STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made and entered into as of
the 27th day of April, 2004, by and between Xxxxxxx X. Xxxxx ("Xxxxx") and Xxxx
Xxxx ("Xxxx")(Collectively referred to as "Sellers"), Classic Manufacturing,
Inc. ("Classic Trailer") and Classic Manufacturing Acquisition Corp., an Indiana
corporation, as nominee of Obsidian Enterprises, Inc. ("Buyer").
Sellers desire to sell to Buyer, and Buyer desires to purchase from
Sellers, the Classic Manufacturing, Inc. Stock (as defined below) according to
the terms and conditions of this Agreement.
Therefore, in consideration of the premises and of the mutual agreements,
representations, warranties and covenants contained herein, Sellers and Buyer
agree as follows:
I. DEFINITIONS. When used in this Agreement, the following terms, in addition
to the other capitalized terms, which are specifically defined in other
sections of this Agreement, have the following meanings:
"Accounts Payable" means all trade accounts payable of Classic Trailer
determined in material accordance with GAAP and reflected on the books and
records of Classic Trailer, but excluding any other accrued liabilities.
"Accounts Receivable" means all accounts receivable of Classic Trailer
determined in material accordance with GAAP and reflected on the books and
records of Classic Trailer.
"Affiliate" of any Person, means any Person directly or indirectly
controlling, controlled by or under common control with such Person, and
includes any Person who is an officer, director or employee of such Person
and any Person that would be deemed to be an "Affiliate" of such Person, as
that term is defined in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended.
"Best of knowledge" or similar phrase, means the actual knowledge the
individual has based on the information possessed and belief formed without
any specific inquiry into the matter in question. When the context refers
to the knowledge possessed by Classic Trailer, it shall be deemed to refer
to the best of Sellers' knowledge.
"Cash Consideration" means the sum of Xxx Xxxxxxx Xxx Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxx Xxxxxx Dollars (US$2,250,000) in immediately available
funds.
"Closing" means the closing of the transactions contemplated by this
Agreement, which shall occur at 10:00 a.m. local time, on the Closing Date
at the Buyer's Offices, 000 Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxxxx,
Xxxxxxx, or at such other place and time as Sellers and Buyer may mutually
agree upon.
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"Closing Date" means April 27, 2004, or such other date as may hereafter be
mutually agreed to by the Buyer and Sellers.
"GAAP" means generally accepted United States accounting principals applied
on a consistent basis.
"Hazardous Substances" means any hazardous or toxic substance or waste,
pollutant, or contaminant, including petroleum products, asbestos, PCBs and
radioactive materials.
"Inventory" means all raw materials through work-in-process to finished
goods determined in material accordance with GAAP and reflected on the
books and records of Classic Trailer.
"Laws"(whether or not capitalized) means all constitutions, statutes,
rules, regulations, ordinances and similar concepts promulgated by any
governmental authority.
"Letter of Intent" means the letter of intent by and between Buyer and
Sellers, dated January 14, 2004.
"Liens" means (i) in respect of any assets other than a security, any lien,
charge, claim, security interest, conditional sale agreement, mortgage,
security agreement, option or other encumbrance; and (ii) in respect of any
security, any of the foregoing and, in addition, any adverse claim or
restriction on voting.
"Parties" means collectively Sellers, Buyer and Classic Trailer.
"Person" means an individual, a corporation, a partnership, an association,
a trust or other entity or organization.
"Shares" means Classic Trailer Stock and is used interchangeably herein.
"Taxes" means any federal, state, provincial, local and foreign income,
payroll, withholding, excise, sales, use, license, lease, personal and
other property, use and occupancy, business and occupation, mercantile,
real estate, gross receipts, employment, windfall profits, social security,
disability, transfer, registration, value-added, estimated, capital stock
and franchise, goods and services, health, social services and education
taxes; and other tax of any kind whatsoever, including interest, penalties
and fines on any of the foregoing, whether or not disputed.
"Transaction" means the sale of the Shares by Sellers to Buyer and the
execution and delivery of all certificates, covenants, agreements,
indemnifications, representations and warranties related and ancillary
thereto.
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"Classic Trailer Stock" means all of the issued and outstanding capital
stock of Classic Trailer together with all rights of any nature whatsoever
to acquire capital stock of Classic Trailer.
II. BASIC TRANSACTION.
2.1 Sale and Purchase of Stock. At the Closing, Sellers, and each of them,
will sell and convey to Buyer, and Buyer will purchase and accept from
Sellers, the Classic Trailer Stock.
2.2 Consideration.
(i) Amount. As consideration for the Shares, Buyer will pay Sellers
the sum of Three Million Five Hundred Thousand Dollars
(US$3,500,000) (the "Purchase Price").
(ii) Payment of Purchase Price. Buyer shall deliver the Purchase Price
to Sellers as follows: (a) payment of the Cash Consideration in
the sum of Two Million Two Hundred Fifty Thousand Dollars
($2,250,000) and (b) by delivering to Sellers shares of
Obsidian's Common Stock (the "Transaction Shares") in such
quantity as will equal One Million Two Hundred and Fifty Thousand
and 00/100 US Dollars ($1,250,000) utilizing an attributed value
based on the average sale price of Obsidian's shares in
arms-length transactions occurring during the 30-day period prior
to Closing (the "Attributed Value"), such Transaction Shares
being subject to restrictions on transfer for a period of one
year following their issuance to Sellers, or longer as may be
required by applicable securities laws. Thereafter the Shares may
only be sold in accordance with applicable securities laws of the
United States of America.
(iii)Put Option. The Transaction Shares shall be issued subject to a
Put Option that will provide Sellers, and each of them, the right
to put all or part of the Transaction Shares back to Obsidian
during a period of time commencing on the fifth anniversary of
the Closing of the Transaction and ending 60 days thereafter, and
with a Put Option Price equal to 90% of the Attributed Value,
provided that Obsidian's Shares have not traded at a closing
price of greater than Attributed Value for any consecutive sixty
(60) trading day period during the period beginning on the date
there are no restrictions on Sellers' sale of the Transaction
Shares (under applicable securities laws or otherwise), and
ending on the fifth anniversary of Closing (the "Selling
Period"). If the closing sale price of Obsidian shares has traded
at a value equal to or greater than the Attributed Value for any
consecutive 60 trading days during the Selling Period, then the
"Put Option" will expire at that point in time. The "Put Option"
is personal and
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exclusive to Sellers and is non-assignable. Xxx Xxxxxx
("Durham"), a principal with Obsidian, shall personally guarantee
the payment of the Put Option Price.
(iv) Right of First Refusal. During the Selling Period, the
Transaction Shares shall also be subject to a right of first
offer for the benefit of Obsidian, first, and Durham, second, on
the following terms and conditions. In the event that Sellers, or
either of them, desire to sell any part of, or all of, their
Transaction Shares, they must give written notice of such desire,
via fax, hand delivery or overnight courier, to Obsidian and Xxx
Xxxxxx. Obsidian shall have until 5:00 P.M. of the third business
day following receipt of such notice to advise Seller(s), in
writing, that it elects to purchase such Transaction Shares at
the price at which Obsidian's shares closed on the public market
on the date of such notice. If Obsidian does not elect to
purchase all of the offered Transaction Shares, Durham shall have
until 5:00 P.M. of the fifth business day following receipt of
the notice to notify Seller(s), in writing, of his election to
purchase such Transaction Shares at the same price. If either
Obsidian or Durham elects to purchase all or any part of the
offered Transaction Shares, they shall pay the full purchase
price in immediately available funds to Seller(s) within 30 days
of giving notice of their election to purchase. In the event that
Obsidian and Durham do not give notice of their intention to
purchase any part of the offered Transaction Shares, then the
offered shares that were not purchased by either Obsidian or
Durham may be immediately sold by Seller(s) in the public or
private market place, however, the Put Option shall not be
assignable by Sellers to any assignees.
(v) If Obsidian sells or transfers any of the Classic Trailer Stock,
or sells or transfers more than 35% of the assets of Classic
Trailer, during the period beginning on the Closing Date and
ending on the fifth anniversary of Closing, Obsidian shall redeem
any Transaction Share owned By Sellers at their Attributed Value.
Durham shall personally guarantee the redemption payment.
III. OTHER COVENANTS AND AGREEMENTS.
From the date of the Letter of Intent to Closing, Sellers, Classic Trailer
and Buyer have covenanted and agreed, whether in writing or otherwise, and as of
Closing, they hereby confirm the following:
3.1 Due Diligence. Sellers have afforded Buyer and its representatives
reasonable access to Classic Trailer's records and properties and have
furnished Buyer and its representatives such financial and other
information with respect to Classic Trailer as was requested. Any
information actually received by Buyer in its due
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diligence review and/or environmental audit shall be a deemed
representation of Sellers. Buyer has kept confidential all information
so received and has used its best efforts to ensure that its agents,
lenders, and representatives keep confidential all such information,
provided that Buyer may disclose any such information to the extent
required by any court, government agency, or authority of the United
States.
3.2 Ordinary Course. Except as disclosed on Schedule 3.2, Sellers have
caused Classic Trailer to carry on its business diligently in the
ordinary and regular course, and in the same manner as heretofore
conducted, and Sellers have not allowed Classic Trailer to engage in
any transaction or activity, or enter into any agreement or make any
commitment, except in the ordinary and regular course of business.
3.3 No Transfer. Except as disclosed on Schedule 3.3, Classic Trailer has
not sold or conveyed, or agreed to sell or convey, any material assets
other than the sale of finished goods inventory and/or excess
equipment in the ordinary course of business.
3.4 Liens. Contemporaneously with the Closing, Sellers will cause to be
released all liens on Classic Trailer's assets.
3.5 No Capital Expenditures. Sellers have not allowed Classic Trailer to
commit to any capital expenditures, or make any capital expenditures,
except for commitments or expenditures within existing operating or
capital budgets or otherwise disclosed to Buyer on Schedule 3.5
hereto.
3.6 Compensation. Except as disclosed on Schedule 3.6 hereto, Sellers have
not allowed Classic Trailer to make any increase in the compensation
payable by Classic Trailer to any officer, employee or agent, nor has
Sellers allowed Classic Trailer to make any bonus payment to (except
pursuant to existing plans), grant any stock option to, or enter into
any employment or consulting agreement with, any officer, employee or
agent.
3.7 Dividends. Except as disclosed on Schedule 3.7 hereto, Classic Trailer
has not declared or paid any dividends or made any distributions with
respect to any class of its capital stock.
3.8 Consents. Sellers have obtained all consents, approvals, and other
agreements, which are required for the due and punctual consummation
of the Transaction contemplated by this Agreement.
3.9 Preservation of Business. Sellers have caused Classic Trailer to use
its best efforts consistent with past practices to promote, develop,
and preserve its
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relationships with its vendors, suppliers, employees, customers, and
others having business relations with it.
3.10 Employees. Classic Trailer has not terminated any of its key employees
prior to Closing.
3.11 Noncompetition Agreements. Each Seller will enter into Employment and
Noncompetition Agreements with Classic Trailer in forms attached
hereto as Schedule 3.11.
IV. REPRESENTATIONS AND WARRANTIES OF SELLERS AND CLASSIC TRAILER.
Sellers and Classic Trailer hereby, jointly and severally represent and
warrant to Buyer as follows:
4.1 Ownership; Corporate Organization; Good Standing. Sellers (i) are the
sole beneficial and record owners of the Shares and such Shares are
free and clear of any Lien or encumbrance; and (ii) have full legal
right, power, capacity and authority to enter into this Agreement and
to sell the Shares to Buyer, without the need for the consent of any
other Person; and (iii) Classic Trailer is a corporation duly
organized, validly existing, and in good standing under the laws of
Michigan and has the corporate power to enter into this Agreement and
to carry out the transactions contemplated hereby. Classic Trailer has
not received notice or other communication from any governmental body
or agency where it is not qualified to do business to the effect that
it should be so qualified to do business; and (iv) an Officer's
Certificate with true and complete copies of the Articles of
Incorporation, By-Laws and Good Standing Certificates of Classic
Trailer are attached hereto as Schedule 4.1.
4.2 Authority and Binding Effect. The execution, delivery and performance
of this Agreement and all documents contemplated hereby by Sellers and
Classic Trailer have been duly authorized by all requisite corporate
and shareholder actions of Classic Trailer; and this Agreement and all
documents and instruments contemplated to be hereby executed by
Sellers and Classic Trailer constitute and will constitute the legal,
valid and binding obligations of each of Sellers and Classic Trailer
enforceable against Sellers and Classic Trailer in accordance with
their respective terms.
4.3 No Violation. Neither the execution and delivery of this Agreement nor
the consummation by the Sellers of the Transactions contemplated
hereby will (i) cause any default in or contravene any provision of
Classic Trailer's Articles of Incorporation or Bylaws or any
indenture, lease or other material contract to which the Sellers or
Classic Trailer is bound, and none of such actions will result in
acceleration, or any similar right of any party, under any material
agreement to
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which Sellers or Classic Trailer is a party, (ii) result in the
creation of any liens or encumbrances upon the Shares or any assets of
Classic Trailer, or (iii) result in the loss of any rights of or
creation of any obligations of Classic Trailer. Neither the execution
nor delivery of this Agreement nor the consummation by Sellers of the
transactions contemplated hereby will constitute a violation of any
judgment, decree, order, regulation or rule of any court or
governmental authority or any statute or law. No consent, approval or
authorization of any third party is required in connection with the
execution, delivery and performance of this Agreement by the Sellers
that will not have been obtained by the Closing.
4.4 Classic Trailer Stock. The authorized equity securities of Classic
Trailer consist of Fifty Thousand (50,000) shares of common stock,
Twenty-five Thousand (25,000) of which are Class A Voting Stock with
Eleven Thousand Two Hundred and Seventy-eight (11,278) shares
outstanding and Twenty-five Thousand (25,000) of which are Class B
Non-voting Stock with One Thousand Two Hundred and Twenty-two (1,222)
shares outstanding, $1.00 par value, and constitute the Shares.
Sellers are and will be on the Closing Date the record and beneficial
owners and holders of 100% of the Classic Trailer Stock. The Shares
have been duly authorized and validly issued and are fully paid and
nonassessable. Classic Trailer has not authorized or issued any other
share of any class of its capital stock or any securities exchangeable
for or convertible into any such shares or any options, rights, or
other agreements giving a person the right to acquire any such shares.
Sellers will transfer and convey to Buyer title to the Shares free and
clear of all liens and encumbrances, and as of Closing there will be
no restrictions on Sellers' right to transfer the Shares to Buyer as
set forth in this Agreement.
4.5 Financial Statements. Except as specifically set forth on Schedule
4.5, the books of account and related records of Classic Trailer
fairly reflect in reasonable detail its assets, liabilities and
transactions in material accordance with GAAP. Schedule 4.5 attached
hereto consists of copies of the following financial statements
(including the notes thereto) of Classic Trailer,: The Balance Sheet,
Statements of Income and Retained Earnings, and Cash Flow Statements
for the year ended December 31, 2003 (such financial statements and
the notes thereto being hereinafter referred as the "Financial
Statements"), as reviewed by Xxxxxx Xxxxxxx, CPA; and the unreviewed
Balance Sheet, Cash Flow Statement, Statement of Income and Retained
Earnings for the period ending March 31, 2004 prepared by Classic
Trailer (the "2004 Interim Financial Statements").
The Financial Statements and the 2004 Interim Financial Statements:
(i) are substantially correct and complete and in accordance with the
books and records of Classic Trailer; (ii) fairly present the
financial condition, assets and liabilities of Classic Trailer as of
their respective dates and the results of Classic Trailer operations
and changes in financial position for the periods covered thereby;
(iii) have been prepared in material accordance with GAAP.
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4.6 No Undisclosed Liabilities. Except as disclosed on Schedule 4.6,
Classic Trailer has no liability or obligation of any nature, whether
due or to become due, absolute, contingent or otherwise, except (i) to
the extent fully reflected as a liability on the 2004 Interim
Financial Statements; (ii) liabilities incurred in the ordinary course
of business since the 2004 Interim Financial Statements date that are
consistent in character and amount with those incurred in the past,
and that are fully reflected as liabilities on the Classic Trailer
books of account; (iii) contractual obligations arising under
materials contracts and (iv) liabilities which have otherwise
specifically disclosed on the Schedules to this Agreement.
4.7 Long Term Debt. As of the date hereof, Classic Trailer has no Long
Term Indebtedness. Classic Trailer has no other debt except for trade
payables arising in the ordinary course of business consistent with
past experience and in the aggregate no greater than that reflected in
the 2004 Interim Financial Statements.
4.8 Personal Property. Schedule 4.8 contains a list of all tangible
property of Classic Trailer. Unless otherwise disclosed on Schedule
4.8 hereto, Classic Trailer has good and valid title to all of its
tangible personal property and assets reflected on the 2004 Interim
Financial Statements (except those disposed of in the ordinary course
of business since the 2004 Interim Financial Statements date) and all
tangible personal property and assets acquired since the 2004 Interim
Financial Statements date, free and clear of any lien, except (i)
minor imperfections of title, none of which, individually or in the
aggregate, materially detracts from the value or impairs the use of
the affected properties or impairs the operations of Classic Trailer;
and (ii) liens for current Taxes not yet due and payable. All tangible
personal property and assets which are consigned or leased to Classic
Trailer and are used in the operations of the business are listed on
Schedule 4.8 hereto. Included in the personal property leased by
Company and listed at Schedule 4.8 are certain assets leased by
Company from Roost Leasing, LLC. At Closing, or prior to Closing, in
consideration of the transfer of all life insuranace policies ofn the
lives of sellers Seller will cause Roost Leasing, LLC to deliver title
to all such items of personal property by way of Xxxx of Sale at no
cost to Company. Except as disclosed on Schedule 4.8 hereto, Classic
Trailer owns and has in its possession all tangible personal property
used or which has been used within the twelve months preceding the
date hereof in the conduct of its business, except for inventory and
other assets disposed of in the ordinary course of business consistent
with past practice. Except as specifically noted in Schedule 4.8
hereto, to the best of Sellers' and Classic Trailer's knowledge, the
machinery and equipment of Classic Trailer is in good operable order.
4.9 Real Property and Leaseholds. (i) Schedule 4.9 hereto contains a true,
correct and complete list of all real estate properties owned, leased,
subleased, licensed or otherwise occupied by Classic Trailer and
separately indicates the nature of Classic Trailer's interest therein.
Except as set forth on Schedule 4.9 hereto, no
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other person has any oral or written right, agreement or option to
acquire, lease, sublease or otherwise occupy all or any portion of
such real property. Classic Trailer has received no written or oral
notice of assessment for public improvements against any of the real
properties that remains unpaid, and, to the best of Classic Trailer
and Sellers' knowledge, no such assessment has been proposed. There is
no pending condemnation, expropriation, imminent domain, or similar
proceeding affecting all or any portion of any of the real properties
and to the best knowledge of Classic Trailer and Sellers, no such
proceeding is contemplated.
(ii) Except as disclosed on Schedule 4.9 hereto, to the best of
Sellers' and Classic Trailer's knowledge: (a) Classic Trailer has
good, marketable and insurable legal and equitable fee simple title to
the real property owned by Classic Trailer and (b) leasehold title to
the property leased pursuant to the leases (the "Leased Real
Property") in all cases free and clear of any and all liens,
exceptions, items, encumbrances, easements, restrictions and other
matter, either of record or not of record, which could prohibit or
adversely interfere with Buyer's use of such property, (c) no material
default or breach exists under any of the covenants, conditions,
restrictions, rights of way or easements, if any, affecting all or any
portion of the real property, (d) the current zoning or other
administrative permission for the Classic Trailer facility permits the
operator of such property to utilize the property for manufacture and
sale of trailers. Neither Sellers nor Classic Trailer has made any
application for a rezoning of any of the real properties, has any
knowledge of any proposed or pending change to any zoning affecting
any of the real properties, or has any knowledge of any expropriation
or condemnation or similar proceeding pending or threatened against
any of the real properties or any part of the real properties.
(iii) To the best of Sellers' and Classic Trailer's knowledge, all
utilities, including without limitation, potable water, sewer, gas,
electric, telephone, and other public utilities and all storm water
drainage required by law or necessary for the operation of the real
properties, (a) either enter the real property through open public
streets adjoining the real properties, or if they pass through
adjoining private land, do so in accordance with valid public or
private easements or rights of way, which will inure to the benefit of
Buyer, (b) are installed, connected and operating in good condition,
and in compliance with all applicable laws, including, without
limitation, the permanent right to discharge sanitary waste into the
collector system of the appropriate sewer authority, and (c) are
adequate to service the real property for its intended use in the
business as presently conducted thereon.
(iv) Except as set forth on Schedule 4.9, to the best of Sellers and
Classic Trailer's knowledge: there are no material defects in,
mechanical failure of or damage to the improvements located on the
real property, including the roof, structure, soil, walls, heating,
air conditioning, ventilation, plumbing, electrical, drainage, fire
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alarm, communications, security and exhaust systems and their
component parts, or other improvements on or forming a part of the
real properties, all of which have been constructed in good and
workmanlike manner.
4.10 Inventory. Except as disclosed on Schedule 4.10 hereto:
(i) All of the items included in Inventory of Classic Trailer,
including the Inventories reflected on the 2004 Interim Financial
Statements, are valued at cost; and
(ii) All of the items included in the Inventory of Classic Trailer
consist of items of a quality and quantity usable in the ordinary
course of Classic Trailer's business within a reasonable period of
time and at normal profit margins, and all of the raw materials and
work in process Inventory of Classic Trailer can reasonably be
expected to be consumed in the ordinary course of business within a
reasonable period of time; and
(iii) Classic Trailer has provided for adequate reserves in material
accordance with GAAP with respect to excess Inventory of Classic
Trailer.
4.11 Accounts Receivable. All of the Accounts Receivable of Classic Trailer
reflected on the 2004 Interim Financial Statements and all Accounts
Receivable arising or existing thereafter represent amounts receivable
for merchandise actually delivered or services actually provided, have
arisen in the ordinary course of business, are not subject to any
counterclaims or offsets and have been billed and, except as set forth
on Schedule 4.11 hereto, are generally due within sixty (60) days
after such billing. To the best of Sellers' and Classic Trailer's
knowledge all such receivables are fully collectible in the normal and
ordinary course of business, except to the extent of a reserve in an
amount not in excess of the reserve for doubtful accounts reflected on
the 2004 Interim Financial Statements. Schedule 4.11 hereto sets forth
(i) the total amount of Accounts Receivable of Classic Trailer
outstanding as of the 2004 Interim Financial Statements Date and (ii)
the agings of such receivables based on the following schedule: 0-30
days; 31-60 days, 61-90 days, from the date of the invoice therefore.
4.12 Intangible Property. Schedule 4.12 attached hereto lists and describes
all intangible property utilized by Classic Trailer including customer
lists, patents, trademarks, trade names, trade secrets, and
copyrights. Classic Trailer owns, or has the sole and exclusive right
to use, all such intangible property, and the consummation of the
transactions contemplated hereby will not alter or impair the use of
any such rights by Classic Trailer or Buyer. No claims have been
asserted during the past five (5) years by any person against the use
by Classic Trailer of, or challenging or questioning the validity or
effectiveness of, any such intangible property, and Sellers do not
know of any valid basis for any such claim. To the
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best of Sellers' and Classic Trailer's knowledge, the use of such
intangible property by Classic Trailer is not in violation of, and
does not infringe any patent, trademark, trade name, copyright,
technology, know-how or process, or other proprietary or trade rights
of any third party.
4.13.Contracts. Schedule 4.13 attached hereto lists and describes all
contracts to which Classic Trailer is a party that cannot be
terminated by Classic Trailer without penalty or liability on ninety
(90) days or less notice (the "Material Contracts"). Neither Classic
Trailer nor the other party thereto is in default under any such
contract. True and complete copies of the Material Contracts or
summaries of material oral agreements have been delivered to Buyer
prior to the date hereof. Correct and complete copies of all standard
form sales orders, sales invoices and purchase orders used by Classic
Trailer have been delivered or made available to Buyer prior to the
date hereof.
All Material Contracts to which Classic Trailer is a party or by which
it is bound are in full force and effect; and Classic Trailer has
complied with the provisions thereof and is not in default under any
of the terms thereof and no event has occurred that with passage of
time or the giving of notice, or both would constitute such a default.
Neither Classic Trailer nor Sellers have received any written claim
from any other party to any material contract that Classic Trailer has
breached any obligations to be performed by it thereunder to date, or
is otherwise in default or delinquent of performance thereunder, where
the consequence of such breach or default could reasonably be expected
to have a material adverse effect on the financial condition,
business, properties or prospects of Classic Trailer taken as a whole.
4.14.Environmental Matters. Schedule 4.14 includes a list of all
environmental studies, site assessments and tests conducted at Classic
Trailer's facility within the last 5 years. Except as disclosed on
Schedule 4.14 hereto,
(i) To the best of Sellers' and Classic Trailer's knowledge, Classic
Trailer is not in violation of any Federal, state, regional or local
statutory or common law, regulation, rule, order, ordinance,
guideline, direction, policy or notice, relating to the environment,
including those relating to Hazardous Substances ("Environmental
Laws").
(ii) To the best of Sellers' and Classic Trailer's knowledge, Classic
Trailer holds and is in compliance with all environmental permits,
certificates, consent or other settlement agreements, licenses,
approvals, registrations and authorization required under all
Environmental Laws ("Environmental Permits"), and all such
Environmental Permits are valid and in full force and effect. All such
Environmental Permits are listed on Schedule 4.14 hereto and any that
are not transferable are so designated.
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(iii) To the best of Sellers' and Classic Trailer's knowledge, no
consent, approval or authorization of, or registration or filing with
any Person, including any environmental governmental authority or
regulatory agency, is required in connection with the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(iv) To the best of Sellers' and Classic Trailer's knowledge, no
notice, citation, summons or order is currently issued or outstanding,
no complaint is currently filed, and no investigation or review is
pending or threatened by any governmental or other entity: (a) with
respect to any alleged violation by Classic Trailer of any
Environmental Law; or (b) with respect to any alleged failure by
Classic Trailer to have any Environmental Permit; or (c) with respect
to any use, possession, generation, treatment, storage, recycling,
transportation or disposal (collectively "Management") of any
Hazardous Substances by or on behalf of Classic Trailer.
(v) Neither Sellers nor Classic Trailer have received any request for
information, notice of claim, demand, order or notification that it or
they are or may be potentially responsible with respect to any
investigation or clean-up of any threatened or actual Release of any
Hazardous Substance.
(vi) To the best of Sellers' and Classic Trailer's knowledge, Classic
Trailer has not used, generated, treated, stored for more than 90
days, recycled or disposed of any Hazardous Substances on any property
now or previously owned, operated or leased by Classic Trailer, nor
has anyone else treated, stored for more than 90 days, recycled or
disposed of any Hazardous Substances on any property now or previously
owned, operated or leased by Classic Trailer.
(vii) To the best of Sellers' and Classic Trailer's knowledge, no
polychlorinated biphenyls or asbestos-containing materials are or have
been present at any property now owned, operated or leased by Classic
Trailer, nor are there any underground storage tanks, active or
abandoned, at any property now owned, operated or leased by Classic
Trailer.
(viii) Within the last 120 days, no Hazardous Substances generated by
Classic Trailer has been recycled, treated, stored, disposed of or
transported by any entity other than those listed on Schedule 4.14
hereto.
(ix) To the best of Sellers' and Classic Trailer's knowledge , no
Hazardous Substances managed by Classic Trailer has come to be located
at any site which is listed or proposed for listing under CERCLA,
CERCLIS or on any similar state list, or at any site which is subject
of Federal, State or local enforcement actions or other investigations
which may lead to claims against Classic Trailer or Buyer for clean-up
costs, remedial work, damages to natural resources or for personal
injury claims, including, but not limited to, claims under CERCLA.
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(x) To the best of Sellers' and Classic Trailer's knowledge, no
Hazardous Substance has been Released at, on, about or under or is
present in any property now owned, operated or leased by Classic
Trailer.
(xi) No oral or written notification of a Release or threat of Release
of a Hazardous Substance has been filed by or on behalf of Classic
Trailer or in relation to any property now owned, operated or leased
by Classic Trailer. No such property is listed or proposed for listing
on the National Priority List promulgated pursuant to CERCLA, or on
CERCLIS.
(xii) To the best of Sellers' and Classic Trailer's knowledge, there
are no environmental Liens on any properties owned or leased by
Classic Trailer and no government actions have been taken or are in
process or pending which could subject any of such properties to such
Liens.
(xiii) To the best of Sellers' and Classic Trailer's knowledge, no
deed or other instrument of conveyance of real property to Classic
Trailer with respect to real property owned, operated or leased by
Classic Trailer contains a notice or restriction relating to the
actual or suspected presence of Hazardous Substances.
(xiv) Sellers know of no facts or circumstances related to
environmental matters concerning real property owned, operated or
leased by Classic Trailer that could reasonably be expected to lead to
any future environmental claims, against Classic Trailer or Buyer
under current law.
(xv) To the best of Sellers' and Classic Trailer's knowledge , there
have been no environmental inspections, investigations, studies,
audits, tests, reviews or other analyses conducted in relation to any
property or business now owned, operated or leased by Classic Trailer
which have not been provided to Buyer prior to the date hereof.
4.15 Insurance. All policies of fire, liability, workers compensation, life
and all other forms of insurance owned or held by Classic Trailer are
set forth and fully disclosed on Schedule 4.15 hereto. All such
polices are outstanding and in full force and effect. To the best of
Sellers' and Classic Trailer's knowledge the coverages provided by
such policies are reasonable in both scope and amount in light of the
risks attendant to the business of Classic Trailer, and are comparable
to companies in similar lines of business, and such insurance is
sufficient in the aggregate to cover all reasonably foreseeable damage
to and liabilities or contingencies related to the conduct by Classic
Trailer of its business. Except as set forth on Schedule 4.15, there
are no outstanding claims under such policies and there are no
outstanding unpaid and overdue premiums under such policies.
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4.16 Customers and Suppliers. Attached as Schedule 4.16 is a list of all of
Classic Trailer's Customers and Suppliers. Except as described on
Schedule 4.16, there has not been any material adverse change in the
business relationship of Classic Trailer with any of its ten (10)
largest customers or suppliers (in terms of sales or purchases) within
the last two (2) years.
4.17 Litigation; Compliance with Law. Except as set forth in Schedule 4.17
hereto, to the best of Sellers' and Classic Trailer's knowledge: (i)
Classic Trailer is not engaged in nor a party to, or threatened with,
any claim, controversy, legal action or other proceeding, whether
before a court, administrative agency, or arbitral body; (ii) Classic
Trailer has no claim, obligation, liability, loss, damage or expense,
of whatever kind or nature, contingent or otherwise, incurred or
imposed or based upon any provision of federal, state or local law or
regulation or common law, pertaining to health, safety or
environmental protection and arising out of any act or omission by
Classic Trailer, its employees, agents or representatives; (iii) no
product liability claims are pending or threatened against Classic
Trailer; and (iv) Sellers do not know of any valid basis for any of
the foregoing.
4.18 Tax Returns and Liabilities. Except as disclosed on Schedule 4.18, to
the best of Sellers' and Classic Trailer's knowledge, Classic Trailer
has: (i) duly and timely filed in proper form all tax returns for all
taxes required to be filed with all appropriate governmental
authorities. (ii) All taxes due and payable by Classic Trailer (or
claimed to be due and payable) have been paid (regardless whether tax
returns relating to such taxes have been duly and timely filed or if
filed, regardless whether such tax returns are deficient), except such
amounts as are being contested diligently and in good faith and are
not in the aggregate material and for which Classic Trailer has
adequately reserved in its Financial Statements. (iii) There are no
pending tax audits, claims or proceedings relating to Classic Trailer.
(iv) Classic Trailer has not agreed to any waiver or extension of any
statute of limitations relating to any tax. (v) All taxes that Classic
Trailer are required by law to withhold or collect have been duly
withheld or collected and have been timely paid over to the
appropriate Tax Authority.
4.19 Employee Benefit Plans. Except as set forth on Schedule 4.19 hereto,
Classic Trailer has not established or maintained or is obligated to
make contributions to or under or otherwise participate in (i) any
bonus or other type of incentive compensation or expense reimbursement
plan, program, contract or arrangement or (ii) any employee benefit
plan, fund or program described in ss. 3.3 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). Classic Trailer has
made available to Buyer true and complete copies of the documents for
each plan, program, contract, arrangement and fund disclosed on
Schedule 4.19.
(iii) Neither Classic Trailer nor any other employee (an "ERISA
Affiliate") that is, or at any relevant time was, together with
Classic Trailer, treated as a "single
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employer" under section 414(b), 414(c) or 414(m) of the Code, has, at
any time (a) maintained or contributed to any defined benefit pension
plan, as defined by Section 3(35) of ERISA, that is or was subject to
Title IV of ERISA, (b) been required to contribute to, or incurred any
withdrawal liability, within the meaning of Section 4201 of ERISA to
any multi-employer pension plan, within the meaning of Section 3(37)
of ERISA or (c) maintained any stock purchase, stock ownership or
stock option plan.
(iv) To the best of Sellers' and Classic Trailer's knowledge, Classic
Trailer and each of the Benefit Plans, are in compliance in all
material respects with the applicable provisions of ERISA, and those
provisions of the Code applicable to the Benefit Plans. Each Benefit
Plan has been timely amended to properly reflect the applicable
provisions of ERISA and the Code and, as appropriate, such amendments
have been adopted so that they can be given retroactive effect to any
relevant effective date under the Tax Reform Act of 1986.
(v) Except as may be disclosed on Schedule 4.19 hereto, all
contributions to, and payments from, the Benefit Plans which may have
been required to be made in accordance with the Benefit Plans have
been timely made. All such contributions to the Benefits Plans, and
all payments under the Benefit Plans, except those to be made from a
trust qualified under Section 401(a) of the Code, for any period
ending before the Closing Date that are not yet, but will be, required
to be made are properly accrued and reflected on the 2004 Interim
Financial Statements or are disclosed on Schedule 4.19 hereto.
(vi) To the best of Sellers' and Classic Trailer's knowledge, except
as indicated on Schedule 4.19 hereto, all material reports, returns
and similar documents with respect to the Benefit Plans required to be
filed with any government agency or distributed to any Benefit Plan
participant have been duly and timely filed or distributed.
(vii) To the best of Sellers' knowledge, Classic Trailer has complied
with the notice and continuation coverage requirements of Section
4980B of the Code and the regulations thereunder with respect to each
Benefit Plan that is, or was during any taxable year of Classic
Trailer for which the statute of limitations on the assessment of
federal income taxes remains open, by consent or otherwise, a group
health plan within the meaning of Section 5000(b)(1) of the Code.
(viii) Except as indicated on Schedule 4.19 hereto, all of the Benefit
Plans which are pension benefit plans have received determination
letters from the Internal Revenue Service to the effect that such
plans are qualified and exempt from federal income taxes under Section
401(a) and 501(a), respectively, of the Code, as amended to comply
with the applicable provisions of the Tax Reform Act of 1986, as
amended, and the regulations promulgated thereunder; and no
determination letter with respect to any Benefit Plan has been revoked
nor, to the
15
best of Sellers' and Classic Trailer's knowledge, has revocation been
threatened, nor has any Benefit Plan been amended since the date of
its most recent determination letter in any respect which would
adversely affect its qualification or materially increase its cost.
(ix) To the best of Sellers' and Classic Trailer's knowledge, each of
the Benefit Plans has been administered at all times, and in all
material respects, in accordance with its terms.
(x) Except as indicated on Schedule 4.19 hereto, to the best of
Sellers' and Classic Trailer's knowledge, there are no pending
investigations by any governmental agency involving the Benefit Plans
and no threatened or pending claims (except for claims for benefits
payable in the normal operations of the Benefit Plans), suits or
proceedings against any Benefit Plan or asserting any rights or claims
to benefits under any Benefit Plan which could give rise to any
material liability, nor, to the best of Sellers' and Classic Trailer's
knowledge are there any facts which could give rise to any material
liability in the event of any such investigation, claim, suit or
proceeding.
(xi) To the best of Sellers' and Classic Trailer's knowledge, neither
the Benefit Plans, any ERISA Affiliate, Sellers, nor any employee of
the foregoing, nor any trusts created thereunder, nor any trustee,
administrator or other fiduciary thereof, has engaged in a "prohibited
transaction" (as such term is defined in Section 4975 of the Code or
Section 406 of ERISA) which could subject any thereof to the tax or
penalty on prohibited transactions imposed by such Section 4975 or the
sanctions imposed under Title I of ERISA.
(xii) To the best of Sellers' and Classic Trailer's knowledge, neither
Classic Trailer nor any ERISA Affiliate has incurred or is reasonably
likely to incur any liability with respect to any plan or arrangement
that would be included within the definition of "Benefit Plan" except
for premiums, employee deferral contributions, matching contributions
and the like normally made in the ordinary course of business
(xiii) Except as listed in Schedule 4.19 hereto, to the best of
Sellers' and Classic Trailer's knowledge, no payment which is or may
be made by Classic Trailer or any ERISA Affiliate, or from any Benefit
Plan, to any employee, former employee, director or agent of Classic
Trailer or any ERISA Affiliate under the terms of any Benefit Plan,
either alone or in conjunction with any other payment, will or could
be characterized as an excess parachute payment under Section 280G of
the Code.
(xiv) To the best of Sellers' and Classic Trailer's knowledge, neither
Classic Trailer nor any ERISA Affiliate maintains, contributes to or
either has or is likely to have a material liability with respect to,
any material pension, welfare, bonus,
16
stock purchase, stock ownership, stock option, deferred compensation,
incentive, severance, termination or other compensation plan or
arrangement, or other material employee fringe benefit plan which
would be described in (i) above, except for premiums, employee
deferral contributions, matching contributions and the like normally
made in the ordinary course of business.
4.20 Labor Relations. Except as set forth on Schedule 4.20, to the best of
Sellers' and Classic Trailer's knowledge (i) Classic Trailer is in
compliance with all federal and state laws respecting employment and
employment practices, terms and conditions of employment, and wages
and hours, and is not engaged in any unfair labor practice; (ii) there
is no unfair labor practice complaint against Classic Trailer pending
before the National Labor Relations Board; (iii) there is no labor
strike, dispute, slowdown, stoppage or other labor difficulty actually
pending or threatened against or involving or affecting Classic
Trailer; (iv) no union represents and no question exists respecting
whether any union represents the employees of Classic Trailer; (v) no
grievance or any arbitration proceeding is pending and no claim
therefore exists respecting the employees of Classic Trailer; (vi)
there is no collective bargaining agreement which is binding on
Classic Trailer; and (vii) Classic Trailer has not experienced any
labor stoppage, concerted activity or other labor difficulty during
the past five (5) years.
4.21 Brokers and Finders Fees. Neither Sellers nor Classic Trailer nor
anyone acting on their behalf has done anything to cause or incur any
liability to any party for any brokers or finders fees or the like in
connection with this Agreement or the transactions contemplated hereby
for which Classic Trailer or Buyer would have any liability.
4.22 Confidential Information. Neither Sellers nor Classic Trailer has
disclosed to any third party any information of a confidential nature
with respect to Classic Trailer's business other than normal
communications with its attorneys, accountants, employees or agents,
in the normal course of business.
4.23 Certain Transactions. Except as set forth on Schedule 4.23, since
January 1, 2004, Classic Trailer has not (i) paid any dividends or
made any other distributions to its shareholders, (ii) made any sales
or transfers of any material assets outside the ordinary course of
business, or (iii) otherwise conducted its business outside the
ordinary course.
4.24 Sufficiency of Assets. Classic Trailer owns or otherwise has the right
to use all assets required for the continued conduct of its business
after the Closing in substantially the same manner as conducted prior
to the Closing.
4.25 Employee Health and Safety. Except as disclosed on Schedule 4.25
hereto, to the best of Classic Trailer's and Sellers' knowledge, no
employee or other person has been injured during their employment with
Classic Trailer or on Classic
17
Trailer's premises, and Classic Trailer has complied with and is
not in violation of any federal, state or local or statutory
common law, regulation, rule, ordinance or guideline relating to
employee health and safety.
4.26 Disclosure. No representation or warranty by Sellers and/or Classic
Trailer contained in this Agreement, and no statement, certificate,
schedule, list, exhibit, instrument or other writing furnished or to
be furnished by Sellers and/or Classic Trailer pursuant to the
provisions hereof or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material
fact or omit or will omit to state a material fact necessary in order
to make the statements contained herein or therein, in light of the
circumstances in which they were made, not misleading or necessary to
provide Buyer with adequate and complete information as to Classic
Trailer and its affairs.
V. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents and
warrants to Sellers as follows:
5.1 Corporate Organization; Good Standing. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of
Indiana; and Buyer has the corporate power to enter into this
Agreement and to carry out the transactions contemplated hereby.
5.2 Authority and Binding Effect. The execution, delivery and performance
of this Agreement and the other documents contemplated hereby to be
executed by Buyer have been duly authorized by all necessary corporate
action on the part of Buyer. This Agreement has been, and other
documents to be executed by Buyer pursuant hereto will be, duly and
validly executed and delivered by Buyer and constitute and will
constitute, as the case may be, the valid and binding obligation of
Buyer, enforceable against Buyer in accordance with their respective
terms.
5.3. No Violation. Neither the execution and delivery of this Agreement nor
the consummation by Buyer of the transactions contemplated hereby will
(i) cause any default in or breach of any provision of the Articles of
Incorporation or Bylaws of Buyer, or any indenture, lease or other
material contract to which Buyer is bound, and none of such actions
will result in acceleration, or any similar right of any party, under
any loan or other agreement to which Buyer is a party, or (ii) result
in the creation of any encumbrances upon any of the properties or
assets of Buyer. Neither the execution nor delivery of this Agreement
nor the consummation by Buyer of the transactions contemplated hereby
will constitute a violation of any judgment, decree, order, regulation
or rule of any court or governmental authority or any statute or law.
No consent, approval or authorization of any third party is required
in connection with the execution, delivery and performance of this
Agreement by Buyer.
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5.4 Brokers and Finder Fees. Neither Buyer nor anyone acting on its behalf
has done anything to cause or incur any liability to any party
including Sellers and/or Classic Trailer for any brokers or finders
fees or the like in connection with this Agreement or the transactions
contemplated hereby.
VI. CONDITIONS TO BUYER'S OBLIGATIONS. The obligations of Buyer to consummate
the transactions contemplated by this Agreement and to purchase the Classic
Trailer Stock are subject to the satisfaction, on or prior to the Closing
Date, of the following conditions, any and all of which may be waived in
whole or in part by Buyer:
6.1 Representations True; Obligations to Perform. (i) The representations
and warranties of the Sellers and Classic Trailer contained in this
Agreement shall be true and correct at and as of the time of the
Closing, except for representations and warranties specifically
relating to a time or times other than the time of the Closing (which
shall be true and correct at such other time or times) and except for
changes permitted by this Agreement, with the same force and effect as
if made at and as of the time of Closing; (ii) Sellers and Classic
Trailer shall have performed and complied with all agreements and
covenants required by this Agreement to be performed by Sellers and
Classic Trailer at or prior to the Closing; and (iii) Sellers and
Classic Trailer shall have delivered to Buyer a certificate, signed by
the Sellers and Classic Trailer, respectively, and dated the Closing
Date, that all such representations are true and that all covenants
have been satisfied.
6.2 Litigation. No suit, investigation, action or other proceeding shall
be pending or threatened against Classic Trailer, Sellers, or Buyer
before any court or governmental agency that, in the opinion of
counsel for Buyer, could result in the restraint, prohibition or the
obtaining of damages or other relief against Buyer in connection with
this Agreement or the consummation of the transactions contemplated
hereby.
6.3 Consents and Approvals. All consents and approvals required by private
parties or governmental authorities with respect to the transactions
contemplated by this Agreement shall have been obtained.
6.4 Opinion of Counsel. Buyer shall have received a satisfactory opinion
from Xxxxxx Xxxxxxxx, counsel to Sellers and Classic Trailer, dated
the date of the Closing, addressing the matters set forth in Schedule
6.4 hereto.
6.5 Financing. The Closing of this transaction shall not be contingent on
Buyer obtaining financing.
6.6 Classic Trailer Stock . Sellers shall have delivered to Buyer
certificates representing the Classic Trailer Stock, duly endorsed in
blank or with stock transfer powers attached, in form proper for
transfer.
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6.7 Employment/Noncompetition Agreements. Sellers shall have executed
Employment Agreements and Noncompetition Agreements in favor of
Classic Trailer in the form of Schedule 3.11 and the sum of $5,000 of
the Purchase Price shall have been allocated to each of Sellers as
consideration for the execution and delivery of the Non-Competition
Agreements.
6.8 Releases; Resignations. The releases and resignations of all of the
current officers and directors of Classic Trailer shall have been
delivered in the form of Schedule 6.8.
6.9 Real Estate Lease. Sellers shall have delivered to Buyer a lease of
Classic Trailer's facilities in the form of Schedule 6.9
VII. CONDITIONS TO THE SELLERS' OBLIGATIONS. The obligations of the Sellers to
consummate the transactions contemplated by this Agreement and to sell the
Classic Trailer Stock to Buyer are subject to satisfaction, on or prior to
the Closing Date, of the following conditions, any and all of which may be
waived by Sellers:
7.1 Representations and Warranties True; Obligations to Perform. (i) The
representations and warranties of Buyer contained in this Agreement
shall be true and correct at and as of the time of Closing, except for
representations and warranties specifically relating to a time or
times other than the time of Closing (which shall be true and correct
at such other time or times) and except for changes permitted by this
Agreement, with the same force and effect as if made at and as of the
time of the Closing; (ii) Buyer shall have performed or complied with
all agreements and covenants required by this Agreement to be
performed by Buyer at or prior to the Closing; and (iii) Buyer shall
have delivered to the Sellers a certificate, signed by the Secretary
of Buyer and dated the day of Closing, to all of such effects.
7.2. Consideration. Buyer shall have furnished the consideration for the
Classic Trailer Stock in accordance with Section 2.2 hereof.
7.3. Litigation. No suit, investigation, action or other proceeding shall
be threatened or pending against Classic Trailer, Sellers, or Buyer
before any court or governmental agency that, in the opinion of
counsel for Sellers, could result in the restraint, prohibition or the
obtaining of damages or other relief against Sellers in connection
with this Agreement or the consummation of the transactions
contemplated hereto.
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7.4. Consents and Approval. All consents and approvals required by private
parties or governmental authorities with respect to the transactions
contemplated by this Agreement shall have been obtained.
VIII. INDEMNIFICATION.
8.1 Indemnification by Sellers.
(i) General. Sellers, jointly and severally, hereby indemnify and
agree to hold Buyer harmless from, against and in respect of, and
shall on demand reimburse Buyer for:
(a) Any and all losses, liabilities and damages suffered or
incurred by Buyer resulting from any untrue representation,
breach of material warranty or nonfulfillment of any
material covenant or agreement by Sellers contained herein
or in any certificate, document or instrument delivered to
Buyer pursuant hereto or in connection herewith;
(b) Any and all losses, liabilities and damages suffered or
incurred by Buyer or Classic Trailer arising out of events
that occurred or conditions that existed prior to the
Closing Date and known to Sellers and not disclosed in this
Agreement;
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including,
without limitation, legal fees and expenses, incident to any
of the foregoing or incurred in investigating or attempting
to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
(ii) Limitations. Anything contained in the foregoing subsection or
this Agreement to the contrary notwithstanding, Sellers' liability to
indemnify Buyer or Classic Trailer or Sellers' liability to Buyer or
Classic Trailer for any other reason, shall be limited as follows:
(a) Sellers shall only be responsible to indemnify Buyer or
Classic Trailer, or pay any type of damages to Buyer or
Classic Trailer, if and only if, the aggregate net amount of
Sellers' liability under Section 8.1(i) above, 8.2 below, or
for any other reason, exceeds the amount of Fifty Thousand
Dollars ($50,000) exclusive of legal fees and expenses
incident to any loss, liability or damages suffered by Buyer
or Classic Trailer or incurred in investigating or
attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this Agreement or indemnity.
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(b) Sellers shall only be liable to Buyer and/or Classic Trailer
for any damages or indemnification, howsoever arising, up to
a maximum amount equaling the Purchase Price, except for
claims arising from environmental contamination or
intentional misrepresentations, which will not be limited.
8.2 Sellers's Tax Indemnification. In addition to any indemnification
provided in Section 8.1 hereto, after the Closing Date, Sellers shall
indemnify, hold harmless and defend Buyer and Classic Trailer from and
against any liability with respect to (i) Sellers' Taxes (including,
but not limited to, those Taxes arising on account of the sale of the
Shares hereunder); (ii) Classic Trailer's federal income taxes,
including federal income taxes that "flow through" to Sellers pursuant
to Classic Trailer's "S" corporation status, that are attributed to
any period on or before the Closing Date to the extent the liability
therefore is supposed to be allocated to Sellers, consistent with
Section 9.15 below, (iii) Classic Trailer's Taxes (except federal
income taxes) attributed to or appointed to any period on or before
the Closing Date to the extent the liability therefore exceeds the
liability for Classic Trailer's accrued Taxes reflected in Classic
Trailer's books of account as of the 2004 Interim Financial
Statements, as may be specifically identified in a schedule of such
Taxes to be delivered by Sellers to Buyer on the Closing Date, and
(iv) any liability resulting from Classic Trailer being liable for any
Taxes of Sellers or of any consolidated group of which Classic Trailer
was a member prior to the Closing Date pursuant to Treasury
Regulations ss. 1.1502-6 or any analogous state or local tax
provision. Sellers shall pay such amounts as it is obligated to pay to
Buyer under the preceding sentence within five business days after
payment of any applicable Tax liability by Buyer or Classic Trailer.
Buyer and Sellers agree that any indemnification payments made
pursuant to this Section 8.2 shall be treated for tax purposes as an
adjustment to Purchase Price, unless otherwise required by applicable
law.
8.3 Buyer's Indemnification. Buyer hereby agrees to indemnify and hold
Sellers harmless from, against and in respect of, and shall on demand
reimburse Sellers for:
(i) Any and all losses, liabilities and damages suffered or incurred
by Sellers resulting from any untrue representation, breach of
warranty or nonfulfillment of any covenant or agreement by Buyer
contained herein or in any certificate, document or instrument
delivered to Sellers pursuant hereto or in connection herewith;
(ii) Any and all losses, liabilities and damages suffered or incurred
by Sellers by reason of the operation of Classic Trailer's business by
the Buyer following the Closing; and
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(iii) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without
limitation, legal fees and expenses, incident to any of the foregoing
or incurred in investigating or attempting to avoid the same or to
oppose the imposition thereof, or in enforcing this indemnity.
8.4 Notice and Opportunity to Defend.
(i) Notice of Asserted Liability. Promptly after receipt by any party
hereto (the "Indemnitee") of notice of any demand, claim or
circumstances which, with the lapse of time, would or might give rise
to a claim or a commencement (or threatened commencement) to any
action, proceeding or investigation (an "Asserted Liability"), that
may result in a loss, the Indemnitee shall give notice thereof (the
"Claims Notice") to the party obligated to provide indemnification
pursuant to Sections 8.1, 8.2 or 8.3 (the "Indemnifying Party"). The
Claims Notice shall describe the Asserted Liability in reasonable
detail and shall indicate the amount (estimated if necessary and to
the extent feasible) of the loss that has been or may be suffered by
the Indemnitee.
(ii) Opportunity to Defend. The Indemnifying Party may elect to
compromise or defend, at its own expense and by its own counsel, any
Asserted Liability and to prosecute by way of counterclaim or third
party complaint any claims arising out of or relating to any Asserted
Liability. If the Indemnifying Party elects to compromise or defend
such Asserted Liability, it shall within thirty (30) days (or sooner,
if the nature of the Asserted Liability so requires) notify the
Indemnitee of its intent to do so, and Indemnitee shall cooperate, at
the expense of Indemnifying Party, in the compromise of, or defense
against, such Asserted Liability. If the Indemnifying Party elects not
to compromise or defend the Asserted Liability or fails to notify the
Indemnitee of its election as herein provided, the Indemnitee may pay,
compromise or defend such Asserted Liability at the expense of the
Indemnifying Party. If the Indemnifying Party elects to defend an
Asserted Liability but contests its obligation to indemnify against
such Asserted Liability, the Indemnifying Party shall carry on such
defense in good faith. Notwithstanding the foregoing, neither the
Indemnifying Party nor the Indemnitee may settle or compromise any
claim over the objection of the other; provided, however, that consent
to settlement or compromise shall not be unreasonably withheld; and
provided further that if the Indemnifying Party contests its
obligation to indemnify against an Asserted Liability, consent to
settlement or compromise shall be withheld in the absolute discretion
of the Indemnitee. In any event, the Indemnitee and the Indemnifying
Party may participate, at their own expense, in the defense of such
Asserted Liability. If the Indemnifying Party chooses to defend any
claim, the Indemnitee shall make available to the Indemnifying Party
any books, records or other documents within its control that are
necessary or appropriate for such defense.
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IX. MISCELLANEOUS.
9.1 Entire Agreement. This Agreement (including the exhibits and
schedules) contains all the terms and conditions agreed upon by the
parties with respect to the subject matter hereof, and no other
representations, promises, agreements or understandings, written or
oral, made prior hereto or contemporaneously herewith, regarding the
subject matter of this Agreement, shall be of any force or effect.
9.2 Modifications and Waivers. No change, modification or waiver of any
provision of this Agreement shall be valid or binding unless it is in
writing, dated subsequent to the date hereof, and signed by the party
intended to be bound. No waiver of any breach, term or condition of
this Agreement by either party shall constitute a subsequent waiver of
the same or any other breach, term or condition.
9.3 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument.
9.4. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Michigan applicable to
agreements made and to be performed entirely within such state.
9.5 Headings. The headings used in this Agreement are for convenience
only, shall not be deemed to constitute a part hereof, and shall not
be deemed to limit, characterize or in any way affect the provisions
of this paragraph.
9.6 Exhibits. The exhibits and schedules are part of this Agreement as if
fully set forth herein.
9.7 Severability. If any provision of this Agreement is invalid, those
portions of this Agreement that are not invalid shall nevertheless be
enforced, unless such enforcement would materially alter the relative
rights and obligations of the parties.
9.8 Notices. All notices, requests, demands or other communications
required or permitted by this Agreement shall be in writing, and
delivery shall be deemed to be sufficient if delivered personally or
by fax, followed by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
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If to Buyer:
Obsidian Enterprises, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
If to Xxxxxxx X. Xxxxxx:
Xxxxxxx X. Xxxxxx
Obsidian Enterprises, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
If to Sellers:
Xxxxxx X. Brothers
000 Xxxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Either party may change its address pursuant to notice given by such
party in accordance with the provisions of this section.
9.9 Further Assurances. Each party agrees, at any time and from time to
time, without further consideration, to take all such actions and
execute and deliver all such documents as may be necessary to
effectuate the purposes of this Agreement. Each party further agrees
to cooperate in connection with any Internal Revenue Service audit
relating to the transactions contemplated hereby.
9.10 Announcements. Neither Sellers nor Buyer, without the express written
consent of the other, which shall not be unreasonably withheld, will
make any public announcement or issue any press release, or make any
recording in any public record, in respect of this Agreement or the
transactions contemplated hereby until following the Closing.
9.11 Expenses. Except as otherwise provided herein, Buyer and Sellers shall
each pay the fees and expenses of its respective counsel, accountants
and other experts incident to the negotiation and preparation of this
Agreement and consummation of the transactions contemplated hereby.
Sellers will not cause Classic Trailer to incur any out-of-pocket
expenses in connection with the transactions contemplated by this
Agreement.
9.12 Survival of Representations, Warranties and Covenants. Each of the
representations, warranties, obligations, covenants and agreements of
the parties included or provided for herein or in any schedule,
certificate or other document delivered pursuant to this Agreement
shall remain in full force and effect and
25
shall survive the Closing for a period of five years following the
Closing Date and thereafter neither Sellers nor Buyer shall have any
liability whatsoever with respect to any such representation or
warranties, except for claims then pending or theretofore asserted in
writing by any party in accordance with the terms and conditions of
this Agreement.
9.13 Specific Performance. Each party hereto agrees that any remedy at law
for any breach of the provisions contained in this Agreement shall be
inadequate and that the other parties hereto shall be entitled to
specific performance and any other appropriate injunctive relief in
addition to any other remedies such party might have under this
Agreement or at law or in equity.
9.14 Assignment. Neither Buyer nor Sellers may assign this Agreement, in
whole or in part, without the prior written consent of the other,
which shall not be unreasonably withheld. This Agreement and all of
the provisions hereof shall be binding upon, and inure to the benefit
of, Buyer and its respective successors and permitted assigns and
Sellers and its respective successors and permitted assigns.
9.15 Termination of S Election. Classic Trailer is an "S" corporation
pursuant to xx.xx. 1361-1379 of the Code. It is the parties'
understanding and intent that Classic Trailer's "S" corporation status
will terminate on the Closing Date. In accordance with ss. 362 of the
Code and regulations promulgated thereunder, the parties agree that
Classic Trailer shall prepare and file a "short year" federal tax
return for the period from January 1, 2004 to the day before the
Closing Date and that any federal income taxes resulting from the
operations during the short year shall be the responsibility of the
Sellers (and will "flow through" to the Sellers in accordance with the
Code). Any taxes arising from operations that occur subsequent to said
short year, shall be the responsibility of Classic Trailer. Buyer
shall be responsible for filing the notice of termination of S
election with the IRS pursuant to Treas. Reg. 1.1362-2(b)(1).
SELLERS: BUYER:
. Classic Manufacturing
Acquisition Corp.
/s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------- --------------------------------
Xxxxxxx X. Xxxxx Xxxxxxx X. Xxxxxx, as President
and as guarantor
/s/ Xxxx X. Xxxx
-------------------------------
Xxxx X. Xxxx
CLASSIC TRAILER:
Classic Manufacturing, Inc.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Xxxxxxx X. Xxxxx, CEO
Signature Page-CLASSIC TRAILER Stock Purchase Agreement
PUT OPTION AGREEMENT
This Put Option Agreement (this "Agreement") is made and entered into as of
April 27th, 2004 (the "Effective Date"), by and between Xxxxxxx X. Xxxxx
("Xxxxx") and Obsidian Enterprises, Inc., a Delaware corporation (the
"Company").
W I T N E S S E T H:
WHEREAS, Xxxxx and the Company have closed this day a Stock Purchase
Agreement pursuant to which Xxxxx has sold to the Company all of his shares of
capital stock of Classic Manufacturing, Inc, a Michigan corporation (the "Stock
Purchase Agreement"); and
WHEREAS, part of the consideration to be paid by the Company to Xxxxx
pursuant to the Stock Purchase Agreement, is the execution and delivery of this
Agreement.
NOW, THEREFORE, in consideration of the premises and mutual agreements and
covenants set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties hereto,
such parties, intending to be legally and equitably bound, hereby, agree as
follows:
1. Grant of Put Option. The Company grants to Xxxxx, at any time, during
the period of time commencing on the fifth anniversary of the date hereof and
ending sixty days thereafter (the "Put Period"), the right ("Put Option") to
require the Company to purchase all of the shares of Company's stock delivered
by Company to Xxxxx as part of the Purchase Price paid by Company to Xxxxx
pursuant to the Stock Purchase Agreement, such shares being hereinafter referred
to as the Transaction Shares.
2. Put Price. Upon the exercise of this Put Option, Company shall pay to
Xxxxx $6.5970 per share for the Transaction Shares subject to such exercise.
3. Partial Exercise. During the Put Period, Xxxxx may partially exercise
the Put Option increments but, in no event, shall any such partial exercise be
for less than 10,000 Transaction Shares.
4. Procedure for Exercise of Put Option. Xxxxx may exercise this Put Option
granted hereunder by delivering to the Company the Notice of Exercise attached
hereto as Exhibit A. Company and Xxxxx shall use their best efforts to close the
purchase and sale of the Transaction Shares within 30 days following Company's
receipt of the Notice of Exercise.
5. Closing. The sale and purchase upon exercise of the Put Option granted
to XXXXX hereunder may be consummated at one or more closings (each, a
"Closing"). The date upon which a Closing actually occurs is herein referred to
as the "Closing Date."
1
6. Representations and Warranties of Company. The Company represents and
warrants to XXXXX that, as of the date hereof:
6.1 Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
6.2 Corporate Power: Authorization. The Company has the corporate
power and has the authority to execute, deliver and perform this Agreement.
The Board of Directors of the Company has duly authorized the execution,
delivery and performance by the Company of this Agreement. No other
corporate proceedings on the part of the Company or its stockholders are
necessary to authorize the execution, delivery or performance by the
Company of this Agreement. This Agreement has been duly executed and
delivered by the Company and, assuming due execution and delivery thereof
by Xxxxx, are valid and legally binding agreements of the Company,
enforceable in accordance with their respective terms, subject to
bankruptcy, insolvency, moratorium, reorganization and similar laws of
general applicability relating to or affecting creditors' rights and
general equity principles.
6.3 The Company's Business. The Company has full power and authority
to own all of its properties and assets and to carry on its business, as it
is now being conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership of its property or the
conduct of its business requires such qualification, if the failure to so
qualify would have a material adverse effect on the business, financial
condition or results of operations of the Company.
6.4 Capitalization. The authorized capital stock of the Company
consists of 5,000,000 shares of Preferred Stock and 10, 000,000 shares of
Common Stock of which there are, as of the date hereof, 2,838,530 shares
issued and outstanding. Each such share has been validly issued, and is
fully paid and non-assessable. The Company's shares are publicly traded
"over the counter" under the symbol OBDE.OB and information regarding the
Company and its shares is available from the company's filings with the
Securities and Exchange Commission.
6.5 Exchange Act Reporting. The Company is subject to Section 13 or
15(d) of the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx").
6.6 Compliance with the Exchange Act. In connection with this
Agreement, the Company has complied, and will continue to comply, in all
material respects with the applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation,
Sections 10 and 14 of the Exchange Act and Rule 10b-5 of the Exchange Act.
2
7. Representations and Warranties of Xxxxx. Xxxxx represents and warrants
to the Company as follows:
7.1 Investment Intent; Blue Sky. Xxxxx is acquiring the Put Option and
Transaction Shares for investment for his own account, not as a nominee or
agent, and not with a view to, or for resale in connection with, any
distribution thereof.
7.2. Restrictions on Transfer; Restrictive Legends. Unless or until
registered under the Securities Act, the transfer of the Transaction Shares
is restricted by applicable state and federal securities laws, and further
restricted by the Stock Purchase Agreement, and the Transaction Shares are
subject to a right of first refusal. The certificates representing the
Transaction Shares will be imprinted with a restrictive legend
substantially as follows:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED. THESE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND
MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SHARES UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF SUCH SHARES
TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SUCH
ACT AND SUCH STATE SECURITIES LAWS.
FURTHER, THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO A RIGHT OF FIRST REFUSAL ON ANY SALE IN FAVOR OF
(1) OBSIDIAN ENTERPRISES, INC. AND (2) XXXXXXX X. XXXXXX,
ALL AS PROVIDED FOR IN THAT CERTAIN STOCK PURCHASE AGREEMENT
BETWEEN OBSIDIAN ENTERPRISES, INC AND XXXXXXX X. XXXXX AND
XXXX X. XXXX, DATED APRIL 27TH, 2004, REGARDING THE PURCHASE
OF THE CAPITAL STOCK OF CAPITAL MANUFACTURING, INC.
8. Closing Conditions.
8.1 Conditions to Obligations of Each Party. The obligation of each
party to consummate the transactions contemplated by this Agreement shall
be subject to the satisfaction at or prior to any Closing of the following
conditions:
(a) Governmental approvals. All authorizations, consents, permits
and approvals of all federal, state and local governmental agencies
and authorities required to be obtained in order to permit
consummation of the transactions contemplated by this Agreement shall
have been obtained.
(b) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint
or prohibition preventing the consummation of the transactions
contemplated by this Agreement shall be in effect, nor shall any
proceeding brought by an administration agency or commission or other
governmental authority or instrumentality, domestic or foreign,
seeking any of the foregoing be pending; nor shall there be any action
taken, or any statute, rule, regulation or other enacted, entered,
enforced or deemed applicable to the transactions contemplated by this
Agreement that makes the consummation of such transactions illegal.
3
9. No Assignment of Rights. Xxxxx may not assign his rights under this
Agreement.
10. Automatic Termination. This Put Option shall terminate without notice
or any other act on the part of either party if Company's shares have traded at
a closing price of greater than $7.33 per share for any consecutive period of 60
trading days during the period of time commencing on the date there are no
restrictions on Xxxxx'x sale of the Transaction Shares (under applicable
securities laws or otherwise) and ending on the fifth anniversary of this
Agreement.
11. Guarantee. Xxxxxxx X. Xxxxxx, Chairman and CEO of Company shall
personally guarantee the purchase of and payment for, the shares put to the
Company if the Company cannot or will not purchase the shares subject to this
Put Option.
12. Miscellaneous.
11.1 Conflicts: Additional Instruments.
(a) In the event of any conflict between the terms and conditions
of the Stock Purchase Agreement and this Agreement, this Agreement
shall control.
(b) The parties covenant and agree to execute and deliver any
additional instruments or documents necessary to carry out the general
intent of this Agreement.
11.2 Headings. The descriptive headings contained in this Agreement
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.3 Severability. If any term or other provision of this Agreement is
deemed invalid, illegal or incapable of being enforced by any law or public
policy, all other terms and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic and legal substance
of the transactions contemplated hereby are not affected or impeached in
any manner materially adverse to any party.
11.4 Entire Agreement. This Agreement, together with the Exhibit(s)
attached hereto, constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all prior agreements
and undertakings, both written and oral, between Xxxxx and the Company with
respect to the subject matter hereof.
11.5 Amendment. This Agreement may not be amended or modified except
by an instrument in writing signed by, or on behalf of, duly authorized
representatives of Xxxxx and the Company.
4
11.6 Notices. All notices, requests or other communications to any of
the parties by another party shall be in writing and shall be deemed duly
received on the earlier of the date the same is delivered in person or by a
nationally recognized overnight courier or actually delivered by the United
States mail, certified or registered, postage prepaid, return receipt
requested or, upon the appropriate media confirmation of receipt, if sent
via facsimile ("Fax") or electronic mail ("e-mail"), as follows:
If to Obsidian Enterprises, Inc.:
Xxxxxxx X. Xxxxxx, President
Obsidian Enterprises, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx XX 00000
Tel: 000.000.0000
Fax: 000.000.0000
If to Xxxxx:
Xxxxxxx X. Xxxxx
00000 Xxxxxx Xxxx
Xxxxxxx, XX 00000
Tel: 000-000-0000
Any party may designate by notice in writing to the other a new
address or fax number to which notices, requests and other communications
hereunder shall be given.
11.7 Applicable Law, Venue. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware
without regard to the conflicts of laws principles thereof.
11.8 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO
A TRIAL BY JURY WITH RESPECT TO ANY ACTIONS OR PROCEEDINGS DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR
THE TRANSACTIONS CONTEMPLATED HEREUNDER.
11.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same
agreement.
11.10 No Waiver. The failure of any party to enforce any provision of
this Agreement shall not constitute a waiver of the right subsequently to
enforce such provision, or any other provision of this Agreement.
11.11 Force Majeure. No party shall be held liable for any failure to
perform any of its obligations under this Agreement for as long as, and to
the extent that such failure is due to an event of force majeure. An event
of force majeure shall include general strikes, lockouts, acts of God, acts
of war, mobilization of troops, fire, extreme weather, flood, or other
natural calamity, embargo, acts of governmental agency, government or any
other laws or regulations.
11.12 Expenses. Each party shall bear its own expenses incurred in
connection with this Agreement.
5
11.13 Assignment; Subcontracting; Third party Beneficiaries.
(a) Except as expressly provided for herein, this Agreement may
not be assigned or otherwise transferred by either party, by operation
of law or otherwise, without the express written consent of the other
party.
(b) This Agreement shall be binding upon and inure solely to the
benefit of the parties hereto and, as to Company, its permitted
assigns, subcontractors or transferee, and nothing herein, express or
implied, is intended to or shall confer upon any other person,
including, without limitation, any union or any employee or former
employee of any party, any legal or equitable right, benefit or remedy
of any nature whatsoever, including, without limitation, any rights of
employment for any specified period, under or by reason of this
Agreement.
11.14 General and Number. Unless the context otherwise requires, when
used herein, the singular includes the plural, and vice versa, and the
masculine includes the feminine and neuter, and vice versa.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate originals by their duly authorized officers or
representatives.
Obsidian Enterprises, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxx, Chairman and CEO
/s/ Xxxxxxx X. Xxxxx
--------------------------------------
Xxxxxxx X. Xxxxx
As to Guarantee Only:
/s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxx
6
EXHIBIT A
PUT OPTION EXERCISE FORM
(To be signed only upon exercise of Put Option)
The undersigned, the holder of the Put Option created in that certain Put
Option Agreement, dated February ___, 2004, by and between Obsidian Enterprises,
Inc. and Xxxxxxx X. Xxxxx, hereby irrevocably elects to exercise his rights to
put ______________ of the Transaction Shares, as defined in said Put Option
Agreement, at a sale and purchase price of $6.5970 per share and hereby tenders
the certificate representing such shares duly executed in blank for transfer.
The Purchase Price for such tendered shares and a certificate for any remaining
shares, if applicable, shall be delivered to me at the following address:
Xxxxxxx X. Xxxxx
---------------------------
---------------------------
---------------------------
Dated:
----------------------
----------------------------------
Xxxxxxx X. Xxxxx
7
PUT OPTION AGREEMENT
This Put Option Agreement (this "Agreement") is made and entered into as of
April 27th, 2004 (the "Effective Date"), by and between Xxxx X. Xxxx ("Wolf")
and Obsidian Enterprises, Inc., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Wolf and the Company have closed this day a Stock Purchase
Agreement pursuant to which Wolf has sold to the Company all of his shares of
capital stock of Classic Manufacturing, Inc, a Michigan corporation (the "Stock
Purchase Agreement"); and
WHEREAS, part of the consideration to be paid by the Company to Wolf
pursuant to the Stock Purchase Agreement, is the execution and delivery of this
Agreement.
NOW, THEREFORE, in consideration of the premises and mutual agreements and
covenants set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties hereto,
such parties, intending to be legally and equitably bound, hereby, agree as
follows:
1. Grant of Put Option. The Company grants to Wolf, at any time, during the
period of time commencing on the fifth anniversary of the date hereof and ending
sixty days thereafter (the "Put Period"), the right ("Put Option") to require
the Company to purchase all of the shares of Company's stock delivered by
Company to Wolf as part of the Purchase Price paid by Company to Wolf pursuant
to the Stock Purchase Agreement, such shares being hereinafter referred to as
the Transaction Shares.
2. Put Price. Upon the exercise of this Put Option, Company shall pay to
Wolf $6.5970 per share for the Transaction Shares subject to such exercise.
3. Partial Exercise. During the Put Period, Wolf may partially exercise the
Put Option increments but, in no event, shall any such partial exercise be for
less than 10,000 Transaction Shares.
4. Procedure for Exercise of Put Option. Wolf may exercise this Put Option
granted hereunder by delivering to the Company the Notice of Exercise attached
hereto as Exhibit A. Company and Wolf shall use their best efforts to close the
purchase and sale of the Transaction Shares within 30 days following Company's
receipt of the Notice of Exercise.
5. Closing. The sale and purchase upon exercise of the Put Option granted
to Wolf hereunder may be consummated at one or more closings (each, a
"Closing"). The date upon which a Closing actually occurs is herein referred to
as the "Closing Date."
1
6. Representations and Warranties of Company. The Company represents and
warrants to Wolf that, as of the date hereof:
6.1 Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
6.2 Corporate Power: Authorization. The Company has the corporate
power and has the authority to execute, deliver and perform this Agreement.
The Board of Directors of the Company has duly authorized the execution,
delivery and performance by the Company of this Agreement. No other
corporate proceedings on the part of the Company or its stockholders are
necessary to authorize the execution, delivery or performance by the
Company of this Agreement. This Agreement has been duly executed and
delivered by the Company and, assuming due execution and delivery thereof
by Wolf, are valid and legally binding agreements of the Company,
enforceable in accordance with their respective terms, subject to
bankruptcy, insolvency, moratorium, reorganization and similar laws of
general applicability relating to or affecting creditors' rights and
general equity principles.
6.3 The Company's Business. The Company has full power and authority
to own all of its properties and assets and to carry on its business, as it
is now being conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership of its property or the
conduct of its business requires such qualification, if the failure to so
qualify would have a material adverse effect on the business, financial
condition or results of operations of the Company.
6.4 Capitalization. The authorized capital stock of the Company
consists of 5,000,000 shares of Preferred Stock and 10,000,000 shares of
Common Stock of which there are, as of the date hereof, 2,838,530 shares
issued and outstanding. Each such share has been validly issued, and is
fully paid and non-assessable. The Company's shares are publicly traded
"over the counter" under the symbol OBDE.OB and information regarding the
Company and its shares is available from the company's filings with the
Securities and Exchange Commission.
6.5 Exchange Act Reporting. The Company is subject to Section 13 or
15(d) of the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx").
6.6 Compliance with the Exchange Act. In connection with this
Agreement, the Company has complied, and will continue to comply, in all
material respects with the applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation,
Sections 10 and 14 of the Exchange Act and Rule 10b-5 of the Exchange Act.
7. Representations and Warranties of Wolf. Wolf represents and warrants to
the Company as follows:
7.1 Investment Intent; Blue Sky. Wolf is acquiring the Put Option and
Transaction Shares for investment for his own account, not as a nominee or
agent, and not with a view to, or for resale in connection with, any
distribution thereof.
2
7.2. Restrictions on Transfer; Restrictive Legends. Unless or until
registered under the Securities Act, the transfer of the Transaction Shares
is restricted by applicable state and federal securities laws, and further
restricted by the Stock Purchase Agreement, and the Transaction Shares are
subject to a right of first refusal. The certificates representing the
Transaction Shares will be imprinted with a restrictive legend
substantially as follows:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THESE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER OF SUCH SHARES TO THE EFFECT THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT AND SUCH STATE SECURITIES LAWS.
FURTHER, THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO A RIGHT OF FIRST REFUSAL ON ANY SALE IN FAVOR OF (1) OBSIDIAN
ENTERPRISES, INC. AND (2) XXXXXXX X. XXXXXX, ALL AS PROVIDED FOR
IN THAT CERTAIN STOCK PURCHASE AGREEMENT BETWEEN OBSIDIAN
ENTERPRISES, INC AND XXXXXXX X. XXXXX AND XXXX X. XXXX, DATED
APRIL 27TH 2004, REGARDING THE PURCHASE OF THE CAPITAL STOCK OF
CAPITAL MANUFACTURING, INC.
8. Closing Conditions.
8.1 Conditions to Obligations of Each Party. The obligation of each
party to consummate the transactions contemplated by this Agreement shall
be subject to the satisfaction at or prior to any Closing of the following
conditions:
(a) Governmental approvals. All authorizations, consents, permits
and approvals of all federal, state and local governmental agencies
and authorities required to be obtained in order to permit
consummation of the transactions contemplated by this Agreement shall
have been obtained.
(b) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint
or prohibition preventing the consummation of the transactions
contemplated by this Agreement shall be in effect, nor shall any
proceeding brought by an administration agency or commission or other
governmental authority or instrumentality, domestic or foreign,
seeking any of the foregoing be pending; nor shall there be any action
taken, or any statute, rule, regulation or other enacted, entered,
enforced or deemed applicable to the transactions contemplated by this
Agreement that makes the consummation of such transactions illegal.
3
9. No Assignment of Rights. Wolf may not assign his rights under this
Agreement.
10. Automatic Termination. This Put Option shall terminate without notice
or any other act on the part of either party if Company's shares have traded at
a closing price of greater than $7.33 per share for any consecutive period of 60
trading days during the period of time commencing on the date there are no
restrictions on Wolf's sale of the Transaction Shares (under applicable
securities laws or otherwise) and ending on the fifth anniversary of this
Agreement.
11. Guarantee. Xxxxxxx X. Xxxxxx, Chairman and CEO of Company shall
personally guarantee the purchase of and payment for, the shares put to the
Company if the Company cannot or will not purchase the shares subject to this
Put Option.
12. Miscellaneous.
11.1 Conflicts: Additional Instruments.
(a) In the event of any conflict between the terms and conditions
of the Stock Purchase Agreement and this Agreement, this Agreement
shall control.
(b) The parties covenant and agree to execute and deliver any
additional instruments or documents necessary to carry out the general
intent of this Agreement.
11.2 Headings. The descriptive headings contained in this Agreement
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.3 Severability. If any term or other provision of this Agreement is
deemed invalid, illegal or incapable of being enforced by any law or public
policy, all other terms and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic and legal substance
of the transactions contemplated hereby are not affected or impeached in
any manner materially adverse to any party.
11.4 Entire Agreement. This Agreement, together with the Exhibit(s)
attached hereto, constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all prior agreements
and undertakings, both written and oral, between Wolf and the Company with
respect to the subject matter hereof.
11.5 Amendment. This Agreement may not be amended or modified except
by an instrument in writing signed by, or on behalf of, duly authorized
representatives of Wolf and the Company.
4
11.6 Notices. All notices, requests or other communications to any of
the parties by another party shall be in writing and shall be deemed duly
received on the earlier of the date the same is delivered in person or by a
nationally recognized overnight courier or actually delivered by the United
States mail, certified or registered, postage prepaid, return receipt
requested or, upon the appropriate media confirmation of receipt, if sent
via facsimile ("Fax") or electronic mail ("e-mail"), as follows:
If to Obsidian Enterprises, Inc.:
Xxxxxxx X. Xxxxxx, President
Obsidian Enterprises, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx XX 00000
Tel: 000.000.0000
Fax: 000.000.0000
If to Wolf:
Xxxx X. Xxxx
----------------------
Xxxxxxx, XX 00000
Tel: _______________
Any party may designate by notice in writing to the other a new
address or fax number to which notices, requests and other communications
hereunder shall be given.
11.7 Applicable Law, Venue. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware
without regard to the conflicts of laws principles thereof.
11.8 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO
A TRIAL BY JURY WITH RESPECT TO ANY ACTIONS OR PROCEEDINGS DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR
THE TRANSACTIONS CONTEMPLATED HEREUNDER.
11.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same
agreement.
11.10 No Waiver. The failure of any party to enforce any provision of
this Agreement shall not constitute a waiver of the right subsequently to
enforce such provision, or any other provision of this Agreement.
11.11 Force Majeure. No party shall be held liable for any failure to
perform any of its obligations under this Agreement for as long as, and to
the extent that such failure is due to an event of force majeure. An event
of force majeure shall include general strikes, lockouts, acts of God, acts
of war, mobilization of troops, fire, extreme weather, flood, or other
natural calamity, embargo, acts of governmental agency, government or any
other laws or regulations.
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11.12 Expenses. Each party shall bear its own expenses incurred in
connection with this Agreement.
11.13 Assignment; Subcontracting; Third party Beneficiaries.
(a) Except as expressly provided for herein, this Agreement may
not be assigned or otherwise transferred by either party, by operation
of law or otherwise, without the express written consent of the other
party.
(b) This Agreement shall be binding upon and inure solely to the
benefit of the parties hereto and, as to Company, its permitted
assigns, subcontractors or transferee, and nothing herein, express or
implied, is intended to or shall confer upon any other person,
including, without limitation, any union or any employee or former
employee of any party, any legal or equitable right, benefit or remedy
of any nature whatsoever, including, without limitation, any rights of
employment for any specified period, under or by reason of this
Agreement.
11.14 General and Number. Unless the context otherwise requires, when
used herein, the singular includes the plural, and vice versa, and the
masculine includes the feminine and neuter, and vice versa.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate originals by their duly authorized officers or representatives.
Obsidian Enterprises, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxx, Chairman and CEO
/s/ Xxxx X. Xxxx
--------------------------------------
Xxxx X. Xxxx
As to Guarantee Only:
/s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxx
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EXHIBIT A
PUT OPTION EXERCISE FORM
(To be signed only upon exercise of Put Option)
The undersigned, the holder of the Put Option created in that certain Put
Option Agreement, dated February ___, 2004, by and between Obsidian Enterprises,
Inc. and Xxxx X. Xxxx, hereby irrevocably elects to exercise his rights to put
______________ of the Transaction Shares, as defined in said Put Option
Agreement, at a sale and purchase price of $6.5970 per share and hereby tenders
the certificate representing such shares duly executed in blank for transfer.
The Purchase Price for such tendered shares and a certificate for any remaining
shares, if applicable, shall be delivered to me at the following address:
Xxxx X. Xxxx
---------------------------
---------------------------
---------------------------
Dated: __________________
----------------------------------
Xxxx X. Xxxx
AGREEMENT REGARDING RESTRICTIONS ON
SALE OF SHARES
AGREEMENT made this 27th day of April, 2004 by and among (i) Obsidian
Enterprises, Inc., a Delaware corporation (the "Company"), (ii) Xxxxxxx X. Xxxxx
and Xxxx X. Xxxx, holders of shares of the Company's Common Stock ("Holders")
and (iii) Xxxxxxx X. Xxxxxx ("Durham").
WITNESSETH:
WHEREAS, the Holders have this day acquired as part of the Purchase Price
under that certain Stock Purchase Agreement between the Holders and Classic
Manufacturing Acquisition Corp., a subsidiary of the Company, and the Holders
currently own, collectively, 170,451 shares of the Common Stock, par value $.001
per share (the "Common Stock"), of the Company;
WHEREAS, The Stock Purchase Agreement provided that the Common Stock was to
be held by Holders subject to certain restrictions on transfer, which
restrictions are set out herein;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company, the Holders and Durham agree as follows:
1. Prohibited Transfers. In addition to any other restrictions that apply
to the Company's shares by law, rule or otherwise, the Holders shall not sell,
assign, transfer, pledge, hypothecate, mortgage or dispose of, by gift or
otherwise, or in any way encumber ("Transfer"), all or any part of the Common
Stock owned by them except in compliance with the terms of this Agreement. The
Company shall not transfer on its books any shares of its capital stock which
are subject to this Agreement unless the provisions hereof have been complied
with in full. Any purported Transfer of Stock without full compliance with the
provisions of this Agreement shall be null and void.
2. Right of First Refusal. If at any time within 5 years from the date
hereof, any Holder (the "Selling Holder") wishes to sell, assign, transfer or
otherwise dispose of any or all Common Stock owned by him (the "Subject
Shares"), he shall submit a written offer to sell such Subject Shares to Company
and to Durham (the "Offer"). The Offer shall be delivered via fax, hand delivery
or overnight courier, to Company and Durham. Company shall have until 5:00 P.M.
of the third business day following receipt of such notice to advise the Selling
Holder in writing, that it elects to purchase such Transaction Shares at the
price at which Company's shares closed on the public market on the date of such
Offer. If Company does not elect to purchase all of the offered Subject Shares,
Durham shall have until 5:00 P.M. of the fifth business day following receipt of
the Offer to notify the Selling Holder, in writing, of his election to purchase
such Subject Shares at the same price. If either Company or Durham, or both,
elect to purchase all or any part of the Subject Shares, they shall pay the full
purchase price to Seller(s) within 30 days of giving notice of their election to
purchase. In the event that Company and Durham do not give notice of their
intention to purchase any part of the offered Subject Shares, then those
remaining shares may be immediately sold by the Selling Holder in the public or
private market place, as the case may be, however, the Put Option that the
Company Stock now is enhanced by shall not be assignable by the Selling Holder
to any successor holders.
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3. Permitted Transfers.
(i) Anything herein to the contrary notwithstanding, the provisions of
Sections 1 and 2 shall not apply to: (a) any transfer of Subject Shares by
Holder by gift or bequest or through inheritance to, or for the benefit of,
any member or members of his or her immediate family (which shall include
any spouse, lineal ancestor or descendant) or to a trust, partnership or
limited liability company for the benefit of such members; or (b) any
transfer of Subject Shares by a Holder to a trust in respect of which he or
she serves as trustee, provided that the trust instrument governing said
trust shall provide that such Holder, as trustee, shall retain sole and
exclusive control over the voting and disposition of said Subject Shares
until the termination of this Agreement.
(ii) In the event of any such transfer, the transferee of the Subject
Shares shall hold the Subject Shares so acquired with all the rights
conferred by, and subject to all the restrictions imposed by this
Agreement, and as a condition to such transfer, each such transferee shall
execute and deliver an Instrument of Accession in the form of Schedule I
agreeing to be bound by the provisions of this Agreement.
4. Specific Performance. The rights of the parties under this Agreement are
unique and, accordingly, the parties shall, in addition to such other remedies
as may be available to any of them at law or in equity, have the right to
enforce their rights hereunder by actions for specific performance to the extent
permitted by law.
5. Legend. The certificates representing the shares of Common Stock held by
the Holders hereto shall bear on their face a legend indicating the existence of
the restrictions imposed hereby.
6. Amendments. Except as otherwise expressly provided herein, this
Agreement may not be amended except by an instrument in writing executed by (i)
the Company, (ii) Holders and (iii) Durham.
7. Assignment; Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective heirs,
executors, legal representatives, successors and permitted transferees, except
as may be expressly provided otherwise herein.
8. Severability. In case any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement and such invalid, illegal
and unenforceable provision shall be reformed and construed so that it will be
valid, legal, and enforceable to the maximum extent permitted by law.
9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10. Section Headings. The headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
11. Governing Law. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Delaware, without
regard to its principles of conflicts of laws.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.
Obsidian Enterprises, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxx, CEO
/s/ Xxxxxxx X. Xxxxx
------------------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxx X. Xxxx
------------------------------------------
Xxxx X. Xxxx
/s/ Xxxxxxx X. Xxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxx
3
SCHEDULE I
OBSIDIAN ENTERPRISES, INC.
INSTRUMENT OF ACCESSION
The undersigned,__________________________________________, as a condition
precedent to becoming the owner or holder of record of (______) shares of the
stock, par value $.001 per share, of Obsidian Enterprises, Inc., a Delaware
corporation (the "Company"), hereby agrees to become a Holder under that certain
Stockholders Agreement dated as of April ___, 2004 by and among the Company and
other stockholders of the Company. This Instrument of Accession shall take
effect and shall become an integral part of, and the undersigned shall become a
party to and bound by, said Stockholders Agreement immediately upon execution
and delivery to the Company of this Instrument.
IN WITNESS WHEREOF, this INSTRUMENT OF ACCESSION has been duly executed by
or on behalf of the undersigned as of the date below written.
Date: ____________________________________
Signature: ____________________________________
Printed: ______________________________________
Address: _______________________________________
_______________________________________
_______________________________________
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