Exhibit 10.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 11th day of May, 2005, by and between Halter Financial Group,
Inc. ("Purchaser"), maintaining an address at 00000 Xxxxxxx Xxxx, Xxxxxx, Xxxxx
00000, and TS Electronics, Inc., a Delaware corporation (the "Company"),
maintaining an address at 0000 Xxxxxxxxxx Xxxx, Xxxxxxxxx, XX 00000.
W I T N E S S E T H:
WHEREAS, the Company desires to sell to Purchaser and Purchaser desires
to purchase from the Company a total of 1,875,045 restricted shares (the
"Shares") of the common capital stock of the Company, par value $0.001 per
share, representing 75% of the Company's issued and outstanding common capital
stock at the time of Closing (as hereinafter defined), upon the terms,
provisions, and conditions and for the consideration hereinafter set forth; and
WHEREAS, Xxxxx X. Xxxx, the President and a member of the Board of
Directors of Company ("Xxxx"), has agreed to be a party to this Agreement solely
for purposes of making the representations and warranties set forth in Section 4
and providing the indemnification set forth in Section 7 of this Agreement; and
NOW, THEREFORE, for and in consideration of the premises and mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto do hereby represent, warrant, covenant, and agree as follows:
Section 1. Issuance and Sale of Shares.
Based upon the representations, warranties, and covenants and subject
to the terms, provisions, and conditions contained in this Agreement, the
Company agrees to sell and deliver the Shares to Purchaser, free and clear of
all liens, pledges, encumbrances, security interests, and adverse claims, and
Purchaser agrees to purchase the Shares from the Company for the consideration
hereinafter set forth.
Section 2. Purchase Price.
The total purchase price to be paid to the Company by Purchaser for the
Shares is $200,000 (the "Purchase Price"), $50,000 of which was previously paid
to the Company, payable in cash by wire transfer of immediately available funds
or certified check.
Section 3. The Closing.
Upon execution of this Agreement (the "Closing"), the Company shall
deliver to Purchaser a certificate(s) evidencing the Shares issued in the name
of Purchaser, and immediately upon delivery thereof, Purchaser shall deliver to
Company the Purchase Price.
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Section 4. Representations and Warranties of the Company.
In connection with the transactions contemplated hereby, the Company
and Xxxx hereby jointly and severally represent and warrant to Purchaser that
the Shares are the duly authorized, validly issued and outstanding shares of the
Company. The Company has full legal right, power and authority to execute and
deliver this Agreement and to sell the Shares to Purchaser pursuant to this
Agreement. Upon delivery of the Shares to Purchaser in accordance with this
Agreement, good and marketable title to the Shares, free and clear of all liens,
pledges, encumbrances, security interests and adverse claims will be delivered
to Purchaser.
The Company and Xxxx hereby further jointly and severally represent and
warrant to Purchaser as follows:
4.1. Organization, Standing and Power.
The Company is duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is incorporated and has the
requisite corporate power and authority to carry on its business as now being
conducted. The Company is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed (individually or in the aggregate) would not have a Company Material
Adverse Effect. For purposes of this Agreement, the term "Company Material
Adverse Effect" means any material adverse effect with respect to the Company,
taken as a whole, or any change or effect that adversely, or is reasonably
expected to adversely, affect the ability of the Company to maintain its current
business operations or to consummate the transactions contemplated by this
Agreement in any material respect.
4.2. Capital Structure.
The authorized capital stock of the Company consists of 30,000,000
shares of common stock, par value $0.001 per share (the "Company Common Stock").
As of the date of this Agreement, there are 625,015 shares of Company Common
Stock issued and outstanding. No shares of Company Common Stock are held by the
Company in its treasury. All outstanding shares of capital stock of the Company
have been duly authorized and validly issued, are fully paid and nonassessable,
and were not subject to preemptive or similar rights at the time of issuance. No
bonds, debentures, notes or other indebtedness of the Company having the right
to vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which the stockholders of the Company may vote are
issued or outstanding. There are no outstanding stock appreciation rights or
similar derivative securities or rights, including options or warrants, of the
Company.
4.3. Absence of Certain Changes or Events; No Undisclosed Material
Liabilities.
Except as otherwise set forth in Schedule 4.3 to this Agreement, the
Company has no Liabilities. "Liability" means, as to any person, all debts,
liabilities and obligations, direct, indirect, absolute or contingent of such
person, whether accrued, vested or otherwise, whether known or unknown and
whether or not actually reflected, or required in accordance with GAAP to be
reflected, in such person's balance sheet.
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4.4. Compliance with Applicable Laws.
The Company has and after giving effect to the transactions
contemplated hereby will have in effect all federal, state, local and foreign
governmental approvals, authorizations, certificates, filings, franchises,
licenses, notices, permits and rights ("Permits") necessary for it to own, lease
or operate its properties and assets and to carry on its business as now
conducted, and there has occurred no default under any such Permit, except (a)
for the lack of Permits and for defaults under Permits which individually or in
the aggregate would not have a Company Material Adverse Effect, or (b) notices
to be filed with the U.S. Securities and Exchange Commission and state
securities agencies with regard to transactions contemplated herein. The Company
is in compliance with, and has no liability or obligation under, all applicable
statutes, laws, ordinances, rules, orders and regulations of any Governmental
Entity, including any liability or obligation to undertake any remedial action
under hazardous substances laws, except for (y) instances of non-compliance,
liabilities or obligations, which individually or in the aggregate would only
have an immaterial effect, or (z) notices to be filed with the U.S. Securities
and Exchange Commission and state securities agencies with regard to
transactions contemplated herein.
4.5. Litigation, etc.
As of the date hereof, (a) there is no suit, claim, action or
proceeding (at law or in equity) pending or threatened against the Company
(including, without limitation, any product liability claims) before any court
or governmental or regulatory authority or body, and (b) the Company is not
subject to any outstanding order, writ, judgment, injunction, order, decree or
arbitration order that, in any such case described in clauses (a) and (b), (i)
could reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect or (ii) involves an allegation of criminal
misconduct or a violation of the Racketeer and Influenced Corrupt Practices Act,
as amended. As of the date hereof, there are no suits, actions, claims or
proceedings pending or threatened, seeking to prevent, hinder, modify or
challenge the transactions contemplated by this Agreement.
4.6. Disclosure.
The representations and warranties and statements of fact made in this
Agreement are, as applicable, accurate, correct and complete and do not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements and information contained herein not
false or misleading.
4.7. Taxes and Tax Returns.
All tax returns ("Returns") required to be filed to date with respect
to the operations of the Company have been accurately prepared in all material
respects and duly filed, or an extension therefrom has been duly obtained, and
all taxes payable have been paid when due; there is no examination or audit, or
any claim, asserted deficiency or assessment for additional taxes in progress,
pending, or threatened, nor is there any reasonable basis for the assertion of
any such claim, deficiency or assessment; no material special charges,
penalties, fines, liens, or similar encumbrances have been asserted against the
Company with respect to payment of or failure to pay any taxes which have not
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been paid or resolved without further liability to the Company. The Company has
not executed or filed with any taxing authority any agreements extending the
period for assessment or collection of any taxes. Proper amounts have been
withheld by the Company from its employees' compensation payments for all
periods in compliance with the tax withholding provisions of applicable federal
and state laws. The Company is not a party to any tax-sharing or tax-allocation
agreement, nor does the Company owe any amounts under any tax-sharing or
tax-allocation agreement.
4.8. Employee Benefit Plans.
The Company does not have in place any arrangement or policy (written
or oral) providing for insurance coverage, workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, retirement
benefits or deferred compensation, profit sharing, bonuses, stock options, stock
appreciation rights, stock purchases or other forms of incentive compensation or
post-retirement insurance, compensation or benefits which is maintained or
administered by the Company, or to which the Company contributes, and which
covers any employee or former employee of the Company or under which the Company
has any liability, including "employee welfare benefit plan," "employee benefit
plan" and "employee pension benefit plan" as defined under the Employee
Retirement Income Security Act of 1974, or ERISA.
The Company is not a party to any collective bargaining agreements.
There are no strikes or labor disputes or lawsuits, unfair labor or unlawful
employment practice charges, contract grievances or similar charges or actions
pending or threatened by any of the employees, former employees or employment
applicants of the Company that would have a Company Material Adverse Effect.
4.9. Certain Contracts.
There are no written employment agreements or termination agreements
with current officers, directors or consultants of the Company and to which the
Company is a party.
As of the date of this Agreement, (i) the Company is not a party to or
bound by any commitment, agreement or other instrument (excluding commitments
and agreements in connection with extensions of credit by the Company) which
contemplates the payment of amounts in excess of $5,000, or which otherwise is
material to the operations, assets or financial condition of the Company,
including but not limited to any royalty, franchising fees, or any other fee
based on a percentage of revenues or income and (ii) no commitment, agreement or
other instrument to which the Company is a party or by which it is bound limits
the freedom of the Company to compete in any line of business or with any
person.
As of the date of this Agreement, the Company is not in default in any
material respect under any material lease, contract, mortgage, promissory note,
deed of trust, loan agreement, license agreement (as to royalty payments) or
other commitment or arrangement.
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4.10. Assets; Properties and Insurance.
The Company has no assets, whether tangible or intangible, owns no real
property and maintains no insurance of any kind.
4.11. Minute Books.
The minute book of the Company contains records which, in all material
respects, accurately record all meetings of their stockholders and Board of
Directors (including committees of the Board of Directors).
4.12. Environmental Matters.
The Company has not received any written notice, citation, claim,
assessment, proposed assessment or demand for abatement alleging that the
Company is responsible for the correction or cleanup of any condition resulting
from the violation of any law, ordinance or other governmental regulation
regarding environmental matters, which correction or cleanup would be material
to the business, operations, assets or financial condition of the Company.
Neither the Company nor Xxxx have any knowledge that any toxic or hazardous
substances or materials have been emitted, generated, disposed of or stored on
any real property owned or leased by the Company, or owned or controlled by the
Company as a trustee or fiduciary (collectively, "Properties"), in any manner
that violates or, after the lapse of time may violate, any presently existing
federal, regional, state or local law or regulation governing or pertaining to
such substances and materials, the violation of which would have a Company
Material Adverse Effect. Neither the Company nor Xxxx have any knowledge that,
during the Company's ownership or lease of such Properties, any of such
Properties has been operated in any manner that violated any applicable
national, state or local law or regulation governing or pertaining to toxic or
hazardous substances and materials, the violation of which would have a Company
Material Adverse Effect.
4.13. Loans, etc.
As of the date of this Agreement, there are no liabilities, obligations
or indebtedness of any kind whatsoever chargeable to any Company stockholder and
payable to the Company by a Company stockholder.
4.14. Intellectual Property.
The Company has no arrangements relating to intellectual property.
There are no arrangements relating to the use by the Company of any intellectual
property owned by another person, and the Company has not at any time been in
breach of such arrangements. The Company has not granted or is not obligated to
grant a license, assignment or other right with respect to any intellectual
property.
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4.15. Bankruptcy.
The Company has neither filed a voluntary bankruptcy petition nor been
the subject of an involuntary bankruptcy petition nor is the Company the subject
of an action under state insolvency laws or any other relevant laws.
4.16. Criminal Proceedings.
Neither the Company and its respective officers, directors, affiliates,
promoters nor any predecessor of the Company have been subject to or suffered
any of the following:
o Any conviction in a criminal proceeding or being subject to a
pending criminal proceeding (excluding traffic violations and
other misdemeanor offenses) within ten (10) years from the
date hereof;
o Any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or
otherwise limiting such person's involvement in any type of
business, securities or banking activities; or
o Being found guilty by a court of competent jurisdiction (in a
civil action), the Securities and Exchange Commission or the
Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the
judgment has not been reversed, suspended or vacated.
Section 5. Representations and Warranties of Purchaser.
Purchaser acknowledges and understands that the Shares are being
acquired for investment in a transaction that is considered to be exempt from
registration. In connection with the transactions contemplated hereby, Purchaser
hereby represents and warrants to the Company that:
a) Purchaser is acquiring the Shares solely for investment purposes and
not with a view to, or for resale in connection with, any distribution
thereof or with any present intention of distributing or selling any
of the Shares, except as allowed by the Securities Act of 1933, as
amended, or any rules or regulations promulgated thereunder
(collectively, the "Act").
b) Purchaser will hold the Shares subject to all of the applicable
provisions of the Act, and Purchaser will not at any time make any
sale, transfer, or other disposition of the Shares in contravention of
said Act.
c) Purchaser acknowledges that it must bear the economic risk of its
investment in the Shares for an indefinite period of time since the
Shares have not been registered under the Act and therefore cannot be
sold unless the Shares are subsequently registered or an exemption
from registration is available.
d) The sale of the Shares to Purchaser is being made without any public
solicitation or advertisements.
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e) Criminal Proceedings.
Neither the Purchaser and its respective officers, directors,
affiliates, promoters nor any predecessor of the Purchaser have been subject to
or suffered any of the following:
o Any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other
misdemeanor offenses) within ten (10) years from the date hereof;
o Any order, judgment or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting such
person's involvement in any type of business, securities or banking
activities; or
o Being found guilty by a court of competent jurisdiction (in a civil
action), the Securities and Exchange Commission or the Commodity
Futures Trading Commission to have violated a federal or state
securities or commodities law, and the judgment has not been reversed,
suspended or vacated.
Section 6. Conditions to the Obligations of Purchaser.
The obligations of Purchaser at Closing are conditioned upon
satisfaction, on or prior to such date, of the following conditions, which
conditions are further conditioned upon the delivery of the Purchase Price by
Purchaser:
6.1. Stock Certificates.
The Company shall have delivered to Purchaser certificate(s) issued in
the name of Purchaser representing the number of Shares to be purchased by
Purchaser pursuant to this Agreement.
6.2. Creditor Agreements.
The Company shall have delivered to Purchaser the Creditor Agreement,
the form of which is attached hereto as Exhibit "A," executed by Xxxxxx X.
Xxxxx.
6.3. Lock-Up Agreement
The Company shall have delivered to Purchaser the Lock-Up Agreement,
the form of which is attached hereto as Exhibit "B", executed by the parties
referenced therein.
6.4. Resignation and Appointment of Officers and Directors.
The Company shall have delivered duly executed letters of resignation
from each of its officers and directors. The Company shall have also delivered
resolutions approved by the Board of Directors duly appointing Xxxxxxx X. Xxxxxx
as the sole officer of the Company, holding the titles of President, Secretary
and Chief Accounting Officer, and as the sole member of the Board of Directors.
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Section 7. Indemnification.
Xxxx acknowledges that he understands the meaning and legal
consequences of his representations, warranties and covenants and that the
Purchaser has relied upon such representations, warranties, and covenants, and
he hereby agrees to indemnify and hold harmless the Purchaser and his agents and
employees for a period of one year from the date of this Agreement from and
against any and all loss, damage or liability due to or arising out of a breach
of any such representation, warranty, or covenant or any adverse consequence
suffered by Purchaser as a result of the operation of the Company by Purchaser.
The total amount of indemnification for which Xxxx may be held liable under this
Section 7 (including claims arising from a breach of a representation or
warranty) shall not exceed $25,000.
Section 8. Survival of Representations and Warranties.
All representations, warranties, covenants, and agreements contained
herein shall not be discharged or dissolved upon, but shall survive the Closing
and shall be unaffected by any investigation made by any party at any time.
Section 9. Entirety and Modification.
This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes any and all
prior agreements and understandings, whether oral or written, between the
parties hereto relating to such subject matter. No modification, alteration,
amendment, or supplement to this Agreement shall be valid or effective unless
the same is in writing and signed by all parties hereto.
Section 10. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the
respective parties hereto, their successors and permitted assigns, heirs, and
personal representatives.
Section 11. Notices.
All notices or other communications required or permitted to be given
pursuant to this Agreement shall be in writing and shall be considered as
properly given or made if hand delivered, mailed from within the United States
by certified mail, or sent by overnight delivery service to the applicable
address appearing in the preamble to this Agreement, or to such other address as
either party may have designated by like notice forwarded to the other party
hereto. All notices shall be deemed given when postmarked (if mailed), when
delivered to an overnight delivery service or, if hand delivered, when delivered
to the recipient.
Section 12. Severability.
Every provision of this Agreement is intended to be severable. If any
term or provision hereof is illegal or invalid for any reason whatever, such
illegality or invalidity shall not affect the validity of the remainder of this
Agreement.
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Section 13. Headings.
The headings of this Agreement are inserted for convenience and
identification only, and are in no way intended to describe, interpret, define
or limit the scope, extent or intent hereof.
Section 14. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
Section 15. Legal Fees and Costs.
If a legal action is initiated by any party to this Agreement against
another, arising out of or relating to the alleged performance or
non-performance of any right or obligation established hereunder, or any dispute
concerning the same, any and all fees, costs and expenses reasonably incurred by
each successful party or his, her or its legal counsel in investigating,
preparing for, prosecuting, defending against, or providing evidence, producing
documents or taking any other action in respect of, such action shall be the
joint and several obligation of and shall be paid or reimbursed by the
unsuccessful party(ies).
Section 16. Publicity.
Except as otherwise required by law, none of the parties hereto shall
issue any press release or make any other public statement, in each case
relating to, connected with or arising out of this Agreement or the matters
contained herein, without obtaining the prior approval of the other to the
contents and the manner of presentation and publication thereof.
Section 17. Governing Law.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Texas.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement as of the date first written above.
PURCHASER: HALTER FINANCIAL GROUP, INC.
By:/s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
THE COMPANY: TS ELECTRONICS, INC.
By:/s/ Xxxxx X. Xxxx
---------------------------------
Name: Xxxxx X. Xxxx
Title: President
XXXX: /s/ Xxxxx X. Xxxx
------------------------------------
Xxxxx X. Xxxx, solely as to Sections
4. and 7. hereof.
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Schedule 4.3
to
Stock Purchase Agreement
