1
Exhibit 6(H)
STOCK PURCHASE AGREEMENT
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THIS AGREEMENT made as of this 27th day of August, 1996 by and between
AMERICAN STONE INDUSTRIES, INC., a Delaware corporation (the "Company") , and
XXXXXXXX VENTURES LIMITED PARTNERSHIP, an Ohio limited partnership (the
"Buyer").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Company requires additional capital and desires to obtain
such capital from Buyer and Buyer desires to provide capital to the Company
through the purchase of common stock of the Company;
NOW, THEREFORE, for the considerations, subject to the representations
and warranties and upon the terms and conditions hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I.
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PURCHASE AND SALE OF STOCK
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SECTION 1.1. SALE OF STOCK Subject to the terms and provisions of this
Agreement, Buyer agrees to purchase on the Closing Date (as hereinafter
defined) from the Company and the Company agrees to sell, transfer, deliver and
convey to Buyer 4,000,000 shares of common stock par value $.001 per share (the
"Shares"), of the Company for a consideration of One Million, Five Hundred
Thousand Dollars ($1,500,000).
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ARTICLE II
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CLOSING
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SECTION 2.1. CLOSING. The closing of the transactions contemplated by
this Agreement and all deliveries to be made at the time fixed for the closing
shall take place at the offices of Xxxxx & Xxxxxxxxx, 3200 National City Center,
0000 Xxxx 0xx Xxxxxx, Xxxxxxxxx, Xxxx, xx August 27, 1996, at 2:00 p.m. or on
such other date or at such other place as the parties may agree to in writing
(the "Closing Date").
SECTION 2.2. CLOSING; DELIVERY. At the closing, the Company shall
deliver to Buyer a certificate or certificates for the Shares in such form as
Buyer shall designate and such other instruments and documents as are required
by this Agreement. At the closing, Buyer shall deliver to the Company (a) the
amount of $1,500,000; and (b) such other instruments and documents as are
required by this Agreement.
ARTICLE III
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REPRESENTATIONS AND WARRANTIES
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SECTION 3.1. The Company hereby, and as of the Closing, represents
and warrants to Buyer that:
(a) CORPORATE ORGANIZATION. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and is qualified to do business and in good standing in each
jurisdiction in which the nature of its business conducted or property owned
therein requires such qualification; the Company has all requisite corporate
power and authority to own, lease, hold and operate its properties and or
conducted and to consummate the transactions contemplated by this Agreement.
(b) SUBSIDIARIES. A "Subsidiary" shall mean a corporation or
other entity of which the Company owns directly, or indirectly (through a
Subsidiary or otherwise) 50% or more of the outstanding securities entitled
generally to vote. Schedule 3.1(b) sets forth with respect to each Subsidiary
(i) the name of the Subsidiary; (ii) the jurisdiction of its incorporation
(iii) the number and class of shares of its capital
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stock issued and outstanding and the number of shares, or amounts of, other
outstanding securities of it; (iv) a description of any outstanding options or
other rights to acquire (including by way of conversion or exchange) its
securities; (v) the securities of such corporation owned, directly or
indirectly, by the Company; (vi) a description of any limitations on the
Company's ability to vote or alienate such securities; (vii) with respect to
each such Subsidiary, a list of all jurisdictions in which such Subsidiary is
qualified to do business, and (viii) the names and percentage ownership of all
record owners and all beneficial owners of securities (including capital stock)
of each such Subsidiary other than the Company. Except for capital stock of the
Subsidiaries as set forth in Schedule 3.1(b), the Company does not own, directly
or indirectly, any capital stock or other equity securities of any corporation
or have any direct or indirect equity or ownership interest in any business
other than the businesses conducted by the Company and the Subsidiaries. Except
as set forth in Schedule 3.1 (b) , neither the Company nor any Subsidiary is
subject to any obligation or requirement to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
person or entity.
All outstanding shares of capital stock of each Subsidiary have been
validly issued and are fully paid, nonassessable and free of preemptive rights.
Each Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, with all requisite
power and authority (corporate and other) to own, operate and lease its
properties and to carry on its business as now being conducted, and is qualified
to do business and is in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification necessary. There are no voting trusts or other
agreements or understandings with respect to the voting of the capital stock of
any of the Subsidiaries. There is no subscription, option, warrant, call, right,
contract, commitment, understanding or arrangement relating to the issuance,
sale or transfer by any Subsidiary of any shares of the capital stock of the
Company or any Subsidiary, including any right of conversion or exchange under
any outstanding security or other instrument. All shares of each Subsidiary,
which are owned directly or indirectly by the Company, are owned by the Company
or a Subsidiary free and clear of all liens, charges,
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encumbrances, security interests, equities, claims and options of whatever
nature. The Company has heretofore delivered to Buyer complete and correct
copies of the charter, articles, by-laws or codes of regulations (which terms
shall be deemed to also include comparable governing instruments with different
names) of each Subsidiary, as amended and presently in effect, and no Subsidiary
is in default in the performance, observation or fulfillment of any provision
its charter, articles, by-laws or code of regulations.
(c) CAPITALIZATION. Upon consummation of the transactions set
forth in this Agreement, The authorized capitalization of the Company will
consist solely of 20,000,000 shares of Common Stock, par value $.001 per share,
of the Company (the "Common Stock"), of which 16,313,628 shares will be
issued and outstanding; such shares will constitute all of the issued and
outstanding shares of capital stock of any classes of the Company; and all of
the issued and outstanding capital stock of the Company will be duly and validly
issued and fully paid and nonassessable. Except as set forth in Schedule 3.1(c)
there are no outstanding subscriptions, options, warrants, puts, calls,
agreements or other commitments or rights of any type to purchase any securities
of the Company, nor are there outstanding any securities which are convertible
into or exchangeable for any shares of capital stock of the Company; and the
Company does not have an obligation of any kind to issue any additional
securities. The list of Shareholders attached as Schedule 3.1(c) dated July 11,
1996 is complete and accurate as of that date.
(d) CORPORATE DOCUMENTS. The copies of the Certificates of
incorporation, as amended, of the Company and the Subsidiaries certified by the
Secretary of State and the By-Laws of the Company and the Subsidiaries delivered
to Buyer, certified by the Secretary of the Company, are true, correct and
complete copies of said Certificates and By-Laws currently in effect.
(e) FINANCIAL STATEMENTS. The audited financial statements of
the Company and the Subsidiaries for the fiscal year ended December 31, 1995,
including the notes thereto, and the unaudited financial statements of the
Company and the Subsidiaries for the period ended July 31, 1996, (the "Financial
Statements") and the related statements of income and retained earnings for such
period and initialed by the President of the Company for identification are all
true, correct and complete in all material respects, have
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been prepared in conformity with generally accepted accounting principles
applied on a consistent basis, and fairly present the financial condition of the
Company and the Subsidiaries as at the dates indicated and the results of
operations for the periods then ended, in accordance with such principles.
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since January 1,
1996, except as shown on Schedule 3.1 (f) , there has not been:
(i) Any material adverse change in the capital
structure, condition, financial or otherwise, or in the operation of
the business (as conducted prior to the Closing) of the Company or the
Subsidiaries, or any occurrence, circumstance, or combination thereof,
which reasonably could be expected to result in any such material
adverse change;
(ii) Any material adverse event, including, without
limitation, shortage of materials or supplies, fire, explosion,
accident, labor trouble, requisition or taking of property by any
governmental agency, flood, drought, earth-quake or other natural
event, riot, act of God or the public enemy, or damage, destruction
or other casualty, whether covered by insurance or not, materially
adversely affecting the property, assets or business of the Company,
or the Subsidiaries; or
(iii) Any material transaction or agreement entered
into or carried out by the Company, or the Subsidiaries other than in
the ordinary and usual course of business;
(iv) Any borrowings or agreement to borrow funds,
or any incurrence of any other indebtedness or liability, contingent
or otherwise, except in the usual and ordinary course of business; or
any endorsement, assumption, or direct or indirect guarantee of
payment or performance of any loan or obligation of any other
individual, firm, corporation or other entity by the Company,
or the Subsidiaries;
(v) Any material change made by the Subsidiaries in
their methods of doing business or of accounting;
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(vi) Any sale, lease or disposition of or any
agreement to sell, lease or dispose of any assets held for use or
used in the business of the Company, or the Subsidiaries other than
sales, leases or dispositions in the usual and ordinary course
of business for fair equivalent value;
(vii) Any labor disputes or disturbances materially
or adversely affecting the business or financial condition of the
Company, or the Subsidiaries, including the filing of any petition or
charge of unfair labor practices with the National Labor Relations
Board of which the Company, or the Subsidiaries has received notice
or is aware;
(viii) Any loan or advance made by the Company, or
the Subsidiaries to any individual, firm, corporation or
entity except for advances not material in amount made in the
usual and ordinary course of business to employees; or
(ix) To the best of the Company's knowledge, any
other event or condition of any character which materially or
adversely affects, or may reasonably be expected to so affect, the
business operations (as now conducted or as presently proposed to be
conducted), assets, properties or rights, condition (financial or
otherwise), or prospects of the Company, or the Subsidiaries.
(g) UNDISCLOSED LIABILITIES. To the best of the Company's
knowledge, the Company, or the Subsidiaries have no material liability or
obligation, liquidated, unliquidated, accrued, absolute, contingent or
otherwise, whether due or to become due, except:
(i) those set forth or reflected in the Financial
Statements that have not been paid or discharged since the date
thereof;
(ii) those arising under agreements or other
commitments expressly referred to in this Agreement or any Schedule
hereto;
(iii) current liabilities incurred in or as a result
of the conduct of its business in the ordinary and usual course
consistent with past practice since January 1, 1996 (in transactions
in the ordinary and usual course of such business) that are properly
reflected on the books and not
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inconsistent with the other representations, warranties and
agreements of the Company set forth herein; and
(iv) those existing in the ordinary and usual course
of business of the Company, or the Subsidiaries.
(h) TAXES.
(i) The Company and the Subsidiaries have duly and
timely filed or caused to be filed with the appropriate federal,
state, county, local and foreign governmental agencies or
instrumentalities all tax returns and tax reports required to be
filed or obtained appropriate extensions of time for the making of
such filings, and all such returns and reports, as delivered to
Buyer, were properly prepared on a reasonable basis and have not
been amended; all taxes, assessments, fees and other governmental
charges due pursuant thereto have been paid.
(ii) There have been no audits of federal, state and
local tax returns performed by federal, state or local taxing
authorities and no waivers of any applicable statutes of limitations
are outstanding for the Company or the Subsidiaries. There is
no pending and no threatened federal, state or local tax audit of the
Company, or the Subsidiaries and there is no agreement with any
federal, state or local taxing authority that may affect the
subsequent tax liabilities of the Company, or the Subsidiaries.
(i) COMPLIANCE WITH LAW. To the best of the Company's
knowledge, the Company, and the Subsidiaries have complied and are in compliance
in all material respects with all applicable federal, state and local laws,
statutes, licensing requirements, rules and regulations and judicial or
administrative decisions pertaining to the ownership of their assets or the
operation of their business, including, without limitation, all Securities and
Exchange Commission zoning or safety, building, pollution, environmental
control, matters and laws, ordinances, regulations and requirements. To the best
of the Company's knowledge, the Company, and the Subsidiaries have been granted
any and all valid licenses, permits, authorizations and approvals (collectively
the "Permits") from federal, state and local government regulatory bodies
necessary to carry on
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their business as such business has been and is expected to be conducted, all
of which are currently in full force and effect. The Company and the
Subsidiaries are not in violation of any of the Permits. There is no order
issued, or any investigation or proceeding pending or threatened, nor has any
notice been served with respect to any violation of any law, ordinance, order,
writ, decree, rule or regulation by any state, county, municipal or local
court, or any governmental agency or instrumentality to which the Company, or
the Subsidiaries is subject.
(j) RESTRICTIVE DOCUMENTS OR LAWS. To the best of the
Company's knowledge, except as disclosed in the Financial Statements or other
Schedules attached hereto, the Company, and the Subsidiaries are not parties to
or bound under any mortgage, lien, lease, agreement, contract, instrument, or
any other restriction of any other kind or character which materially and
adversely affects, or could reasonably be expected to materially and adversely
affect, (i) the condition, financial or otherwise, of the Company, or the
Subsidiaries, or any assets or properties owned or used by them in their
business; or (ii) the consummation of the transactions contemplated by this
Agreement.
(k) CONTRACTS AND COMMITMENTS. Except as set forth on Schedule
3.1(k), all material contracts, arrangements, agreements, leases, licenses,
commitments and instruments to which the Company or the Subsidiaries is a party
or by which they are bound are in full force and effect and are valid, binding
and enforceable in accordance with their respective terms, and the Company or
the Subsidiaries is not in default, nor has there occurred an event or condition
which, with the passage of time or the giving of notice (or both), would
constitute a material default, with respect to the payment or performance of any
obligation thereunder; no claim of such a default has been asserted and there is
no reasonable basis upon which such a claim could validly be made. The Company
and the Subsidiaries have not received any notice that any person intends or
desires to modify, waive, amend, rescind, release, cancel or terminate any such
contract, agreement, commitment, lease, license, instrument or arrangement.
(l) NO CONFLICT OR DEFAULT. Neither the execution and delivery
of this Agreement, nor compliance with the terms and provisions hereof,
including, without limitation, the consummation of the
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transactions contemplated hereby, will violate any statutes, regulation or
ordinance of any governmental authority applicable to the Company or will
conflict with or result in the breach of any term, condition or provision of
the Certificate of Incorporation, or By-Laws of the Company or the
Subsidiaries, or of any agreement, deed, contract, mortgage, indenture, writ,
order, decree, commitment or instrument to which the Company, or the
Subsidiaries is a party or by which they or their assets or properties is
bound, or constitute a default (or an event which, with the lapse of time or
the giving of notice, or both, would constitute a default) thereunder or result
in the creation or imposition of any lien, charge or encumbrance, or
restriction of any nature whatsoever thereon, or give to others any interest or
rights, including rights of termination, acceleration or cancellation in
or with respect to its properties, assets, contracts or business.
(m) LITIGATION. There is no suit, claim, action litigation or
proceeding, administrative or judicial, or governmental investigation, pending
or threatened, against the Company or the Subsidiaries or involving any of their
properties and assets, including without limitation, any claim, proceeding, or
litigation for the purpose of challenging, enjoining or preventing the execution
and delivery of this Agreement, the performance of the terms and conditions
hereof or the consummation of the transaction contemplated hereby. To the best
of the Company's knowledge, there is no reasonable basis upon which any suit,
claim, action, litigation, proceeding or investigation could be brought or
initiated against the Company or the Subsidiaries. To the best of the Company's
knowledge, neither the Company nor the Subsidiaries is subject to or in default
under any order, writ, injunction, or decree of any court or governmental
authority.
(n) TITLE TO PROPERTIES. The Company and the Subsidiaries have
good, valid and marketable title (in fee simple in the case of real property),
to all of its assets and properties of every kind, nature and description,
tangible or intangible, known and unknown, wherever located, which constitute
all of the property now used in and necessary for the conduct of its business as
presently conducted (including, without limitation, all property and assets
shown or reflected on the December 31, 1995 and June 30, 1996 financial
statements). All such properties are held free and clear of all mortgages,
pledges, liens, security interests, encumbrances and restrictions of any nature
whatsoever, except as shown in Schedule 3.1(n). No
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financing statement under the Uniform Commercial Code or similar law naming
the Company or any Subsidiary as debtor has been filed in any jurisdiction, and
the Company and the Subsidiaries are not a party to or, to the best knowledge
of Seller, bound under any agreement or legal obligation authorizing any party
to file any such financing statement. To the best knowledge of Seller, the
Company conducts all phases of its business in compliance with any leases or
other agreements, any restrictions of record, and all zoning, fire, safety,
building, pollution, environmental and other laws, ordinances, regulations and
requirements of every governmental authority applicable to the ownership,
operation or other use of such assets and properties. All real property, plants
and structures and all machinery and equipment and tangible personal property
owned or used by the Company and material to the operation of its business
is suitable for the purpose or purposes for which it is being used. Except as
set forth in Hull & Associates, Inc., reports of Phase I Environmental Property
Assessment dated April 1, 1992, (i) no hazardous waste or toxic material other
than xylene and mineral spirits is or has been stored on or disposed of on any
real property owned or used by the Company, or any Subsidiary, there are no oil
or gas xxxxx capped or uncapped, or piping, structures, fixtures or other
appliances relating thereto on or about such property and no such property has
been used as a landfill and (ii) no hazardous waste or toxic material is or has
been stored on or disposed of on any real property owned or used by the Company
or any Subsidiary. There are no pending or threatened zoning, environmental,
condemnation or eminent domain proceedings, building, utility or other
moratoria, or injunctions or court orders which would materially affect
continued operation of the business of the Company or any Subsidiary.
(o) LABOR RELATIONS. To the best of the Company's knowledge,
the Company and the Subsidiaries have complied with Title VII of the Civil
Rights Act of 1964, as amended, the Fair Labor Standards Act, as amended, and
the Occupational Safety and Health Act of 1970, as amended, and all applicable
federal, state and local laws, rules and regulations relating to employment. To
the best of the Company's knowledge, the Subsidiaries have complied with all
applicable laws, rules and regulations governing payment of minimum wages and
overtime rates and the withholding and payment of taxes from
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compensation of employees. There are no controversies threatened between the
Subsidiaries and their employees; and the Subsidiaries have no collective
bargaining unit representing any of its employees.
(p) PATENTS, TRADEMARKS, ETC. The Company and the Subsidiaries
possess and have been issued valid patents, patent rights and licenses,
trademarks, trademark rights, service marks, trade names, trade name rights,
franchises, and franchise rights (all rights of this nature hereinafter referred
to in this Section as "Rights") sufficient to conduct their business as now
operated. To the best of the Company's knowledge, no one is infringing upon the
Rights of the Company or the Subsidiaries, and the Rights of the Company and the
Subsidiaries do not infringe upon or conflict with valid or asserted Rights or
applications therefor of others.
(q) EMPLOYEE BENEFIT PLANS; ERISA. There are no bonus,
deferred compensation, hospitalization or other medical, stock purchase,
pension, life or other insurance, profit-sharing or retirement plan or
arrangement, and each other employee benefit plan or arrangement of the Company
and the Subsidiaries, whether formal or informal and whether legally binding or
not. The Company and the Subsidiaries have no plan or commitment, whether formal
or informal and whether legally binding or not, to create any additional such
plan or arrangement. The Company and the Subsidiaries have no "employee pension
benefit plans" as that term is defined in Section 3 (2) of the Employee
Retirement Income Security Act of 1974, as amended, and the rules and
regulations promulgated thereunder ("ERISA") or any "employee benefit plan"
within the meaning of Section 3 (3) of ERISA.
(r) CONTRACTS. Schedule 3.1(r) lists all contracts,
agreements, contract rights, leases, license agreements, franchise rights and
agreements, policies, purchase and sales orders, quotations and executory
commitments, instruments, arrangements, obligations and understandings (written
or oral) (a "Contract") to which the Company or the Subsidiaries is a party (i)
which are material to the condition (financial or otherwise), operations,
assets, business or prospects of the Company or the Subsidiaries taken as a
whole, (ii) which (other than unfilled purchase orders to purchase goods)
involve payments or commitments in excess of $25,000, (iii) with directors,
officers, employees, former employees, agents or
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consultants with respect to salaries, bonuses, percentage compensation,
pensions, deferred compensation or retirement benefits, or any profit-sharing,
stock option, stock purchase or other employee benefit plan or arrangement,
(iv) which provide for the future purchase by the Company or the Subsidiaries
of any materials, equipment, services or supplies, which continue for a period
of more than twelve months (including periods covered by any option to renew by
either party) or which provide for a price materially in excess of current
market prices or are in excess of normal operating requirements over their
remaining terms, or (v) which involve any of the following: (A) any borrows or
guaranties; or (B) any Contract providing for indemnification or responsibility
for the obligations or losses of any person. All of the Contracts are
valid and binding, in full force and effect and enforceable in accordance with
their respective provisions. The Company is not in violation of, in default in
respect of nor has there occurred an event or condition which, with the passage
of time or giving or notice (or both), would constitute a default of any
Contract.
(s) BINDING OBLIGATION. This Agreement is a legal, valid and
binding obligation of the Company enforceable against it in accordance with its
terms, except that such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' right generally and that the remedy of specific
performance and injunctive or other equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(t) ACCOUNTS RECEIVABLE; CUSTOMERS. All accounts receivable
and any accounts receivable arising between the date hereof and the Closing are
or will be valid and subsisting; represent or will represent sales actually
made; arose or will arise in the ordinary and usual course of the business of
the Company and the Subsidiaries; and, to the extent not collected prior to the
time of Closing. Such accounts are not and will not be subject to any
counterclaim, set-off or defense and are not and will not be subject to any
lien, charge or encumbrance which are material in nature.
(u) INVENTORIES. All inventory held by the Company and the
Subsidiaries is merchantable and currently usable in the ordinary course of the
Company's and the Subsidiaries' business at values not less
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than book value, and will be free and clear of all pledges, liens, security
interests, encumbrances, charges, equities and other restrictions of any
material nature whatsoever.
(v) AUTHORITY. The Company has all requisite power and
authority and has taken all corporate action necessary for the execution,
delivery and performance by it of this Agreement. This Agreement constitutes a
valid and binding obligation of Seller enforceable in accordance with its terms.
SECTION 3.2. COMPLETENESS OF REPRESENTATIONS AND WARRANTIES. The
Company further represents and warrants that:
(a) The subparagraphs of Section 3.1 hereof, including the
material incorporated by reference are, and other written information provided
by the Company to Buyer is, true, accurate and complete and do not or does not
contain any untrue statement of material fact or omit to state a material fact
necessary to make the statements herein or therein contained not misleading.
(b) There is no fact known to the Company which materially and
adversely affects or could reasonably be expected to materially and adversely
affect the business prospects, operations or condition (financial, business,
labor or otherwise) of the Company or of any of its properties or assets, which
has not been set forth herein or therein.
ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF BUYER
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SECTION 4.1. Buyer hereby represents and warrants to the Company that:
(a) ORGANIZATION. Buyer is a partnership duly organized,
validly existing and in good standing under the laws of the State of Ohio, and
has all requisite power and authority to enter into this Agreement, perform its
obligations hereunder and consummate the transactions contemplated hereby.
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(b) AUTHORIZATION. All necessary and appropriate action has
been taken by Buyer with respect to the execution and delivery of this Agreement
and the performance by Buyer of its obligations hereunder, and this Agreement
constitutes a valid and binding obligation of Buyer.
(c) REVIEW BY BUYER. The representatives and agents of the
Buyer who have investigated the purchase of the Shares of the Company have
knowledge and experience in venture capital investing. Prior to the execution of
this Agreement, the Buyer will have received and reviewed the information and
records referred to in the Schedules to this Agreement. In consummating the
purchase of the Shares contemplated by this Agreement, the Buyer will not be
relying upon any information about the Company or the Subsidiaries which it may
have received as referred to in Section (d) (xi) below, except the information
referred to in the Schedules to this Agreement or otherwise provided by the
Company to the Buyer in written form pursuant to this Agreement and the
representations and warranties of Company set forth in Article III.
(d) INVESTMENT REPRESENTATION. Buyer is aware of the
following:
(i) The Shares have not been registered under the
Securities Act in reliance upon the exemption provided by
Section 4 (2) and/or Section 4 (6) of the Securities Act
and/or Regulation D promulgated thereunder;
(ii) The Shares are offered to Buyer only as an
investment and without a view to resale in connection with any
distribution.
(iii) The Company is subject to the reporting
requirements of the Securities Exchange Act of 1934, as
amended, (the "Exchange Act"), and the Company represents
that it has filed all reports required to be filed during the
twelve months preceding the date of this letter. Buyer has had
an opportunity to review the most recent reports filed by the
Company under the Exchange Act and all other publicly
available information concerning the Company.
(iv) Buyer understands that, although the Common
Stock of the Company is traded on the NASDAQ, (a) there is
limited market for the Common Stock and (b) the Shares to be
sold to Buyer pursuant to this Agreement are restricted and
cannot be
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transferred unless registered pursuant to the Securities Act
of 1933 (the "Act") , applicable state securities laws or
applicable laws of foreign jurisdiction or an exemption from
registration exists under the Act, applicable state laws or
the laws of foreign jurisdiction.
(v) Buyer understands and acknowledges that the
Shares which it is purchasing must be held for investment
purposes unless subsequently registered under the Act or until
the Company is satisfied that the securities may be legally
sold or otherwise transferred without registration. Such
restrictions will apply to any sales or transfers of Shares.
(vi) In effecting the sales as set forth in the
Agreement, Buyer understands that the Company is relying upon
the representations and warranties set forth in this
Agreement.
(vii) Buyer has not received a general solicitation
of general advertising concerning the Common Stock of the
Company.
(viii) Buyer will not participate, trade or hold a
position, directly, in any hedging transactions with respect
to the Shares (including a short position, or any part or
option to dispose of the Company's Common Stock) until such
time as the Shares may be freely sold by Buyer in compliance
with the Act.
(ix) Buyer agrees and understands that any and all
stock certificates evidencing ownership of the Shares shall be
stamped or otherwise printed with a distinctive legend that
shall adhere to the following form:
THE COMMON STOCK EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT"), ANY STATE
SECURITIES LAW OR THE APPLICABLE LAWS OF A FOREIGN JURISDICTION. NO
RESALES, PLEDGES, HYPOTHECATIONS OR OTHER TRANSFERS, IN ANY MANNER
WHATSOEVER, OF THE COMMON STOCK EVIDENCED BY THIS CERTIFICATE, WHETHER
VOLUNTARILY OR INVOLUNTARILY, SHALL BE MADE AT ANY TIME WHATSOEVER,
EXCEPT UPON THE ISSUANCE OF A FAVORABLE OPINION OF LEGAL COUNSEL TO THE
SELLER, WHICH LEGAL OPINION MUST BE
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SATISFACTORY IN FORM AND CONTENT TO THE COMPANY AND ITS LEGAL COUNSEL,
TO THE EFFECT THAT THE RESALE, PLEDGE, HYPOTHECATION OR OTHER TRANSFER
OF SUCH COMMON STOCK SHALL NOT BE IN VIOLATION OF THE ACT, ANY STATE
SECURITIES ACT OR THE LAWS, REGULATIONS, ORDINANCES, ORDERS OR RULES OF
ANY FOREIGN JURISDICTION, WHICHEVER MAY BE APPLICABLE. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A CERTAIN STOCK PURCHASE
AGREEMENT, A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE CORPORATION
AND WILL BE FURNISHED TO ANY PROSPECTIVE PURCHASERS UPON REQUEST. BY
ACCEPTANCE OF THIS CERTIFICATE, EACH HOLDER AGREES TO BE BOUND BY THE
PROVISIONS OF SUCH STOCK PURCHASE AGREEMENT AND EACH AMENDMENT THERETO.
(x) Buyer understands and agrees that it has no right
to demand registration of the Shares under the Act.
(xi) Buyer acknowledges that its representatives have
had access to the management and operation facilities of the
Company, have had an opportunity to make inquiries with
respect to the organization and operations of the Company and
have undertaken such acts of due diligence as Buyer deems
necessary and appropriate under the circumstances.
(xii) Buyer is acquiring the Shares for its own
account, for investment purposes only and not with a view to
distribution or resale thereof.
SECTION 4.2. COMPLETENESS OF REPRESENTATIONS AND WARRANTIES. Buyer
further represents and warrants that:
(a) The subparagraphs of Section 4.1 hereof, including the
material incorporated by reference are, and all other written information
provided by Buyer to the Company is, true, accurate and complete and do not or
does not contain any untrue statement of material fact or omit to state a
material fact necessary to make the statements herein or therein contained not
misleading.
(b) There is no fact known to the Buyer which materially and
adversely affects or could reasonably be expected to materially and adversely
affect the business prospects, operations or condition
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17
(financial, business, labor or otherwise) of Buyer or of its Properties or
assets, which has not been set forth herein or therein.
ARTICLE V
---------
COVENANTS
---------
SECTION 5.1. AFFIRMATIVE COVENANTS. During the period from the date of
this Agreement so long as Buyer remains a shareholder of the Company, unless
Buyer otherwise consents in writing, the Company and the Subsidiaries shall:
(a) OPERATION OF BUSINESS. Conduct their business and
operations in compliance with all applicable laws and diligently and
substantially in the same manner as conducted heretofore, maintain its books of
account and records in a manner consistent with generally accepted accounting
principles consistently applied, prepare properly and file on or prior to the
due date thereof all tax returns required by any jurisdiction and pay all taxes
shown to be due thereon; and promptly advise Buyer of any audit, suit, claim,
administrative action filed or threatened against the Company and the
Subsidiaries or the default on or breach of any material contract of the Company
and the Subsidiaries.
(b) MAINTAIN EXISTENCE AND PROPERTY. Maintain their corporate
existence and maintain in working order and condition all properties used in
its business, and make all such repairs, renewals, replacements, additions and
improvements thereto as may be needed and appropriate.
(c) FINANCIAL STATEMENTS. The Company shall deliver financial
statements for the Company and the Subsidiaries monthly to Buyer within 15 days
after the end of each month and an annual audited statement on or before ninety
days following the end of each fiscal year.
SECTION 5.1. NEGATIVE COVENANTS. Except, as otherwise expressly
provided herein, during the period from the date of this Agreement and so long
as Buyer remains a shareholder of the Company, unless Buyer otherwise consents
in writing, the Company and the Subsidiaries shall not:
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18
(a) COMPENSATION. Increase the compensation payable or to
become payable to or for the benefit of any director, shareholder, officer or
employee of the company or any Subsidiary (whose salary is in excess of $50,000
per annum) in an amount greater than $20,000 per annum.
(b) REDEMPTIONS. Redeem, or purchase or otherwise acquire, any
of its own stock or any outstanding options, warrants, rights to acquire such
stock, or enter into agreements to purchase or acquire such stock.
(c) CHANGES IN GOVERNING DOCUMENTS. Amend or change the
Certificate of Incorporation or By-Laws of the Company.
ARTICLE VI
----------
CONDITIONS
----------
SECTION 6.1 CONDITIONS TO OBLIGATIONS OF BUYER. Each and every
obligation of the Buyer to be performed at the Closing shall be subject to the
satisfaction as of or before such time of the following conditions (unless
waived in writing by the Buyer) and unless so satisfied shall permit Buyer to
terminate this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. The Company's
representations are warranties set forth in Article III of this Agreement shall
have been true and correct in all respects at the Closing as though such
representations and warranties were made as of such time.
(b) CONVERSION OF ADVANCE. The Shareholder advance to the
Company (currently $748,344) shall be converted to equity as a contribution to
capital.
(c) SHAREHOLDER EQUITY. Total Shareholder equity in the
Company will be in excess of $1,750,000 immediately prior to the Closing.
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19
(d) PERFORMANCE OF AGREEMENT. All covenants, conditions and
other obligations under this Agreement which are to be performed or complied
with by the Company, shall have been fully performed and complied with by it on
or prior to the Closing Date.
(e) CERTIFICATES. The Company shall have delivered to Buyer on
the Closing Date a Certificate of an officer of TMT Masonry, Ltd. relating to
the sale of its shares to the Company and conversion of its loan to capital and
a Certificate of the President of the Company, dated the Closing Date, to the
effect that the representations and warranties set forth in Article III of this
Agreement are true and correct in all material respects, and containing an
agreement to cooperate in good faith with Buyer in the selection of members of
the Board of Directors of the Company by appropriate Corporate action promptly
following the Closing.
(f) OPINION OF COUNSEL. The Buyer shall have received the
opinion of counsel for the Company, dated the Closing Date, in form satisfactory
to counsel for Buyer, substantially to the effect that:
(i) this Agreement has been duly executed and
delivered by the Company and is the legally valid and binding
obligation of the Company, enforceable in accordance with its
respective terms except as limited by bankruptcy, insolvency,
reorganization or other similar laws relating to creditors'
rights and by general principles of equity;
(ii) The Company and the Subsidiaries have been duly
incorporated and are validly existing as a corporation in good
standing under the laws of the States in which they are
incorporated, with all requisite corporate power and authority
to own, hold and operate its properties and to conduct its
businesses as now owned, leased, held, operated and conducted,
and is qualified to do business and is in good standing in
each jurisdiction in which the nature of its business
conducted or property owned therein requires such
qualification;
(iii) the authorized and outstanding capital stock of
the Company is as stated in Section 3.1(c) of this Agreement;
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20
(iv) the outstanding shares of Common Stock of the
Company have been validly authorized and issued and are
fully-paid and non-assessable;
(v) no authorization, approval or consent under any
agreement or undertaking to which the Company is a party is
required in connection with the execution or performance of
this Agreement or the authorization, issuance, sale or
delivery of the Shares;
(vi) all corporate action has been taken by the
Company to authorize the execution, delivery and performance
of this Agreement, the Shares and all of the transactions
contemplated herein and therein; and
(vii) Other than as disclosed in the schedules to the
Agreement, counsel has no knowledge of any material
litigation, legal or administrative proceeding investigation
or other action of any nature pending or threatened against or
affecting the Company or the Subsidiaries.
(g) The Company has received a commitment from a bank for a
loan of at least $750,000 in a form satisfactory to Buyer.
(h) A Buy-Sell Agreement relating to the disposition of the
Shares of the Company has been executed by Buyer and TMT Masonry, Ltd.
SECTION 6.2. CONDITIONS TO OBLIGATIONS OF THE COMPANY. Each and every
obligation of the Company to be performed at the Closing shall be subject to the
satisfaction as of or before such time of the following conditions (unless
waived in writing by the Company) and unless so satisfied shall permit the
Company to terminate this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. Buyer's representations
and warranties set forth in Article IV of this Agreement shall have been true
and correct in all material respects at the Closing as though such
representations and warranties were made as of such time.
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21
(b) PERFORMANCE OF AGREEMENT. All covenants, conditions and
other obligations under this Agreement which are to be performed or complied
with by Buyer, shall have been fully performed and complied with by it on or
prior to the Closing Date.
(c) A Buy-Sell Agreement relating to the disposition of the
Shares of the Company has been executed by Buyer and TMT Masonry, Ltd.
Page 185
22
ARTICLE VII
-----------
MISCELLANEOUS
-------------
SECTION 7.1. THE COMPANY'S REPRESENTATION CONCERNING FEES. The Company
represents and warrants that it has not incurred any obligation to any finder,
broker or agent in connection with the transactions contemplated by this
Agreement and will defend and indemnify Buyer, against any loss, costs or
expenses of any kind arising out of any claim of such obligation.
SECTION 7.2. BUYER'S REPRESENTATION CONCERNING FEES. Buyer represents
and warrants that it has not incurred any obligation to any finder, broker or
agent in connection with the transactions contemplated by this Agreement and
will defend and indemnify the Company against any loss, cost or expenses of any
kind arising out of any claim of such obligation.
SECTION 7.3. TERMINATION OF AGREEMENT. All representations and
warranties contained in this Agreement by and on behalf of the Company in
connection with the transactions contemplated hereby, shall survive the
execution and delivery of this Agreement and any investigations made by Buyer.
This Agreement and all covenants, representations and warranties shall terminate
upon the redemption or repurchase by the Company or others of any and all equity
interests in the Company held by the Buyer or its permitted assigns.
SECTION 7.4. SCHEDULES AND EXHIBITS INCORPORATED. All references herein
to this Agreement shall be deemed to also refer to the Schedules and Exhibits
attached hereto, which are incorporated into this Agreement.
SECTION 7.5 NO LIMITATION OR WAIVER OF RIGHTS OF BUYER. No course of
dealing on the part of, nor any omission or delay by, Buyer, with respect to
exercising any right, power or privilege of Buyer shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, power or
privilege preclude any other or further exercise thereof or of any other right,
power or privilege, and Buyer may exercise each such right, power or privilege
either independently or concurrently with the others and as often and in such
order as it may deem desirable.
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23
SECTION 7.6. PARTIES BOUND BY AGREEMENT; ASSIGNMENT. This Agreement
shall be binding upon the Company and its legal representatives, transferees,
successors and assigns; provided, however, the Company shall not assign this
Agreement without the prior written consent of Buyer. This Agreement shall not
be assigned by Buyer without the prior written consent of the Company, except to
Buyer's partners or a corporation or other entity controlled by Buyer's General
Partners.
SECTION 7.7. ENTIRE AGREEMENT. This Agreement and the Schedules and
Exhibits hereto embody the entire agreement and understanding between Buyer and
the Company and supersede all prior agreements and understandings relative to
the subject matter hereof. This Agreement may not be changed, modified,
terminated, or discharged, in whole or in part, except by a writing executed by
Buyer and the Company. All such writings shall be signed by the parties and
dated, whereupon they shall become an integral part of, or be construed together
with this Agreement. No waiver of the provisions or conditions of this
Agreement or of any of the rights of a party hereto shall be effective or
binding unless such waiver shall be in writing and signed by the party claimed
to have given or consented to such waiver.
SECTION 7.8. NOTICES. Any notice required or permitted hereunder shall
be deemed given if personally delivered or mailed by registered or certified
mail, return receipt requested (or such form of mail as may be substituted
therefor by United States postal authorities), postage prepaid to the following
addresses of the parties or at such other addresses as either the Company or
Buyer shall, from time to time, designate by written notice:
TO BUYER: Xxxxxxxx Ventures Limited Partnership
-------- 0000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
and to:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxx & Xxxxxxxxx
3200 National City Center
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Page 187
24
TO COMPANY: Van X. Xxxxxx, Esq.
---------- Xxxxxx & Xxxxxxxxxx, L.L.P.
0000 Xxxxxxxx Xxxxx
00 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
All notices so mailed shall be deemed given on the date indicated by the
postmark thereof.
SECTION 7.9. HEADINGS, TIME AND GOVERNING LAW. The headings contained
in this Agreement are for convenience only and are not to be used as an aid in
the interpretation of this Agreement. Time is of the essence in this Agreement,
which shall be governed by the laws of the State of Ohio. Any dispute concerning
the interpretation of this Agreement, or the performance of obligations of the
respective Parties to this Agreement which cannot be amicably settled between
the Parties within sixty (60) days of written notice by the aggrieved Party to
the other, shall be finally settled by binding arbitration in accordance with
the rule and regulations of the American Arbitration Association. The place of
Arbitration shall be Cleveland, Ohio, unless other agreed.
SECTION 7.10. OTHER AND FURTHER DOCUMENTS. The parties shall, in good
faith, either before or after the Closing Date, take such further action and
execute such other and further instruments, assignments or documents as may be
necessary or appropriate for the consummation of the transactions contemplated
by this Agreement provided that no such additional instrument, assignment, or
document shall increase or modify the obligations of any party under this
Agreement.
SECTION 7.11. COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which together shall be construed as one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
WITNESS: XXXXXXXX VENTURES LIMITED PARTNERSHIP
---------------------------------- By:
----------------------------------
General Partner
Page 188
25
WITNESS: AMERICAN STONE INDUSTRIES, INC.
------------------------------ By:
----------------------------------
Its:
----------------------------------
Page 189
26
SCHEDULE 3.1 (b)
----------------
(i) AMERICAN STONE CORPORATION
(ii) Delaware Corporation
(iii) 100 common shares issued and outstanding
(iv) no options or rights exist to acquire its securities
(v) 100 common shares owned by American Stone Industries, Inc.
(vi) no limitations on the issued and outstanding securities
(vii) state of Delaware, and Ohio, Province of Ontario
(viii) no other ownership
(i) XXXXXXX XXXXX DESIGN, INC.
(ii) Ontario Corporation
(iii) 100 common shares issued and outstanding
(iv) no options or rights exist to acquire its securities
(v) 100 common shares owned by American Stone Industries, Inc.
(vi) no limitations on the issued and outstanding securities
(vii) Province of Ontario
(viii) no other ownership
INDIRECT ENTITY INTEREST
Through American Stone Corporation, The Company owns an 89.1% limited
partnership interest in Cleveland Quarries, L.P.
Page 190
27
SCHEDULE 3.1(C)
---------------
An Option Agreement exists between the Company and Suncrest Management Services
Dated August 8, 1998 for the purchase of 250,000 common shares of the company
for $0.25 per share in whole or in part with an expiry date of August 8, 1998.
Option Agreements exist between the Company and each of Xxxx Xxxxxxxxx, Xxxxx
Xxxxxxx and Xxxx Xxxxxxxxxx, all dated October 30, 1995 for the purchase of
100,000 shares each at an exercise price of $0.05 per share in whole or in part
until October 30, 1996 or for $0.75 per share until October 30, 1997.
Shareholders list attached.
Page 191
28
SCHEDULE 3.1(F)
---------------
(i) Changes to the capital of the Company
Shares Issued Date
750,000 April 17, 1996
972,000 May 00, 0000
(xx) Xxxx
(xxx) Agreement to purchase Xxxxxxx Xxxxx Design, Inc.
Letter of intent to purchase Stoklosar Marble Quarries Ltd.
Agreement by American Stone Corporation to purchase Park Industries,
Inc. Block Saw.
(iv) Funds borrowed from Terrazzo Mosaic & Tile Company Limited and Georgia
Capital Corp.
(v) None
(vi) None
(vii) None
(viii) None
(ix) None
Page 192
29
SCHEDULE 3.1(K)
---------------
(i) Secured 6% Note Dated December 10, 1992 in the face amount of
$1,000,000.00 and Due December 10, 1994, with an amended due date of
December 10, 1995 and now past due. Principal outstanding as of August
1, 1996 of $439,314.00 and accrued interest payable of $17,071.71
Page 193
30
SCHEDULE 3.1(N)
(i) Secured 6% Note Dated December 10, 1992 in the face amount of
$1,000,000.00 and Due December 10, 1994, with an amended due date of
December 10, 1995 and now past due. Principal outstanding as of August
1, 1996 of $439,314.00 and accrued interest payable of $17,071.71.
Page 194
31
SCHEDULE 3.1(R)
---------------
(i) Note to Draft [Do we want a list of all the quarry permits here]
(ii) Xxxxx Xxxxxxx employment agreement
Letter of Intent to purchase Stoklosar
Agreement to purchase Block Saw
(iii) Option Agreements
Sucrest Management Services 250,000 shares
Xxxx Xxxxxxxxx 100,000 shares
Xxxxx Xxxxxxx 100,000 shares
Xxxx Xxxxxxxxxx 100,000 shares
(iv) American Stone Corporation
(a) Case Credit $973.00/month until 12/97
Caterpiller $356.00/month until 2/98
Caterpiller $378.00/month until 07/98
(v) (A) None
(B) None
Page 195
