EXHIBIT 10.23
STOCK PURCHASE AGREEMENT
by and among
EISI,
A CALIFORNIA CORPORATION
and
THE PURCHASERS LISTED ON SCHEDULE 1
June 24, 1998
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement, dated as of June 24, 1998 (the
"Agreement"), is entered into by and among EISI, a California corporation
("EISI"), and each of the Purchasers whose names appear on the signature page of
this Agreement (collectively, the "Purchasers").
RECITALS
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In order to provide a portion of the funds required by EISI to
consummate certain strategic acquisitions (the "Acquisitions"), each Purchaser
desires to purchase with cash the number of shares of common stock, no par
value, of EISI (the "Shares"), set forth opposite the Purchaser's name in
Schedule I hereto and EISI desires to sell such Shares to the Purchasers.
AGREEMENT
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NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1.
PURCHASE OF STOCK
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1.1. Purchase of Shares for Cash. Upon the terms and subject to the
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conditions contained herein, EISI shall issue and deliver to each Purchaser the
number of Shares set forth opposite each Purchaser's name in Schedule I hereto
in exchange for the purchase price therefor set forth opposite each Purchaser's
name in Schedule I hereto, in an aggregate amount of $1,050,000.
ARTICLE 2.
CLOSING
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2.1. Closing. The closing of the purchase of Shares (the "Closing")
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shall take place at 10: 00 am. on June 25, 1998 at the offices of Xxxxxx, Xxxx &
Xxxxxxxx LLP, 000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000
and after the satisfaction or waiver of all the conditions to Closing contained
in Articles 5 and 6 herein. At the Closing, each Purchaser will pay to the
Company in cash, by wire transfer of immediately available funds, the amount set
forth as the purchase price opposite such Purchaser's name in Schedule I hereto
and the Company will issue to each Purchaser the respective number of Shares set
forth opposite such Purchaser's name in Schedule I hereto.
ARTICLE 3.
REPRESENTATIONS OF EISI
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3.1. EISI hereby represents and warrants to each Purchaser that:
(a) Capitalization; Title to Shares. The authorized capital
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stock of EISI consists solely of 5,000,000 shares of common stock, no par
value per share. There are 949,200 shares issued and outstanding, all of which
have been duly authorized and are validly issued, fully paid and non-
assessable. Schedule 3(a) lists all shareholders of EISI and the number of
shares owned by each shareholder. Except for options to acquire 88,800 shares
and shares to be issued to consummate the Acquisitions, there are outstanding
no securities convertible into, exchangeable for, or carrying the right to
acquire, equity securities of EISI, or subscriptions, warrants, options,
rights, calls, agreements, demands or other arrangements or commitments of any
character obligating EISI to issue or dispose of any of its equity securities
or any ownership interest therein or otherwise relating to the capital stock
of EISI. The Shares will be duly authorized, upon receipt of purchase price
therefor in accordance with terms of agreement, the Shares will be validly
issued, fully paid, nonassessable, will be valid and binding agreement of
EISI, enforceable in accordance with this Agreement. The sale and delivery of
the Shares to the Purchasers pursuant to Article I hereof will vest in the
Purchasers legal and valid title to the Shares, free and clear of any and all
liens, security interests, pledges, mortgages, charges, limitation, claims,
restrictions, rights of first refusal, rights of first offer, rights of first
negotiation or other encumbrances of any kind or nature whatsoever
(collectively, "Encumbrances"), other than Encumbrances created by any such
Purchaser.
(b) Subsidiaries. Except for Educational Industrial Sales,
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Inc., a California corporation (the "Subsidiary"), and the contemplated
Acquisitions, EISI does not hold a direct, indirect or beneficial interest in
any entity (corporation, partnership, joint venture, association or other
business enterprise).
(c) Organization. Each of EISI and the Subsidiary is a
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corporation duly organized, validly existing and in good standing under the
laws of the State of California and has all requisite corporate power and
authority to own its properties and carry on its business as it is now being
conducted. Each of EISI and the Subsidiary is duly qualified to do business
and is in good standing as a foreign corporation in all jurisdictions where
the nature of the business conducted by it makes such qualification necessary
and the absence of such qualification could, individually or in the aggregate,
have a material adverse effect on the condition (financial or otherwise),
business, net worth, results of operations, earnings, properties or prospects,
whether or not arising in the ordinary course of business, of EISI and the
Subsidiary considered as a whole.
(d) Power and Authority; Effect of Agreement. EISI has all
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requisite power and authority to execute, deliver and perform this Agreement
and the agreements, certificates, instruments or other documents to be
executed and delivered in connection herewith, including, but not limited to,
the Registration Rights Agreement and the Investor Agreement
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contemplated hereby, each of even date herewith (collectively, the "Ancillary
Documents"), and to consummate the transactions contemplated hereby and
thereby. This Agreement has been duly and validly executed and delivered by
EISI and constitutes the valid and binding obligation of EISI, and the
Ancillary Documents, assuming the due execution and delivery hereof by each
Purchaser, upon execution and delivery by EISI, will constitute valid and
binding obligations of EISI, in each case enforceable against EISI in
accordance with its terms, except to the extent that such enforceability may
be limited by (A) bankruptcy, insolvency, reorganization, moratorium (whether
general or specific) or similar laws now or hereafter in effect relating to
creditors' rights generally, and (B) general principles of equity (regardless
of whether such enforcement is sought in a proceeding in equity or at law).
The execution, delivery and performance by EISI of this Agreement and the
Ancillary Documents and the consummation by EISI of the transactions
contemplated hereby and thereby will not, with or without the giving of notice
or the lapse of time, or both, (i) violate or conflict with any provision of
law, rule or regulation to which EISI or the Subsidiary is subject or by which
any of the property of EISI or the Subsidiary is bound, (ii) violate or
conflict with any order, judgment or decree applicable to EISI or the
Subsidiary, (iii) violate or conflict with any provision of the Articles of
Incorporation or the Bylaws of EISI or the Subsidiary or (iv) result in a
violation or breach of, or permit any third party to modify, terminate or
rescind any term or provision of, or constitute a default under, any
Commitment (as defined in Section 3(o)), including, without limitation, any
indenture, mortgage, deed of trust, promissory note or industrial revenue
bond, if any, to which EISI or the Subsidiary is a party or by which any of
the property of EISI or the Subsidiary is bound, or result in the creation of
an Encumbrance on any of the assets of EISI or the Subsidiary.
ARTICLE 4.
REPRESENTATIONS OF THE PURCHASERS
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4.1. Each Purchaser severally hereby represents and warrants that:
(a) Each Purchaser is either (i) an individual and has all requisite
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby or (ii) a corporation duly organized, validly
existing and in good standing under the laws of the state of its applicable
jurisdiction of organization and has all requisite corporate power and authority
to conduct its respective business as it is now conducted and to enter into this
Agreement and to consummate the transactions contemplated hereby.
(b) This Agreement has been duly and validly authorized, executed and
delivered by such Purchaser and, assuming the due execution and delivery hereof
by EISI, constitutes a valid and binding obligation of such Purchaser,
enforceable against such Purchaser in accordance with its terms, except as such
enforcement may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium (whether general or specific) or similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles of
equity (regardless of whether such enforcement is sought in a proceeding in
equity or at law).
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(c) Such Purchaser is acquiring the Shares for its own account and
not as a nominee or agent for any other person and it has no present intention
to transfer, sell, convey, or dispose of any of the Shares.
(d) Such Purchaser has had an opportunity to ask questions of and to
receive answers from the officers of EISI, or a person or persons acting on
EISI's behalf, concerning the terms and conditions of the purchase of the Shares
pursuant thereto.
(e) Such Purchaser is able to bear the economic risk of its
investment in the Shares pursuant to this Agreement and such Purchaser has given
consideration as to whether it can afford to hold its Shares for an indefinite
period and whether, at this time, such Purchaser could afford a complete loss of
its investment in the Shares.
(f) Such Purchaser understands that there is no public market for the
Shares and that the Shares have not been registered under the Securities Act of
1933 as amended (the "1933 Act"), or under any state securities ("Blue Sky")
laws, and therefore the Shares cannot be resold unless registered under the 1933
Act and Blue Sky laws or unless an exemption from registration is available.
ARTICLE 5.
CONDITIONS TO EISI'S OBLIGATIONS
--------------------------------
The obligations of EISI contained herein with respect to the issuance
of the Shares to a Purchaser are subject to the satisfaction, on or prior to the
Closing, of the following conditions:
5.1. Additional Documents. Such Purchaser shall execute and deliver
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such additional documents reasonably requested by EISI that are necessary or
advisable to carry out the provisions of this Agreement
5.2. Representations and Warranties True. Such Purchaser's
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representations and warranties contained in Article 4 hereof shall be true at
and as of the Closing, as if made on and as of such date (except to the extent
such representations and warranties speak as to a particular date).
ARTICLE 6.
CONDITIONS TO EACH PURCHASER'S OBLIGATIONS
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The obligations of each Purchaser contained herein to purchase the
Shares from EISI are subject to the satisfaction, on or prior to the Closing, of
the following conditions:
6.1. Additional Documents. EISI shall execute and deliver such
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additional documents reasonably requested by any Purchaser that are necessary or
advisable to carry out the provisions of this Agreement.
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6.2. Representations and Warranties True. EISI's representations and
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warranties contained in Article 3 hereof shall be true at and as of the Closing,
as if made on and as of such date (except to the extent such representations and
warranties speak as to a particular date).
6.3. Ancillary Documents. Simultaneously with the sale to the
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Purchasers of the Shares at the Closing, EISI shall have entered into the
Registration Rights Agreement, substantially in the form attached as Exhibit A,
and the Investor Agreement, substantially in the form attached as Exhibit B, and
the Purchasers shall have received an original, duly executed by EISI, of the
Registration Rights Agreement and the Investor Agreement.
6.4. Closing by All Purchasers. Each of the Purchasers collectively
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shall have purchased a number of Shares such that when such purchases are taken
together, the aggregate purchase price received by EISI in cash from the sale
hereof shall be at least $ 1,000,000.
ARTICLE 7.
RESTRICTIONS ON TRANSFER
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7.1. Restrictions on Transfer. Each Purchaser agrees that:
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(a) It shall not sell, assign, convey, hypothecate or in any
other manner transfer any of the Shares except in compliance with the 1933 Act
and any applicable Blue Sky laws.
(b) Each certificate representing the Shares issued pursuant
to this Agreement shall bear legends in substantially the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
ARTICLE 8.
MISCELLANEOUS
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8.1. Notices. Any notice, request, instruction or other document to
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be given hereunder by any party to the others shall be in writing and delivered
in person or by courier, telegraphed, telexed or by facsimile transmission or
mailed by certified mail, postage prepaid,
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return receipt requested (such mailed notice to be effective on the date of
such receipt is acknowledged), as follows:
If to EISI: EISI
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
With a copy to: Xxxxxxx X. Xxxxx, Xx., Esq.
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
If to Purchasers: E*Capital Corporation
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Xxxxxxxx Family Trust
c/o Xxxx X. Xxxxxxxx and Xxxx X. Xxxxxxxx,
as Trustees
0000 Xx Xxxxx
Xxxxxx Xxxxx Xx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Den-Mat Corp.
X.X. Xxx 0000
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Xxxxxx X. Xxxxxxx
00000 Xxx xx Xxxxxxx
Xxxxxx Xxxxx Xx. Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
8.2. Governing Law; Choice of Forum. This Agreement shall be
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construed, interpreted and the rights of the parties determined in accordance
with the internal laws of the State of California without regard to the
conflict of law principles thereof.
8.3. Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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8.4. Headings. The headings of the Articles and Sections herein
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are inserted for convenience of reference only and are not intended to be a
part of or to affect the meaning or interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
or have caused this Agreement to be duly executed on their respective behalf by
their respective officers thereunto duly authorized, as of the day and year
first above written.
EISI, INC.
a California corporation
By: /s/ XXXXXX X. XXXXXX
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Xxxxxx X. Xxxxxx
Its: Chairman of the Board
E*CAPITAL CORPORATION,
a California corporation
By: /s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
Its: President
XXXXXXXX FAMILY TRUST
By: /s/ XXXX X. XXXXXXXX
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Xxxx X. Xxxxxxxx
Its: Trustee
By: /s/ XXXX X. XXXXXXXX
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Xxxx X. Xxxxxxxx
Its: Trustee
DEN-MAT CORP.,
a Delaware corporation
By: /s/ XXXXXX X. XXXXX
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Xxxxxx X. Xxxxx,
Its: President
/s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
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SCHEDULE 1
PURCHASER Number of Shares PURCHASE PRICE
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E*Capital Corporation 14,703 $ 400,000
Xxxxxxxx Family Trust 9,189 $ 250,000
Den-Mat Corp. 5,514 $ 150,000
Xxxxxx X. Xxxxxxx 9,189 $ 250,000
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Total 38,595 $1,050,000
