STOCK PURCHASE AGREEMENT ("Agreement"), effective as of June ___, 1997, by
and among Royal Capital, Inc., a Delaware corporation with offices located at 00
Xxxxxxxxx Xxxx, Xxxxxxxxxxxxx, Xxx Xxxxxx 00000 (the "Company"); Whitestone
Industries, Inc., a Delaware corporation with offices located at 00000 Xxx
Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000 ("Whitestone"); and Xxxxxx X. Xx, an
individual residing at 0000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxx 00000
("Stockholder").
WHEREAS, the Company desires to acquire control of Whitestone through the
acquisition of all outstanding shares of stock of Whitestone held by the
Stockholder in accordance with the terms and conditions set forth herein; and
WHEREAS, the Stockholder desires to acquire control of Golden Bear
Entertainment Corp. ("Golden"), a wholly owned subsidiary of Whitestone, through
the acquisition of all outstanding shares of capital stock of Golden held by
Whitestone at time of Closing in accordance with the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the covenants set forth herein, it is
agreed as follows:
ARTICLE I
THE EXCHANGE
1.1 Terms of Purchase. On the basis of the representations, warranties,
covenants and agreements contained herein, and subject to the terms and
conditions of this Agreement.
(i) The Stockholder shall sell, assign, transfer and convey to the Company
at the Closing Date (as hereinafter defined) or as soon thereafter as
practicable 1,120,000 shares of Whitestone Common Stock, $.0001 par value
("Common
Stock") and 100,000 shares of Whitestone Series A Preferred Stock, $.01
par value ("Preferred Stock")(collectively the "Whitestone Shares"). The
Stockholder shall deliver at the Closing Date certificates representing
the Whitestone Shares duly endorsed in blank or accompanied by stock
powers duly endorsed in blank, in each case in proper form for transfer,
with signatures guaranteed as reasonably requested by the Company and with
all stock transfer and other required documentary stamps affixed thereto.
(ii) In consideration for the Whitestone Shares, (i) the Company shall
deliver to Stockholder at the Closing Date a check or wire in the amount
of $100,000, of which $10,000 has been previously paid; and (ii)
Whitestone shall issue to Stockholder certificates representing all
outstanding shares of the capital stock of Golden ("Golden Shares") held
by Whitestone.
ARTICLE II
CLOSING
2.1 Closing. The Closing contemplated by Article 1 of this Agreement shall
be held at the offices of Silverman, Collura, Xxxxxxx & Xxxxxxx, P.C. within
five days after the conditions set forth in Article 7 of this Agreement have
been satisfied, unless another place or on such date as is agreed upon in
writing by the parties (the "Closing Date").
2.2 After the Closing Date and from time to time thereafter, the parties
to this Agreement shall execute such additional instruments and take such other
action as either party may reasonably request in order to effectuate the
transactions contemplated by this Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Whitestone and the Stockholder as
follows:
3.1 Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite power, qualification and authority, corporate or
otherwise, to own, lease and operate its properties and assets and carry on its
business as and in the places where such properties and assets are now owned,
leased or operated or such business is now being conducted.
3.2 Authorization. The Company has all requisite power and authority to
execute, deliver and perform this Agreement. All necessary corporate proceedings
of the Company have been duly taken to authorize the execution, delivery and
performance of this Agreement by the Company. This Agreement has been duly
authorized, executed and delivered by the Company, constitutes the legal valid
and binding obligation of the Company, and is enforceable in accordance with the
terms hereof.
3.3 No Further Action Needed. No consent, authorization, approval, order,
license, certificate, permit, declaration or filing with, any federal, state,
local or other governmental authority or any court or other tribunal is required
by the Company for the execution, delivery or performance of this Agreement by
the Company. No consent of any party to any contract, agreement, instrument,
lease, license, arrangement, or understanding to which the Company is a party,
or to which it or any of its properties or assets are subject, is required for
the execution, delivery or performance of this Agreement. The execution,
delivery and performance of this Agreement will not violate, result in a breach
of, conflict with, or entitle any party to terminate
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or call a default under any term of any contract, agreement, instrument, lease,
license, arrangement, or understanding whereby the Company is a party to, or
violate or result in a breach of any term of the Certificate of Incorporation
(or other charter document) or by-laws of the Company, or violate, result in a
breach of, or conflict with any law, rule, regulation, order, judgment, or
decree binding on the Company or to which any of its operations, business,
properties or assets are subject.
3.4 Veracity of Statements. Neither this Agreement nor the representations
and warranties by the Company contained herein or in any documents,
instruments,certificates or schedules furnished pursuant hereto or in connection
with the transactions contemplated hereby contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
or facts contained herein and therein not misleading. There is no fact which
adversely affects, or in the future may adversely affect, the business,
operations, affairs, condition or prospects of the Company's assets and/or
business which has not been set forth in this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF WHITESTONE AND STOCKHOLDER
Whitestone and Stockholder hereby represent and warrant to the Company as
follows:
4.1 Organization and Standing. Whitestone is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite power and authority, corporate or otherwise, to own, lease
and operate its properties and to carry on its businesses in the places where
such properties are now owned, leased or operated or such business is now being
conducted, or contemplated to be conducted.
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4.2 Authorization. Whitestone has all requisite power and authority,
corporate and otherwise, to enter into this Agreement and to assume and perform
its obligations hereunder. The execution and delivery of this Agreement and the
performance by Whitestone of its obligations hereunder will be duly authorized
by all necessary corporate action. No further action or approval, corporate or
otherwise, will be required in order to constitute this Agreement as a valid,
binding and enforceable obligation of Whitestone.
4.3 Capitalization. The authorized capital stock of Whitestone consists of
30,000,000 shares of $.0001 par value Common Stock ("Common Stock"), of which
5,924,320 shares are issued and outstanding. Each of such outstanding shares of
Common Stock is validly authorized, validly issued and fully paid and
non-assessable, has not been issued and is not owned or held in violation of any
preemptive right of stockholders. At the Closing Date, the Whitestone Shares
shall be validly issued, fully paid and non-assessable.
4.4 Lack of Commitment to Issue Securities. There is not presently
outstanding nor is there any commitment, plan, or arrangement to issue, any
options, warrants or other rights calling for the issuance of any shares of
stock of Whitestone or any security or other instrument convertible into,
exercisable for or exchangeable for stock of Whitestone, except as disclosed on
Schedule 4.4 attached hereto.
4.5 Financial Condition. Annexed hereto as Schedule 4.5 are true and
correct copies of the following: (i) audited consolidated balance sheets of
Whitestone for its last three fiscal years ended December 31, 1996, 1995, and
1994; (ii) the unaudited balance sheet of Whitestone as of March 31, 1997 (most
recent date available); (iii) audited consolidated statements of income,
statements of retained earnings, and statements of changes in financial position
and/or
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cash flow of Whitestone for the last three fiscal years ended December 31, 1996,
1995 and 1994; and (iv) the unaudited consolidated statements of income,
consolidated statements of retained earnings, and consolidated statements of
changes in financial position and/or cash flow of Whitestone for the three (3)
months ended March 31, 1997 (most recent available). Each such balance sheet
presents fairly the consolidated financial condition, assets, liabilities, and
stockholders' equity of Whitestone as of its date; each such statement of income
and statement of retained earnings presents fairly the consolidated results of
operations of Whitestone for the period indicated; and each such statement of
changes in financial position and/or cash flow presents fairly the consolidated
information purported to be shown therein. The financial statements referred to
in this Section 4.5 have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved, are
correct and complete, and are in accordance with the books and records of
Whitestone.
4.6 Lack of Material Changes. Since March 31, 1997 (the most recent
audited financial statement date) except as described on Schedule 4.6 annexed
hereto,
(a) There has not been any material adverse change in the financial
condition, results of operations, business, properties, assets,
liabilities, or future prospects of Whitestone.
(b) Whitestone has not authorized, declared, paid, or effected any
dividend or liquidating or other distribution in respect of its
capital stock or any direct or indirect redemption, purchase, or
other acquisition of any such stock.
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(c) The operations and business of Whitestone have been conducted in all
respects only in the ordinary course.
(d) Whitestone has not mortgaged, pledged or subjected to lien or other
encumbrances any of its assets.
(e) Whitestone has not suffered an extraordinary loss (whether or not
covered by insurance) or waived any right of substantial value.
(f) Whitestone has not sold or transferred any of its assets having a
book value of $100,000 or more or canceled any debts or claims,
except, in each case, in the ordinary course of business.
(g) There has not been any issuance of the Whitestone's capital stock,
bonds or other corporate securities.
(h) There has not been any strike, lockout, labor trouble or any similar
event or condition of any character adversely affecting the business
of Whitestone.
(i) There has not been any increase in the compensation payable or to
become payable by Whitestone to any of its officers, employees or
agents, or any known payment or arrangement made to or with any of
such persons, except as disclosed to the Company.
There is no fact known to Whitestone which materially adversely affects or
in the future (as far as Whitestone can foresee) may materially adversely affect
the financial condition, results of operations, business, properties, assets,
liabilities, or future prospects of Whitestone;
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provided, however, that Whitestone express no opinion as to political or
economic matters of general applicability.
4.7 Tax and Other Liabilities. (i) Whitestone has no liability or
obligation of any nature, accrued or contingent, including without limitation
liabilities for federal, state, local, or foreign taxes, liabilities to
customers or suppliers, direct or indirect, claims, losses, damages,
deficiencies (including deferred income tax and other net tax deficiencies),
costs, expenses, obligations, guarantees, or responsibilities, whether accrued,
absolute, or contingent, known or unknown, fixed or unfixed, liquidated or
unliquidated, secured or unsecured, (hereinafter collectively referred to as
"Liabilities") other than the following:
(a) Liabilities for which full provision and/or disclosure has been made
on the audited balance sheet (the "Last Balance Sheet") as of
December 31, 1996 (the "Last Balance Sheet Date") referred to in
Section 4.5 of this Agreement; and
(b) Other liabilities arising since the Last Balance Sheet and prior to
the Closing Date in the ordinary course of business which are not
inconsistent with the representations and warranties of Whitestone
or any other provision of this Agreement. To the extent that any
other liabilities in excess of $3,000 have arisen since the Last
Balance Sheet, such other liabilities are described in Schedule 4.7
annexed hereto.
(ii) Without limiting the generality of the foregoing, the amounts set up as
provisions for taxes on the Last Balance Sheet are sufficient for all accrued
and unpaid federal, state, local and foreign taxes of Whitestone, whether or not
due and payable and whether or not disputed, under
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tax laws, as in effect on the Last Balance Sheet Date or now in effect, for the
period ended on such date and for all fiscal years prior thereto. Whitestone has
filed all federal tax returns required to be filed by them. Whitestone has paid
(or has established on the Last Balance Sheet a reserve for) all taxes,
assessments, and other governmental charges payable or remittable by it or
levied upon it or its properties, assets, income, or franchises which are due
and payable. Whitestone has not received reports as to adjustments from any
taxing authority during the past five years and Whitestone knows of no
governmental or other proceeding (formal or informal), or investigation pending,
threatened, or in prospect with respect to any such report or the subject matter
of any such report.
4.8 Litigation and Claims. There is no litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or investigation pending,
threatened, or in process (or any basis therefore known to Stockholder or
Whitestone) with respect to Whitestone, or any of its or his business,
properties, or assets except as disclosed on Schedule 4.8 attached. Whitestone
is not affected by any present or threatened strike or other labor disturbance
nor to the knowledge of Whitestone, is any union attempting to represent any
employee of the Company as collective bargaining agent. Whitestone is not in
violation of, or in default with respect to, any law, rule, regulation, order,
judgment, or decree; nor is Whitestone required to take any action in order to
avoid such violation or default.
4.9 Assets. The financial statements annexed hereto as Schedule 4.5
contain a true and complete list of all real and other properties and material
assets (including but not limited to machinery, equipment, inventories, and
intangibles owned, leased, used in its business and/or licensed by Whitestone
(collectively the "Assets"). The Assets constitute all such properties and
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assets which are necessary to conduct the business of Whitestone as presently
conducted and/or as Whitestone contemplates conducting.
4.10 Title to Assets. Whitestone has good and marketable title to all of
the Assets (except real and other properties and assets as are held pursuant to
leases as referred to in Article 4.14 herein, free and clear of all liens,
mortgages, security interests, pledges, charges, conditional sales agreements
and security investments, and encumbrances (except as are listed in the
financial statements attached to the Agreement as Schedule 4.5).
4.11 Accounts and Notes Receivable. All accounts and notes receivable
reflected on the Last Balance Sheet, and those arising since the Last Balance
Sheet Date constitute valid and binding obligations, have been collected or are
and will be good and collectible, in each case at the aggregate recorded amounts
thereof without right of recourse, defense, deduction, return of goods,
counterclaim, offset, or set off on the part of the obligor, and, if not
collected, can reasonably be anticipated to be paid within 60 days of the date
incurred.
4.12 Lack of Restrictions. No real property owned, leased, licensed, or
used by Whitestone lies in an area which is, or to the knowledge of Whitestone,
will be, subject to zoning, use, or building code restriction which would
prohibit, and no state of facts relating to the actions of another person or
entity or its ownership, leasing, licensing, or use of any real or personal
property exists or will exist which would prevent, the continued effective
ownership, leasing, licensing, or use of such real property in the business in
which Whitestone is now engaged or the business in which it contemplates
engaging.
4.13 Contracts and Other Instruments. (i) Schedule 4.13 accurately and
completely details all contracts, licenses, instruments and agreements to which
Whitestone is a party,
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including but not limited to, all telephone agency agreements, supply
agreements, manufacturer agreements, price protection agreements,
distributorship agreements, OEM agreements, partnership agreements, dealership
agreements, fiduciary agreements, license agreements, marketing agreements,
commission agreements, sales agency agreements, other agency agreements, bank
credit agreements, factoring agreements, loan agreements, indentures, promissory
notes, guarantees, undertakings, other evidences of indebtedness, letters of
credit, joint venture agreements, operating agreements, management agreements,
agreements for the acquisition of merger or combination with any other company,
corporation or businesses signed within the last two years, employment
agreements, labor agreements, salesmen commission agreements, independent
contractor agreements, sales or purchase agreements for a term in excess of one
year which have an aggregate sale or purchase price in excess of $50,000;
contracts, agreements, arrangements, or understandings with any stockholder, any
director, officer, or employee, any relatives or affiliate of any stockholder or
of any such director, officer, or employee, or any other corporation or
enterprise in which any stockholder, any such director, officer, or employee, or
any such relative or affiliate then had or now has a 5% or greater equity or
voting or other substantial interest; government contracts, franchise
agreements, management agreements, advisory agreements, consulting agreements,
advertising agreements, construction agreements, warehousing agreements,
engineering agreements, design agreements, major utility agreements and any
other agreements which involve the payment of in excess of $50,000 prior to the
date it can be terminated without penalty or premium (all of which contracts,
licenses, instruments, and agreements are hereinafter referred to collectively
as the "Contracts").
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(ii) Neither Whitestone nor any other party to any such Contract, to the
best of Whitestone's knowledge, is now or expects in the future to be in
violation or breach of, or in default with respect to complying with, any
material provision thereof, and each such Contract, is in full force and effect
and is the legal, valid, and binding obligation of the parties thereto and is
enforceable as to them in accordance with their respective terms. Neither
Whitestone nor any other party to any such Contract has given notice of
termination or taken any action inconsistent with the continuance thereof. The
execution, delivery, and performance of this Agreement will not prejudice any
such Contract. Whitestone is not party to or bound by any other contract,
agreement, instrument, lease, license, arrangement, or understanding, or subject
to any charter or other restriction, which has had or may in the future have a
material adverse effect on the financial condition, results of operations,
business, properties, assets, liabilities, or future prospects of Whitestone.
4.14 Leases. Schedule 4.14 attached hereto describes all of Whitestone's
leases and subleases to which Whitestone is a party ("Leases"). Whitestone
enjoys peaceful and undisturbed possession under all such leases. All such
Leases are legal, valid and binding agreements and Whitestone is a tenant or
possessor in good standing thereunder, free of any default or breach whatsoever
and quietly enjoys the premises provided for therein. Each rental, royalty or
other payment due thereunder has been made; each act required to be performed
which, if not performed, would constitute a material breach thereof has been
duly performed; and no prohibited acts have been performed thereunder which, if
presented, would constitute a material breach thereof. Each of such leases is in
full force and effect and there is not under
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any such lease any default or claim of default or event which, with or without
notice of the lapse of time or both would constitute a breach or default
thereunder.
4.15 Capital Projects. As of the date of this Agreement, Whitestone has
not undertaken any capital projects the cost of completion of which would exceed
$3,000 except as listed in Schedule 4.15 attached hereto and made a part hereof.
4.16 Environmental Laws. Whitestone is in material compliance with all
federal, state and local laws regarding environmental matters.
4.17 ERISA Matters. Whitestone does not have, nor does it contribute to,
any pension, profit sharing, option, other incentive plan, or any other type of
employee benefit plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974), or any obligation to or customary arrangement with
employees for bonuses, incentive compensation, or severance pay.
4.18 Insurance. Schedule 4.18 attached hereto and made a part hereof is a
complete and correct list of all insurance policies of any kind held by
Whitestone. Each such policy is valid and enforceable; all premiums and other
payments due from Whitestone on account of any such policy have been paid, there
is no act or failure to act which has or might cause any such policy to be
canceled or terminated.
4.19 Labor Disputes. Whitestone is not a party to any union representation
or labor contract. Whitestone has not received any notice from any labor union
or group of employees that such union or group represents or believes or claims
it represents or intends to represent any of the employees of Whitestone; no
strike or work interruption by any of its employees is planned, under
consideration, threatened or imminent; and Whitestone has not made any loan
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or given anything of value, directly or indirectly, to any officer, official,
agent or representative of any labor union or group of employees. Whitestone is
not delinquent in payments to any of its employees for any wages, salaries,
commissions, bonuses or other direct compensation for any services performed by
them to the date hereof or amounts required to be reimbursed to such employees.
In the event of termination of the employment of any of its employees,
Whitestone will not by reason of anything done prior to the Closing Date be
liable to any of said employees for "severance pay" or any other payments.
Whitestone is in compliance with all federal, state and local laws and
regulations respecting labor, employment and wages and hours; and there is no
unfair labor practice complaint against Whitestone pending before the National
Labor Relations Board or any comparable state or local agency.
4.20 Liens on Assets. Except as reflected on Whitestone's financial
statements (Schedule 4.5) Whitestone has good and marketable title to all of its
assets and such assets are not subject to any mortgages, pledges, liens,
conditional sales agreements, encumbrances and security interests or claims
except for minor imperfections in title and encumbrances, if any, which
singularly and in the aggregate are not substantial in amount and do not
materially detract from the value of the property subject thereto or impair the
use thereof in Whitestone's business.
4.21 Condition of Tangible Assets. As of the Closing Date, all of
Whitestone's assets will be in normal, operating and useable condition, in a
state of good maintenance and repair, subject to ordinary wear and tear and
scheduled maintenance items, taking into consideration the age and utilization
thereof, and will conform to all applicable ordinances, regulations and other
laws (including those relating to building and zoning and environmental
protection and occupational safety and health).
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4.22 Validity of Contemplated Transactions. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby (i) have been duly approved by the unanimous consent of the
Board of Directors of Whitestone; (ii) do not and will not contravene, violate
and/or result in a breach or default under any provision of the Certificate of
Incorporation or Bylaws of Whitestone as presently in effect; (c) do not
violate, are not in conflict with, and do not constitute a default under, or
cause the acceleration of any payments pursuant to, or otherwise impair the good
standing, validity, or effectiveness of any material agreement, contract,
license, indenture, instrument, lease, or mortgage, or subject Whitestone or any
of its assets to any indenture, mortgage, contract, commitment, or agreement,
other than this Agreement, to which Whitestone is a party or by which Whitestone
or any of its assets are bound; and (d) does not violate any material provision
of law, rule, regulation, order, permit, or license to which Whitestone is
subject.
4.23 Subsidiaries. Whitestone owns no shares of capital stock or other
equity interest in any corporation, partnership, joint venture or other business
organization or enterprise, except as set forth in the financial statements
included in Schedule 4.5 annexed hereto.
4.24 Bank Accounts. Schedule 4.24 annexed hereto lists the names and
addresses of every bank and other financial institution in which Whitestone
maintains an account (whether checking, savings or otherwise), lock box or safe
deposit box, and the account numbers and names of persons having signing
authority or other access thereto.
4.25 Questionable Payments. Neither Whitestone, any director, officer,
agent, employee, or other person associated with or acting on behalf of
Whitestone has, directly or indirectly: (i) used any corporate funds for
unlawful contributions, gifts, entertainment, or other
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unlawful payment to foreign or domestic governmental officials or employees or
to foreign or domestic governmental officials or employees or to foreign or
domestic political parties or campaigns from corporate funds; (ii) violated any
provision of the Foreign Corrupt Practices Act of 1977; (iii) established or
maintained any unlawful or unrecorded fund of corporate monies or other assets;
(iv) made any false or fictitious entry on the books or records of Whitestone;
(v) made any bribe, rebate, payoff, influence payment, kickback, or other
unlawful payment; (vi) given any favor or gift which is not deductible for
federal income tax purposes; and/or (viii) made any bribe, kickback, or other
payment of a similar or comparable nature, whether lawful or not, to any person
or entity, private or public, regardless of form, whether in money, property, or
services, to obtain favorable treatment in securing business or to obtain
special concessions, or to pay for favorable treatment for business secured or
for special concessions already obtained.
4.26 Directors and Officers. A true and complete list as of the date of
this Agreement indicating Whitestone's directors and officers, each of whom has
been duly elected is as follows:
NAME POSITION
---- --------
Xxxxxx Xx President, Chief Executive and Director
Xxxxx Xxxxx Secretary, Treasurer and Director
Xxxxxxxx Xxxxx Asst. Secretary
4.27 Liabilities. The financial statements annexed hereto as Schedule 4.5
reflect a true and complete list of all Whitestone bank loans, lines of credit,
financial institution indebtedness and other liabilities (including but not
limited to accounts payable and accrued expenses) outstanding as of the date of
this Agreement, which schedule includes the name of the creditor,
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amount outstanding as of the date of this Agreement and essential repayment
terms and conditions.
4.28 Public Company. The Common Stock of the Whitestone is registered with
the United States Securities and Exchange Commission ("SEC") pursuant to Section
12(g) of the Securities Exchange Act of 1934 ("Exchange Act"). The Company is
not current with respect to its filing obligations to the Commission as a
"reporting company." It has filed all required reports but for Forms 10-QSB for
the quarterly periods ended September 30, 1996 and March 31, 1997, and Form
10-KSB for the year ended December 31, 1996. To the best of the Whitestone's
knowledge and belief, there are no pending or foreseeable enforcement
proceedings or investigations relative to the Company commenced by either the
SEC or any state securities bureau.
ARTICLE 5
COVENANTS OF THE COMPANY
5. Covenants of the Company. The Company covenants as follows:
5.1 The representations and warranties of the Company contained in this
Agreement and in the schedules hereto shall be true and correct in all respects
as of the Closing Date. The Company shall give Whitestone prompt notice of any
change in any of the information contained in the representations and warranties
of the Company, the schedules hereto or the documents furnished by the Company
in connection herewith which occurs prior to the Closing Date. Upon the
happening of any occurrence or event prior to the Closing Date, which shall have
a material adverse effect upon the business or assets of the Company, Whitestone
shall have the right to
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terminate this Agreement by written notice to the Company and upon such
termination, no party shall have any further liability or obligation under this
Agreement.
5.2 The Company shall, prior to the Closing Date, deliver to Whitestone
the unanimous consent of its Board of Directors, which consent evidences the
approval of this Agreement and the transactions contemplated hereby.
5.3 The Company will, prior to the Closing Date, comply with all laws
affecting operation of its business, will not operate the said business other
than in the ordinary course, and will give notice to Whitestone of any event or
circumstance not in the ordinary course which materially affect the Company's
business or the Assets.
5.4 The Company shall use its best efforts to take or cause to be taken
all action and do or cause to be done all things necessary, proper or advisable
to consummate the transactions contemplated by this Agreement, including,
without limitation, to obtain all consents, approvals and authorizations of
third parties, to make all filings with and give all notices to third parties
which may be necessary or required in order to effectuate the transactions
contemplated hereby and to provide all information necessary to enable the
Company to meet its disclosure responsibilities to the SEC, NASD and the
investment community.
ARTICLE 6
COVENANTS OF WHITESTONE AND STOCKHOLDER
Whitestone and Stockholder covenant as follows:
6.1 The representations and warranties of Whitestone and Stockholder
contained in this Agreement shall be true and correct in all material respects
as of the Closing Date, and Whitestone and the Stockholder shall give the
Company prompt notice of any change in any of
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the information contained in the representations and warranties of Whitestone
and Stockholder hereunder or the documents furnished by Whitestone in connection
herewith which occurs prior to the Closing Date.
6.2 Whitestone will use its best efforts to, prior to the Closing Date,
comply with all laws affecting the operation of its business.
6.3 Whitestone shall use its best efforts to take or cause to be taken all
action and do or cause to be done all things necessary, proper or advisable to
consummate the transactions contemplated by this Agreement, including, without
limitation, to obtain all consents, approvals and authorizations of third
parties and to make all filings with and give all notices to third parties which
may be necessary or required in order to effectuate the transactions
contemplated hereby.
ARTICLE 7
CONDITIONS OF CLOSING
7.1 The obligation of the Company to close hereunder shall be subject to
the fulfillment and satisfaction by Stockholder and/or Whitestone, prior to or
at the Closing Date, of the following conditions or the written waiver thereof
by the Company:
(i) Board Meeting. Whitestone's Board of Directors shall have approved all
of the transactions described in this Agreement by either a vote or
written consent of the majority of Board members, and a majority of
Whitestone's stockholders shall have executed consents approving the
transactions contemplated by this Agreement. At the Board meeting, the
outgoing Board of Directors shall adopt the following resolutions:
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a) A recapitalization of Whitestone including a reverse stock split
of Whitestone's Common Stock in a ratio requested by the Company;
b) Designation of incoming directors;
c) Resignation of outgoing directors, effective as soon as past due
reports on Forms 10-QSB and Form 10-KSB have been filed with the SEC;
d) Declaration of a stock dividend of 5% of Golden's outstanding
common stock to be distributed to Whitestone's shareholders of record on
the day preceding the Closing Date'
e) Amendment of Whitestone's Certificate of Incorporation to provide
for the aforementioned reverse split and to effect a name change to
Proformix, Inc.; and
f) Approval of the filing of Registration Statement on Form S-8 with
respect to shares to be issued to consultants Xxxxxxx Xxxxx and Xxxx Xxxx.
(ii) Representations and Warranties. The representation and warranties of
Whitestone and the Stockholder in this Agreement shall be true and correct
in all material respects when made and shall be true and correct in all
material respects on and as of the Closing Date.
(iii) Reporting Obligations. Whitestone shall file with the SEC all
delinquent Exchange Act reports including, but not limited to, Form 10-QSB
for the quarter ended September 30, 1996, Form 10-KSB for the year ended
December 31, 1996, and Form 10-QSB for the quarter ended March 31, 1997.
The outgoing Board of Directors will be responsible for the filing of such
delinquent reports.
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(iv) Delivery of Officers' Certificate. A certificate signed by
Whitestone's CEO shall be delivered to the Company certifying that each of
the warranties and representations set forth in this Agreement are true
and accurate as of the date of the Closing Date and that no event or
occurrence has transpired as of the Closing Date which has or will have a
material adverse effect upon the business or assets being acquired.
(v) Compliance with Agreement. Whitestone shall have performed and
complied with all of its covenants and obligations under this Agreement
and the Letter of Intent dated May 15, 1997, and Whitestone and the
Stockholder further specifically agree to file all required Exchange Act
reports, issue all shares of stock, including issuance to the Stockholder
of all the outstanding capital stock of Golden, less the 5% stock dividend
provided for hereinabove, and to perform and comply with all other
covenants and obligations which are to be discharged after the effective
date hereof as set forth hereunder.
(vi) Absence of Suit. No action, suit or proceedings before any court or
any governmental or regulatory authority shall have been commenced or
threatened and, no investigation by any governmental or regulatory
authority shall have been commenced against Whitestone seeking to
restrain, prevent or change the transactions contemplated hereby, or
questioning the validity or legality of any such transactions, or seeking
damages in connection with any of such transactions.
21
(vii) Receipt of Approvals, Etc. All approvals, consents and/or waivers
for Whitestone that are necessary to effect the transactions contemplated
hereby shall have been received.
(viii) Accuracy of Financial Statements. All balance sheets, statements of
income, statements of changes in financial position and/or cash flows and
other financial statements of Whitestone furnished to the Company pursuant
to this Agreement shall be true, accurate and prepared in accordance with
generally accepted accounting principles.
(ix) Proceedings and Instruments Satisfactory; Certificates. All
proceedings, corporate or otherwise, to be taken in connection with the
transactions contemplated by this Agreement shall have occurred and all
appropriate documents incident thereto as the Company may reasonably
request shall have been delivered to the Company.
(x) Opinion of Counsel. Whitestone shall produce an opinion of counsel as
of the Closing Date addressed to the Company to the effect that (i) this
Agreement has been duly executed and delivered by Whitestone and the and
constitutes a legal, binding obligation of Whitestone and Stocholder
enforceable in accordance with its terms; (ii) Whitestone has taken all
action necessary to authorize the execution and performance of this
Agreement; and (iii) that the Whitestone Shares are duly authorized,
validly issued, fully paid and non-assessable.
22
7.2 The obligation of Whitestone to close hereunder shall be subject to
the fulfillment and satisfaction, prior to or at the Closing Date, of the
following conditions by the Company or the written waiver thereof by the
Whitestone:
(i) Representatives and Warranties. The representation and warranties of
the Company in this Agreement shall be true and correct in all material
respects when made and shall be true and correct in all material respects
on and as of the Closing Date.
(ii) Delivery of Officers' Certificate. The Company shall deliver to the
Company a certificate signed by its CEO, certifying that each of the
warranties and representations of the Company set forth in this Agreement
is true and accurate as of the date of the Closing Date and that no event
or occurrence has transpired as of the Closing Date which has or will have
a material adverse effect upon the business or assets being acquired.
(iii) Compliance with Agreement. The Company shall have performed and
complied with materially all of their obligations and delivered all monies
to the Stockholder required to be delivered under this Agreement and the
Letter of Intent dated May 15, 1997.
(iv) Absence of Suit. No action or lawsuit shall have been commenced
against the Company, seeking to restrain, prevent or change the
transactions contemplated hereby, or questioning the validity or legality
of any such transactions, or seeking damages in connection with any of
such transactions.
23
(v) Receipt of Approvals, Etc. All approvals, consents and/or waivers for
the Company that are necessary to effect the transactions contemplated
hereby shall have been received.
(vi) Proceedings and Instruments Satisfactory; Certificates. All
proceedings, corporate or otherwise, to be taken in connection with the
transactions contemplated by this Agreement shall have occurred and all
appropriate documents incident thereto as Whitestone may reasonably
request shall have been delivered to Whitestone.
ARTICLE 8
INDEMNIFICATION
8.1 By the Company. The Company shall defend and promptly indemnify and
save Whitestone and the Stockholder harmless from, against, for and in respect
of and shall pay any and all damages, losses, obligations, liabilities, claims,
encumbrances, deficiencies, costs and expenses, including, without limitation,
reasonable attorneys' fees and other costs and expenses incident to any action,
investigation, claim or proceeding (all hereinafter collectively referred to as
"Losses") suffered, sustained, incurred or required to be paid by Whitestone and
the Stockholder by reason of the Company's breach of any warranty,
representation or covenant hereunder.
8.2 By Whitestone. Whitestone shall defend and promptly indemnify the
Company and its officers and directors, and save and hold them harmless from,
against, for and in respect of and shall pay any and all damages, losses,
obligations, liabilities, claims, encumbrances, deficiencies, costs and
expenses, including without limitation, reasonable attorneys' fees and
24
other costs and expenses incident to any suit, action, investigation, claim or
proceeding (all hereinafter collectively referred to as "Losses") suffered,
sustained, incurred or required to be paid by the Company by reason of (i) the
existence of any and all obligations and/or liabilities of Whitestone which were
not disclosed to the Company in this Agreement; (ii) any breach or failure of
observance or performance of any representation, warranty, covenant, agreement
or commitment made by Whitestone and the Stockholder hereunder or relating
hereto or as a result of any such representation, warranty, covenant, agreement
or commitment being untrue or incorrect in any respect, or (iii) any and all
actions, suits, investigations, proceedings, demands, assessments, audits,
judgments and claims arising out of any of the foregoing or from any
misrepresentation or omission from any schedule to this Agreement, certificates,
financial statements or from any document furnished or required to be furnished
hereunder.
ARTICLE 9
EXPENSES
9.1 Expenses. The parties agree to bear their expenses individually, each
in respect of all expenses of any character incurred by it in connection with
this Agreement or the transactions contemplated hereby.
ARTICLE 10
SECURITIES ACT PROVISIONS
10.1 Restrictions on Disposition of Shares. The Company and Stockholder
covenants and warrants that the Whitestone Shares and the Golden Shares,
respectively, to be received from the Stockholder and Whitestone, respectively,
pursuant to this Agreement are acquired for their own respective accounts and
not with the present view towards the distribution thereof
25
without compliance with securities laws and they will not dispose of the
Whitestone Shares and Golden Shares except (i) pursuant to an effective
registration statement under the Securities Act of 1933, as amended, or (ii) in
any other transaction which, in the opinion of Whitestone's or Golden's counsel,
as the case may be, is exempt from registration under the Securities Act of
1933, as amended, or the rules and regulations of the SEC thereunder. In order
to effectuate the covenants of this subsection 10.1 an appropriate legend has
been be placed upon each of the certificates of stock at the time of
distribution of the Whitestone and Golden Shares by the Stockholder and
Whitestone pursuant to this Agreement, and stop transfer instructions shall be
placed with the transfer agent for said Shares.
10.2 Evidence of Compliance with Private Offering Exemption. The
Stockholder agrees to supply the Company with such evidence as counsel for the
Company may require in order to evidence the private offering character of the
distribution of shares made pursuant to this Agreement.
10.3 Notice of Limitation Upon Disposition. The Company and the
Stockholder is aware that the Whitestone Shares and Golden Shares distributed
pursuant to this Agreement will not have been registered pursuant to the
Securities Act of 1933, as amended, and therefore, under current interpretations
and applicable rules, said Shares can not be publicly sold for a period of at
least one year, and at the expiration of such one year period, sales of said
Shares may be confined to brokerage transactions of limited amounts requiring
certain notification filings with the SEC and such disposition may be available
only if Whitestone are current in its filings with the SEC under the Securities
Act of 1933, as amended, or other public disclosure requirements.
26
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1 Entire Agreement. This Agreement and the Letter of Intent dated May
15, 1997 constitutes the entire agreement of the parties with respect to the
subject matter hereof.The representations, warranties, covenants and agreements
set forth in this Agreement and in any financial statements, schedules or
exhibits delivered pursuant hereto constitute all the representations,
warranties, covenants and agreements of the parties hereto and upon which the
parties have relied and except as may be specifically provided herein. No
change, modification, amendment, addition or termination of this Agreement or
any part thereof shall be valid unless in writing and signed by or on behalf of
the party to be charged therewith.
11.2 Survival of Covenants, etc. All warranties, representations and
covenants set forth herein shall survive the Closing Date of this Agreement.
11.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be given or made pursuant to any of the provisions of
this Agreement shall be deemed to have been duly given or made for all purposes
if sent by Federal Express delivery or by certified or registered mail, return
receipt requested and postage prepaid or hand delivered as follows:
For the Company:
Royal Capital, Inc.
00 Xxxxxxxxx Xxxx
Xxxxxxxxxxxxx, XX 00000
Copy to:
Silverman, Collura, Xxxxxxx & Xxxxxxx. P.C
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
00
Xxx Xxxx, Xxx Xxxx 00000
For Stockholder:
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
11.4 Waiver. No waiver of the provisions hereof shall be effective unless
in writing and signed by the party to be charged with such waiver. No waiver
shall be deemed a continuing waiver or waiver in respect of any subsequent
breach or default, either of a similar or different nature, unless expressly so
stated in writing.
11.5 Governing Law. This Agreement shall be governed, interpreted and
construed in accordance with the laws of the State of New York applicable to
contracts to be performed entirely within that State. Any dispute in any way
related to the subject matter of this Agreement shall be litigated exclusively
within the State of New York and all parties hereto, including shareholders of
the Company consent to the jurisdiction of the State and/or United States
District Courts of New York. Should any clause, section or part of this
Agreement be held or declared to be void or illegal for any reason, all other
clauses, sections or parts of this Agreement which can be affected without such
illegal clause, section or part shall nevertheless continue in full force and
effect.
11.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns or heirs and personal representatives; provided, however, that no party
may assign any of its rights or delegate any of its duties under this Agreement
without the prior written consent of the other parties hereto.
28
11.7 Captions. The headings, captions or titles of paragraphs under
sections or subsections of this Agreement are for convenience and reference only
and do not in any way modify, interpret or construe the intent of the parties or
effect any of the provisions of this Agreement.
11.8 Time Periods. Any time period provided for herein which shall end or
expire on a Saturday, Sunday, or legal holiday shall be deemed extended to the
next full business day thereafter.
11.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same Agreement.
11.10 Confidentiality. Neither this Agreement nor any memorandum of this
Agreement shall be recorded in the Public Records of any State or County. The
parties hereto agree to keep this Agreement confidential, as well as any
information or document obtained by either party in connection with this
transaction, except to the extent disclosure is required to or by any government
agency or regulatory or quasi-regulatory body. Whitestone will not release any
information by press release or otherwise regarding this transaction without the
prior consent of the Company.
29
11.11 Joint Draftsmanship. The preparation of this Agreement has been a
joint effort of the parties and this Agreement shall not, solely as a matter of
judicial construction, be construed more severely against one of the parties
than the other.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed on the date and year first above written.
ROYAL CAPITAL INCORPORATED
By:_____________________________
Xxxxx Xxxxxx, President
WHITESTONE INDUSTRIES, INC.
By:_____________________________
Xxxxxx X. Xx, President
________________________________
Xxxxxx X. Xx, Individually
1. Article 1.1(i) is amended as follows:
(i) The Stockholder shall sell, assign, transfer and convey to the Company
at the Closing Date (as hereinafter defined), or as soon thereafter as
practicable, 100,000 shares of Whitestone Series A Preferred Stock, $.01
par value ("Preferred Stock"). The Stockholder shall arrange for an
irrevocable proxy to be executed by a Whitestone shareholder providing the
Company with sole voting power of 1,120,000 shares of Whitestone Common
Stock, $.0001 par value ("Common Stock") (the Preferred Stock and Common
Stock collectively referred to herein at the "Whitestone Shares"). The
Stockholder shall deliver at the Closing Date certificates representing the
Preferred Stock duly endorsed in blank or accompanied by stock powers duly
endorsed in blank, in each case in proper form for transfer, with
signatures guaranteed as reasonably requested by the Company and with all
stock transfer and other required documentary stamps affixed thereto. The
Stockholder shall also deliver at the Closing Date an executed irrevocable
proxy pursuant to the terms described above.
ROYAL CAPITAL INCORPORATED
By:____________________________
Xxxxx Xxxxxx, President
WHITESTONE INDUSTRIES, INC.
By:____________________________
Xxxxxx Xx, President
_____________________________
Xxxxxx Xx, Individually
1. Article 1.1(ii) is amended to provide for the escrow of $60,000 of the
purchase price, to be released to Stockholder upon the satisfaction of the
following conditions:
(a) The Stockholder will provide the litigation documents relating to
the injunction and stop transfer instructions pertaining to 1,120,000
shares of Whitestone Industries, Inc. Common Stock held or record by
Stockholder; and
(b) The filing of all delinquent Securities Exchange Act of 1934
reports by Stockholder as described in Article 4.28.
ROYAL CAPITAL INCORPORATED
By:____________________________
Xxxxx Xxxxxx, President
WHITESTONE INDUSTRIES, INC.
By:____________________________
Xxxxxx Xx, President
_____________________________
Xxxxxx Xx, Individually
