STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of February 27, 1998, among SIRCO
INTERNATIONAL CORP., a New York corporation ("Buyer"), and XXXX XXXXXXX, an
individual residing at 000 Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxx 00000
(individually, and as custodian for Xxxxxxxxx X. Xxxxxxx and Xxxxxx Xxxxxxx,
"Xxxxxxx"), TN CAPITAL GROUP INC. ("TN Capital"), a New York corporation with an
office at 0000 Xxxx Xxxx Xxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxxxxxxx 00000, and
XXXXXXX XXXXXXX, an individual residing at 0000 Xxxxxxxxxx Xxxxxx, Xxxxxxx, Xxx
Xxxx 00000 ("Xxxxxxx," and collectively with Xxxxxxx and TN Capital, the
"Sellers").
W I T N E S S E T H:
WHEREAS, Sellers own all the issued and outstanding capital stock of
ESSEX COMMUNICATIONS, INC., a New York corporation (the "Company"); and
WHEREAS, Buyer desires to acquire from Sellers all the issued and
outstanding shares of capital stock, including any and all options, warrants and
distribution entitlements therewith, of the Company (collectively, the "Company
Shares") upon the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
Section 1. Representations and Warranties of Sellers.
Sellers jointly and severally represent and warrant to
Buyer that:
1.1. The Company is a corporation duly organized and
validly existing and in good standing under the laws of the State of New York.
The Company has all necessary power to own all of its properties and assets and
to carry on its business as now being conducted.
1.2. At the date of this Agreement, the Company has an
authorized capitalization consisting of 200 shares of capital stock, no par
value, of which 100 shares are issued and outstanding, and of which none are
held in the treasury of the Company.
1.3. Set forth below is a true and correct list of the
beneficial and record owners of the issued and outstanding Company Shares:
Company
Owner Shares Owned
----- ------------
Xxxx Xxxxxxx 25
Xxxx Xxxxxxx, as custodian for Xxxxxxxxx X. Xxxxxxx 10
Xxxx Xxxxxxx, as custodian for Xxxxxx Xxxxxxx 10
TN Capital 45
Xxxxxxx Xxxxxxx 10
100
Each of the issued and outstanding Company Shares is fully paid and
non-assessable. The Company Shares are owned by the Sellers as the record owners
thereof free and clear of all liens, charges and encumbrances and are not
subject to any restrictions with respect to their transferability. The Company
does not have any outstanding options, warrants or rights to purchase any of its
securities.
1.4. The Company does not own stock in, and does not
control, directly or indirectly, any other corporation, association or business
organization. The Company is not a party to any joint venture or partnership.
1.5. Sellers have heretofore furnished Buyer with complete
copies of the unaudited financial statements of the Company for the period
commencing on the date of incorporation of the Company (December 8, 1997) and
ending February 19, 1998, including a balance sheet at February 19, 1998 and a
statement of operations for the period commencing on December 8, 1997 and ending
February 19, 1998. The balance sheet of the Company at February 19, 1998,
annexed hereto as Exhibit A, is herein referred to as the "Company Balance
Sheet."
All such financial statements have been prepared in
accordance with generally accepted accounting principles consistently followed
throughout the periods indicated, reflect all known liabilities of the Company,
including all known contingent liabilities as of their date, and present fairly
the financial condition of the Company at such date and the results of
operations for the period then ended.
1.6. The Company owns all of the personal property
reflected in the Company Balance Sheet and all personal property acquired by the
Company since the date thereof (except such property as has been disposed of in
the ordinary course of business) free and clear of any liens, claims, charges,
exceptions or encumbrances, except for those, if any, which in the aggregate are
not material and which do not materially affect the continued use of such
property. All machinery, tools, equipment and other tangible assets included in
determining the net worth of the Company in the Company Balance Sheet currently
are used by or useful to the Company in the ordinary course of business and are
in good operating condition and in a state of reasonable maintenance and repair.
1.7. Sellers have delivered to Buyer a true and complete
list as of the date of this Agreement, certified by an officer of the Company,
setting forth:
(a) The name of each director and officer of the
Company and the offices held by each.
(b) The name of each person receiving compensation
from the Company as of January 31, 1998, the amount paid or
payable to each such person for such services, and the basis
therefor.
(c) The name of each bank in which the Company has an
account or safe deposit box, the identifying numbers or
symbols thereof, and the name of each person authorized to
draw thereon or to have access thereto.
(d) The name of each person, if any, holding tax or
other powers of attorney from the Company, and a summary
statement of the terms thereof.
1.8. There is no litigation, governmental investigation or
other proceeding pending or, so far as is known to the Company or its officers,
threatened against or relating to the Company, its properties or business, or
the transactions contemplated by this Agreement and, so far as is known to the
Company or its officers, no basis for any such action exists.
1.9. The Company does not own or have any rights in any
patents, patent applications, trademarks, trade names or copyrights. The Company
is not a licensor in respect of any patents, trademarks, trade names, copyrights
or applications therefor or manufacturing processes, formulas or trade secrets.
The Company does not require any licenses or other rights to use any patents,
trademarks, trade names, copyrights, manufacturing processes, formulas and trade
secrets of any third party necessary to conduct its business as now operated. No
significant claim is pending or, to the knowledge of Sellers or the officers of
the Company, has been made to the effect that the present or past operations of
the Company infringe upon or conflict with the asserted rights of others.
1.10. Sellers have delivered to Buyer true copies of all
material contracts, obligations and commitments of the Company. No material
default or alleged default exists thereunder, and there are no material
agreements of the parties relating to such contracts, obligations and
commitments, which have not been disclosed to Buyer. The Company is not a party
to any written or oral:
(a) Contract not made in the ordinary course of
business other than this Agreement.
(b) Employment contract which is not terminable
without cost or other liability to the Company, or any
successor thereof, upon notice of 30 days or less.
(c) Contract with any labor union.
(d) Bonus, pension, profit sharing, retirement, stock
purchase, hospitalization, insurance or similar plan providing
for employee benefits.
(e) Lease with respect to any property, real or
personal, whether as lessor or lessee.
(f) Contract for the future purchase of materials,
supplies or equipment (i) which is in excess of the current
requirements of the business of Seller now booked or for
normal operating inventories, or (ii) which is not terminable
without cost or liability to the Company, or any successor
thereof, upon notice of 30 days or less.
(g) Contract for the performance of service for or by
the Company which is not terminable without cost or liability
to the Company, or any successor thereof, upon notice of 30
days or less.
(h) Insurance contract.
(i) Contract continuing for a period of more than six
months from its date.
(j) Loan agreement or other contract for money
borrowed.
1.11. The Company has not, since the date of the Company
Balance Sheet:
(a) Incurred any material obligation or liability
(absolute, accrued, contingent or otherwise), except in
connection with the performance of this Agreement.
(b) Discharged or satisfied any lien or encumbrance,
or paid or satisfied any obligation or liability (absolute,
accrued, contingent or otherwise) other than (i) liabilities
shown or reflected on the Company Balance Sheet, or (ii)
liabilities incurred since the date of the Company Balance
Sheet in the ordinary course of business.
(c) Increased or established any reserve for taxes or
any other liability on its books or otherwise provided
therefor, except as may have been required due to income or
operations of the Company since the date of the Company
Balance Sheet.
(d) Mortgaged, pledged or subjected to any lien,
charge or other encumbrance any of its assets, tangible or
intangible.
(e) Sold or transferred any of its assets or canceled
any debts or claims or waived any rights, except in the
ordinary course of business.
(f) Disposed of or permitted to lapse any patents or
trademarks or any patent or trademark applications material to
the operation of its business.
(g) Granted any general or uniform increase in the
rates of pay of employees or any substantial increase in
salary payable or to become payable by it to any officer,
employee, consultant, or agent (other than normal merit
increases), or by means of any bonus or pension plan, contract
or other commitment increased the compensation of any officer,
employee, consultant or agent.
(h) Made any declaration, setting aside or payment to
its shareholders of any dividend or other distribution in
respect of its capital stock, or redeemed or purchased any of
its capital stock, or agreed to take any such action.
(i) Except for this Agreement, entered into any
material transaction other than in the ordinary course of
business.
(j) Issued any stocks, bonds or other corporate
securities.
(k) Experienced damage, destruction or loss (whether
or not covered by insurance) materially and adversely
affecting any of its properties, assets or business, or
experienced any other material adverse change in its financial
condition, assets, liabilities or business.
1.12. The Company has filed all tax returns required to be
filed by it under the laws of the United States, the state of its incorporation
and each state in which it conducts business. The Company has paid or set up an
adequate reserve in respect of all taxes for the periods covered by such
returns. The Company does not have any tax liability for which no tax reserve
has been made in respect of any jurisdiction in which the Company has business
activities. The amounts set up as provisions for taxes in the Company Balance
Sheet are sufficient for all accrued and unpaid federal, state, county and local
taxes, including any interest and penalties in connection therewith, of the
Company, whether or not disputed, for all fiscal periods to the date of the
Company Balance Sheet.
1.13. The Company has no material liabilities of any
character whatsoever, whether or not accrued and whether or not determined or
determinable (including, without limitation, tax liabilities due or to become
due), other than (i) liabilities disclosed in the Company Balance Sheet and (ii)
liabilities, none of which has been materially adverse to the business or assets
of the Company, incurred in the ordinary course of business subsequent to the
date of the Company Balance Sheet.
1.14. The Company is not in violation of, or in default
under, (i) any term or provision of its certificate of incorporation or by-laws;
(ii) any material term or provision or any financial covenants of any indenture,
mortgage, contract, commitment or other agreement or instrument to which it is a
party or by which it or any of its property or business is or may be bound or
affected; or (iii) any existing applicable law rule, regulation, judgment, order
or decree of any governmental agency or court, domestic or foreign, having
jurisdiction over the Company or any of the Company's properties or business.
The Company owns, possesses or has obtained all governmental and other
(including those obtainable from third parties) permits, certifications,
registrations, approvals, consents, orders, licenses, franchises or other
authorizations (collectively, the "Permits") necessary to own or lease, as the
case may be, and to operate its properties, whether tangible or intangible, and
to conduct the business and operations of the Company as presently conducted
and, with respect to the State of New Jersey, as proposed to be conducted, and
all such Permits are outstanding and in good standing, and there are no
proceedings pending or to the best of the Company's knowledge, threatened, or
any basis therefor, seeking to cancel, terminate or limit such Permits.
Section 2. Representations and Warranties by Buyer.
Buyer represents and warrants that:
2.1. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York.
2.2. Buyer has corporate power to execute, deliver and
perform this Agreement, and has taken all action required by law, its
certificate of incorporation, its by-laws or otherwise to authorize the
execution and delivery of this Agreement. The execution and delivery of this
Agreement does not, and the consummation of the purchase contemplated hereby
will not, violate any provision of the certificate of incorporation or by-laws
of Buyer, or any agreement, instrument, order, judgment or decree to which Buyer
is a party or by which it is bound, or violate any of the restrictions of any
kind to which it is subject. Buyer has all necessary power to own all of its
properties and assets and to carry on its business as now being conducted.
2.3. On the Closing Date, Buyer will have a sufficient
number of authorized but unissued and/or treasury shares of Buyer's Stock
available for issuance to Sellers in the amount set forth in Section 3.1. The
shares of Buyer's Stock to be delivered to Sellers pursuant to this Agreement
will, when so delivered, be validly issued and outstanding, fully paid and
non-assessable.
2.4. Buyer had, as of December 31, 1997, an authorized
capitalization of 10,000,000 shares of common stock, $0.10 par value ("Buyer's
Stock"), of which 4,300,400 shares were issued and outstanding, 11,000 shares
were held in treasury and 1,200,000 shares were reserved for issuance under
Buyer's 1995 Stock Option Plan. In addition, the Buyer had, as of December 31,
1997, 1,000,000 shares of authorized but unissued preferred stock.
2.5. Buyer has heretofore furnished Sellers with a copy of
its Annual Report on Form 10-K for the fiscal year ended November 30, 1996,
including a consolidated balance sheet as at the end of such fiscal year and a
statement of income and retained earnings for such year, audited by Xxxxxxxx,
Xxxxx & Xxxxxx, independent accountants retained by Buyer. Buyer has also
furnished Seller with copies of its (i) Quarterly Reports on Form 10-Q for the
quarters ended February 28, 1997, May 30, 1997 and August 31, 1997
(collectively, the "Quarterly Reports on Form 10-Q") and (ii) Current Report on
Form 8-K dated November 6, 1997. The financial statements in said Annual Report
on Form 10-K, together with the notes thereto, have been prepared in accordance
with generally accepted accounting principles consistently followed throughout
the periods indicated, reflect all known liabilities of Buyer, including all
known contingent liabilities as of the end of said fiscal year, and present
fairly the financial condition of Buyer at said date and the consolidated
results of operations for the year then ended. Since the end of its last fiscal
year, there has been no material adverse change in the business or financial
condition of Buyer and its subsidiaries which has not been disclosed in the
Quarterly Reports on Form 10-Q, except for any such changes which may have
occurred in the ordinary course of business as a result of changes in general
economic conditions.
Section 3. Terms of the Exchange of Stock.
The exchange by Sellers of the Company Shares for shares
of Buyer's Stock and the acquisition of the Company Shares by Buyer in exchange
for its shares shall be made on the Closing Date (as defined in Section 4). Such
exchange shall be based on the respective representations, warranties and
agreements of Sellers and Buyer, and shall be subject to the terms and
conditions herein stated.
3.1. (a) Buyer shall, at the Closing Date, transfer and
deliver an aggregate 250,000 shares of Buyer's Stock to the Sellers in exchange
for the transfer and delivery by the Sellers to Buyer of all the issued and
outstanding Company Shares. The 250,000 shares of Buyer's Stock shall be divided
among, and registered in the name of, the Sellers as follows:
Seller Shares Percentage
------ ------ ----------
Xxxx Xxxxxxx 62,500 25%
Xxxx Xxxxxxx, as custodian for Xxxxxxxxx X. Xxxxxxx 25,000 10
Xxxx Xxxxxxx, as custodian for Xxxxxx Xxxxxxx 25,000 10
TN Capital 112,500 45
Xxxxxxx Xxxxxxx 25,000 10
------- ---
Total 250,000 100%
The shares of Buyer's Stock to be so transferred to the Sellers may be treasury
shares, newly issued shares, or any thereof, all in the absolute discretion of
Buyer.
(b) Buyer shall, at the Closing Date, transfer and
deliver to the Sellers three-year Warrants to purchase up to 225,000 shares of
Buyer's Stock at a price per share of $2.75, of which Warrants to purchase
75,000 shares shall vest and become exercisable immediately (the "Vested
Warrants"). Of the remaining 150,000 warrants to purchase such shares of Buyer's
Stock (the "Remaining Warrants"), 75,000 shall vest and become exercisable only
at such time as the Company has at least 7,500 local telephone lines in service
(exclusive of lines acquired from third parties after the Closing Date) and
75,000 shall vest and become exercisable only at such time as the Company has at
least 12,500 local telephone lines in service (exclusive of acquired lines). The
Vested Warrants shall be divided among, and registered in the name of, the
Sellers as follows:
Seller Warrants
------ --------
Xxxx Xxxxxxx 12,500
TN Capital 12,500
Xxxxxxx Xxxxxxx 50,000
------
Total 75,000
The Remaining Warrants shall be divided among, and registered in the name of,
the Sellers in the same proportion as the shares of Buyer's Stock delivered
pursuant to Section 3.1(a).
(c) Buyer shall issue to the Sellers additional
shares of Buyer's Stock upon the Company obtaining the following performance
objectives over the 18-month period following the Closing Date (as defined
below):
Business Development: 25,000 shares for Xxxx Atlantic
contract
25,000 shares for an Interexchange
carrier agreement
25,000 shares for SNET contract
25,000 shares for N.Y. PSC approval
25,000 shares for CT PSC approval
Aggregate No.
of Growth Lines* Shares
2,000 100,000
4,000 100,000
6,000 100,000
8,000 100,000
10,000 100,000
12,000 100,000
---------------
* Exclusive of lines acquired from third parties after the Closing Date.
Such additional shares of Buyer's Stock shall be divided among, and registered
in the name of, the Sellers in the same proportion as the shares of Buyer's
Stock delivered pursuant to Section 3.1(a):
3.2. If any Seller shall fail or refuse to deliver to
Buyer on the Closing Date any Company Shares to be sold, transferred and
delivered by such Seller hereunder, such failure or refusal shall not relieve
any other Seller of any obligation under this Agreement, and Buyer, at its
option, and without prejudice to its rights against such defaulting Seller, may
either acquire the remaining Company Shares which it is entitled to purchase
hereunder, or refuse to do so and thereby terminate all its obligations
hereunder.
3.3. Buyer Stock issued pursuant to this Agreement shall
be restricted shares that will contain the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR IN ACCORDANCE WITH AN EXEMPTION FROM REGISTRATION UNDER THAT ACT.
3.4. Each of the Sellers and the Buyer shall be liable for
or required to pay their own costs fees or expenses including:
(a) Fees and expenses of any person for financial
services or services as a finder rendered in connection with
the sale contemplated by this Agreement.
(b) Fees and expenses of legal counsel and
accountants for services rendered in connection with the sale
contemplated by this Agreement, including expenses of in
connection with the preparation and examination of financial
data.
(c) Documentary stamp taxes or other similar charges
incurred by the transfer of the Company Shares to Buyer.
Section 4. Closing.
The Closing of the transactions contemplated hereby shall
be held at the offices of Pryor, Cashman, Xxxxxxx & Xxxxx, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, or at such other place as the parties may agree upon, at
ten o'clock a.m., New York City Time on February 27, 1998, or at such later time
and date as may be mutually approved by the parties. The time and date of
Closing is herein called the "Closing Date."
Section 5. Access to Information and Documents.
Sellers will, or will cause the Company to, give to Buyer
and its counsel, accountants, and other representatives full access during
normal business hours to all the properties, documents, contracts and records of
the Company and furnish Buyer with copies of such documents (certified if so
requested) and with such information with respect to the affairs of the Company
as Buyer may from time to time reasonably request. Up to the Closing Date (and,
in the event of a termination of this Agreement, at all times thereafter), Buyer
will not disclose or use any confidential information of or with respect to the
Company which Buyer obtained from or through Sellers at any time or in any
manner during negotiations preceding the execution of this Agreement or after
its execution, and if the Closing is not consummated and this Agreement
terminates, Buyer agrees promptly to return all documents, contracts, records or
properties of the Company, and all copies thereof furnished pursuant to this
Section, or otherwise.
Section 6. Covenants of Sellers.
6.1. Prior to the Closing Date, Sellers will not incur any
lien, charge or encumbrance on any Company Shares owned by Sellers, other than
as provided in this Agreement.
6.2. Sellers will use their best efforts to preserve the
business organization of the Company intact, to keep available to Buyer and the
Company the services of the present officers and employees of the Company, and
to preserve for Buyer and the Company the good will of the suppliers, customers
and others having business relations with the Company.
6.3. Prior to the Closing Date, Sellers will not, without
first obtaining the written consent of Buyer, permit the Company to:
(a) Encumber any asset or enter into any transaction
or make any contract or commitment relating to its properties,
assets and business otherwise than in the ordinary course of
business.
(b) Enter into any employment contract which is not
terminable upon notice of 30 days or less at will without
penalty to the Company.
(c) Enter into any contract or agreement which cannot
be performed within three months or less.
(d) Reclassify or change in any manner its
outstanding shares of capital stock or issue or sell any
shares of capital stock or other securities of the Company.
(e) Make any payment or distribution to the trustee
under any bonus, pension, profit sharing or retirement plan or
incur any obligation to make any such payment or contribution
which is not in accordance with the Company's usual past
practice, or make any payment or contribution or incur any
obligation pursuant to or in respect of any other plan or
contract or arrangement providing for bonuses, executive
incentive compensation, pensions, deferred compensation,
retirement payments, profit sharing or the like.
(f) Extend credit to any customer who became such on
or after the date of this Agreement.
(g) Guarantee the obligation of any person, firm or
corporation, except by the endorsement of negotiable
instruments for deposit or collection in the ordinary course
of business.
(h) Take any action of the character described in
Sections 1.11(a) to 1.11(k), inclusive.
6.4. Sellers will jointly and severally cooperate with
Buyer in delivering to Buyer all records, formulas, know-how, technical data,
secrets and other methods and processes used by the Company in its business, and
will cooperate with Buyer in connection therewith after the Closing Date in such
manner as may reasonably be required by Buyer.
Section 7. Covenants of Buyer.
If, prior to the Closing Date, Buyer shall pay a stock
dividend upon, or subdivide, split up, reclassify or combine its shares of
Common Stock, $0.10 par value, at the Closing Date Sellers shall be entitled to
receive, and Buyer shall deliver to Sellers, respectively, in lieu of the shares
of Buyer's Stock specified in Section 3.1, such number of shares of stock of
Buyer as Sellers would own or be entitled to receive if the Closing Date had
occurred immediately prior to the occurrence of such event and Sellers had at
all times thereafter retained the shares of Buyer's Stock which they would have
received at the Closing Date in accordance with the provisions of Section 3.1
and/or any shares thereafter issued in respect thereof by reason of any
subsequent event of the character specified above. All adjustments pursuant to
the provisions of this Section 7.1 shall be made to the nearest whole share, and
Buyer shall not be required to issue any fractional shares.
Section 8. Termination of Agreement.
8.1. This Agreement and the transactions contemplated
hereby may be terminated or abandoned at any time prior to the Closing Date:
(a) By mutual consent of the Sellers and Buyer;
(b) By Buyer, if there has been a material
misrepresentation in this Agreement by any Seller, or a material breach
by any Seller of any of the warranties or covenants of Sellers set
forth herein, or a failure of any condition to which the obligations of
Buyer are subject;
(c) By Sellers, if there has been a material
misrepresentation in this Agreement by Buyer, or a material breach by
Buyer of any of the warranties or covenants of Buyer set forth herein,
or a failure of any condition to which the obligations of Sellers are
subject; or
(d) By Sellers or Buyer if the Closing Date shall not have
occurred on or prior to February 28, 1998 for any reason other than the
failure of the party seeking to terminate this Agreement to perform its
obligations hereunder.
8.2. In the event of any termination of this Agreement
pursuant to Sections 8.1(a) or 8.1(d), neither party shall have any further
obligation to the other except as set forth in Sections 3.4 and 5.
Section 9. Conditions to Closing - Buyer.
The obligation of Buyer to exchange Buyer's Stock for
Company Shares, pursuant to this Agreement, shall be subject to the
satisfaction, at or prior to the Closing Date, of the following conditions (any
of which may be waived by Buyer):
9.1. Each of the agreements of the Sellers to be performed
at or prior to the Closing Date pursuant to the terms hereof shall have been
duly performed.
9.2. Sellers shall have furnished Buyer with copies of the
following documents relating to the Company:
(a) The certificate of incorporation and all
amendments thereto of the Company, duly certified by the
appropriate official of the jurisdiction in which the Company
is incorporated.
(b) Certificates, executed by the proper official of
each jurisdiction, as to the good standing and qualification
to do business of the Company in the jurisdiction of its
incorporation and in each other jurisdiction in which it is
required to qualify to do business as a foreign corporation.
(c) By-laws of the Company, duly certified by its
Secretary.
(d) A list of shareholders of the Company as of
immediately prior to the Closing Date, duly certified by
its Secretary.
(e) Resignations, effective the Closing Date, of all
officers and directors of the Company.
9.3. Sellers shall have furnished Buyer with a favorable
opinion, dated the Closing Date, of Xxxxxxxxx Xxxxxxx, P.C., counsel for the
Company and the Sellers, in form and substance satisfactory to Buyer and its
counsel, to the effect that:
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of
the State of New York.
(b) The Company has power to own all of its
properties and assets and to carry on its business as it
is being conducted at the date of this Agreement and at
the Closing Date.
(c) The execution and delivery of this Agreement did
not, and the consummation of the transactions contemplated
hereby will not, violate the certificate of incorporation
or by-laws of the Company or the provisions of any
mortgage, lien, lease, agreement, instrument, order,
arbitration award, judgment or decree of which such
counsel has knowledge, to which the Company or any of the
Sellers is a party or by which it or any of them is bound,
or violate any other restriction of any kind or character
to which the Company or any of the Sellers is subject of
which such counsel has knowledge.
(d) The Company has an authorized capitalization
consisting of 200 shares of capital stock, no par value,
of which 100 shares are issued and outstanding, and none
of which are held in the treasury of the Company.
(e) The Company has good and marketable title to all
its properties and assets, including those reflected in
the Company Balance Sheet (except as since sold or
otherwise disposed of in the ordinary course of business),
subject to no mortgage, pledge, lien, conditional sale
agreement, encumbrance or charge, except as shown on the
Company Balance Sheet as securing specified liabilities
(with respect to which no default exists) and (ii) except
for minor imperfections of title and encumbrances, if any,
which are not substantial in amount, do not materially
detract from the value of the property subject thereto, or
materially impair the operations of the Company, and which
have arisen only in the ordinary course of business.
(f) Such counsel has no knowledge of, and does not
have any reasonable grounds to know of, any litigation,
proceeding or governmental investigation pending or
threatened against or relating to the Company, its
properties or business, or the transactions contemplated
by this Agreement or any legal impediment to the continued
operation and use by the Company in the ordinary course of
business of its properties and assets.
(g) The Company Shares being sold by the Sellers
herein constitute all the duly issued and outstanding
shares of capital stock of the Company, and all such
shares are fully paid and nonassessable.
(h) Each of the Sellers has full power and authority
to sell, assign and transfer his Company Shares to Buyer
as provided in this Agreement, and good and marketable
title to all such Company Shares, free and clear of all
liens, charges and encumbrances, has been passed to Buyer
hereunder.
(i) This Agreement has been duly executed and
delivered by the Sellers and constitutes the legal, valid
and binding obligation of the Sellers, enforceable in
accordance with its terms.
(j) The Company is not in violation of, or in default
under, (i) any term or provision of its certificate of
incorporation or by-laws; (ii) any material term or
provision or any financial covenants of any indenture,
mortgage, contract, commitment or other agreement or
instrument to which it is a party or by which it or any of
its property or business is or may be bound or affected;
or (iii) any existing applicable law rule, regulation,
judgment, order or decree of any governmental agency or
court, domestic or foreign, having jurisdiction over the
Company or any of the Company's properties or business.
The Company owns, possesses or has obtained all
governmental and other (including those obtainable from
third parties) permits, certifications, registrations,
approvals, consents, orders, licenses, franchises or other
authorizations (collectively, the "Permits") necessary to
own or lease, as the case may be, and to operate its
properties, whether tangible or intangible, and to conduct
the business and operations of the Company as presently
conducted and, with respect to the State of New Jersey, as
proposed to be conducted, and all such Permits are
outstanding and in good standing, and there are no
proceedings pending or to the best of the Company's
knowledge, threatened, or any basis therefor, seeking to
cancel, terminate or limit such Permits.
Such opinion shall also cover such other matters
incident to the transactions contemplated hereby as Buyer
or its counsel may reasonably request. In rendering its
opinion such counsel may rely upon title certificates,
abstracts or policies and certificates of public officials
and of officers of the Company as to factual matters not
independently established by such counsel; provided that
the extent of such reliance is specified in such opinion
and that copies of such documents so relied upon are
delivered to Buyer.
9.4. All legal matters shall have been approved by counsel
for Buyer, and Buyer shall have received from such counsel an opinion, dated the
Closing Date, satisfactory to Buyer, relating to legal matters in connection
with the transactions contemplated hereby.
9.5. The representations and warranties of Sellers
contained in this Agreement (including the Exhibits hereto) or in any
certificate or document delivered to Buyer pursuant hereto, shall be deemed to
have been made again at the Closing Date and shall then be true in all material
respects; Sellers shall have performed and complied with all agreements and
conditions required by this Agreement to be performed or complied with by
Sellers prior to or at the Closing Date; and Buyer shall have been furnished
with certificates of the Sellers and of appropriate officers of the Company,
dated the Closing Date, certifying in such detail as Buyer may reasonably
request to the fulfillment of the foregoing conditions.
9.6. Each Seller shall have delivered to Buyer a
certificate or certificates for the number of Company Shares set forth opposite
such Seller's name in Section 1.3, duly endorsed for transfer, or with a duly
executed stock power attached.
9.7. Each Seller shall have executed and delivered to
Buyer a Shareholders' Agreement in the form of Exhibit B, attached hereto.
9.8. There shall not have been any material adverse change
in the financial condition of the Company at the Closing Date from that
disclosed in the Company Balance Sheet due to the results of operations of the
Company for the period from the date of the Company Balance Sheet to the Closing
Date, and Buyer shall have been furnished with certificates of the appropriate
officers of the Company, dated the Closing Date, to that effect.
9.9. Xxxxxxx shall have executed and delivered to the
Buyer an employment agreement in the form of Exhibit C hereto.
Section 10. Conditions to Closing - Sellers.
The obligation of Sellers to exchange Company Shares for
Buyer's Stock pursuant to this Agreement shall be subject to the satisfaction,
at or prior to the Closing Date, of the following conditions (any of which may
be waived by Sellers):
10.1. Each of the agreements of Buyer to be performed at
or prior to the Closing Date pursuant to the terms hereof shall have been duly
performed.
10.2. Buyer shall have delivered to each of the Sellers a
certificate or certificates for the number of shares of Buyer's Stock required
to be delivered to the respective Sellers under Section 3.1, in each case duly
registered in the name of the respective Seller.
10.3. Buyer shall have furnished Sellers with a favorable
opinion, dated the Closing Date, of Pryor, Cashman, Xxxxxxx & Xxxxx, counsel for
Buyer, in form and substance satisfactory to Sellers and their counsel, to the
effect that:
(a) Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of
New York.
(b) Buyer has corporate power to execute, deliver and
perform this Agreement, and has taken all action required by
law, its certificate of incorporation, its by-laws or
otherwise, to authorize such execution, delivery and
performance.
(c) This Agreement constitutes the valid and legally
binding agreement of Buyer in accordance with its terms.
(d) Buyer has taken all necessary corporate action to
issue Buyer's Stock to Sellers, and upon such issuance to
Sellers, Buyer's Stock will have been duly authorized and
issued, fully paid and nonassessable.
(e) Good and marketable title to such Buyer's Stock,
free and clear of all liens, charges and encumbrances, has
been passed to Sellers hereunder, subject only to the
restrictions set forth in the investment agreements executed
by the Sellers.
Such opinion shall also cover such other matters incident to the transactions
contemplated hereby as Sellers or their counsel may reasonably request. In
rendering their opinion, such counsel may rely upon certificates of public
officials and of officers of Buyer as to matters of fact, provided that the
extent of such reliance is specified in such opinion or opinions and that copies
of such documents relied upon are delivered to Sellers.
10.4. Buyer shall have retained Geils & Co., Inc.
("Geils") on a month-to-month basis to provide the Buyer with investment banking
services according to the terms and conditions under the engagement letter dated
February 27, 1998, and attached hereto as Exhibit D.
10.5. All legal matters shall have been approved by
counsel for Sellers, and the Sellers shall have received from such counsel an
opinion, dated the Closing Date, satisfactory to Sellers, relating to legal
matters in connection with the transaction contemplated hereby.
10.6. The representations and warranties of Buyer
contained in this Agreement or in any certificate or document delivered to
Sellers pursuant hereto shall be deemed to have been made again at the Closing
Date and shall then be true in all material respects; Buyer shall have performed
and complied with all agreements and conditions required by this Agreement to be
performed or complied with by Buyer prior to or at the Closing Date; and Sellers
shall have been furnished with certificates of appropriate officers of Buyer,
dated the Closing Date, certifying in such detail as Sellers may reasonably
request, to the fulfillment of the foregoing conditions.
10.7. Buyer shall have executed and delivered to each
Seller a Shareholders' Agreement in the form of Exhibit B, attached hereto.
Section 11. Miscellaneous.
11.1. The representations and warranties made in this
Agreement and in any certificate, exhibit or document delivered in connection
therewith shall survive the Closing Date. The liability of Sellers for breach of
any representation or warranty shall be limited to the amount of damages
incurred by Buyer or the Company as a result of such breach.
11.2. Buyer and Sellers represent and warrant that there
are no claims for brokerage commissions or finder's fees in connection with the
transactions contemplated hereby resulting from any action taken by Sellers, by
Buyer, by the officers and directors of the Company or Buyer, or by any of them.
11.3. This Agreement shall be construed and enforced in
accordance with the internal law of the State of New York.
11.4. All notices, consents, requests, instructions,
approvals and other communications provided for herein shall be validly given,
made or served if in writing and delivered personally, or sent by certified
mail, postage prepaid, or by telegraph, charges prepaid,
(a) if to Buyer, addressed to:
Sirco International Corp.
00 Xxxxxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Chief Executive Officer
with a copy to:
Pryor, Cashman, Xxxxxxx & Xxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
(b) if to Sellers, addressed to:
Xxxx Xxxxxxx
000 Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxx 00000
TN Capital Group, Inc.
0000 Xxxx Xxxx Xxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxxxx 00000
Xxxxxxx Xxxxxxx
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
with a copy to:
Xxxxxxxxx Xxxxxxx
0000 Xxxxxxxxxx Xxxx
Xxxxx, Xxx Xxxx 00000
or such other address as shall be furnished in writing by either party to the
other party.
11.5. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Agreement.
11.6. This Agreement may be executed in one or more
counterparts, and shall become effective when one or more counterparts have been
signed by each of the parties.
[Signature Page to follow]
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the day and year first above written.
SIRCO INTERNATIONAL CORP.
By: ____________________
Name:
Title:
SELLERS:
-------------------------
XXXX XXXXXXX
TN CAPITAL GROUP INC.
By: ____________________
Name:
Title:
-------------------------
XXXXXXX XXXXXXX
