to relieve or discharge the liability of any other party, nor shall any
provisions hereof give any entity any right of subrogation against or action
against any party to this Agreement.
Section 26. Survival of Representations and Warranties.
All representations and warranties made pursuant to this Agreement and all
agreements made by the parties pursuant to this Agreement shall survive the
consummation of the transaction or transactions contemplated by this Agreement
and by investigations made by or on behalf of any of the parties.
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Section 27. Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
THE PARTIES, by the execution hereof, state that this Agreement has been
read, that the parties hereto agree to each and every provision hereof, and
hereby acknowledge receipt of a copy of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
SELLER: BUYER:
HEARTLAND, INC., a Maryland corporation
/s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxxxxxxxx
--------------------- ----------------------------
Xxxxxxx X. Xxxxxx Xxxxx Xxxxxxxxxxx
