1
EXHIBIT 10.5
AMENDED
STOCK PURCHASE AGREEMENT
This Agreement is made this 18th day of November, 1998, amending and in lieu of
the Stock Purchase Agreement dated November 11, 1998, by and among 35 Xxxxxxxx
Corporation, a New York corporation ("Xxxxxxxx"), and Xxxxxxx X. Xxxxxxx, an
individual residing in _________________ ("Xxxxxxx") (collectively "Buyer"),
and Xxxxxx X. Xxxxxx, Xx., an individual residing in San Antonio, Texas
("Seller").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF STOCK.
1.1. Sale of Common Stock. Subject to the terms and conditions of this
Agreement, the Buyer agrees to purchase at the Closing, and the Seller agrees
to sell to Buyer eighty-eight and three-tenths percent (88.3%) of the common
stock of Houston Operating Company, a Delaware corporation ("Houston"), or
2,459,417 shares (the "HOC Common Stock") for the purchase price specified in
Section 1.2.
1.2 Purchase Price. The aggregate purchase price to be paid by Buyer for the
HOC Common Stock shall be $1,000 in cash and the undertaking and agreement by
Buyer to contribute at Closing all of the outstanding capital stock of Xxxxxxxx
to Houston.
1.3 Closing. The purchase and sale of the HOC Common Stock shall take place at
the offices of Xxxxxx & Xxxxxxxxx, L.L.P., 000 X. Xx. Xxxx'x, Xxxxx 0000, Xxx
Xxxxxxx, Xxxxx 00000, or such other location as agreed by the parties, on
November 30, 1995, or at such other time and place as the Seller and the Buyer
mutually agree upon in writing (which time and place are designated as the
"Closing"). At the Closing the Seller shall deliver to the Buyer certificates
representing the HOC Common Stock which Buyer is purchasing, together with a
stock power transferring the HOC Common Stock to Buyer against delivery to the
Seller of the Purchase Price as follows:
(a) A check for $1,000 made payable to Seller;
(b) Certificates representing all of the outstanding capital stock of
Xxxxxxxx together with a stock power transferring the stock to
Houston; and
(c) A Promissory Note from HOC to Seller in the amount of $8,530 on terms
set forth in paragraph 4.3 hereof.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND HOUSTON.
The Seller hereby represents and warrants to Buyer, that, now or prior to
Closing:
2.1 Organization, Good Standing and Qualification. Houston is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to carry
on its business as now conducted. Houston is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure so
to qualify would have a material adverse effect on its business or properties.
1
2
2.2 Capitalization. The authorized capital of Houston consists of (i)
50,000,000 shares of $0.001 par common stock of which 2,795,171 shares are
issued and outstanding, of which 2,511,345 shares are owned by the Seller and
283,326 shares are owned by public shareholders, (ii) 5,000,000 shares of
preference stock, none of which is issued and outstanding; and (iii) 5,000,000
shares of preferred stock, none of which is issued and outstanding.
2.3 Subsidiaries. Houston does not presently own or control, directly or
indirectly, any interest in any other corporation, association, or other
business entity.
2.4 Authorization. The performance of all obligations of Seller hereunder
has been taken or will be taken prior to the Closing, and this Agreement
constitutes a valid and legally binding obligation of the Seller, enforceable in
accordance with its terms.
2.5 Valid Issuance of Common Stock.
(a) The HOC Common Stock which is being sold by the Seller and
purchased by the Buyer hereunder, when assigned and delivered in
accordance with the terms hereof for the consideration expressed herein,
will be sold and delivered in compliance with all applicable federal and
state securities laws and shall be free of all liens, claims or rights
of any other person or entity; provided Buyer executes and delivers an
investment letter in the form of Schedule 2.5(a) hereof.
(b) The shares of HOC Common Stock are all duly and validly
authorized and issued, fully paid and nonassessable.
(c) There are no shares of Common Stock of Houston issued and
outstanding other than as set forth in Section 2.2, no preemptive
rights, rights of first refusal or other third party rights in favor of
any person or entity.
(d) There are 400 or more shareholders of record of Houston.
2.6 Governmental Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
federal, state, local or provincial governmental authority on the part of the
Seller is required in connection with the consummation of the transactions
contemplated by this Agreement.
2.7 Litigation. There is no action, suit, proceeding or investigation
pending or currently threatened against Seller or Houston which questions the
validity of this Agreement or the right of Houston or the Seller to enter into
it, or to consummate the transactions contemplated hereby, or which might
result, in the aggregate, in any material adverse changes in the assets,
condition, affairs or prospects of Houston. Houston is not a party or subject to
the provisions of any order, writ, injunction, judgment or decree of any court
or government agency or instrumentality.
2.8 Disclosure. The Seller has fully provided and made available to Buyer
all the information which Buyer has requested in making the investment decision
as to whether to purchase the HOC Common Stock and there is no other information
of any kind of which Seller is aware which in Seller's judgment acting in good
faith would be material.
2
3
2.9 Corporate Documents. The Articles of Incorporation and Bylaws of Houston
are in the form which has been provided to Buyer previously.
2.10 Title to Property and Assets. Houston owns no property or assets and
since Seller acquired control of Houston in November 1994, has engaged in no
business, has acquired no assets, and has incurred no obligations, other than
the amount of $8,500 due to Seller.
2.11 Financial Statements. The Seller has delivered to Buyer Houston's audited
financial statements (balance sheet and profit and loss statement), at June 30,
1995. There are no financial statements which are available subsequent to the
June 30, 1995, statements. The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated and fairly present the financial
condition and operating results of Houston as of the dates, and for the periods,
indicated therein, subject to normal audit adjustments.
2.12 Changes. Since December 1, 1994, there has not been:
(a) Any change in the assets, liabilities, financial condition or
operating results of the Houston from that reflected in the Financial
Statements, except changes in the ordinary course of business which have
not been, in the aggregate, materially adverse;
(b) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties,
financial condition, operating results, prospects or business of the
Houston;
(c) Any waiver by Houston of a valuable right or of a material debt
owed to it, except allowing outstanding warrants for the acquisition of
Houston shares to expire;
(d) Any satisfaction or discharge of any lien, claim or encumbrance or
payment of any obligation by Houston, except in the ordinary course of
business and which is not material to the assets, properties, financial
condition, operating results or business of the Houston; or
(e) Any change or amendment to a material contract or arrangement by
which Houston or any of its assets or properties is bound or subject.
2.13 Insurance. Houston has no insurance policies.
2.14 Obligations, Agreement and Actions. Houston is not bound by or subject
to, and none of its assets or properties is bound by or subject to, any written
or oral contract, commitment or arrangement with any person or entity.
2.15 Absence of Undisclosed Liabilities. Houston has no material liabilities
or obligations, either accrued or unaccrued, fixed or contingent, except as set
forth on Schedule 2.15 attached hereto.
2.16 Tax Returns and Audits. Houston and Seller have filed, on a timely basis,
all income, franchise and other tax returns and reports of every nature required
to be filed by each of them, accurately reflecting any and all net operating
losses, tax credit carryovers and carrybacks, and taxes owing to the United
States, or any other
3
4
government or any subdivision thereof, domestic or foreign, state or local, or
any other taxing authority, and has paid in full all taxes shown on said
returns to be due and owing. There are and will hereafter be no tax
deficiencies (including penalties and interest) of any kind assessed against
Houston or Seller, with respect to any taxable periods ending on or before the
Closing other than tax deficiencies relating solely to an election (or deemed
election) pursuant to Section 338 of the Internal Revenue Code with respect to
the acquisition of the Common Stock by Buyer which the parties hereto agree
shall not be treated as a liability of Houston or a breach of or a
misstatement in any representation or warranty of Seller made herein.
3. Representations and Warranties of the Buyer.
The Buyer hereby represents and warrants to Seller that:
3.1 Purchase Entirely for Own Account. This Agreement is made with the Buyer,
and each of them, in reliance upon the Buyer's representations to the Seller
that the HOC Common Stock to be received by the Buyer will be acquired for
investment for the Buyer's own accounts, not as nominees or agents, and not
with a view to the resale or distribution of any part thereof, and that the
Buyer has no present intention of selling or granting any participation in or
otherwise distributing the same.
3.2 Accredited Investing. Buyer is an "accredited investor" within the meaning
of Rule 501 of Regulation D promulgated by the Securities and Exchange
Commission ("SEC"), as presently in effect.
3.3 Organization, Good Standing and Qualification. Xxxxxxxx is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York and has all requisite corporate power and authority to carry
on its business as now conducted. Xxxxxxxx is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure so
to qualify would have a material adverse effect on its business or properties.
3.4 Authorization. All action on the part of the Buyer necessary for the
authorization, execution and delivery of this Agreement, and the performance of
all obligations of Buyer hereunder has been taken or will be taken prior to the
Closing, and this Agreement constitutes a valid and legally binding obligation
of Buyer, enforceable in accordance with its terms.
3.5 Valid Issuance of Common Stock.
(a) The common stock of Xxxxxxxx which is being transferred by Buyer to
Houston as part of the purchase price, when delivered in accordance with
the terms hereof for the consideration expressed herein, will be issued
in compliance with all applicable federal and state securities laws.
(b) The outstanding shares of common stock of Xxxxxxxx are all duly and
validly authorized and issued, fully paid and nonassessable.
(c) The shares of common stock of Xxxxxxxx are each and all free and clear
of all liens, claims, options, charges, security interests, encumbrances
or restriction of any kind.
4
5
3.6 Governmental Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state, local or provincial governmental authority on the part of the
Buyer is required in connection with the consummation of the transactions
contemplated by this Agreement.
3.7 Litigation. There is no action, suit, proceeding or investigation pending
or currently threatened against the Buyer which questions the validity of this
Agreement or the right of Buyer to enter into it, or to consummate the
transactions contemplated hereby, or which might result, in the aggregate, in
any material adverse changes in the assets, condition, affairs or prospects of
Xxxxxxxx.
3.8 Disclosure. The Buyer has fully provided and made available to Seller all
the information which Seller has requested in making the investment decision as
to whether to sell the HOC Common Stock and there is no other information of
any kind of which Buyer is aware of which in Buyer's judgment acting in good
faith would be material.
3.9 Corporate Documents. The Articles of Incorporation and Bylaws of Xxxxxxxx
are in the form which will be provided to the Seller upon Closing.
3.10 Title to Property and Assets. Xxxxxxxx owns its property and assets free
and clear of all mortgages, liens, loans and encumbrances, except such
encumbrances and liens which arise in the ordinary course of business and which
do not materially impair Caroline's ownership or use of such property or assets
and except as reflected on the financial statements delivered to Seller by
Buyer. With respect to the property and assets leased, Xxxxxxxx is in
compliance with such leases and, to the best of Buyer's knowledge, holds valid
leasehold interests free of any liens, claims or encumbrances.
3.11 Financial Statements. Xxxxxxxx has delivered to Seller its unaudited
financial statements (balance sheet and profit and loss statement), at the
dates set forth thereon, all attached as Schedule 3.11 hereof. The financial
statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods indicated and
fairly present the financial condition and operating results of the Buyer as
of the dates, and for the periods, indicated therein, subject to normal audit
adjustments.
3.12 Changes. Since the date on each of the financial statements attached on
Schedule 3.11 hereof, there has not been:
a) Any change in the assets, liabilities, financial condition or
operating results of Caroline's from that reflected in the financial
statements, except changes in the ordinary course of business which have
not been, in the aggregate, materially adverse;
b) Any damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting the assets, properties, financial
condition, operating results, prospects or business of Xxxxxxxx;
c) Any waiver by Xxxxxxxx of a valuable right or of a material debt owed
to it;
5
6
d) Any satisfaction or discharge of any lien, claim or encumbrance or
payment of any obligation by Xxxxxxxx, except in the ordinary course of
business and which is not material to the assets, properties, financial
condition, operating results or business of Xxxxxxxx; or
e) Any change or amendment to a material contract or arrangement by
which Xxxxxxxx or any of its assets or properties is bound or subject.
3.13 Insurance. Xxxxxxxx has in full force and effect fire and casualty
insurance policies, with extended coverage, sufficient in amount (subject to
reasonable deductibles) to allow each to replace any of its respective material
properties that might be damaged or destroyed.
3.14 Obligations, Agreements and Actions. Xxxxxxxx is not bound by or subject
to, and none of its assets or properties is bound by or subject to, any written
or oral contract, commitment or arrangement with any person or entity.
3.15 Absence of Undisclosed Liabilities. Xxxxxxxx has no material liabilities or
obligations, either accrued or unaccrued, fixed or contingent, except as set
forth on Schedule 3.15 attached hereto.
3.16 Tax Returns and Audits. Xxxxxxxx has filed, on a timely basis, all income,
franchise and other tax returns and reports of every nature required to be filed
by it, accurately reflecting any and all net operating losses, tax credit
carryovers and carrybacks, and taxes owing to the United States, or any other
government or any subdivision thereof, domestic or foreign, state or local, or
any other taxing authority, and has paid in full all taxes shown on said returns
to be due and owing. There are and will hereafter be no tax deficiencies
(including penalties and interest) of any kind assessed against Xxxxxxxx, with
respect to any taxable periods ending on or before the Closing other than tax
deficiencies relating solely to an election (or deemed election) pursuant to
Section 338 of the Internal Revenue Code with respect to the acquisition of the
HOC Common Stock by Buyer which the parties hereto agree shall not be treated as
a liability of Buyer or a breach of or a misstatement in any representation or
warranty of Buyer made herein.
4. Conditions of the Buyer's Obligations at Closing.
The obligations of Buyer under subsection 1.1 of this Agreement are subject to
the fulfillment on or before the Closing of each of the following conditions:
4.1 Representations and Warranties of the Seller. The representations and
warranties of the Seller contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
4.2 Performance by the Seller. The Seller shall have performed and complied
with all agreements, obligations and conditions contained in this Agreement
that are required to be performed or complied with by it on or before the
Closing.
4.3 Other Agreement. Buyer shall be obligated to purchase up to all of
Seller's remaining Common Stock for the sum of $75,000 in cash which amount is
subject to an escrow agreement among Xxxxxxx X. Xxxxxxxxx ("Xxxxxxxxx"),
Xxxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx, Xx. (the "Escrow Agreement"). In
addition, Houston shall pay to Seller an amount in cash equal to $8,530 payable
over a five (5) year period in self-liquidating
6
7
monthly installments, together with interest accruing at a rate of six percent
(6%) per annum, as represented in the form of note attached hereto as Schedule
4.3.
5. Conditions of the Seller's Obligations at Closing.
The obligations of the Seller to Buyer under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions by the
Buyer and the Seller:
5.1 Representations and Warranties. The representations and warranties of
the Buyer contained in Section 3 shall be true on and as of the Closing with the
same effect as though such representations and warranties had been made on and
as of the Closing.
5.2 Performance by the Buyer. The Buyer shall have performed and complied
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by him on or before the Closing.
5.3 Escrow Agreement. Buyer shall deliver to Seller a fully executed Escrow
Agreement together with written acknowledgment from Xxxxxxxxx that he has
possession of the certificate of deposit and power of attorney called for in the
Escrow Agreement.
6. Survival of Representations and Warranties and Indemnification
6.1 Survival of Representations and Warranties. Notwithstanding the closing
of the transactions contemplated by this Agreement, the representations and
warranties of Seller and Buyer contained in this Agreement shall survive the
closing until the date one (1) year after the date of the Closing and not
thereafter.
6.2 Indemnification by Seller. Seller covenants and agrees to indemnify and
save harmless Buyer from any and all direct costs, expenses, losses, damages and
liabilities incurred or suffered directly or indirectly by Buyer (including
reasonable legal fees and costs) proximately resulting from or attributable to
the material breach of, or a material misstatement in, any one or more of the
representations or warranties of Seller made in or pursuant to this Agreement.
Notwithstanding any other provision of this Agreement, Buyer acknowledges and
agrees that no representation of Seller hereunder or omission from this
Agreement or his schedules shall be deemed materially misleading and no warranty
hereunder by Seller shall be deemed breached if Buyer has obtained accurate
information regarding the matter prior to the Closing and in no event shall
Seller's liability for any such event exceed $75,000 or at Seller's option the
return of the shares of Houston retained by Seller. Further, Seller shall not be
liable or responsible for any act, omission or conduct respecting the management
or operation of Houston occurring after the date of Closing.
6.3 Indemnification by Buyer. Buyer covenants and agrees to indemnify and
save harmless Seller from any and all costs, expenses, losses, damages and
liabilities incurred or suffered by Seller (including reasonable legal fees and
costs) proximately resulting from or attributable to the material breach of, or
a material misstatement in, any one or more of the representations or warranties
of Buyer made in or pursuant to this Agreement or which relate to acts,
omissions or conduct respecting the management or operation of Houston occurring
after Closing.
7
8
6.4 DEFENSE AGAINST ASSERTED CLAIMS. If any claim or assertion of liability is
made or asserted by a third party against a party indemnified pursuant to this
Article 6 ("Indemnified Party") based on any liability or absence of right
which, if established, would constitute a matter for which the Indemnified Party
would be entitled to indemnification by another party hereto ("The Indemnifying
Party") the Indemnified Party shall with reasonable promptness give to the
Indemnifying Party written notice of the claim or assertion of liability and
request the Indemnifying Party to defend the same. The Indemnifying Party shall
have the right to defend against such liability or assertion, in which event the
Indemnifying Party shall give written notice to the Indemnified Party of the
acceptance of defense of such claim and the identity of counsel selected by the
Indemnifying Party with respect to such matters. The Indemnified Party shall be
entitled to participate with the Indemnifying Party in such defense and also
shall be entitled at its option to employ separate counsel for such defense at
the expense of the Indemnified Party. In the event the Indemnifying party does
not accept the defense of the matter as provided above or in the event that the
Indemnifying Party or its counsel fails to use reasonable care in maintaining
such defense, the Indemnified Party shall have the full right to employ counsel
for such defense at the expense of the Indemnifying Party. All parties hereto
will cooperate with each other in the defense of any such action and the
relevant records of each shall be available to the other with respect to such
defense.
7. MISCELLANEOUS.
7.1 SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties provided any such assignment shall have first been
approved in writing by the other party to this Agreement than the assignor.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
7.2 GOVERNING LAW. This Agreement shall be governed by and construed under the
laws of the State of Texas as applied to agreements among Texas residents
entered into and to be performed entirely within Texas.
7.3 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.
7.4 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
7.5 NOTICES. Any notice required or permitted under this Agreement shall be
given in writing and shall be deemed effectively given upon personal delivery
to the party to be notified or upon deposit with the United States Post Office,
by registered or certified mail, postage prepaid and addressed to the party to
be notified at the address indicated for such party on the signature page
hereof, or at such other address as such party may designate by ten (10) days'
advance written notice to the other parties.
7.6 FINDER'S FEE. Each party represents that it neither is nor will be
obligated for any finders' fee or commission in connection with this
transaction.
7.7 EXPENSES. Each party shall pay its or his respective costs and expenses
incurred with respect to the negotiation, execution, delivery and performance
of this Agreement.
8
9
7.8 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of all parties hereto.
7.9 SEVERABILITY. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
7.10 BINDING AGREEMENT. This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto, together with their respective legal
representative, successors and assigns.
7.11 ENTIRE AGREEMENT. This Agreement and all exhibits and schedules hereto
which are incorporated herein and the Escrow Agreement constitute the entire
agreement and understanding between the parties with respect to the subject
matter hereof and supersede all prior or contemporaneous agreements, any
representations or communications, whether written or oral, between the parties.
The terms of this Agreement may not be amended except by a writing executed by
all parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
SELLER:
/s/ XXXXXX X. XXXXXX, XX.
---------------------------------------
Xxxxxx X. Xxxxxx, Xx.
BUYER:
/s/ XXXXXXX X. XXXXXXX
---------------------------------------
Xxxxxxx X. Xxxxxxx
35 XXXXXXXX CORPORATION:
By: /s/ XX XXXXXXX
------------------------------------
Name: XX Xxxxxxx
----------------------------------
Title: Pres
---------------------------------
9
