STOCK PURCHASE AGREEMENT
Exhibit
2.3
THIS
STOCK PURCHASE AGREEMENT (the “Agreement”)
dated
effective as of October 15, 2008 (the “Effective
Date”),
is by
and among Western Capital Resources, Inc., a Minnesota corporation (the
“Buyer”),
PQH
Wireless, Inc., a Nebraska corporation (the “Company”),
Xxxx
Xxxxxxx (“Xxxxxxx”),
Xxxxxxx Xxxxx (“Xxxxx”),
and
Xxxx Xxxxxxxx (“Xxxxxxxx,”
and
collectively with Houlton and Xxxxx, the “Stockholders,”
and
each individually a “Stockholder”).
INTRODUCTION
A. The
Company conducts the business of owning and operating nine (9) stores at the
locations identified on Exhibit
A
as an
authorized seller of Cricket cellular phones (the “Business”).
B. The
Stockholders collectively own, beneficially and of record, all of the issued
and
outstanding shares of capital stock of the Company (collectively, the
“Stock”).
C. The
Stockholders desire to sell the Stock to Buyer, and Buyer desires to purchase
the Stock from the Stockholders, on the terms and conditions set forth in this
Agreement.
AGREEMENT
NOW,
THEREFORE, in consideration of the foregoing facts and premises, the covenants
and agreements contained herein, and for other good and valuable consideration
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as follows:
Article
1
Purchase
and Sale of Stock; Purchase Price
1.1 Purchase
and Sale.
Subject
to the terms and conditions of this Agreement and in reliance upon the
representations and warranties contained in this Agreement, the Stockholders
hereby sell to Buyer, and Buyer hereby purchases the Stock from the
Stockholders.
1.2 Purchase
Price.
The
aggregate purchase price to be paid by the Buyer to the Stockholders in full
consideration for the Stock is $3,035,000.00 (the “Purchase
Price”).
The
Purchase Price shall be paid by the Buyer to the Stockholders, on the Effective
Date, as follows:
(a) $535,000.00
in cash to Xxxxx by wire transfer, which the wire transfer instructions having
been provided to Buyer prior to the Effective Date;
(b) $500,000.00
in the form of a promissory note to Xxxxx, with interest accruing on the
outstanding principal at the rate of 7% per annum;
(c) $1,000,000
in the form of a promissory note to Houlton, with interest accruing on the
outstanding principal at the rate of 10% per annum; and
(d) $1,000,000
in the form of a promissory note to Xxxxxxxx, with interest accruing on the
outstanding principal at the rate of 10% per annum.
A
form of
the promissory notes deliverable in satisfaction of the Purchase Price on the
Effective Date (collectively, the “Notes”)
is
attached hereto as Exhibit
B.
1.3 Security
Interest.
As
security for the performance of Buyer’s obligation under the Notes, the Company
shall grant the Stockholders a security interest in the assets now owned and
hereafter acquired by the Company at the locations identified on Exhibit
A
attached
hereto, by executing and delivering to each of the Stockholders on the Effective
Date a Security Agreement in the form of Exhibit
C
attached
hereto.
Article
2
Representations
and Warranties of Stockholders
To
induce
the Buyer to enter into this Agreement and purchase the Stock, each Stockholder
hereby jointly and severally represents and warrants to the Buyer as set forth
in this Article.
2.1 Organization.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nebraska, and has the requisite corporate power
and authority to own its properties and to carry on the Business in all material
respects as it is now being conducted.
2.2 Authorization.
This
Agreement has been duly authorized by all necessary corporate action on behalf
of the Company and has been duly executed and delivered by authorized officers
of the Company. This Agreement is a valid and binding agreement on the part
of
the Company and is enforceable against the Company in accordance with its terms.
Each Stockholder has full power and authority to enter into and to perform
the
transactions contemplated by this Agreement, and this Agreement is valid and
binding against each Stockholder in accordance with its terms.
2.3 Title
to Stock.
Each
Stockholder is the record and beneficial owner of the Stock to be conveyed
by
such Stockholder under this Agreement, free and clear of all liens and
encumbrances. Upon the delivery to the Buyer of a duly executed stock power
and
stock certificate pursuant to Section 6.1, the Buyer will own good and
marketable title to such Stock free and clear of all liens and encumbrances
of
any kind.
2.4 Capitalization.
The
Stock conveyed pursuant to this Agreement represents the entire equity ownership
interest outstanding of and in the Company. No Person (as defined below) has
any
claims or right to any option, call, warrant, put, contract, commitment,
subscription, purchase preemptive or other right of any kind relating to any
of
the authorized or issued shares of capital stock of the Company. Each
Stockholder understands, acknowledges and agrees that, after the consummation
of
the transactions contemplated by this Agreement, it shall no longer be a
stockholder of the Company, and shall no longer have any right to control or
participate in the management and affairs of, or receive any economic benefit
(other than the purchase price) from, the Company.
2.5 Non-Contravention.
The
execution, delivery and performance by the Stockholders and the Company of
this
Agreement and the consummation of the transactions contemplated hereby by the
Stockholders and the Company do not and will not (i) violate the charter or
other organizational or governing documents of the Company, (ii) violate any
law
applicable to the Stockholders or the Company, (iii) require any consent or
other action by any Person (as defined below) under, constitute a default under,
or give rise to any right of termination, cancellation or acceleration of any
right or obligation of any Stockholder or the Company or to a loss of any
benefit to which any Stockholder or the Company is entitled under any provision
of any agreement or other instrument or (iv) result in the creation or
imposition of any lien or encumbrance on any asset of the
Company.
2.6 Litigation.
There
are no legal actions, suits, arbitrations or other legal, administrative or
governmental proceedings or investigations pending or, to the knowledge of
the
Stockholders or the Company, threatened against a Stockholder or the Company,
its properties, assets or business (if any), and the Stockholders and the
Company are not aware of any facts which are likely to result in or form the
basis for any such action, suit or other proceeding. None of the Stockholders
nor the Company is in default with respect to any judgment, order or decree
of
any court or any governmental agency or instrumentality binding upon any
Stockholder or the Company.
2.7 Other.
The
Company has timely filed (or has had timely filed on its behalf) all required
tax returns and has timely paid all associated taxes prior to the Effective
Date. The Company owns good and marketable title to all of the assets purported
to be owned by the Company on the Effective Date, free and clear of all liens
and encumbrances.
Article
3
Representations
and Warranties of the Buyer
The
Buyer
hereby represents and warrants to the Stockholders as follows:
3.1 Buyer
Organization.
The
Buyer is duly organized, validly existing and in good standing under the laws
of
the jurisdiction of its incorporation, and has the requisite power and authority
to own its properties and to carry on its business in all material respects
as
it is now being conducted.
3.2 Authority;
Binding Effect.
The
Buyer has full power and authority to enter into and to perform the transactions
contemplated by this Agreement in accordance with its terms, and this Agreement
is valid and binding against the Buyer in accordance with its
terms.
3.3 Non-Contravention.
Neither
the execution nor delivery of, nor the performance of or compliance with, this
Agreement nor the consummation of the transactions contemplated hereby will,
with or without the giving of notice or passage of time, result in any breach
of, or constitute a default under the articles of incorporation or bylaws of
the
Buyer. The Buyer is not subject to any restriction which would prohibit it
from
entering into or performing its obligations under this Agreement.
Article
4
Covenants
4.1 Non-Competition
Restrictions.
(a) During
the Restricted Period, but subject to paragraph (e) below, each Stockholder
(except if Buyer is in default of its obligations under the Note delivered
to
such Stockholder) hereby agrees that he shall not, without Buyer’s prior written
consent (which may be withheld with or without reason), directly or indirectly,
for itself, together with, or on behalf of any other any other person, firm
or
corporation, entity or association (collectively, any “Person”),
engage or be interested in, directly or indirectly, a Restricted Business,
as a
partner, investor, stockholder, principal, agent, officer, director, manager,
governor, employee, consultant, technical advisor, lender, trustee, beneficiary
or otherwise, anywhere within the Restricted Territory.
(b) From
and
after the Effective Date, each Stockholder hereby agrees that it shall not
disclose any confidential information to any Person (except Buyer), which
confidential information relates to the Company or the Company’s former conduct
of the Business.
(c) Each
Stockholder hereby agrees that during the Restricted Period he shall not,
without Buyer’s prior written consent (which may be withheld with or without
reason), directly or indirectly, acting alone or together with or on behalf
of
or through any other Person (i) hire as employee, consultant or other
independent contractor, (ii) enter into any other business relationship
(including without limitation as partners, joint venturers, guarantors, business
associates, investors, financiers, owners of a corporation or other business
organization, entity, enterprise or other Person) with or (iii) request, induce,
advise or encourage a termination of employment by, any employee of the Company
who, as of the Effective Date, continues as an employee of the
Company.
(d) Because
the breach or anticipated breach of the restrictive covenants set forth in
this
Section 4.1 could result in immediate and irreparable harm and injury to Buyer,
for which it will not have an adequate remedy at law, each Stockholder hereby
agrees that Buyer shall be entitled to relief in equity to enjoin temporarily
and/or permanently such breach or anticipated breach and to seek any and all
other legal and equitable remedies to which Buyer may be entitled. In the event
that the foregoing restrictive covenants are considered by a court of competent
jurisdiction or arbitrator to be excessive in duration or scope, such covenants
shall be considered modified and valid for such duration and for such business
and area as such court or arbitrator may determine reasonable under the
circumstances.
(e) The
restriction set forth in paragraph (a) above shall not apply to a Stockholder,
but only with respect to a particular opportunity to engage or be interested
in
a Restricted Business, in the event that: (i) such Stockholder presents, in
writing, such opportunity to the Buyer and (ii) the Buyer (by decision of its
Chief Executive Officer or Board of Directors) determines, within 90 days of
written notification from the Stockholder, not to pursue that opportunity and
notifies the Stockholder in writing of such determination.
4.2 Certain
Definitions.
As used
in Section 4.1 above, the following terms shall have the following
meanings:
(a) “Buyer”
shall
be deemed to include any and all subsidiaries and affiliates of
Buyer.
(b) “Restricted
Business”
means
any business activities competitive with the Business as presently conducted
by
the Company or presently planned to be conducted.
(c) “Restricted
Period”
means
the period commencing on the Effective Date and ending on the third anniversary
of the Effective Date; provided,
however,
that if
a Stockholder violates the covenant not to compete, the Restricted Period shall
be extended, with respect to that particular Stockholder, for an added period
equal to the duration of the period of such violation.
(d) “Restricted
Territory”
means
the United States of America.
(e) The
term
“engage
or be interested, directly or indirectly”
shall
include, without limitation, giving advice or technical or financial assistance
by loan, guarantee, stock transactions or in any other manner to any Person
engaging or about to engage in the Restricted Business within the Restricted
Territory, but shall not by itself include ownership by a Stockholder of one
percent or less of the outstanding stock of any corporation the shares of which
are traded on a national securities exchange or automated quotation
system.
4.3 Subordination
Agreement.
If
requested by Buyer, each of the Stockholders will execute and deliver
subordination agreements for the benefit of third-party lenders of Buyer with
respect to the Stockholders’ rights under the Notes and Security Agreements;
provided,
however,
such
subordination agreements shall be reasonably acceptable to the Stockholders.
Article
5
Indemnification
of Buyer
Each
of
the Stockholders, jointly and severally, covenant and agree with Buyer that
the
Stockholders will pay and perform, and shall indemnify Buyer and the Company,
and hold them harmless from, against and in respect of, both prior to and after
the Effective Date, any and all costs, losses, claims, liabilities, fines,
penalties, damages and expenses (including interest which may be imposed in
connection therewith and court costs and reasonable fees and disbursements
of
counsel) (collectively, “Indemnified
Liabilities”)
resulting from, arising out of or incurred by either of them in connection
with:
(a) the operation of the Business or the ownership of the Stock prior to the
Effective Date, whether known or unknown; or (b) any breach of a representation,
warranty, agreement, covenant or obligation of the Stockholders in or under
this
Agreement.
Article
6
Additional
Documents
The
parties acknowledge that they are delivering among themselves, in addition
to
those other deliveries set forth elsewhere in this Agreement, the following
documents ancillary hereto and the transactions contemplated
hereby:
6.1 From
the Stockholders.
On the
Effective Date, the Stockholders shall deliver to the Buyer: (a) stock
certificates representing all of the Stock, if any, duly endorsed in blank
or
accompanied by stock transfer powers with all requisite transfer-tax stamps
attached; (b) a signed Consent and Estoppel certificate, in such final form
as
is acceptable to Buyer, for each lease being assumed hereunder by the Buyer;
and
(c) any other agreements and documents necessary or reasonably requested by
the
Buyer in connection herewith.
6.2 From
the Buyer.
On the
Effective Date, the Buyer shall deliver to the Stockholders (a) certified
resolutions of the Buyer’s board of directors authorizing the execution and
delivery of this Agreement and the consummation of the transactions contemplated
herein; (b) the Purchase Price as described in Section 1.2(a); (c) the
promissory notes as described in Sections 1.2(b), (c) and (d); and (d) any
other
agreements and documents necessary or reasonably requested by the Stockholders
in connection herewith.
6.3 Further
Assurances.
At any
time after the Effective Date, each of the parties shall do all such acts and
things and shall execute and deliver, or cause to be executed and delivered,
all
such documents, instruments and agreements as may be reasonably necessary or
desirable to give effect to the provisions of and intent of this
Agreement.
Article
7
General
Provisions
7.1 Entire
Agreement.
This
Agreement constitutes all of the terms agreed upon by the parties with respect
to the subject matter herein and may not be changed or terminated orally. No
attempted change, termination or waiver of any provisions herein shall be
binding unless reduced to writing and executed and delivered by the party
against whom the same is sought to be enforced.
7.2 Survival.
The
representations, warranties, covenants and agreements of parties to this
Agreement will survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, regardless of any
investigation that may have been made at any time by or on behalf of the party
to which such representations, warranties, covenants and agreements are made,
for a period of two years after the Effective Date.
7.3 Benefit
and Assignment.
This
Agreement shall bind and, except as otherwise stated herein, shall inure to
the
benefit of the parties and their legal representatives, and their permitted
successors, assigns and heirs, as the case may be. No party may assign all
or
any part of this Agreement without the prior written consent of the
others.
7.4 No
Third-Party Beneficiary.
Except
as otherwise expressly stated herein, this Agreement is made solely and
specifically among and for the benefit of the parties hereto and their
respective permitted successors and assigns, and no other person or entity
will
have any rights, interest or claims hereunder or be entitled to any benefits
under or on account of this Agreement as a third-party beneficiary or
otherwise.
7.5 Governing
Law; Venue.
This
Agreement shall be governed by, interpreted and enforced according to the laws
of the State of Nebraska without regard to its conflicts-of-law provisions.
The
venue for any legal action brought in connection with this Agreement shall
be in
the State of Nebraska, whether or not such venue is or subsequently becomes
inconvenient, and the parties hereby consent to the jurisdiction of the courts
of the State of Nebraska, County of Xxxxxxx, and the U.S. District Court,
District of Nebraska.
7.6 Consent
and Waiver.
No
consent under and no waiver of any right under any provision of this Agreement
on any one occasion shall constitute a consent under or waiver of any other
provision on such occasion or on any other occasion; nor shall it constitute
a
consent under or waiver of the consented-to or waived provision on any other
occasion. Moreover, no consent or waiver shall be enforceable unless it is
in
writing and signed by the party against whom such consent or waiver is sought
to
be enforced.
7.7 Severability.
If any
provision of this Agreement is held to be unlawful or unenforceable in any
respect by a court of competent jurisdiction, such provision shall be severed
and shall not affect the validity or enforceability of the remaining provisions.
Further, if any provision of this Agreement is held to be overbroad, such
provision shall be deemed amended in order to narrow its application to the
extent necessary to render the provision enforceable under applicable
law.
7.9 Counterparts;
Delivery.
This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. Furthermore, signatures delivered by facsimile and other electronic
means of transmission shall be valid and binding to the same extent as original
signatures.
7.10 Notices.
All
notices and other communications provided for hereunder shall be in writing
and
shall be personally delivered or mailed or sent to each party at its address
set
forth beside its name below or at such other address as may be designated by
such party in written notice to each of the other parties. All such notices
and
communications shall be effective when delivered in person or transmitted by
facsimile, or three business days after dispatch by certified or registered
first class mail, postage prepaid, return receipt requested, to the party to
whom the same is so given or made:
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If to the Stockholders:
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Xxxx Xxxxxxxx
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00000 Xxxxxxxxx Xxxxxx
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Xxxxx, Xxxxxxxx 00000
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Xxxx Xxxxxxx
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00000 Xxxxxxxxx Xxxxxx
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Xxxxx, Xxxxxxxx 00000
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Xxxxxxx X. Xxxxx
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000 X. 000xx Xxxxxx
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Xxxxxxx, Xxxxxxxx 00000
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With a copy to:
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Bradford & Xxxxxx, LLC
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First National Center
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0000 Xxxxx Xxxxxx, Xxxxx 0000
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Xxxxx, Xxxxxxxx 00000-0000
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Fax: (000) 000-0000
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If to the Buyer:
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Western Capital Resources, Inc.
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0000 Xxxx Xxxxxxxx, Xxxxx 0
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Xxxxxxx Xxxxxx, Xxxx 00000
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Attn: Xxxxxxxxxxx Xxxxxx, CEO
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Fax: (000) 000-0000
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With a copy to:
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Xxxxxx Xxxxxxx Xxxxxx & Brand, LLP
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3300 Xxxxx Fargo Center
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00 Xxxxx 0xx Xxxxxx
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Xxxxxxxxxxx, Xxxxxxxxx 00000
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Attn: Xxxx X. Xxxxxxxxxx, Esq.
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Fax: (000) 000-0000
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7.11 Dispute
Resolution.
Any
dispute among the parties hereto arising on or after the Effective Date shall
be
resolved in accordance with the provisions of this Section
7.11:
(a) To
the
greatest extent possible, the parties will endeavor to resolve any disputes
relating to this Agreement through amicable negotiations. Failing an amicable
settlement, any controversy, claim or dispute arising under or relating to
this
Agreement, including the existence, validity, interpretation, performance,
termination or breach of this Agreement, will finally be settled by binding
arbitration before a single arbitrator (the “Arbitration
Tribunal”)
which
will be jointly appointed by the parties. The Arbitration Tribunal shall
self-administer the arbitration proceedings utilizing the Commercial Rules
of
the American Arbitration Association; provided,
however,
the
American Arbitration Association shall not be involved in administration of
the
arbitration. The arbitrator must be a retired judge of a state or federal court
of the United States or a licensed lawyer with at least ten years of corporate
or commercial law experience and have at least an AV rating by Martindale
Xxxxxxx. If the parties cannot agree on an arbitrator, either the Buyer or
a
Stockholder may request the American Arbitration Association to appoint an
arbitrator which appointment will be final.
(b) The
arbitration will be held in Minneapolis, Minnesota. Each party will have
discovery rights as provided by the Federal Rules of Civil Procedure within
the
limits imposed by the arbitrator; provided,
however,
that
all such discovery will be commenced and concluded within 60 days of the
selection of the arbitrator. It is the intent of the parties that any
arbitration will be concluded as quickly as reasonably practicable. Once
commenced, the hearing on the disputed matters will be held four days a week
until concluded, with each hearing date to begin at 9:00 a.m. and to conclude
at
5:00 p.m. The arbitrator will use all reasonable efforts to issue the final
written report containing award or awards within a period of five business
days
after closure of the proceedings. Failure of the arbitrator to meet the time
limits of this Section will not be a basis for challenging the award. The
Arbitration Tribunal will not have the authority to award punitive damages
to
either party. Each party will bear its own expenses, but the parties will share
equally the expenses of the Arbitration Tribunal. The Arbitration Tribunal
shall
award attorneys’ fees and other related costs payable by the losing party to the
successful party as it deems equitable. This Agreement will be enforceable,
and
any arbitration award will be final and non-appealable, and judgment thereon
may
be entered in any court of competent jurisdiction.
IN
WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement
to
be duly executed and delivered to be effective as of the Effective
Date.
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PQH WIRELESS, INC.
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WESTERN CAPITAL RESOURCES, INC.
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a Nebraska corporation
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a Minnesota corporation
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By:
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/s/ Xxxx Xxxxxxxx
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By:
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/s/
Xxxxxxxxxxx Xxxxxx
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XXXX XXXXXXXX
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XXXXXXXXXXX
XXXXXX
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President
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President
and Chief Executive Officer
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/s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx
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/s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
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/s/ Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx
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EXHIBIT
A
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1.
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0000
Xxxxxxxx Xxx., Xxxxxx Xxxx, Xxxxxxxx
00000
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2.
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0000
Xxxxxxxx Xxx., Xxxxxx Xxxx, Xxxxxxxx
00000
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3.
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0000
Xxxxx Xxx., Xxxxxx Xxxx, Xxxxxxxx
00000
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4.
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0000
X. 00xx
Xxxxxx, Xxxxx, Xxxxxxxx 00000
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5.
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0000
Xxxxx Xxxxxx, Xxxxx, Xxxxxxxx 00000
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6.
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000
X. 00xx
Xxxxxx, Xxxxxxx, Xxxxxxxx 00000
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7.
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00000
Xxxxxx Xxxxxx Xx., Xxx Xxxxxxx, Xxxxx
00000
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8.
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0000
Xxxxxxxxxxxxx Xx., Xxx Xxxxxxx, Xxxxx
00000
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9.
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0000
Xxxxxxx Xx., Xxxxx # 00, Xxx Xxxxxxx, Xxxxx
00000
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