STOCK PURCHASE AGREEMENT
Exhibit 10(d)
THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is effective as of March 1, 2011 (the
“Effective Date”), between VIDEO DISPLAY CORPORATION, a Georgia corporation (“Seller”), and FI
ACQUISITION LLC, a Georgia limited liability company (“Purchaser”).
WHEREAS, Seller owns all of the outstanding capital stock (the “Fox Shares”) of Fox
International Ltd., Inc., an Ohio corporation (“Fox”); and
WHEREAS, Seller wishes to sell to Purchaser, and Purchaser wishes to purchase from Seller, all
of the Fox Shares, on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants and conditions contained
in this Agreement and other good and valuable consideration, the receipt, adequacy and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. Purchase and Sale of Fox Shares. Seller hereby agrees to sell to Purchaser, and
Purchaser hereby agrees to purchase from Seller, the Fox Shares on the terms and conditions
hereinafter set forth.
2. Purchase Price and Payment. The total purchase price for the Fox Shares (the
“Purchase Price”) shall be equal to Three Million Five Hundred Twenty-Three Thousand Eight Hundred
Seventy-Seven Dollars ($3,523,877). The Purchase Price shall consist of: (a) Eight Hundred
Thousand (800,000) shares of Seller’s common stock, no par value (the “VDC Shares”), with a value
of Three Million Two Hundred Seventy-Two Thousand Dollars ($3,272,000), based on the February 22,
2011 closing price of $4.09 per share, as quoted on NASDAQ; and (b) Two Hundred Fifty-One Thousand
Eight Hundred Seventy-Seven Dollars ($251,877) payable in cash or other immediately available funds
(the “Cash Payment”). The Purchase Price is equal to the net book value shown on the February 28,
2011 audited financial statements of Fox, which indicate total assets of $6,408,589 and liabilities
not exceeding $2,884,712, as set forth more fully on attached Exhibit A.
3. Closing. The transfer of ownership of the Fox Shares and payment of the Purchase
Price shall be deemed to take place for accounting purposes on March 1, 2011, to coincide with the
start of the fiscal year of Seller. As soon as practicable after the Effective Date, Purchaser
shall promptly deliver to Seller the Cash Payment and all certificates representing the VDC Shares,
and Seller shall promptly deliver to Purchaser all certificates representing the Fox Shares, in
each case duly endorsed in blank or accompanied by a duly executed stock transfer power.
4. Profit Participation. For a period of sixty (60) days after the Effective Date
(the “Profit Participation Period”), Seller shall be entitled to one-half (1/2) of all net profits
from any sale by Purchaser of all or substantially all of the assets or stock of Fox, provided that
such sale must be consummated within the Profit Participation Period.
5. Representations and Warranties of Seller. Seller represents and warrants to
Purchaser as follows:
(a) Standing. Seller is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Georgia. Seller is duly authorized to conduct business and
is in good standing under the laws of each jurisdiction where such qualification is required.
(b) Authorization. Seller has the right, power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated herein. The execution,
delivery and performance of this Agreement and the consummation of the transactions contemplated
herein have been duly and validly authorized by all necessary corporate action on the part of
Seller. This Agreement is, and any other documents and instruments required hereby will be, when
executed and delivered by the parties, the legal, valid and binding obligations of Seller,
enforceable against Seller in accordance with their respective terms.
(c) Fox Shares Valid. The Fox Shares are and shall be validly issued, fully paid and
non-assessable and constitute all of the issued and outstanding equity interests of Fox. Without
limiting the generality of the foregoing, all of the formerly issued and outstanding shares of Fox
International Limited, Inc., an Ohio corporation, have been duly canceled.
(d) Ownership of Fox Shares. Seller is the owner of the Fox Shares free and clear of
all liens, charges, claims, encumbrances and restrictions; Seller has full power to transfer the
Fox Shares to Purchaser; and Seller has obtained all necessary approvals and consents to effectuate
the sale of the Fox Shares to Purchaser.
(e) No Violation. The execution and performance of this Agreement do not violate,
result in the breach of, or constitute a default under any applicable law or regulation, the
Articles of Incorporation or Bylaws of Seller, or any order, judgment or decree of any court or
governmental agency.
6. Representations and Warranties of Purchaser. Purchaser represents and warrants to
Seller as follows:
(a) Standing. Purchaser is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Georgia. Purchaser is duly authorized
to conduct business and is in good standing under the laws of each jurisdiction where such
qualification is required.
(b) Authorization. Purchaser has the right, power and authority to execute, deliver
and perform this Agreement and to consummate the transactions contemplated herein. The execution,
delivery and performance of this Agreement and the consummation of the transactions contemplated
herein have been duly and validly authorized by all necessary corporate action on the part of
Purchaser. This Agreement is, and any other documents and instruments required hereby will be,
when executed and delivered by the parties, the legal, valid and binding obligations of Purchaser,
enforceable against Purchaser in accordance with their respective terms.
2
(c) Restrictions on Transferability. Purchaser agrees that any certificate
representing the Fox Shares, and any replacement certificate therefor, will bear a restrictive
legend on the reverse of the certificate in substantially the following form:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the “Act”),
or any applicable state securities laws. The securities may not be
sold, transferred or assigned in the absence of an effective
registration statement for the securities under the Act or
applicable state securities laws, or an opinion of counsel,
satisfactory in form, substance and scope to the issuer of the
securities, that registration is not required under the Act or
applicable state securities laws.
(d) No Violation. The execution and performance of this Agreement do not violate,
result in the breach of, or constitute a default under any applicable law or regulation, the
Articles of Organization or Operating Agreement of Purchaser, or any order, judgment or decree of
any court or governmental agency.
(e) Due Diligence Inspection. Purchaser has had full and complete access to all
material financial, operating and legal information concerning the business and operations of Fox,
and is purchasing the Fox Shares with knowledge of all such material information. Purchaser agrees
to not assert any claim of any nature whatsoever, including claims of fraud, that Purchaser may
have against Seller if Purchaser suffers any adverse consequence, whether monetary or otherwise, as
a result of the transactions contemplated herein.
7. Indemnification.
(a) Survival. All representations, warranties, agreements, covenants and obligations
made or undertaken by each party in this Agreement or in any document or instrument executed and
delivered pursuant hereto are material, have been relied upon by the other party and shall survive
the consummation of the transactions contemplated in this Agreement.
(b) Agreement to Indemnify. Each party (for purposes of this Section, the
“Indemnitor”) agrees to indemnify and hold the other party, its successors and assigns
(collectively, the “Indemnitee”), harmless from and against all liability, loss, damage, claim or
expense of any kind whatsoever (including reasonable attorneys’ fees and costs) that may be
sustained, suffered, or incurred by the Indemnitee that arises from or is in any way connected
with: (i) any misrepresentation by the Indemnitor contained in this Agreement or in any document or
instrument executed and delivered pursuant hereto, or any misrepresentation in or omission from any
instrument furnished or to be furnished by the Indemnitor hereunder; and (ii) the breach of any
representation, warranty and/or covenant made by the Indemnitor in this Agreement or any other
agreement delivered in connection with this transaction.
8. General.
(a) Assignment. This Agreement may not be assigned by either party without the prior
written consent of the other party.
3
(b) Notices. All communications and notices required or permitted under this
Agreement shall be in writing and shall be deemed to have been given when delivered personally or
by messenger or by overnight delivery service, or when mailed by certified United States mail,
postage prepaid, return receipt requested, addressed as follows:
| If to Seller: | Video Display Corporation | |||
| 0000 Xxxxxx Xxxxxxxxxx Xxxxx | ||||
| Xxxxxx, Xxxxxxx 00000 | ||||
| Attn: Xxxx Xxxxxxx | ||||
| If to Purchaser: | FI Acquisition LLC | |||
| 0000 Xxxxxx Xxxxxxxxxx Xxxxx | ||||
| Xxxxxx, Xxxxxxx 00000 | ||||
| Attn: Xxxxxx X. Xxxxxx |
or to such other address as a party designates by notice in writing to the other party in the
manner provided by this Section.
(c) Governing Law. This Agreement shall be construed and governed by the substantive
laws of the State of Georgia, without regard to conflicts of law principles.
(d) Amendments. This Agreement may only be amended or modified by a writing executed
by all of the parties.
(e) Further Action. The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or appropriate to achieve
the purposes of this Agreement.
(f) Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the other provisions, and this Agreement is to be construed in all
respects as if it had not contained the invalid or unenforceable provision.
(g) Binding Agreement. Subject to the restrictions on transferability set forth in
this Agreement, this Agreement shall be binding upon and shall inure to the benefit of the parties
and their respective legal representatives, heirs, successors and assigns.
(h) Headings; Gender; Number. The headings and captions in this Agreement are for
convenience and identification purposes only, are not an integral part of this Agreement, and are
not to be considered in the interpretation of any part of this Agreement. When the context so
requires, the masculine, feminine and neuter genders may be used interchangeably and the singular
may include the plural and vice versa.
(i) Counterparts. This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original but all of which taken together shall constitute one and the same
instrument. Facsimile and electronic executions and deliveries shall have the full force and
effect of original signatures.
4
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the Effective
Date.
| SELLER: Video Display Corporation |
||||
| By: | ||||
| Its: | ||||
| PURCHASER: FI Acquisition LLC |
||||
| By: | ||||
| Xxxxxx X. Xxxxxx, Manager | ||||
5
Exhibit A
Purchase Price Calculation
| Excl InterComp | Mgnt Bid | Mgnt Bid | Mgnt Bid | |||||||||||||||||||||
| 10th | 10th | 10th | 11th | 12th | 12th | |||||||||||||||||||
| Period | Period | Period | Period | Period | Period | |||||||||||||||||||
ASSETS |
||||||||||||||||||||||||
Cash |
406,122 | 406,122 | 406,122 | 67,766 | (5,784 | ) | (5,784 | ) | ||||||||||||||||
Accounts Receivable |
1,378,394 | 1,378,394 | 1,378,394 | 1,298,068 | 1,143,405 | 1,143,405 | ||||||||||||||||||
Intercompany Trade Rec. |
||||||||||||||||||||||||
Reserve for A/R |
(26,000 | ) | (26,000 | ) | (500,000 | ) | (500,000 | ) | (342,000 | ) | (342,000 | ) | ||||||||||||
Inventory |
||||||||||||||||||||||||
Raw Materials |
||||||||||||||||||||||||
Work in Process |
||||||||||||||||||||||||
Finished Goods |
6,210,673 | 6,210,673 | 6,210,673 | 6,153,422 | 5,954,471 | 5,954,471 | ||||||||||||||||||
Reserve for Inventory |
(1,769,496 | ) | (1,769,496 | ) | (3,269,496 | ) | (2,809,498 | ) | (1,674,662 | ) | (1,674,662 | ) | ||||||||||||
Cost in Excess of Xxxxxxxx |
||||||||||||||||||||||||
Prepaid expenses |
160,909 | 160,909 | 160,909 | 184,261 | 125,932 | 125,932 | ||||||||||||||||||
Income taxes refundable |
||||||||||||||||||||||||
Total Current Assets |
6,360,603 | 6,360,603 | 4,386,602 | 4,394,019 | 5,201,362 | 5,201,362 | ||||||||||||||||||
Property, Plant & Equipment |
||||||||||||||||||||||||
Land |
249,814 | 249,814 | 150,000 | 150,000 | 249,814 | 150,000 | ||||||||||||||||||
Buildings |
1,974,831 | 1,974,831 | 900,000 | 900,000 | 1,977,331 | 900,000 | ||||||||||||||||||
Machinery & Equipment |
5,674,665 | 5,674,665 | 300,000 | 800,000 | 5,705,700 | 134,397 | ||||||||||||||||||
| 7,899,310 | 7,899,310 | 1,350,000 | 1,850,000 | 7,932,845 | 1,184,397 | |||||||||||||||||||
Less Accumulated
Depreciation |
(6,692,415 | ) | (6,692,415 | ) | 0 | 0 | (6,748,448 | ) | 0 | |||||||||||||||
| 1,206,895 | 1,206,895 | 1,350,000 | 1,850,000 | 1,184,397 | 1,184,397 | |||||||||||||||||||
Investments |
0 | 0 | 0 | |||||||||||||||||||||
Goodwill |
0 | 0 | 0 | |||||||||||||||||||||
Intangibles |
0 | 0 | 1,830,895 | 832,616 | ||||||||||||||||||||
Other Assets |
22,830 | 22,830 | 22,830 | 22,830 | 22,830 | 22,830 | ||||||||||||||||||
Intercompany inv / adv |
(4,994,028 | ) | 0 | 0 | ||||||||||||||||||||
Intercompany rec / pay |
0 | 0 | 0 | |||||||||||||||||||||
Total Assets |
2,596,299 | 7,590,327 | 7,590,327 | 7,099,465 | 6,408,589 | 6,408,589 | ||||||||||||||||||
A-1
| Excl InterComp | Mgnt Bid | Mgnt Bid | Mgnt Bid | |||||||||||||||||||||
| 10th | 10th | 10th | 11th | 12th | 12th | |||||||||||||||||||
| Period | Period | Period | Period | Period | Period | |||||||||||||||||||
LIABILITIES |
||||||||||||||||||||||||
Accounts payable |
2,263,851 | 2,263,851 | 2,263,851 | 1,896,021 | 1,656,509 | 1,656,509 | ||||||||||||||||||
Intercompany Trade Pay |
0 | 0 | 0 | |||||||||||||||||||||
Accrued liabilities |
512,962 | 512,962 | 512,962 | 527,392 | 578,711 | 578,711 | ||||||||||||||||||
Xxxxxxxx in excess of cost |
0 | 0 | 0 | 0 | ||||||||||||||||||||
Current Lines of Credit |
0 | 0 | 0 | 0 | ||||||||||||||||||||
Notes payable to officers |
0 | 0 | 0 | 0 | ||||||||||||||||||||
Income taxes payable |
0 | 0 | 0 | 0 | ||||||||||||||||||||
Current portion of L/T debt |
202,478 | 202,478 | 202,478 | 215,116 | 199,118 | 199,118 | ||||||||||||||||||
| 0 | ||||||||||||||||||||||||
Total current liabilities |
2,979,292 | 2,979,292 | 2,979,292 | 2,638,529 | 2,434,338 | |||||||||||||||||||
| 0 | ||||||||||||||||||||||||
Line of credit — #1 |
0 | 0 | 0 | 0 | ||||||||||||||||||||
L/T Debt — #1 |
0 | |||||||||||||||||||||||
L/T Debt — #2 |
0 | |||||||||||||||||||||||
L/T Debt — #3, etc. |
0 | |||||||||||||||||||||||
Financing lease obligation |
217,218 | 217,218 | 217,218 | 213,972 | 187,479 | 187,479 | ||||||||||||||||||
Note payable to officer |
276,966 | 276,966 | 276,966 | 240,437 | 262,895 | 262,895 | ||||||||||||||||||
Total Liabilities |
3,092,938 | 2,884,712 | 2,884,712 | (a) | ||||||||||||||||||||
Minority interest |
4,006,527 | 3,523,877 | 3,523,877 | (b) | ||||||||||||||||||||
Shareholder’s Equity |
||||||||||||||||||||||||
Common stock |
50,000 | 50,000 | ||||||||||||||||||||||
Additional paid in capital |
2,066,805 | 2,066,805 | 4,116,851 | 3,523,877 | ||||||||||||||||||||
Retained earnings |
(1,744,400 | ) | 3,249,629 | |||||||||||||||||||||
Current P/L |
(1,249,583 | ) | (1,249,583 | ) | ||||||||||||||||||||
Total Stockholder’s Equity |
(877,177 | ) | 4,116,851 | 4,116,851 | 3,523,877 | |||||||||||||||||||
| 2,596,299 | 7,590,327 | 7,590,327 | 3,974,251 | |||||||||||||||||||||
| (a) | Assumption of Liabilities | |
| (b) | Net Balance to VDC from Management |
VDC Common Shares: 800,000 shs @ $4.09 |
$ | 3,272,000 | ||
Cash Payment Reduction in VDC Note to RDO |
$ | 199,351 | ||
Cash Payment |
$ | 52,526 |
A-2
