EXHIBIT 10.4
SHARE PURCHASE AND SALE AGREEMENT
THIS SHARE PURCHASE AND SALE AGREEMENT (this "Agreement") is
made to be effective as of May 10, 1996, by and between D.P.E.C., Inc., an Ohio
corporation (the "Company"), and Xxxx Xxxxxxxx ("Xxxx").
WHEREAS, Xxxx owns of record and beneficially, in the
aggregate, 22,275 common shares, without par value, of the Company (the "Common
Shares"), which Common Shares constitute 50% of the issued and outstanding
Common Shares on the date hereof;
WHEREAS, Xxxx desires to sell, and the Company desires to
purchase, 14,850 of the Common Shares owned by Xxxx (the "Shares") on the terms
and subject to the satisfaction of the conditions contained in this Agreement;
and
WHEREAS, the Company and Xxxx desire to establish by this
Agreement certain rights and obligations between them;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants herein contained, the parties hereto agree as follows:
ARTICLE I
Sale and Purchase of the Shares
1.01. SALE AND PURCHASE. Upon the terms and subject to the
satisfaction of the conditions contained in this Agreement, at the Closing (as
hereinafter defined) Xxxx will sell to the Company, and the Company will
purchase from Xxxx, the Shares. At the Closing, Xxxx will deliver to the Company
stock certificate(s) evidencing the Shares, duly endorsed in blank or
accompanied by assignment(s) separate from the certificate(s).
1.02. PURCHASE PRICE. The purchase price for the Shares is
$1,250,000 payable by the Company at the Closing, of which $1,000,000 shall be
paid by a bank draft or certified check and $250,000 shall be paid by a
promissory note in substantially the form attached hereto as Exhibit 1.02 and
incorporated herein by reference (the "Note").
1.03. SUBORDINATION. At the Closing, Xxxx will enter into a
Subordination Agreement and Assignment with the Company for the benefit of
Huntington National Bank (the "Bank") in substantially the form attached hereto
as Exhibit 1.03 and incorporated herein by reference (the "Subordination
Agreement").
1.04. AUTOMOBILE. As additional consideration for the Shares,
at the Closing the Company shall assign and transfer to Xxxx the Company-owned
automobile which Xxxx is currently using.
ARTICLE II
The Closing
2.01. CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") will take place at the offices of Vorys, Xxxxx,
Xxxxxxx and Xxxxx, 00 X. Xxx Xx., Xxxxxxxx, Xxxx 00000, on May 10, 1996, at 3:30
p.m., or at such other place or time as the parties may agree. The date and time
at which the Closing occurs is hereinafter referred to as the "Closing Date."
ARTICLE III
Representations and Warranties of Xxxx
Xxxx represents and warrants to the Company as follows:
3.01. TITLE TO SHARES. Xxxx owns of record and beneficially
the Shares and such ownership is free and clear of any and all pledges, security
interests, liens, charges, encumbrances and claims of any nature whatsoever
except for any Encumbrance Exceptions. At the Closing, the Company will acquire
good title to the Shares, free and clear of any and all pledges, security
interests, liens, charges, encumbrances and claims of any nature whatsoever
except for any Encumbrance Exceptions. For purposes hereof, "Encumbrance
Exceptions" means any shareholder, pledge or other agreement to which the
Company is a party.
3.02. AUTHORITY. Xxxx has full authority to execute and
deliver this Agreement and the Subordination Agreement, the Shareholders
Agreement, the Noncompetition Agreement, the Registration Rights Agreement, and
the Pledge Agreement (collectively, "Fran's Other Agreements") and to consummate
the transactions contemplated hereby and thereby. This Agreement has been, and
Fran's Other Agreements will be at the Closing, duly and validly executed and
delivered by Xxxx, and upon such execution and delivery will constitute her
valid and binding agreements and will be enforceable against her in accordance
with their respective terms, subject to the Enforceability Exceptions. For
purposes hereof, "Enforceability Exceptions" means the limitations that may be
placed on enforceability by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other laws of general applicability relating to or
affecting creditors' rights and by general principles of equity.
3.03. CONSENTS AND APPROVALS; NO VIOLATION. Neither the
execution and delivery by Xxxx of this Agreement or Fran's Other Agreements, nor
the consummation by Xxxx of the transactions contemplated by this Agreement and
Fran's Other Agreements, will (i) require any consent, approval, authorization
or permit of, or filing with or notification to, any
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governmental or regulatory authority, (ii) result in a default under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which Xxxx is a party or by which
any of Fran's assets are bound or (iii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Xxxx or any of Fran's assets.
3.04. BROKERAGE. There are no claims by any person for
brokerage commissions, finder's fees or agent's commissions or like payment for
which Xxxx is obligated or liable in connection with this Agreement or the
transactions contemplated hereby.
3.05. KNOWLEDGE AND EXPERIENCE. Xxxx has such knowledge and
experience with respect to business and financial matters that she is capable of
evaluating the merits and risks of the sale of the Shares. By virtue of her
relationship with the Company, Xxxx has had, and in making this sale is solely
relying upon, her complete access to all relevant information regarding the
business, operations, financial condition, assets, liabilities and prospects of
the Company.
ARTICLE IV
Representations and Warranties of the Company
The Company represents and warrants to Xxxx as follows:
4.01. CORPORATE ORGANIZATION. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Ohio and has the requisite corporate power to carry on its business as
it is now being conducted.
4.02. AUTHORITY. The Company has the requisite corporate power
to execute and deliver this Agreement and the Note, the Shareholders Agreement,
the Noncompetition Agreement, the Registration Rights Agreement and the Pledge
Agreement (collectively, the "Company's Other Agreements") and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Company's Other Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all of
the directors and shareholders of the Company. This Agreement has been, and the
Company's Other Agreements will be at the Closing, duly and validly executed and
delivered by the Company, and upon such execution and delivery will constitute
the Company's valid and binding agreements and will be enforceable against the
Company in accordance with their respective terms, subject to the Enforceability
Exceptions.
4.03. CONSENTS AND APPROVALS; NO VIOLATION. Neither the
execution and delivery by the Company of this Agreement or the Company's Other
Agreements, nor the consummation by the Company of the transactions contemplated
by this Agreement and the Company's Other Agreements, will (i) require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, (ii) result in a breach
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of the Company's articles of incorporation or code of regulations or a default
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, agreement, lease or other instrument or obligation to which the
Company is a party or by which any of the Company's assets may be bound, or
(iii) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company or any of the Company's assets.
4.04. BROKERAGE. There are no claims by any person for
brokerage commissions, finder's fees or agent's commissions or other like
payment for which the Company is obligated or liable in connection with this
Agreement or the transactions contemplated hereby.
ARTICLE V
Other Covenants of the Parties
5.01. RESIGNATION. At the Closing, Xxxx will tender to the
Company her written resignation as an employee and an officer of the Company,
which resignation will be effective as of the Closing Date. Effective as of the
Closing Date, all salary, fringe benefits and other forms of compensation
payable by the Company to Xxxx will terminate, except as provided in the
Noncompetition Agreement or this Agreement. Following the Closing, Xxxx may
serve as an outside consultant to the Company providing such number of hours and
services and receiving such compensation as the Company and Xxxx mutually agree.
5.02. NONCOMPETITION AGREEMENT. At the Closing, Xxxx and the
Company will enter into a Noncompetition Agreement in substantially the form
attached hereto as Exhibit 5.02 and incorporated herein by reference (the
"Noncompetition Agreement").
5.03. REGISTRATION RIGHTS AGREEMENT. At the Closing, Xxxx and
the Company will enter into a Registration Rights Agreement in substantially the
form attached hereto as Exhibit 5.03 and incorporated herein by reference (the
"Registration Rights Agreement"). At the Closing, the Company will cause Xxxxx
Xxxxx ("Xxxxx") also to enter into the Registration Rights Agreement.
5.04. SHAREHOLDERS AGREEMENT. At the Closing, Xxxx and the
Company will enter into the Second Amended and Restated Shareholders Agreement
in substantially the form attached hereto as Exhibit 5.04 and incorporated
herein by reference (the "Shareholders Agreement"). At the Closing, the Company
will cause Xxxxx also to enter into the Shareholders Agreement.
5.05. PLEDGE AGREEMENT. At the Closing, Xxxx and the Company
will enter into a Pledge and Security Agreement in substantially the form
attached hereto as Exhibit 5.05 and incorporated herein by reference (the
"Pledge Agreement"). At the Closing, pursuant to the terms of the Pledge
Agreement, the Company shall deliver to Xxxx stock certificate(s) evidencing
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the Shares pledged thereunder, duly endorsed in blank or with separate powers
attached (the "Pledged Instruments").
5.06. RELEASE FROM LIABILITY. The Company will use its best
efforts to arrange with the Bank to have Xxxx removed as a guarantor on and
released from any liability with respect to any loans and other debts of the
Company which Xxxx may have personally guaranteed.
5.07 PROPRIETARY INFORMATION AND INVENTIONS.
(a) Xxxx shall hold in a fiduciary capacity, for the
benefit of the Company, all Proprietary Information and she
shall keep confidential and shall not disclose any Proprietary
Information to any person without the prior written consent of
the Company. All Proprietary Information, including
Inventions, shall be the exclusive property of the Company,
and Xxxx shall be deemed at the Closing to have assigned the
same to the Company. At any time after the Closing, Xxxx and
Fran's heirs, executors, administrators, and legal
representatives, at the Company's request and expense, shall
provide all information, documents, testimony and other
assistance, and shall execute all assignments or other
documents, that the Company considers to be necessary or
appropriate for the Company to acquire, maintain, perfect or
exercise any form of legal protection, including but not
limited to patent or copyright protection, that the Company
deems desirable in relation to any of the Inventions.
(b) (1) "Proprietary Information" means any
information acquired by Xxxx during or as a result of her
employment or consulting with the Company (including
information conceived, discovered or developed by Xxxx), which
is not in the public domain, and which relates to the business
or contemplated business of the Company, whether such
information is patentable or unpatentable, copyrightable or
uncopyrightable. By way of example, Proprietary Information
includes Inventions (as defined below), information of a
technical nature, such as trade secrets, innovations,
discoveries, formulae, algorithms, research projects,
software, source codes, work processes, flow charts, test
data, technical writings, and confidential information of
other parties which is provided to the Company by any
agreement under which the Company has an obligation to protect
the confidentiality of same. Proprietary Information also
includes matters of a business nature, such as customer lists,
customer requirements and preferences relating to the business
of the Company, costs or prices or license fees or maintenance
fees or other financial information such as sales, profits,
expenses, financial projections, financial goals, local, state
and federal tax returns, litigation,
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compensation, personnel data, business plans, and market
research. Notwithstanding the foregoing, Proprietary
Information does not include information that is in the
public domain (other than by acts by Xxxx or her
representatives in violation of this Section 5.07).
(2) "Inventions" means any inventions,
improvements, works of authorship, designs, plans, creative or
professional work product, discoveries or innovations, whether
of a technical or business nature, whether patentable or
unpatentable, copyrightable or uncopyrightable, relating in
any way to the business or contemplated business of the
Company and conceived or reduced to practice by Xxxx, either
alone or with others, either within or without normal working
hours, during Fran's employment with the Company, including
all data, records, physical embodiments and intellectual
property pertaining thereto.
5.08. LIFE INSURANCE. Each of Xxxx and Xxxxx has procured, as
policy owner and beneficiary, two policies of term insurance on the life of the
other with aggregate face amounts of $1,000,000. At the Closing, Xxxx shall
assign to the Company or its designee the policies and benefits covering Carol's
life and the Company shall cause Xxxxx to assign to Xxxx or her designee the
policies and benefits covering Fran's life.
5.09. EXPENSES AND TAXES. Each party will be responsible for
all costs and expenses incurred by such party in connection with this Agreement
and the transactions contemplated hereby, including any tax liability incurred
by such party.
5.10. FURTHER ASSURANCES. Subject to the terms and conditions
contained in this Agreement, each party hereto will use such party's best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or advisable to cause the Closing to occur
and to consummate and make effective the sale and purchase of the Shares and the
other transactions contemplated by this Agreement.
ARTICLE VI
Closing Conditions
6.01. CONDITIONS TO THE OBLIGATIONS OF XXXX. The obligations
of Xxxx to effect the transactions contemplated hereby are subject to the
satisfaction, at or prior to the Closing, of the following conditions, any one
or more of which may be waived by Xxxx:
(a) The delivery by the Company to Xxxx of a bank
draft or certified check in the amount of $1,000,000 and of
the Note in the amount of $250,000, as provided in Section
1.02 hereof;
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(b) The delivery by the Company to Xxxx of a duly
endorsed certificate of title to the automobile, as provided
in Section 1.04 hereof;
(c) The execution and delivery by the Company to Xxxx
of the Noncompetition Agreement and the Pledge Agreement
(including the Pledged Instruments), as provided in Sections
5.02 and 5.05 hereof, respectively;
(d) The Company's and Carol's execution and delivery
to Xxxx of the Registration Rights Agreement and the
Shareholders Agreement, as provided in Sections 5.03 and 5.04
hereof, respectively;
(e) Xxxx shall have been removed as a guarantor and
released from liability as provided in Section 5.06 hereof;
(f) The assignment by Xxxxx to Xxxx or her designee
of life insurance policies covering Fran's life, as provided
in Section 5.08 hereof;
(g) The execution and delivery by the Company to Xxxx
of a certificate, signed by Xxxxx as President of the Company,
to the effect that the representations and warranties of the
Company set forth in this Agreement were true and correct as
of the date hereof and are true and correct as of the Closing
Date as though made at and as of the Closing Date; and
(h) The representations and warranties of the Company
set forth in Article IV hereof shall be true and correct as of
the date hereof and as of the Closing Date and the Company
shall have performed and complied with all other provisions
contained in this Agreement required to be performed and
complied with by the Company at or prior to the Closing.
6.02. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company to effect the transactions contemplated hereby are
subject to the satisfaction, at or prior to the Closing, of the following
conditions, any one or more of which may be waived by the Company:
(a) The assignment and delivery by Xxxx to the
Company of stock certificate(s) evidencing the Shares, as
provided in Section 1.01 hereof;
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(b) The execution and delivery by Xxxx to the Company
of the Registration Rights Agreement and the Shareholders
Agreement, as provided in Sections 5.03 and 5.04 hereof,
respectively;
(c) The execution and delivery by Xxxx to the Company
of the Subordination Agreement, Fran's written resignation,
the Noncompetition Agreement and the Pledge Agreement, as
provided in Sections 1.03, 5.01, 5.02 and 5.05 hereof,
respectively;
(d) The assignment by Xxxx to the Company or its
designee of life insurance policies covering Carol's life, as
provided in Section 5.08 hereof;
(e) The execution and delivery by Xxxx to the Company
of a certificate to the effect that the representations and
warranties of Xxxx set forth in this Agreement were true and
correct as of the date hereof and are true and correct as of
the Closing Date as though made at and as of the Closing Date;
and
(f) The representations and warranties of Xxxx set
forth in Article III hereof shall be true and correct as of
the date hereof and as of the Closing Date and Xxxx shall have
performed and complied with all other provisions contained in
this Agreement required to be performed and complied with by
Xxxx at or prior to the Closing.
ARTICLE VII
Miscellaneous Provisions
7.01. AMENDMENT AND MODIFICATION. This Agreement may be
amended only by a written agreement signed by the parties hereto.
7.02. WAIVER OF COMPLIANCE; CONSENTS. Except as otherwise
provided in this Agreement, any failure of a party to comply with any
representation, warranty, covenant, or condition contained herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
7.03. SURVIVAL OF REPRESENTATIONS. WARRANTIES AND COVENANTS.
The representations, warranties and covenants of the parties contained herein
shall survive the Closing and shall be deemed to be material and to have been
relied upon by the parties.
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7.04. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or by
facsimile transmission or mailed by registered or certified mail (return receipt
requested), postage prepaid, to the parties at the following addresses and
facsimile numbers (or at such other address or number for a party as shall be
specified by like notice, provided that notices of a change of address or number
shall be effective only upon receipt thereof):
(a) if to Xxxx:
Xxxx Xxxxxxxx
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Facsimile No: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxx, Esq.
Squire, Xxxxxxx & Xxxxxxx
0000 Xxxxxxxxxx Xxxxxx
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Facsimile No.: (000) 000-0000
(b) if to the Company:
D.P.E.C., Inc.
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx Xxxxx
with a copy to:
Xxxxxxx X. Xxxxx, Esq.
Vorys, Xxxxx, Xxxxxxx and Xxxxx
00 Xxxx Xxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Facsimile No.: (000) 000-0000
7.05. ASSIGNMENT. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors, personal representatives and permitted assigns, but
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any party hereto without the prior written consent of the
other parties hereto. This Agreement is not intended to confer upon any person
except the parties hereto any rights or remedies hereunder.
7.06. GOVERNING LAW. This Agreement shall be governed by the
laws of the State of Ohio (regardless of the laws that might otherwise govern
under applicable Ohio principles of conflicts of law) as to all matters.
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7.07. 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.
7.08. INTERPRETATION. The captions contained in this Agreement
are solely for the purpose of reference, are not part of the agreement of the
parties and shall not in any way affect the meaning or interpretation of this
Agreement.
7.09. ENTIRE AGREEMENT. This Agreement, including the other
agreements and instruments referred to herein, embody the entire agreement and
understanding of the parties hereto in respect to the transactions contemplated
by this Agreement. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set forth or
referred to herein or therein. This Agreement supersedes, replaces and
terminates all prior agreements and understandings between the parties with
respect to the subject matter of this Agreement, including, without limitation,
the Letter of Intent, dated March 15, 1996, between Xxxx and Xxxxx.
IN WITNESS WHEREOF, each of the parties has executed, or
caused its duly authorized officer to execute, this Agreement effective as of
the date first above written.
D.P.E.C., INC.
By: /s/ Xxxxx Xxxxx, Pres.
-----------------------------------------
Xxxxx Xxxxx, its President
/s/ Xxxx Xxxxxxxx
-----------------------------------------
Xxxx Xxxxxxxx
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