EXHIBIT 10.7
STOCK PURCHASE AGREEMENT BETWEEN
NEW DIRECTIONS, INC., AN ARIZONA CORPORATION,
AND THE XXX FAMILY PARTNERSHIP, A LIMITED PARTNERSHIP
ORGANIZED UNDER THE LAWS OF THE STATE OF ARIZONA,
DATED JULY 17, 1996
STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT ("Agreement"), is entered into this 17th day of
July, 1996, (the "Effective Date"), by and among the shareholders of New
Directions, offices and manufacturing facilities located at 0000 Xxxx Xxxxxxxx,
Xxxxxxx, Xxxxxxx 00000 (collectively referred to hereinafter as "Shareholders");
New Directions, Inc., an Arizona corporation ("New Directions", "Company" or
"Seller"); and Xxx Family Limited Partnership, a limited partnership organized
under the laws of the State of Arizona with offices located at 0000 Xxxx Xxxx
Xxxxx, Xxxxxxxx, Xxxxxxx 00000 ("Xxx") or the nominee(s) of Xxx (Xxx and such
nominee(s) shall collectively be referred to hereinafter as "Buyer").
The parties recite and declare that:
13. Seller is in the business of manufacturing, distributing and marketing
contemporary oak wood furniture throughout the United States and Canada.
14. The Shareholders identified in Schedule A hereto which is incorporated
herein by this reference and made a part of this Agreement, collectively own
100% of the issued and outstanding capital stock of New Direction.
15. Buyer desires to acquire the shares from New Directions upon the terms
and conditions hereinafter set forth, and Seller desires to sell the same to
Buyer upon such terms and conditions.
16. Buyer desires to pay for the shares, and Seller desires to accept as
payment for the shares, the total consideration of $2,280,000.00 to be paid on
an installment basis as provided herein.
For the reasons set forth above, and in consideration of the mutual covenants
herein contained, the parties agree:
SECTION ONE
SALE AND PURCHASE
Subject to the terms and conditions herein set forth, each of the Sellers
shall individually and severally sell his respective shares to Buyer, and Buyer
shall purchase such shares form Sellers. Each Seller owns a beneficial interest
in the share corresponding exactly with the number of shares appearing with his
name as it appears in this Agreement. Buyer shall not be obligated to purchase
any of the shares of common stock of New Direction unless all the shares shall
be delivered to Buyer the \closing in accordance with the provisions of this
Agreement and in proper form for transfer.
SECTION TWO
CONSIDERATION
Seller hereby sells, assigns, transfers, and sets over to the buyer, seller's
____ shares of common stock of New Directions. Buyer hereby purchases said
stock and agrees to pay in consideration thereof:
1. Purchase Price. Buyer shall pay to seller the total purchase price of
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Two Million Two Hundred Eighty Thousand Dollars ($2,280,000.00), said terms to
be as follows:
(a) Cash Payment. One Million Two Hundred Eighty Thousand Dollars
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($1,280,000.00) at closing;
(b) Promissory Note. The balance of the purchase price in the amount of
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Eight Hundred Thousand Dollars ($800,000.00) shall be satisfied by note executed
by Buyer and by Company, payable on the basis of sixty (60) equal monthly
installments of principal and interest. Interest at the rate of eight (8%)
percent per annum shall be paid monthly; the first such monthly payment shall be
due on or before October 1, 1996, and each payment thereafter shall be due on or
before the first day of each month for a period of sixty (60) months.
(c) Purchase price shall be allocated as follows: (i) $1,280,000 (the
cash payment) as consideration for the stock; and (ii) $800,000.00 (the
installment payment) as consideration for the non-compete agreement.
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2. Rights Concerning Note. Buyer and comakers upon the above-mentioned note
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shall have the right during the term thereof, but not before ____, 199_ , to
make prepayments on the unpaid balance without penalty, provide, however, that
such payments shall not act as a release from any obligation to make monthly
payments provided in Section (b) hereof, but hall reduce The principal balance
due. Only the unpaid principal shall bear interest and all payments shall first
be applied upon accrued interest and the balance upon principal.
3. Adjustments to Purchase Price. The total Purchase Price shall be
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adjusted as follows:
(a) Cash Payment. The total amount of the Cash Payment shall be increased
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or decreased, respectively, by the identical amount by which the accounts
receivable of New Directions, net of the accounts payable, if any, at Closing,
shall be greater than, or less than, Three Hundred Thousand Dollars
($300,000.00). In addition, it is expressly understood between the parties that
the Seller shall be responsible for any payables existing on the day of closing
and shall from their Cash Payment pay said obligations of the company.
4. Additional Adjustment. the outstanding principal amount of indebtedness
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subject to the installment purchase as set forth above, shall be decreased on
the first yearly anniversary of the closing date by the sum of (i) the total
amount of accounts receivable of seller as determined by the parties at closing,
which have not been collected by the Seller as of said anniversary date; and
(ii) the total amount of accounts payable and/or any other claims against the
Seller outstanding as of the Closing Date which were not disclosed in writing to
Buyer or in the event were unknown to the Buyer at the time of the Closing.
Additionally, in the event of excess of accounts receivable of New Directions
over accounts payable, if any, (net receivables) at the time of Closing exceeds
$300,000.00, Buyer agrees to pay the full amount of the excess to the Seller as
receivables are collected subsequent to Closing. The Buyer shall pay this
excess to the Seller every 30 days in amounts equal to 50% of total receivables
collected (including those billed subsequent to Closing) until such time as the
amount of the excess is paid in full. In the event net receivables are less
than $300,000.00, the cash payment at the time of closing shall be reduced by
the deficiency.
5. Assets of the Company. As of the Closing Date, the assets of the Seller
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(the "Assets") including without limitation, all operating and non-operating
assets, all tangible and intangible assets, personal and real property wherever
located, leasehold interests, accounts receivable, bank accounts, customer
deposits, prepaid expenses, contracts, inventory, office and manufacturing
equipment and supplies, business records, customer lists, patents, trademarks,
copyrights, software, computer system designs and documentation, and such other
items as may be identified on Schedule C hereto which is incorporated herein and
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made a part of this Agreement by this reference shall be free and clear of all
debts, liens, incumbrances and any other liabilities, except as noted on
Schedule B hereto which is incorporated herein and made a part of this Agreement
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by this reference.
New company to assume leases on machinery.
6. Closing. The closing ("Closing") of the transaction contemplated by this
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Agreement shall take place in New Directions' executive offices in Phoenix, or
at such other place as the parties shall mutually determine, on a date and at
such time as the parties may agree (the "Closing Date"), on or before August 30,
1996 unless the parties agree in writing to such other date later in time than
August 30, 1996.
7. Closing Events.
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(a) Shareholder's Deliveries. Subject to fulfillment or waiver of the
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conditions set forth in Section Five, at Closing, Shareholders shall deliver to
Buyer all of the following:
(i) Certificates representing all shares, duly endorsed in blank
with signatures guaranteed to the satisfaction of Buyer and any other documents
of transfer and title reasonably requested by Buyer;
(ii) All stock books, stock ledgers, seals, minute books and other
records and other documents required of Seller for closing the sale and purchase
hereunder;
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(iii) The certificate contemplated by Section Five-1, duly executed
by an authorized Officer of New Directions; and
(iv) The certificate contemplated by Section Five-2, dated the
Closing Date, signed by the Chief executive officer and principal accounting and
financial transaction contemplated hereby.
8. Effect of Purchase. As of the Closing Date and until such time as Buyer
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or the authorized representative(s) of Buyer may elect to make any changes
thereto:
(a) The Company. The Shareholders shall relinquish and Buyer shall
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acquire all right, title and interest to and in the Shares of the Company. The
members of the board of directors of the Company shall each resign and be
replaced by the nominee(s) of Buyer.
(b) Management and Employees. Prior to Closing, Buyer shall negotiate
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an employment contract and bonus plan with Xxxx Xxxxxx, Xx. and other selected
employees of the Company. All other managers and employees of the Company as of
the Closing Date shall continue in their roles, duties and responsibilities
pursuant to their respective employment agreement(s), whether written or oral,
with the Company, and the Company shall continue to be bound by the terms of
such agreement(s) including any enforceable severance provisions which have not
been violated, waived or otherwise invalidated by the respective beneficiary
thereof, but may negotiate new agreement with such managers and/or employees
which may include non-disclosure and/or noncompete provisions. In addition,
Buyer may cause additional managers and/or employees to be hired by the Company
for various offices and/or responsibilities.
(c) Operations. The Company shall continue its operations in all
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material respects as it did prior to the Closing Date except that the officers
of the Company shall report to and be responsible to the board of directors
nominated by Buyer.
(d) Covenant Not to Compete. Except as may be expressly consented to by
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Buyer, Shareholders covenant and agree for the benefit of Buyer and their
successors and assigns that for a period of five (5) years after Closing,
Shareholders will not engage or participate, directly or indirectly, as
principal, agent, employee, employer, consultant or in any other individual or
representative capacity whatever, in the conduct or management of, or own
(legally or beneficially) or have the right or option to acquire, any direct or
indirect interest in any business of manufacturing, distributing or marketing
like product; however, it is expressly agreed and understood by the parties that
the Shareholders may engage, directly or indirectly, in the business of retail
furniture sales and/or the manufacture, distribution and marketing of furniture
components, and this noncompete provision shall not apply to such activities or
enterprises if engaged or participated in by any Shareholder.
Additionally, for a period of five (5) years following Closing,
Shareholders will not either directly or indirectly: (i) call on, solicit, or
take away any of the customers or suppliers of the Company or its successors and
assigns either for any Shareholder or for any other person, association or
entity; or (ii) solicit or take away any employees of the Company or its
successors and assigns either for any Shareholder or for any other persons,
association or entity. Shareholders specifically acknowledge and agree that the
foregoing covenants are reasonable in content and scope and are given for
adequate consideration. Buyer shall have the option to reduce the scope and
extent of the foregoing covenants, by written notice to Shareholders, either
before or after any adjudication of the holders, either before or after any
adjudication of the legality of said covenants, whereupon said covenants, as so
reduced, shall be binding and enforceable against Shareholders.
9. Termination.
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(a) This Agreement may be terminated by Buyer at any time prior to the
Closing Date if:
(i) A review of all financial and corporate information, proof of
ownership of assets, accounts receivable, bank statements and copies of deeds,
liens, mortgages, a certificate of good standing dated on or after the date of
this Agreement, and any other documents that may be reasonably required by Buyer
to make an accurate determination of the status and value of the Company and to
discharge Buyer's obligation of due diligence causes Buyer
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to make a reasonable determination that this transaction is not in its best
interests. Should Buyer so determine, Buyer may propose an amendment hereto
agreeable to both parties or may terminate this Agreement with no further
obligation;
(ii) There shall be any actual or threatened action or proceeding
before any court or any governmental body which shall seek to restrain,
prohibit, or invalidate the transaction contemplated by this Agreement and
which, in the judgment of Buyer, made in good faith and based upon the advise of
its legal counsel, makes it inadvisable to proceed with the acquisition
contemplated by this Agreement; or
(iii) Any of the transactions contemplated hereby are disapproved by
any regulatory authority whose approval is required to consummate such
transactions or in the judgment of Buyer, made in good faith and based on the
advice of counsel, there is substantial likelihood that any such approval will
not be obtained or will be obtained only on a condition or conditions which
would be unduly burdensome, making it inadvisable to proceed with the
acquisition.
In the event of termination pursuant to this Subsection 8(a), no obligation,
right, or liability shall arise hereunder, and each party shall bear all of the
expenses hereunder, and each party shall bear all of the expenses incurred by it
in connection with the negotiation, preparation, and execution of this Agreement
and the transaction contemplated hereby.
(b) This Agreement may be terminated at any time prior to the Closing Date
by action of Buyer if the Shareholders shall fail to comply with any material
respect with any of its covenants or agreements contained in this Agreement or
if any of the representations or warranties of Buyer contained herein shall be
inaccurate or incomplete in any material respect. In the event of termination
pursuant to this Subsection 9(b), no obligation, right, remedy, or liability
shall arise hereunder. Shareholders and Buyer shall each bear their own costs
incurred in connection with the negotiation, preparation, and execution of this
Agreement and the transaction contemplated hereby.
(c) This Agreement may be terminated at any time prior to the Closing Date
by action of the board of directors of Shareholders if Buyer shall fail to
comply in any material respect with any of its covenants or agreements contained
in this Agreement, or if any of the representations or warranties of Buyer
contained herein shall be inaccurate in any material respect. In the event of
termination pursuant to this Subsection 9(c), no obligation, right, remedy, or
liability shall arise hereunder. Shareholders and Buyer shall each bear their
own costs incurred in connection with the negotiation, preparation and execution
of this Agreement and the transaction contemplated hereby.
SECTION THREE
REPRESENTATIONS, COVENANTS AND
WARRANTIES OF SHAREHOLDERS
As an inducement to and to obtain the reliance of Buyer, Shareholders
represent and warrant as follows:
1. Organization. The Company is, and will be on the Closing Date, a
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corporation duly organized, validly existing, and in good standing under the
laws of the State of Arizona and has the corporate power, and is and will be
duly authorized, qualified, franchised, and licensed under all applicable laws,
regulations, ordinances, and orders of public authorities, to own all of its
properties and assets and to carry on its business in all material respects as
it is now being conducted, and there are no other jurisdictions in which it is
not so qualified in which the character and location of the assets owned by it
or the nature of the material business transacted by it requires qualification,
except where failure to do so would not have a material adverse effect on its
business, operations, properties, assets, or condition. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof will not,
violate any provision of Shareholder's articles of incorporation or bylaws, or
other agreement to which it or the Company is a party or by which it or the
Company is bound.
2. Approval of Agreements.
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(a) Shareholders have full power, authority, and legal right and has
taken, or shall take, all action required by law, the Company's articles of
incorporation, bylaws, and otherwise to execute and deliver this Agreement and
to consummate the transaction herein contemplated. The board of directors of the
Company have authorized and
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approved the execution, delivery, and performance of this Agreement and the
transaction contemplated hereby. Included in Schedule _______ is a certified
copy of resolutions duly adopted by the board of directors of the Company
evidencing such approval. This Agreement has been duly authorized, executed,
and delivered by Shareholders and is the legal, valid and binding obligation of
Shareholders, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, or other laws affecting
enforcement of creditors' rights generally and by general principles of equity.
(b) Likewise, each of the Shareholders has full power, authority and
legal right to consummate the transaction herein contemplated and does so with a
full and complete understanding of said transaction. Each Shareholder will have
and deliver to Buyer at Closing good and marketable title to his or her
respective Shares free and clear of all security interests, financing
statements, pledges, liens, conditional sales agreements, encumbrances, charges,
proxies, agreements among shareholders, claims, restrictions, qualifications,
limitations or rights of any kind and will have at Closing the right, power and
authority to transfer his or her Shares without breach or default with respect
to any contract, agreement, commitment, or undertaking by which Shareholders or
the Shares are bound.
(c) The execution and deliver of this Agreement, the consummation of the
transaction contemplated hereby, and the fulfillment of the terms hereof by
Shareholders and the Company, (i) do not violate or conflict with, and will not
result in a breach or default, or in any occurrence that, with a lapse of time
or action by a third party or both, could result in a breach of default with
respect to any Agreement or any contract, agreement, commitment, or undertaking,
either written or oral, by which any of the Shareholders are a party or are
bound; (ii) will not violate any applicable foreign or domestic law or public
policy; (iii) will not result in an acceleration or increase of any amounts due
from the Company; and (iv) will not result in an alteration to the detriment of
the Company of the terms or conditions of any agreement, insurance policy or
registration. No contract, agreement, commitment, or undertaking, either oral
or written, or judgment, order, writ, injunction or decree exists that in any
other or performance of this Agreement, the transferability of the Shares, or
the business or assets of the Company.
3. Capitalization. The authorized capitalization of the Company consists of
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_______________ (______) shares of preferred stock, par value $__________ per
share, __________ of which are issued and outstanding as of the Closing Date and
_________________ (__________) shares of Common Stock, par value $___________
per share. __________________ (________) shares of which shall be issued and
outstanding as of the Closing Date, (collectively referred to herein as the
"Shares"). All issued and outstanding shares of the Company shall be legally
issued, fully paid, and nonassessable and not issued in violation of the
preemptive or other right of any person as of the Closing Date. There are no
dividends or other amounts due or payable with respect to any of the shares of
the Company.
4. Financial Statements.
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(a) Included in Schedule _____ are the unaudited balance sheets of the
Company as of _________________, 1995 and 1994, and the statements of
operations, stockholders' equity and cash flows for the years ended
______________ 31, 1995 and 1994, including the notes thereto. The information
referred to in Section ________ also includes the unaudited balance sheet of the
Company as of ___________ _____, 1996, and the related statements of operations,
cash flows, and stockholders' equity for the _____ months ended _____________
31, 1996, and 1995, together with the notes thereto and representations by the
principal accounting and financial officer of the Company to the effect that
such financial statements contain all adjustments (all of which are normal
recurring adjustments) necessary to present fairly the results of operations and
financial position for the periods and as of the dates indicated.
(b) All such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved as explained in the notes to such financial statements. The
Company's balance sheets present fairly, in all material respects, as of their
respective dates, the financial position of the Company. The Company did not
have, as of the date of any such balance sheets, except as and to the extent
reflected or reserved against therein, any liabilities or obligations (absolute
or contingent) which should be reflected in a balance sheet or the notes thereto
and all assets reflected therein present fairly assets of the Company in
accordance with generally accepted accounting principles under which they were
prepared. The consolidated statements of operations, shareholders' equity and
cash flows present fairly the consolidated financial position and results of
operations of the Company as of the respective dates and for the respective
periods covered thereby. The Company shall continue
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to maintain a standard system of accounting established and maintained in a
manner permitting the preparation of the financial statements in accordance with
generally accepted accounting principles under which they were prepared.
(c) The books and records, financial and otherwise, of the Company are in
all material respects complete and correct and have been maintained in
accordance with sound business and bookkeeping practices so as to the accurately
and fairly reflect, in reasonable detail, the transactions in and dispositions
of the assets of the Company. The Company has maintained a system of internal
accounting controls sufficient to provide reasonable assurances that (i) any
transactions have been and are executed in accordance with management's general
or specific authorization; (ii) such transactions are recorded as necessary to
permit the preparation of financial statements in conformity with generally
accepted accounting principles or any other criteria applicable to such
statements and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals, and appropriate action is taken
with respect to any differences.
(d) The Company has filed or will have filed as of the Closing Date all
tax returns required to be filed by it from inception to the Closing Date. All
such returns and reports are accurate and correct in all material respects. The
Company has no liabilities with respect to the payment of any federal, state,
county, local, or other taxes (including any deficiencies, interest, or
penalties) accrued for or applicable to the period ended on the date of the most
recent unaudited balance sheet of the Company, except to the extent reflected on
such balance sheet and adequately provided for, and all such dates and years and
periods prior thereto and for which the Company may at said date have been
liable in its own right or as transferee of the assets of, or as successor to,
any other corporation or entity, except for taxes accrued but not yet due and
payable, and no deficiency assessment or proposed adjustment of any such tax
return is pending, proposed or contemplated. Proper and accurate amounts of
taxes shall have been withheld by or on behalf of the Company with respect to
all compensation paid to employees of the Company for all periods ending on or
before the Closing Date, and all deposits required with respect to compensation
paid to such employees shall have been made, in complete compliance with the
provisions of all applicable federal, state, and local tax and other laws.
Shareholders have not made any election pursuant to the provisions of any
applicable tax laws (other than elections that relate solely to methods of its
financial condition, its business as presently conducted or proposed to be
conducted, or any of their respective properties or material assets. There are
no tax liens upon any of the assets of the Company. There are no outstanding
agreements or waivers extending the statutory period of limitation applicable to
any tax return to the Company.
5. Information. The information concerning the Company set forth in this
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Agreement and in the Schedules, Exhibits and other information delivered by
Shareholders pursuant hereto was, as of the respective dates of such
information, complete and accurate in all material respects and did not contain
any untrue statement of a material fact or omit to state a material fact
required to make the statements made, in light of the circumstances under which
they were made, not misleading. Shareholders shall cause the schedules
delivered by it pursuant hereto and the instruments and data delivered to Buyer
hereunder to be updated after the date hereto up to and including the Closing
Date.
6. Options or Warrants. There shall be no warrants or options, other calls,
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or commitments of any character relating to the authorized and unissued Company
Stock as of the Closing Date.
7. Absence of Certain Changes or Events. Except as set forth in Schedule
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________ herein, since the date of the Company's most recent balance sheet
described in Section Three-4 and included in the information referred to in
Section Three-5:
(a) There has not been (i) any material adverse change in the business,
operations, properties, level of inventory, assets, or condition of the Company
taken as a whole or (ii) any damage, destruction, or loss to the Company
(whether or not covered by insurance) materially and adversely affecting the
business, operations, properties, assets, or conditions of the Company taken as
a whole.
(b) Shareholders have not (i) amended the Company's articles of
incorporation or bylaws; (ii) declared or made, or agreed to declare or make,
any payment of dividends or distributions of any assets of any kind whatsoever
to stockholders or purchased or redeemed, or agreed to purchase or redeem, any
of the Company's capital stock; (iii) waived any rights of value which in the
aggregate are extraordinary or material considering the business of
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the Company; (iv) made any material change in the Company's method of
management, operation, or accounting; (v) entered into any other material
transactions; (vi) made any accrual or arrangement for or payment of bonuses or
special compensation of any kind or any severance or termination pay to any
present or former officer or employee; (vii) increased the rate of compensation
payable or to become payable by it to any of the Company's officers or directors
or any of its employees whose monthly compensation exceeds $1,000.00; or (viii)
made any increase in any profit-sharing, bonus, deferred compensation,
insurance, pension, retirement, or other employee benefit plan, payment, or
arrangement made to, for, or with the Company's officers, directors, or
employees. New Company understands that all bank accounts will have less than
($21.00) Twenty One Dollars at the time of Closing.
(c) Shareholders have not (i) granted or agreed to grant any options,
warrants, or other rights for their stocks, bonds, or other corporate securities
calling for funds or incurred, or become subject to, any material obligation or
liability (absolute or contingent) except liabilities incurred in the ordinary
course of business; (iii) paid any material obligation or liability (absolute or
contingent) other than current liabilities reflected in or shown on the
Company's most recent balance sheet and current liabilities incurred since that
date in the ordinary course of business; (iv) sold or transferred, or agreed to
sell or transfer, any of the Company's assets, properties, or rights (except
assets, properties, or rights not used or useful in its business which , in the
aggregate have a value of less than $5,000) or canceled, or agreed to cancel,
any debts or claims (except debts and claims which in the aggregate are of a
value of less than $5,000); (v) made or permitted any amendment or termination
of any contract, agreement, or license to which the Company is a party is such
amendment or termination is material, considering the business of the Company;
or (vi) issued, delivered, or agreed to issue or delivery any stock, bonds, or
other corporate securities including debentures (whether authorized and unissued
or held as treasury stock); and
(d) To the best knowledge of Shareholders, the Company is not subject to
any law or regulation which materially and adversely affects, or in the future
may adversely affect, the business, operations, properties or assets of the
Company.
8. Title and Related Matters. Except as disclosed in Schedule _____ hereto
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or the Company's most recent unaudited balance sheet and the notes thereto, the
Company has good marketable title to all of its properties, inventory, interests
in properties, and assets, which are reflected in the Company's most recent
balance sheet or acquired after that date (except those sold or otherwise
disposed of since such date in the ordinary course of business), free and clear
of all mortgages, security interests, royalties, liens, pledges, charges, or
encumbrances, except (i) statutory liens or claims not yet delinquent; and (ii)
such imperfections of title and easements as do not, and will not, materially
detract from, or interfere with, the present or proposed use of the properties
subject thereto or affected thereby or otherwise materially impair present
business operations on such properties.
9. Litigation and Proceedings. Except as set forth in Schedule ______
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hereto, there are no actions, suits, administrative or other proceedings pending
or, to the knowledge of Shareholders, threatened by or against the Company or
affecting the Company or its properties, at law or in equity, before any court
or other governmental agency or instrumentality, domestic or foreign, or before
any arbitrator of any kind. Shareholders do not have any knowledge of any
default on its part with respect to any judgment, order, writ, injunction,
decree, award, rule, or regulation of any court, arbitrator, or governmental
agency or instrumentality.
10. Contracts. Except as set forth in Schedule ______ hereto:
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(a) All contracts, agreements, franchises, license agreements, and other
commitments to which the Company is a party or by which their properties are
bound and which are material to the operations or financial condition of the
Company are valid and enforceable by Shareholders in all material respects.
(b) The Company is not a party to or bound by, and its properties are not
subject to, any material contract, agreement, other commitment or instrument;
any charter or other corporate restriction; or any judgment, order, writ,
injunction, decree, or award which materially and adversely affects, or in the
future may (as far as Shareholders can now foresee) materially and adversely
affect, the business, operations, properties, assets, or condition of the
Company.
(c) The Company is not a party to any oral or written (i) contract for
the employment of any officer, director, or employee which is not terminable on
30 days (or less) notice; (ii) profit-sharing, bonus, deferred
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compensation, stock option, severance pay, pension benefit or retirement plan,
agreement, or arrangement covered by Title IV of the Employment Retirement
Income Security Act, as amended; (iii) agreement contract, or indenture relating
to the borrowing of money; (iv) guarantee of any obligation, other than one on
which the Company is a primary obligor, for the borrowing of money or otherwise,
excluding endorsements made for collection and other guarantees of obligations,
which, in the aggregate do not exceed $1,000; (v) consulting or other similar
contract with an unexpired term or more than one year or providing for payments
in excess of $1,000 in the aggregate; (vi) collective bargaining agreement;
(vii) agreement with any present or former officer or director of the Company;
or (viii) contract, agreement, or other commitment involving payments by it of
more than $1,000 in the aggregate.
11. Material Contract Defaults. The Company is not in default in any
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material respect under the terms of any outstanding contract, agreement, lease,
or other commitment which is material to the business, operations, properties,
assets, or condition of the Company taken as a whole, and there is no event of
default or other event which, with notice or lapse of time or both, would
constitute a default in any material respect under any such contract, agreement,
lease, or other commitment in respect of which Shareholders have not taken
adequate steps to prevent such a default from occurring.
12. No Conflict With Other Instruments. The execution of this Agreement and
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the consummation of the transaction contemplated by this Agreement will not
result in the breach of any term or provision of, or constitute an event of
default under, any material indenture, mortgage, deed of trust, or other
material contract, agreement, or instrument to which the Company is a party or
to which any of its properties or operations are subject.
13. Governmental Authorizations. The Company has all licenses, franchises,
---------------------------
permits, and other governmental authorizations that are legally required to
enable it to conduct its businesses in all material respects as conducted on the
date of this Agreement. Except for the satisfaction of requirements of federal
and state securities and corporation laws, as hereinafter provided, no
authorization, approval, consent, or order of, or registration, declaration, or
filing with, any court or other governmental body is required in connection with
the execution and delivery by Shareholders of this Agreement and the
consummation by Shareholders of the transaction contemplated hereby.
14. Compliance With Laws and Regulations. The Company has complied with all
------------------------------------
applicable statutes and regulations of any federal, state, or other governmental
entity or agency thereof, except to the extent that noncompliance would not
materially and adversely affect the business, operations, properties, assets, or
condition of the Company taken as a whole or except to the extent that
noncompliance would not result in the occurrence of any material liability for
the Company.
15. Insurance. All of the insurable properties of the Company are insured
---------
for its benefit in the amount of full replacement value (subject to reasonable
deductibles) against losses due to fire and other casualty, with extended
coverage, and other risks customarily insured against by persons operating
similar properties in the localities where such properties are located and under
valid and enforceable policies issued by insurers of recognized responsibility.
Such policy or policies containing substantially equivalent coverage will be
outstanding and in full force at the closing Date, and copies of said policy or
policies will have been delivered to Buyer prior to Closing.
16. Employee Relations. The Company has complied in all material respects
------------------
with all applicable laws, rules and regulations that relate to prices, wages,
hours harassment, disabled access, and discrimination in employment and
collective bargaining and to the operation of its business and is not liable for
any arrears of wages or any taxes or penalties for failure to comply with any of
the foregoing. Shareholders believe that its relations with its employees are
satisfactory.
17. Indemnification. Officers and Directors of the Company will be
---------------
indemnified as provided for in the Company's Articles of Incorporation and/or
Bylaws.
18. Environmental Matters. Attached hereto as Schedule ___ is a complete and
---------------------
accurate written disclosure with respect to all environmental matters under
federal, state or local law relating to the assets or the business operations of
the Company, or arising from the Company's use or occupancy of property,
directly or indirectly, including without limitation any matters relating to
air, ground, and water pollution or regulation, soil monitoring, occupational
health or safety or the storage, treatment, disposal, release, discharge or
emission of any solid waste, pollutant or contaminant of
8
any kind, including without limitation any hazardous substance or any hazardous
waste, together with a list of all permits, licenses, authorizations,
agreements, injunctions, decrees and orders relating thereto, and copies of any
and all written communications with federal, state and local environmental
regulatory agencies and the Occupational Safety and Health Administration. The
assets and business operations of the Company have been, and are being, used and
operated in compliance with all applicable local, state and federal laws,
ordinances, rules, regulations, permits, licenses, authorizations, agreements,
injunctions, decrees and orders relating to air, ground and water pollution or
regulation; soil monitoring; occupational health or safety; or the storage,
treatment, disposal, release, discharge or emission of any hazardous substances.
No hazardous substances have been disposed of on the properties leased by the
Company and no hazardous substances have been transported by or on behalf of the
Company or in connection with its business operations. Except as expressly
provided in Schedule ______ hereto, the Company and its assets are not, directly
or indirectly, subject to any obligations, liabilities (contingent or
otherwise), claims, judgments, orders, settlements, resolutions of disputes,
writs, injunctions or decrees relating to any product or service sold or
available for sale by the Company, or arising from its use or occupancy of its
properties. There are no threatened or pending litigation, proceedings,
investigations, citations, or notices of violation resulting from the business
activities of the Company, or arising from its use or occupancy of property,
relating to the treatment, storage, disposal, release, discharge or emission of
any economic poisons, hazardous wastes, toxic substances and/or any similar such
pollutants or contaminants. Schedule _____ hereto contains a complete list of
all agreements, contracts, commitments and undertakings involving the Company
and its business or assets relating to the treatment, storage, disposal or
discharge of any economic poisons, hazardous wastes, toxic substances and/or any
similar such pollutants or contaminants. There are no proceedings,
investigations, citations, or notices of violations resulting from the business
activities of the Company, or from or relating to the properties occupied by the
Company, directly or indirectly, relating to the treatment, storage, disposal,
release, discharge or emission of any economic poisons, hazardous wastes, toxic
substances and/or any similar such pollutants or contaminants.
SECTION FOUR
SPECIAL COVENANTS TO BE
SATISFIED PRIOR TO CLOSING
1. Activities of Shareholders and Buyer.
------------------------------------
(a) From and after the date of this Agreement until the Closing Date and
except as set forth in the respective schedules to be delivered by Shareholders
and Buyer pursuant hereto Company and Buyer shall each:
(i) Carry on its business in substantially the same manner as it
has heretofore;
(ii) Maintain in full force and effect insurance comparable in
amount and in scope of coverage to that now maintained by it;
(iii) Perform in all material respects all of its obligations under
material contracts, leases, and instruments relating to or affecting its assets,
properties, and business;
(iv) Use its best efforts to maintain and preserve its business
organization intact, to retain its key employees, and to maintain its
relationships with its material supplies and customers;
(v) Duly and timely file for all taxable periods through 6/30/96 on
or prior to the Closing Date, all federal, state, county, and local tax returns
required to be filed by or on behalf of such entity or for which such entity may
be held responsible and shall pay, or cause to pay, all taxes required to be
shown as due and payable on such returns, as well as all installments of tax due
and payable during the period commencing on the date of this Agreement and
ending on the Closing Date. All such tax returns shall be prepared in a manner
consistent with the preparation of prior years' tax returns except as required
by law or as agreed to by the parties hereto prior to the filing thereof;
(vi) Withhold from each payment made on or prior to the Closing Date
to each employee of such corporation the amount of all taxes required to be
withheld therefrom and will pay the same, before becoming delinquent, to the
proper tax receiving officers; and
9
(vii) Fully comply with and perform in all material respects all
obligations and duties imposed on it by all federal, state, county and local
laws and all rules, regulations, and orders imposed by federal, state, county
and local governmental authorities.
(b) From and after the date of this Agreement, and except as provided herein
until the Closing Date, Shareholders shall not:
(i) Make any change in the articles of incorporation or bylaws of the
Company;
(ii) Take any action described in Section Three-7.;
(iii) Enter into or amend any contract, agreement, or other instrument
of any of the types described in Shareholders schedules hereto, except that the
Company may enter into or amend any contract, agreement, or other instrument in
the ordinary course of business; or
(iv) Enter into any agreement, waiver, or other arrangement providing
for an extension of time with respect to payment by, or assessment against, such
entity or any of its subsidiaries of any tax due and payable with respect to the
period commencing on the date of this Agreement and ending on the Closing Date.
2. Shareholders Approval. Subsequent to the execution and delivery of this
---------------------
Agreement, Shareholders shall, either by a unanimous consent or at a meeting
fully called by the board of directors of the Company to be held as soon as
practicable, present this Agreement for the authorization and approval of the
Shareholders of the Company, in accordance with the applicable provisions of the
laws of the State of Arizona and all applicable federal and state securities
laws and this Agreement.
3. Access to Properties and Records. Shareholders will afford to the
--------------------------------
officers and authorized representatives of Buyer full access to the properties,
books, and records of the Company in order that Buyer may have full access to
the properties, books, and records of the Company in order that Buyer may have
full opportunity to make such reasonable investigation as it shall desire to
make of the affairs of the Company and will furnish Buyer with such additional
financial and operating data and other information as to the business and
properties of the Company as Buyer shall from time to time reasonably request.
4. Indemnification By Buyer. Buyer shall indemnify and hold Shareholders and
------------------------
its directors and officers, and each person, if any, who controls the Company
within the meaning of the Securities Act, harmless from and against any and all
losses, claims, damages, expenses, liabilities, or actions arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in any application or statement filed with a governmental body or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein, or necessary in order to make the
statements therein not misleading, but only insofar as any such statement or
omission was made in reliance upon and in conformity with information furnished
in writing by Shareholders expressly for use therein. Buyer agrees at any time
upon the request of Shareholders to furnish to them a written letter or
statement confirming the accuracy of the information with respect to Buyer
contained in any report or other application or statement referred to in this
Section four, or in any draft of any such documents, and confirming that the
information with respect to Buyer contained in such document or draft was
furnished by Buyer, indicating the inaccuracies or omissions contained in such
document or draft or indicating the information not furnished by Buyer expressly
for use therein. The indemnity agreement continued in this Section Four-5 shall
remain operative and in full force and effect, regardless of any investigation
made by or on behalf of Shareholders and shall survive the consummation of the
transaction contemplated by this Agreement.
5. Indemnification by Shareholders. Shareholders shall indemnify and hold
-------------------------------
harmless Buyer, its directors and officers, and each person, if any, who
controls Buyer within the meaning of the Securities Act, from and against any
and all losses, claims, damages, expenses, liabilities, or actions to which any
of them may become subject under applicable law (including the Securities Act
and the Exchange Act) and will reimburse them for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
claims or actions, whether or not resulting in liability, insofar as such
losses, claims, damages, expenses, liabilities, or actions arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in any application or statement filed with a
10
governmental body or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary in order to make the statements therein not misleading, but only
insofar as any such statement or omission was made in reliance upon and in
conformity with information furnished in writing by Shareholders expressly for
use therein. Shareholders agree at any time upon the request of Buyer to
furnish to it a written letter or statement confirming the accuracy of the
information with respect to the company contained in any information/proxy
statement, report, or other application or statement referred to in this Section
Four, on in any draft of any such document, and confirming that the information
with respect to the company contained in such document or draft was furnished by
the Company, indicating the inaccuracies or omissions contained in such document
or draft or indicating the information not furnished by Shareholders expressly
for use therein. the indemnity agreement contained in this Section Four-6 shall
remain operative and in full force and effect, regardless of any investigation
made by or on behalf of Buyer and shall survive the consummation of the
transaction contemplated in this agreement.
6. Third-Party Consents. Shareholders and Buyer agree to cooperate with
--------------------
each other in order to obtain any third-party consents to this agreement and the
transaction herein contemplated that are required.
SECTION FIVE
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are subject to the satisfaction,
at or before the Closing Date, of the following conditions:
1. Accuracy of Representations. The representations and warranties made
---------------------------
by Shareholders in this Agreement were true when made and shall be true at the
Closing Date with the same force and effect as if such representations and
warranties were made at and as of the Closing Date (except for changes therein
permitted by this Agreement), and Shareholders shall have preformed or complied
with all covenants and conditions required by this Agreement to be performed or
complied with by Shareholders prior to or at the Closing. Buyer shall be
furnished with certificates, signed by duly authorized officers of the Company
and dated the Closing Date, to the foregoing effect.
2. Officer's Certificates. Buyer shall have been furnished with
----------------------
certificates dated the Closing Date and signed by the duly authorized chief
executive officer and principal accounting and financial officer of the Company
to the effect that, except as set forth herein, no litigation, proceeding,
investigation, or inquiry is pending or, to the best knowledge of Shareholders,
threatened, which might result in an action to enjoin or prevent the
consummation of the transaction contemplated by this Agreement. Furthermore,
based on certificates of good standing, representations of government agencies,
and Shareholder's own documents, the certificate shall represent that:
(a) This Agreement has been duly approved by the Company's board of
directors and has been duly executed and delivered in the name and on behalf of
the Company by its duly authorized officers pursuant to, and in compliance with,
authority granted by the board of directors of the Company;
(b) The representations and warranties of Shareholders set forth in this
Agreement are true and correct as of the date of the certificate;
(c) There have been no material adverse changes in the Company up to and
including the date of the certificate;
(d) All conditions required by this Agreement to have been met, satisfied,
or performed by Shareholders have been met;
(e) The consummation of the transaction contemplated by this Agreement
does not violate any law, regulation, order, writ, injunction, or decree of any
court of governmental body or result in the creation or imposition of any
mortgage, lien, charge, or encumbrance of any nature upon any of the properties
of the Company, pursuant to any mortgage, resolution, agreement, or instrument
to which the Company is a party;
(f) All authorizations, consents, approvals, registrations, and/or filings
with any governmental body, agency, or court required in connection with the
execution and delivery of the documents by Shareholders have
11
been obtained and are in full force and effect or, if not required to have been
obtained, will be in full force and effect by such time as may be required; and
(g) There are no legal actions, lawsuits, proceedings, inquiries, or
investigations at law or in equity by any public board or body pending or
threatened against the Company, wherein an unfavorable decision, ruling, or
finding would have an adverse effect on the financial condition of the company,
the operation of the Company, or the acquisition and reorganization contemplated
herein, or any material agreement or instrument by which the Company is bound or
would in any way contest the existence of the Company. In an abundance of
caution, Buyer is advised that on June 7, 1996, Seller received notice of an
injury as a result of a furniture item falling on an individual in the State of
Florida. This matter has been submitted to the insurance liability company of
the Seller for their adjusting.
3. No Material Adverse Change. Prior to the Closing Date, there shall not
--------------------------
have occurred any material adverse change in the financial condition, business,
or operations of the Company, nor shall any event have occurred with, with the
lapse of time or the giving of notice, may cause or create any material adverse
change in the financial condition, business, or operations of the Company.
4. Good Standing. Buyer shall have received certificates of good standing
-------------
from the appropriate authorities, dated as of a date within thirty (30) days
prior to the Closing Date, or any other date satisfactory to Buyer, certifying
that the Company is in good standing as a corporation in the State of Arizona.
5. Shareholder Approval. The Shareholders of the Company shall have
--------------------
approved this Agreement and the transaction contemplated therein in the manner
required by the Company's articles of incorporation and bylaws and the Arizona
Business Corporation Act, as applicable.
6. Due Diligence. Buyer shall have completed a due diligence review of
-------------
the Company and be satisfied as to the Company's documentation and financial
position.
7. Other Items. Buyer shall have received such further documents,
-----------
certificates, or instruments relating to the transaction contemplated hereby as
Buyer may reasonably request.
SECTION SIX
CONDITIONS PRECEDENT TO
OBLIGATIONS OF SHAREHOLDERS
The obligations of Shareholders under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
1. Accuracy of Representations. The representations and warranties made
---------------------------
by Buyer in this Agreement were true when made and shall be true at the Closing
date with the same force and effect as if such representations and warranties
were made at and as of the Closing Date (except for changes therein permitted by
this Agreement), and Buyer shall have performed or complied with all covenants
and conditions required by this Agreement to be performed or complied with by
Buyer prior to or at the Closing. Shareholders shall be furnished with a
certificate, signed by a duly authorized officer of Buyer and dated the Closing
Date, to the foregoing effect.
2. Officer's Certificates. Shareholders shall have been furnished with
----------------------
certificates dated the Closing Date and signed by a duly authorized agent of
Buyer to the effect that no litigation, proceeding, investigation, or inquiry is
pending or, to the best knowledge of Buyer, threatened, which might result in an
action to enjoin or prevent the consummation of the transaction contemplated by
this Agreement. Furthermore, based on certificates of good standing,
representations of government agencies, and Buyer's own documents, the
certificate shall represent that:
(a) This Agreement has been duly approved by Buyer and has been duly
executed and delivered in the name and on behalf of Buyer by its duly authorized
representative pursuant to, and in compliance with, authority granted by the
Buyer;
12
(b) The representations and warranties of Buyer set forth in this Agreement
are true and correct as of the date of the certificate;
(c) Except as provided or permitted herein, there have been no material
adverse changes in Buyer up to and including the date of the certificate;
(d) All conditions required by this Agreement to have been met, satisfied,
or performed by Buyer have been met;
(e) The consummation of the transaction contemplated by this Agreement does
not violate any law, regulation, order, writ, injunction or decree of any court
of governmental body or result in the creation or imposition of any mortgage,
lien, charge, or encumbrance of any nature upon any of the properties of Buyer,
pursuant to any mortgage, resolution, agreement, or instrument to which Buyer is
a party;
(f) All authorizations, consents, approvals, registrations, and/or fillings
with any governmental body, agency, or court required in connection with the
execution and delivery of the documents by Buyer have been obtained and are in
full force and effect or, if not required to have been obtained will be in full
force and effect by such time as may be required; and
(g) There is no action, suit, proceeding, inquiry, or investigation at law
or in equity by any public board or body pending or threatened against Buyer
herein an unfavorable decision, ruling or finding would have an adverse effect
on the financial condition of Buyer the operation of Buyer, or the acquisition
and reorganization contemplated herein, or any material agreement or instrument
by which Buyer is bound or would in any way contest the existence of Buyer.
3. No Material Adverse Change. Except as provided or permitted herein,
--------------------------
prior to the Closing Date, there shall not have occurred any material adverse
change in the financial condition, business, or operations of Buyer, nor shall
any event have occurred which, with the lapse of time or the giving of notice,
may cause or create any material adverse change in the financial condition,
business, or operations of Buyer.
4. Other Items. Shareholders shall have received such further documents,
-----------
certificates, or instruments relating to the transaction contemplated hereby as
Shareholders may reasonably request.
SECTION SEVEN
MISCELLANEOUS
1. Brokers. Shareholders and Buyer agree that there were no finders or
-------
brokers involved in bringing the parties together or who were instrumental in
the negotiations, execution, or consummation of this Agreement. Further,
Shareholders and buyer each agree to indemnify the other against any claim by
any third person for any commission, brokerage, or finder's fee or other payment
with respect to this Agreement or the transaction contemplated hereby based on
any alleged agreement or understanding between such party and such third person,
whether express or implied, from the actions of such party.
2. No Representation Regarding Tax Treatment. No representation or
-----------------------------------------
warranty is being made by any party to any other regarding the treatment of this
transaction for federal or state income taxation. Each party has relied
exclusively on its own legal, accounting, and other tax adviser regarding the
treatment of this transaction for federal and state income taxes and on no
representation, warranty, or assurance from any other party or such other
party's legal, accounting, or other adviser.
3. Governing Law. This Agreement shall be governed by, enforced and
-------------
construed under and in accordance with the laws of the State of Arizona. Any
legal action brought in connection herewith shall be properly brought only in a
court of competent jurisdiction in Maricopa County, Arizona, or in the United
States District Court for the District of Arizona.
13
4. Notices. All notices, demands, requests, or other communications
-------
required or authorized hereunder shall be deemed given sufficiently if in
writing and if personally delivered; if sent by facsimile transmission,
confirmed with a written copy thereof sent by overnight express delivery; if
sent by registered mail or certified mail, return receipt requested and postage
prepaid; or if sent by overnight express delivery;
If to Shareholders: New Directions, Inc.
Attn: Xxxx Xxxxxx, Xx. or Jr.
0000 Xxxx Xxxxxxxx
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (602)
If to Buyer: Xxx Family Limited Partnership
Attn: Xxxx Xxx
0000 Xxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (602)
or such other addresses and facsimile numbers as shall be furnished by any party
in the manner for giving notices hereunder, and any such notice, demand,
request, or other communication shall be deemed to have been given as of the
date so delivered or sent by facsimile transmission, three days after the date
so mailed, or one day after the date so sent by overnight delivery.
5. Attorneys' Fees. In the event that any party institutes any action or
---------------
suit to enforce this Agreement or to secure relief from any default hereunder or
breach hereof, the breaching party or parties shall reimburse the non-breaching
party or parties for all costs, including reasonable attorneys' fees, incurred
in connection therewith and in enforcing or collecting any judgment rendered
therein.
6. Schedules; Knowledge. Whenever in any section of this Agreement
--------------------
reference is made to information set forth in the schedules provided by
Shareholders, or Buyer, such reference is to information specifically set forth
in such schedules and clearly marked to identify the section of this Agreement
to which the information relates. Whenever any representation is made to the
"knowledge" of any party, it shall be deemed to be a representation that no
officer or director of such party, after reasonable investigation, has any
knowledge contrary to the statements made (or omitted) regarding such matters.
7. Third-Party Beneficiaries. This contract is solely between New
-------------------------
Directions, Shareholders and Buyer, except as specifically provided, no
director, officer, stockholder, employee, agent, independent contractor, or any
other person or entity shall be deemed to be third party beneficiary of this
Agreement.
8. Entire Agreement. This Agreement represents the entire agreement
----------------
between the parties relating to the subject matter hereof. All previous
agreements between the parties, whether written or oral, have been merged into
this Agreement. This Agreement alone fully and completely expresses the
agreement of the parties relating to the subject matter thereof. There are no
other courses of dealing, understandings, agreements, representations, or
warranties, written or oral, except as set forth herein.
9. Survival; Termination. The representations, warranties, and covenants
---------------------
of the respective parties shall survive the Closing Date and the consummation of
the transaction herein contemplated.
10. Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
11. Amendment or Waiver. Every right and remedy provided herein shall be
-------------------
cumulative with every other right and remedy, whether conferred herein, at law,
or in equity, and such remedies may be enforced concurrently, and no waiver by
any part of the performance of any obligation by the other shall be construed as
a waiver of the same or any
14
other default then, theretofore, or thereafter occurring or existing. At any
them prior to the Closing Date, this Agreement may be amended by a writing
signed by all parties hereto, with respect to any of the terms contained herein,
and any term or condition of this Agreement may be waived or the time for
performance thereof may be extended by a writing signed by the party or parties
for whose benefit the provision is intended.
12. Confidentiality. Each party will use good, faith efforts to keep
---------------
confidential, (i) all agreements, whether final or preliminary, between the
parties; (ii) the transaction contemplated by this Agreement; and (iii) the
matters pertaining to the other party - including the amount and nature of the
assets disclosed by the other party for the purposes of this transaction -
disclosed to such other party in the course of such other party's due diligence
inspection and review of the proposed transaction (other than information which
is a matter of public knowledge or may be obtained from sources readily
available to the public). Such matters may be disclosed (i) to the party's
directors, officers, employees, legal counsel, accountants, financial advisors,
and similar professionals and consultants to the extent such party deems it
necessary or appropriate in connection with the evaluation of the proposed
transaction; (ii) to potential or existing sources of financing, including
without limitation, potential or existing equity owners of such party (inclusive
of investors, underwriters, or other appropriate persons in connection with the
offering of equity or debt securities); (iii) to the extent required by law; or
(iv) as may subsequently be approved in writing by both parties. In addition,
in the event that this Agreement is terminated prior to consummation of the
transaction contemplated herein, the parties agree to return the entirety of
such documentation provided by such other party, together with all copies made
thereof, upon receipt of a written request for such documentation from the
other party.
13. Restriction on Stock Transfer. The parties to this agreement
-----------------------------
acknowledge the Buyer's indebtedness as a result of the installment purchase of
Seller's stock. Buyer expressly agrees to not encumber, sell, transfer, or in
any other way affect the ownership of the stock without the express written
approval of Seller or the satisfaction and payment in full of all indebtedness
owed to Seller.
14. Time of Essence. Time shall be of the essence in the performance of
---------------
this Agreement and each and every provision hereof. Any extension of time
granted for the performance of any duty under this Agreement shall not be
considered an extension of time for the performance of any other duty under this
Agreement.
15. Publicity. Without prior consultation and agreement with the other
---------
parties hereto, no party, nor the employees or agents of any party, shall make
any public disclosure of the facts of this transaction or the existence of this
Agreement (although disclosure of the existence of this Agreement may be made by
the Company to creditors and suppliers in form satisfactory to Buyer and may be
made by Buyer), the parties hereto, the terms hereof, or any related matter.
IN WITNESS WHEREOF, the parties hereto have executed or caused this Agreement
to be executed by their respective agents, hereunto duly authorized, as of the
date first above written.
SHAREHOLDERS:
/s/ Xxxx Xxxxxx, Xx.
----------------------------
XXXX XXXXXX, XX.
/s/ Xxxx Xxxxxx, Xx.
----------------------------
XXXX XXXXXX, XX.
/s/ Xxxxx Xxxxxx
-----------------------------
XXXXX XXXXXX
15
BUYER:
XXX FAMILY LIMITED PARTNERSHIP
/s/ Xxxx X. Xxx
-------------------------------
Name: Xxxx X. Xxx
Title: Manager
NEW DIRECTIONS, INC.:
/s/ Xxxx Xxxxxx, Xx.
-------------------------------
Name: Xxxx Xxxxxx, Xx.
Title: President
CONSENT AND JOINDER OF SPOUSE
The undersigned, being the spouse of Xxxx Xxxxxx, Xx., one of the
Shareholders, hereby agrees to join in and be bound by the terms of the
foregoing Stock Purchase Agreement and the Exhibits thereto, including without
limitation the indemnification of the Buyer provisions, as one of the
Shareholders.
/s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx Xxxxxx
CONSENT AND JOINDER OF SPOUSE
The undersigned, being the spouse of Xxxx Xxxxxx, Xx., one of the
Shareholders, hereby agrees to join in and be bound by the terms of the
foregoing Stock Purchase Agreement and the Exhibits thereto, including without
limitation the indemnification of the Buyer provisions, as one of the
Shareholders.
/s/ Xxxxxx Xxxxxx
--------------------------------
Name: Xxxxxx Xxxxxx
16
SCHEDULE A
(Shareholders-Shareholders)
Name Address Type/No. of shares
---------------------------------------------------------
Xxxx Xxxxxx, Xx.
Xxxx Xxxxxx, Xx.
Xxxxx Xxxxxx
SCHEDULE B
(Debts, Liabilities-New Directors)
A. Accounts Payable
B. Customer Deposits
C. Payroll Taxes Withheld
D. Commissions Payable
E. Accrued Employment Compensation
F. Accrued Rent
G. Accrued Interest
H. Sales Taxes Payable
I. Contracts Payable
J. Notes Payable
K. Loans Payable
17
EXHIBIT C
(Assets-New Directions)
A. Personal Property
B. Receivables
C. Inventory
D. Leasehold Improvements
E. Deposits and Prepaid Expenses
F. Business Records
G. Intangible Assets
H. Contracts
I. Other Assets
SCHEDULE _____
(Resolutions-Shareholders)
SCHEDULE _____
(Financial Statement-New Directions)
SCHEDULE _____
(Certain Changes or Events-New Directions)
SCHEDULE _____
(Title and Related Matters-New Directions)
SCHEDULE _____
(Litigation and Proceedings-New Directions)
SCHEDULE _____
(Contracts-New Directions)
SCHEDULE _____
(Environmental Matters-New Directions)
18
SCHEDULE _____
(Certain Changes or Events-Buyer)
19
ADDENDUM
--------
THIS ADDENDUM ("Addendum") to the Stock Purchase Agreement (the "Agreement")
dated June ___, 1996 by and among the Shareholders of New Directions, Inc., an
Arizona corporation with principal executive offices and manufacturing
facilities located at 0000 Xxxx Xxxxxxxx, Xxxxxxx, Xxxxxxx 00000 (collectively
referred to hereinafter as "Shareholders"); New Directions, Inc., an Arizona
corporation ("New Directions", "Company", or "Seller"); and Xxx Family Limited
Partnership, a limited partnership organized under the laws of the state of
Arizona with offices located at 0000 Xxxx Xxxx Xxxxx, Xxxxxxxx, Xxxxxxx 00000
("Xxx") or the nominee(s) of Xxx (Xxx and such nominee(s) shall collectively be
referred to hereinafter as "Buyer"), is made and effective this ___ day of June
1996.
AGREEMENT
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NOW THEREFORE, for and in consideration of the mutual covenants and agreements
contained within the Agreement and in reliance on the representations and
warranties set forth therein, and the benefits to be derived therefrom, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties agree to amend the Agreement as follows:
Subsection Seven-One shall be amended to read in its entirety as follows:
--------------------
1. Brokers. The Parties acknowledge and understand that Xxxx Xxxxxxxx, a
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representative of Swallows & Associates ("Swallows"), acted as dual broker for
the purposes of this transaction and is to be compensated by Seller as agreed by
Seller and Swallows. The parties further acknowledge that with the exception of
Swallows, there were no other finders or brokers involved in bring the parties
together or who were instrumental in the negotiation, execution, or consummation
of this Agreement. The parties each agree to indemnify the other against any
claim by any third person for any commission, brokerage, or finder's fee or
other payment with respect to this Agreement or the transaction contemplated
hereby based on any alleged agreement or understanding between such party and
such third person, whether express or implied, from the actions of such party.
Subject to the effect of this addendum, all other terms, covenants, and
provisions of the Agreement shall remain in full force and effect as provided
therein.
IN WITNESS WHEREOF, the parties hereto have executed or caused this Addendum
to the Agreement to be effective the date provided above.
SHAREHOLDERS:
/s/ Xxxx Xxxxxx, Xx.
--------------------------
XXXX XXXXXX, XX.
/s/ Xxxx Xxxxxx, Xx.
--------------------------
XXXX XXXXXX, XX.
/s/ Xxxxx Xxxxxx
---------------------------
XXXXX XXXXXX
BUYER:
XXX FAMILY LIMITED PARTNERSHIP
/s/ Xxxx X. Xxx
--------------------------
Name: Xxxx Xxx
Title: Chairman
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NEW DIRECTIONS, INC.:
/s/ Xxxx Xxxxxx, Xx.
----------------------------
Name: Xxxx Xxxxxx, Xx.
Title: President
21
AGREEMENT TO EXTEND THE STOCK PURCHASE AGREEMENT
Manhattan West, Inc. will provide $100,000 by Friday, October 11, 1996 as an
option purchase under the following terms:
In exchange for the $100,000 the New Directions, Inc. ("Company") will extend
the closing date to January 30, 1997 contained in paragraph of page 4 of the
Stock Purchase Agreement between the Company and the Xxx Family Limited
Partnership, which is hereby incorporated by reference. It is agreed that the
Company will make reasonable and good faith efforts to timely close the stock
purchase agreement.
Should the transaction not close on the Stock Purchase Agreement, the $100,000
option purchase will be forfeited to New Directions, Inc. I.
It is further understood that the $100,000 will be deducted from the purchase
price of the Company at closing.
It is also agreed that the $800,000 note, contained in the Stock Purchase
Agreement, both principal and interest will be paid over a 4 year period.
By signing this agreement the parties accept the above terms.
/s/ Xxxx Xxxxxx, Xx. 10/9/96
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XXXX XXXXXX, XX. Date
/s/ Xxxx Xxxxxx, Xx. 10/9/96
-------------------- -------
XXXX XXXXXX, XX. Date
/s/ Xxxxx Xxxxxx 10/9/96
-------------------- -------
XXXXX XXXXXX Date
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