EXHIBIT 2.2
REDEMPTION AGREEMENT
THIS AGREEMENT made this 2nd day of April, 2004 between XXXXXX WELDING
COMPANY, a Michigan corporation (the "Corporation") and XXXXXXX XXXXXXX (the
"Shareholder").
R E C I T A L S :
The Corporation has forty (40) shares of common stock issued and
outstanding and all of which are owned by the Shareholder. Four (4) of those
shares are subject to a Share Purchase Agreement pursuant to which the
Shareholder has agreed to sell those four (4) shares to Tarpon Industries, Inc.
(f/k/a Wall St. Acquisitions, Inc.) ("TII").
The Shareholder desires to sell to the Corporation the remaining
thirty-six (36) shares (the "Redeemed Shares"). Accordingly, the Corporation
shall redeem the Redeemed Shares from the Shareholder upon the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants
representations and warranties contained herein, the parties agree as follows:
1. PURCHASE OF REDEEMED SHARES. At Closing, the Corporation shall purchase
from the Shareholder, and the Shareholder shall sell to the Corporation, the
Redeemed Shares for a purchase price equal to Three Million Six Hundred Three
Thousand One Hundred Forty Four and 00/100 Dollars ($3,603,144.00) (the
"Purchase Price"), paid as provided in Paragraph 2, below.
2. PAYMENT OF PURCHASE PRICE. The Corporation shall pay the Purchase Price
to the Shareholder as follows:
A. Two Million Nine Hundred Thirty Three Thousand One Hundred Forty
Four and 00/100 Dollars ($2,933,144.00) (the "Closing Cash")
shall be paid in cash at Closing subject to the Shareholder's
obligations as set forth in Paragraph 3, below.
B. The balance of the Purchase Price (in the amount of Six Hundred
Seventy Thousand and 00/100 Dollars) ($670,000.00) shall be paid
to the Shareholder pursuant to a Promissory Note in the form of
Exhibit "A" attached hereto, a fully-executed copy of which shall
be delivered to the Shareholder by the Corporation at Closing.
The Promissory Note will be secured by a pledge of six (6) shares
of the Redeemed Shares pursuant to the Stock Pledge And Escrow
Agreement in the form attached hereto as Exhibit "B."
3. NOTE REPAYMENT. At Closing, the Shareholder shall repay to the
Corporation his note obligations in the amount of Two Million Nine Hundred
Thirty Three Thousand One
Hundred Forty Four and 00/100 Dollars ($2,933,144.00). The Corporation and the
Shareholder acknowledge that such repayment shall pay in full the note
obligations of the Shareholder to the Corporation and is inclusive of any
accrued and unpaid interest.
4. DELIVERIES AT CLOSING. At Closing, the Shareholder shall (i) surrender
the Redeemed Shares to the Corporation, duly endorsed for transfer, and (ii)
such other closing documents or certificates as the Corporation may reasonably
request.
5. EMPLOYMENT AGREEMENT. At Closing, the TII and the Shareholder shall
enter into an employment agreement in the form of Exhibit "C" attached hereto.
6. CLOSING. The Closing of the transaction contemplated by this Agreement
shall take place at the offices of Xxxxxx Xxxxxxxx & Xxxx LLP, 0000 Xxxx Xxxxxx,
Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxx 00000, on or before April 5, 2004; provided,
however, that TII and the Shareholder shall have closed on the Share Purchase
Agreement immediately prior to Closing on this Agreement, which closing shall be
a precondition to the Shareholder's and the Corporation's obligations hereunder.
7. REPRESENTATIONS OF SHAREHOLDER. The Shareholder represents and warrants
that: (a) he is the sole owner of the Redeemed Shares; and (b) the Redeemed
Shares are free and clear of liens or encumbrances of any kind, except for such
rights of TII pursuant to the Share Purchase Agreement; and (c) the
Shareholder's performance of his obligations under this Agreement will not
constitute a breach of any agreement to which he is a party.
8. REPRESENTATIONS OF CORPORATION. The Corporation represents and warrants
that the Corporation's performance of its obligations under this Agreement are
not a violation of any corporate or other law to which the Corporation is
subject nor will it constitute a breach of any provision of its articles, bylaws
or any agreement to which it is a party.
9. COVENANTS OF CORPORATION. To protect against the Corporation taking any
action that may materially alter the structure of the Corporation and the value
and rights associated with the pledge Redeemed Shares during the period of time
that the Promissory Note is outstanding, the Corporation shall not take, permit
or suffer any of the following actions without the prior written consent of the
Shareholder:
A. Issue any additional shares of stock of the Corporation;
B. Amend the Corporation's Articles of Incorporation in any manner,
including without limitation, to increase the authorized shares
of the Corporation, create classes of stock, authorize
preferential rights for shares or create supermajority voting
requirements;
C. Amend the Corporation's Bylaws in any manner, including without
limitation, to alter the shareholder or Board of Directors voting
provisions, or alter the manner of election of the Board of
Directors;
D. Reorganize or recapitalize the Corporation's capital structure;
E. Sell, exchange or lease all or any substantial portion of the
Corporation's assets outside of the ordinary course of business;
F. Dissolve the Corporation, become insolvent, or make an assignment
for the benefit of creditors;
G. Voluntary or involuntary case in bankruptcy, receivership, or
insolvency is commenced by or against the Corporation;
H. Merge, consolidate, or reorganize with any other corporation or
entity;
I. Take any action which would render the Corporation unable to conduct
its normal business operations.
10. INDEMNIFICATION AND LIMITATION OF LIABILITY OF SHAREHOLDER.
A. THE CORPORATION'S INDEMNITY. Shareholder shall indemnify, defend and
hold harmless Corporation, its successors and assigns from, against
and with respect to any claim, liability, obligation, loss, damage,
assessment, judgment, cost and expense (including, without
limitation, reasonable attorneys' and accountants' fees and costs
and expenses reasonably incurred in investigating, preparing,
defending against or prosecuting any litigation or claim, action,
suit, proceeding or demand) of any kind or character arising out of
or in any manner incident, relating or attributable to, net of any
applicable Corporation insurance proceeds and without giving effect
to any tax benefit to the indemnified party, (i) any material
inaccuracy in the representations and warranties of the Shareholder
contained in Xxxxxxxxx 0, (xx) any failure by Shareholder to perform
or observe, or to have performed or observed, in full any covenant,
agreement or condition to be performed or observed by him under this
Agreement up and to Closing, (iii) the enforcement of Corporation's
rights to purchase the Redeemed Shares under this Agreement, and
(iv) any agreements, contracts, negotiations or other dealings by
EWCO or Shareholder with any person concerning the sale of the
Redeemed Shares. However, Shareholder's obligations, if any, to
indemnify Corporation hereunder shall be limited to the amount of
$350,000.00, in the aggregate, including any amounts which
Shareholder may become obligated to TII by way of an indemnification
obligation as specified in the Share Purchase Agreement; unless the
claim for indemnity is based on the intentional misrepresentation or
fraud of Shareholder, in which case there shall be no such
limitation on Corporation's right of indemnification.
B. SHAREHOLDER'S INDEMNITY. Without limiting any other rights or
remedies available to Shareholder, the Corporation shall indemnify,
defend and hold harmless Shareholder from, against and with respect
to any claim, liability, obligation, loss, damage, assessment,
judgment, cost and expense (including, without limitation,
reasonable attorneys' and accountants' fees and costs and expenses
reasonably incurred in investigating, preparing, defending against
or prosecuting any litigation or claim, action, suit, proceeding or
demand) of any kind or character arising out of or in any manner,
incident, relating or attributable to and without giving effect to
any tax benefit to the indemnified party (i) any material inaccuracy
in any representation or breach of warranty
of the Corporation contained in this Agreement or in any
certificate, instrument of transfer or other document or agreement
executed by the Corporation in connection with this Agreement or
otherwise made or given in connection with this Agreement, and (ii)
any failure by the Corporation to perform or observe, or to have
performed or observed, in full any covenant, agreement or condition
to be performed or observed by it under this Agreement or under any
certificates or other documents or agreements executed by the
Corporation in connection with this Agreement. However, the
Corporation's obligations, if any, to indemnify Shareholder
hereunder shall not exceed the amount of Three Hundred Fifty
Thousand and 00/100 Dollars ($350,000.00), in the aggregate,
including any amounts which the Corporation may become obligated to
the Shareholder by way of an indemnification obligation as specified
in the Share Purchase Agreement, unless the claim for indemnity is
based on the intentional misrepresentation or fraud of the
Corporation, in which case there shall be no such limitation on
Shareholder's right to indemnification.
C. LIMITATION OF LIABILITY AND REMEDIES. The parties agree that based
upon a number of factors, including without limitation, the
expedited time schedule for the transaction, the Shareholder's
liability to Corporation for any and all matters arising out of this
Agreement, or the transactions contemplated herein, including
without limitation, any breach of those of Shareholder's
representations, warranties, covenants, obligations or conditions
which survive Closing, shall be limited to the amount of Three
Hundred Fifty Thousand and 00/100 ($350,000.00) Dollars, in the
aggregate, including any amounts which Shareholder may become
obligated to the Corporation under this Agreement or to TII by way
of an indemnification obligation as specified in the Share Purchase
Agreement; unless the claim for indemnity is based on the
intentional misrepresentation or fraud of Shareholder, in which case
there shall be no such limitation on Corporation's right to
indemnify. Furthermore, any claim, liability, obligation, loss,
damage, assessment, judgment, cost and expense of Corporation, its
successors and assigns of any kind or character arising out of or in
any manner, incident, relating or attributable to this Agreement, or
the transaction described herein, including without limitation those
arising from Shareholder's failure to indemnify Corporation,
Corporation's successors and assigns, or Shareholder's breach of any
representation, warranty, covenant or obligation of this Agreement
which survives Closing, shall be satisfied only by way of set-off
against the Promissory Note issued to Shareholder by the Corporation
in connection with the Redemption Agreement, capped, however, at the
amount of Three Hundred Fifty Thousand and 00/100 ($350,000.00)
Dollars. Corporation hereby acknowledges and agrees that from and
after Closing, its sole remedy with respect to the claims arising
hereunder, shall be pursuant to the indemnification provisions
contained herein.
11. PAYMENT OF EXPENSES. Regardless of whether the transactions
contemplated by this Agreement are consummated, the Corporation shall pay all of
the expenses incurred by the Shareholder in connection herewith, including
expenses related to the services of Shareholder's counsel and accountants with
respect hereto.
12. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to its subject matter and may not be modified
or amended orally.
13. NOTICES. All notices or other documents under this Agreement shall be
in writing and delivered personally or mailed by certified mail, postage
prepaid, addressed to the parties at their last known addresses.
14. NON-WAIVER. No delay or failure by either party to exercise any right
under this Agreement, and no partial or single exercise of that right, shall
constitute a waiver of that of any other right, unless otherwise expressly
provided herein.
15. CAPTIONS. Captions in this Agreement are for convenience only and
shall not be used to interpret or construe its provisions.
16. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the laws of the state of Michigan.
17. 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 be one and the same instrument.
18. BINDING EFFECT. The provisions of this Agreement shall be binding upon
and inure to the benefit of each of the parties and their respective successors
and assigns.
THIS AGREEMENT has been executed by the parties hereto as of the day; year
first above written.
XXXXXX WELDING COMPANY, a
Michigan corporation
By: /s/ Xxxxxxx Xxxxxxx /s/ Xxxxxxx Xxxxxxx
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XXXXXXX XXXXXXX
Its: President & CEO
"Corporation" "Shareholder"
