STOCK PURCHASE AGREEMENT
By And Among
EMERGENT GROUP, INC.
AND
THE INDIVIDUALS SET FORTH
ON THE SIGNATURE PAGE HEREOF
September 30, 1995
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING INCLUDING THE
MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED
BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.
FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered
into as of the 30th day of September, 1995, by and among Emergent
Group, Inc., a South Carolina corporation ("Seller") and the
individuals set forth on the signature page hereof (individually, a
"Buyer," and collectively, the "Buyers").
P R E A M B L E
WHEREAS Young Generations, Inc., a North Carolina
corporation (the "Company"), is a wholly-owned subsidiary of Seller
engaged in the children's apparel business;
WHEREAS the Buyers are officers and/or key employees of the
Company and have determined that it is in the best interest of the
Company that it cease to be a wholly-owned subsidiary of Seller;
WHEREAS Seller is willing to sell to the Buyers all
outstanding shares of common stock of the Company (the "Shares")
pursuant to the terms and conditions hereof;
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties herein contained, the parties
hereto agree as follows:
SECTION 1. PURCHASE AND SALE
1.1 Purchase and Sale of Shares. Subject to the terms and
conditions hereof, Seller agrees to sell, assign and transfer (the
"Sale") the Shares to the Buyers at Closing (as defined in Section 1(c)
hereof), free and clear of any liens, encumbrances, or adverse claims,
which Shares shall be evidenced by certificates duly endorsed in
blank, or accompanied by stock transfer powers duly executed in blank,
with all necessary transfer tax stamps affixed. Subject to the
terms and conditions hereof, at Closing, the Buyers shall purchase the
Shares in such amounts as is set forth below:
Name Class A Common Stock Class B Common Stock
Xxxxxx X. Xxxxx 140,092 21,676
Xxxxx Xxxxxxxxx 13,733 2,127
Xxxxx Xxxxx 13,733 2,127
Xxxxxxxx Xxxxxxx 13,733 2,127
Xxxxxx XxXxxxxx 8,491 1,313
Xxxxx Xxxxxx 8,491 1,313
Xxxxx Xxxx 8,491 1,313
Xxxx Xxxx 8,491 1,313
Xxxxx Xxxxxxx 8,491 1,313
Xxxxx Xxxxxxxxx 8,491 1,313
Xxxxxxx Xxxxxx 8,491 1,313
Xxxx Xxxxx 8,491 1,313
Xxxxx Xxxx 8,491 1,313
Xxxxxx XxXxxxxx 8,491 1,313
Dot Marshal 8,491 1,313
---------- ---------
274,692 42,500
1.2 Purchase Price. In consideration of the Sale, the
Buyers shall pay to Seller, pro rata in accordance with their Share
ownership a purchase price equal to $600,000, payable at Closing
through
2
a promissory note, a form of which is attached hereto as Exhibit A (the
"Note").
1.3 The Closing. The Closing of the transaction (the
"Closing") shall occur on or before September 30, 1995 (the "Closing
Date") at the offices of Wyche, Burgess, Xxxxxxx & Xxxxxx, P.A.,
Greenville, South Carolina; provided, however, that in the event that
Closing has not occurred by the Closing Date, either the Seller or
Buyers purchasing a majority of the Shares (a "Majority of the
Buyers") shall have the right to terminate this Agreement, except that
if such failure to close is the result of the breach or nonperformance
of a representation, warranty or covenant hereunder, only the
aggrieved party shall have the right to terminate this Agreement; and
provided, further, that in the event that the Closing has not
occurred by December 31, 1995, this Agreement shall be terminated,
without prejudice to any parties' rights hereunder.
1.4 Offer of Shares to the Company. (a) In the event that
any of the Buyers leaves the employment of the Company for any
reason (including death) prior to September 30, 2000 (such date being a
"Departure Date"), such departing Buyer or his personal
representative (a "Departing Buyer") shall offer all of his Shares (the
"Proffered Shares") first to the Company at a purchase price equal to
$1.89 per share, plus the per share increase (if any) in the net book
value of the Company from the date hereof through the end of the month
immediately preceding the Departure Date (the "Sale Price"). If the
Company does not elect to purchase all of the Proffered Shares within
10 business days after receiving notice of such offer, the Departing
Buyer shall offer at the Sale Price all of the Proffered Shares not
purchased by the Company to the other Buyers (the "Remaining Buyers")
pro rata in accordance with their respective percentage of Company stock
owned among themselves. If the Remaining Buyers do not elect to
purchase all of the remaining Proffered Shares within 10 business days
after receiving notice of such offer, the Departing Buyer shall offer at
the Sale Price all of the Proffered Shares not purchased by the
Company or the Remaining Buyers to Emergent, which shall have the right
to purchase such remaining Proffered Shares within 10 business days
after receiving notice of such offer. Notwithstanding the
foregoing, unless all of the Proffered Shares are purchased pursuant
to this Section 1.4, a Departing Buyer shall have no obligation to sell
any of the Proffered Shares.
(b) The Company, the Buyers and/or Emergent, if purchasing all
or a portion of the Proffered Shares, shall be hereinafter referred
to individually as a "Purchasing Party," or collectively, as the
"Purchasing Parties." In connection with the purchase of all or
a portion of the Proffered Shares, the Purchasing Parties shall assume
(pro rata in accordance with their respective number of Proffered Shares
purchased) all of the Departing Buyer's obligations under the Note
(in partial payment of the Sales Price) and shall pay (pro rata in
accordance with their respective number of Proffered Shares purchased)
the balance of the Sales Price in cash.
(c) Emergent hereby consents to the assignment of a Departing
Buyer of his obligations under the Note to the Company or any of the
Remaining Buyers in any transaction meeting the terms of this Section
1.4.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF ALL PARTIES
Each of the parties hereto represent and warrant to each of
the other parties that the matters set forth below are true and correct
in all material respects.
3
2.1 Organization, Powers and Capitalization of the
Company. The Company is a corporation duly incorporated and
organized, validly existing and in good standing under the laws of
the State of North Carolina and has the corporate power to carry on
its business as such business is now being conducted and to own, lease
or operate the properties and assets it now owns leases or operates.
The authorized capital stock of the Company consists of 400,000 shares
of common stock, par value $1.00, of which 274,692 shares of Class A
common stock and 42,500 shares of Class B common stock are validly
issued and outstanding, and 12,000 shares of preferred stock, none of
which is outstanding. All shares of common stock issued and outstanding
are fully paid and nonassessable. There are no existing options,
warrants, contracts, calls, commitments, demands or other agreements
of any character to which the Company is a party relating to the
authorized and issued or unissued capital stock of the Company.
2.2 Financial Statements. The Company has delivered to the
Seller and the Buyers an audited balance sheet, statement of
operations, statement of stockholders' equity and statement of cash
flows of the Company as of and for the years ended December 31, 1993
and 1994, all as prepared by Xxxxxxx, Xxxxx & Company, LLP and an
unaudited balance sheet, statement of operations, statement of
stockholders' equity and statement of cash flows of the Company as of
and for the six months ended June 30, 1995, (the "Financial
Statements"). To the best of each party's knowledge, each of the
Financial Statements has been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout
the respective periods, and the balance sheets present fairly the
financial condition of the Company as of the respective dates thereof
and the statements of operations, statements of stockholders'
equity and statements of cash flows present fairly the results of
operations and cash flows of the Company for the respective periods set
forth therein.
2.3 No Material Adverse Change. To the best of the
parties' knowledge, since the date of the Financial Statements, there
has been no material adverse change in the financial condition or
operations of the Company nor has there been any event which has
occurred on or prior to the date hereof which in any way has materially
impaired or which will materially impair the ability of Buyer to
carry on the business conducted by the Company substantially as such
business is conducted on the date hereof.
2.4 Books and Records. To the best of the parties'
knowledge, the books and records of the Company fairly and in all
material respects reflect the assets, liabilities and operations of the
Company and the Financial Statements are in material conformity
therewith.
2.5 Absence of Undisclosed Liabilities. To the best of the
parties' knowledge, there are no material liabilities (contingent or
otherwise) of the Company which are not either known to the parties or
disclosed in the Financial Statements.
2.6 Absence of Certain Changes or Events. Since
December 31, 1994, neither the Seller nor the Buyers have acted on
behalf of the Company in a manner which did not constitute the
ordinary course of business or which was not known by or to the
other party. Since December 31, 1994 and except for the termination of
the lease on its retail outlet store in Las Vegas, Nevada and the
entry into a lease with respect to its retail outlet store in
Vicksburg, MS or as known to the other party, the Company (through
either the Seller or the Buyers) has not:
(i) incurred any indebtedness for money borrowed or
any noncurrent indebtedness for the purchase price of any
fixed or capital asset;
(ii) except in the ordinary course of business, made
(A) any change in its properties and
4
assets or in its liabilities, (B) any commitment for any
capital expenditure or (C) any sale, lease or other
disposition of any capital asset;
(iii) (a) authorized any shares of its common stock
for issuance, (b) issued any shares of its previously
authorized but unissued shares of common stock, (c) granted,
issued or made any option or commitment relating to its
common stock, or (d) purchased, redeemed or otherwise acquired
any outstanding shares of its common stock;
(iv) declared or paid any dividend, made any other
distribution or payment, or set aside any amount for payment
with respect to any shares of its common stock;
(v) amended, made or entered into any agreement
with any employee, agent, consultant, advisor or sales or
other representative of the Company;
(vi) amended any material contract, lease or agreement
of the Company; or
(vii) voluntarily incurred any material obligation or
liability, absolute or contingent, except in the ordinary
course of business or pursuant to existing contracts and
agreements described in this Agreement.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER
Seller represents and warrants that the matters set forth
below are true and correct in all material respects.
3.1 Organization, Powers and Capitalization of the
Seller. The Seller is a corporation duly incorporated and
organized, validly existing and in good standing under the laws of
the State of South Carolina and has the corporate power to carry on
its business as such business is now being conducted and to own, lease
or operate the properties and assets it now owns leases or operates.
3.2 Title to the Shares. Seller has valid and full legal
title to the Shares, free and clear of any liens, encumbrances, pledge
or adverse claims. Seller has full right, power and authority to sell,
transfer and deliver such Shares to the Buyers, and upon the
delivery of and payment of the Purchase Price for the Shares, Seller
will have transferred to the Buyers valid and full legal title to such
Shares free and clear of any liens, encumbrances, equities and adverse
claims of any kind or nature which arise through the Seller.
3.3 Corporate Authority. The execution, delivery and
performance of this Agreement have been duly authorized by the Board of
Directors of Seller. No other corporate acts or proceedings on the part
of Seller are required or necessary to authorize this Agreement.
3.4 Binding Effect. When executed, this Agreement will
constitute a valid and legally binding obligation of Seller,
enforceable against Seller in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to the relief of
debtors generally, and general principles of equity.
3.5 Non-Contravention and Defaults; No Liens. Neither the
execution or delivery of this Agreement, nor the fulfillment of, or
compliance with, the terms and provisions hereof, will (i) result in a
breach of the terms, conditions or provisions of, or constitute
a default under, or result in a violation of, termination of or
acceleration of the performance provided by the terms of, any agreement
to which
5
Seller is a party or by which it may be bound, (ii) violate any
provision of any law, rule or regulation, or (iii) violate any
provisions of Seller's Articles of Incorporation or Bylaws.
3.6 Necessary Approvals. No consent, approval, authorization,
registration, or filing with or by any governmental authority, foreign
or domestic, is required on the part of Seller in connection with
the execution and delivery of this Agreement or the consummation
by Seller of the transactions contemplated hereby.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE BUYERS
The Buyers, severally, but not jointly, represent and
warrant with respect to themselves (but not with respect to other
Buyers) that the matters set forth below are true and correct in all
material respects.
4.1 Authorization and Execution of Documents. This Agreement
constitutes a valid and legally binding obligation of the Buyers
enforceable against the Buyers in accordance with its terms. The
execution and delivery of this Agreement and the consummation of the
transaction contemplated hereby (1) will not result in any breach of
the terms and conditions of or constitute a default under any
instrument, agreement or obligation to which the Buyers are now a
party or by which the Buyers or their respective properties or assets
may be bound and (2) will not violate any existing order, writ,
injunction or decree of any court, administrative agency or
governmental body, or any contract, agreement, indenture or instrument
to which the Buyers are a party or by which they are bound. No
consents of third parties are required on behalf of the Buyers in
connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby.
4.2 Certain Securities-related Matters. Each Buyer, on his
own behalf (but not with respect to the other Buyers) hereby represents
as follows:
(a) Each Buyer acknowledges that he has received the
Financial Statements and all other information that he has requested
regarding the Company (the "Information"). Each Buyer hereby
acknowledges and understands that:
(i) No federal or state agency has made any finding or
determination as to the fairness of the offering of Shares
for investment, or any recommendation or endorsement of the
Shares. Seller has made available to each Buyer at a
reasonable time prior to this investment the opportunity to
ask questions and receive answers concerning the terms and
conditions of this Agreement and to obtain any additional
information which Seller possesses or can acquire without
unreasonable effort or expense that is necessary to verify the
information provided in the Information.
(ii) The Shares have not been registered under the
Securities Act or under the securities laws of any state
and thus each Buyer must bear the economic risk of the
investment indefinitely because the Shares may not be sold
unless subsequently registered under the Securities Act and
under any applicable state securities laws or exemptions from
such registration requirements are available. The Buyers
consent to the placement on the certificates representing the
Shares of any appropriate securities legend.
(iii) While any business plans containing
production schedules or other forecasts, and financial data
containing projections, which have been given to the Buyers by
the Company,
6
were based on assumptions deemed reasonable by management
when made, no assurance is given that actual results will
correspond with the results contemplated in such plans or
data.
(iv) Because there will be no immediate public market
for the Shares, the Buyers may not be able to sell, transfer,
assign, exchange, or otherwise dispose of the Shares for an
indefinite period of time.
(v) The Information does not have all of the
disclosure required by Regulation D of the Rules and
Regulations of the Securities Act of 1933, as amended, for
offerings made to non-accredited investors.
(b) Each Buyer represents that the Shares are being purchased
for his own account for investment, and not with a view to, or for sale
in connection with, any distribution thereof, nor with any present
intention of distributing or selling the Shares; and Buyer has no
present or contemplated agreement, arrangement or commitment providing
for the disposition of the Shares.
(c) Each Buyer, either alone or with his advisors (if
any), has such knowledge and experience in financial and business
matters that it or they are capable of evaluating the merits and
risks of the investment in the Shares.
(d) Each Buyer is a resident of the state set forth under his
signature on the Signature Page hereof.
SECTION 5. CONDITIONS PRECEDENT TO CLOSING OF THE BUYERS
Unless waived by a Majority of the Buyers, the obligations
of the Buyers under this Agreement are subject to the fulfillment, prior
to or at Closing, of each of the following conditions:
5.1 Representations and Warranties True at Closing. The
several warranties and representations of the Seller and the Company
contained herein shall be construed to be continuous and continuing from
the date of this Agreement to the Closing Date, and shall be
true at the time of Closing as though such representations and
warranties were made at and as of such time, and shall not be
affected by any investigation, verification or approval by any party
hereto or by anyone on behalf of any of such parties.
5.2 Performance. The Seller and the Company shall have
performed and complied with all agreements, covenants and conditions
required by this Agreement to be performed or complied with by either or
both prior to or at Closing.
5.3 Delivery of Documents. The Seller shall have
delivered to the Buyers and/or the Company all documents and other
information required to be provided to the Seller on or before
Closing as set forth herein. The following additional documents shall
be delivered to the Buyers and/or the Company on or before Closing:
(1) A certificate signed by the Seller stating that all
the warranties and representations made by it herein
remain true and correct on the Closing Date and
that all covenants and agreements required herein to
have been performed by it by Closing have been
performed;
(2) Certificates representing the Shares, endorsed in
blank or with stock powers which authorize the transfer
of the Shares; and
(3) Any and all other instruments and documents that may
be reasonably necessary to effectuate the obligations
of the Seller and the Company hereunder.
7
SECTION 6. CONDITIONS PRECEDENT TO CLOSING OF SELLER
Unless waived by Seller, the obligations of Seller
under this Agreement are subject to the fulfillment, prior to or at
Closing, of each of the following conditions:
6.1 Representations and Warranties True at Closing. The
several warranties and representations of the Buyers and the Company
contained herein shall be construed to be continuous and continuing from
the date of this Agreement to the Closing Date, and shall be
true at the time of Closing as though such representations and
warranties were made at and as of such time, and shall not be
affected by any investigation, verification or approval by any party
hereto or by anyone on behalf of any of such parties.
6.2 Performance. The Buyers and the Company shall have
performed and complied with all agreements, covenants and conditions
required by this Agreement to be performed or complied with by either or
both prior to or at Closing.
6.3 Delivery of Documents. The Buyers and the Company shall
have delivered to Seller all documents and other information required
to be provided to Seller on or before Closing as set forth herein.
The following additional documents shall be delivered to Seller at or
before Closing:
(1) The Purchase Price;
(2) A certificate signed by the Buyers stating that all
the warranties and representations made by them
herein remain true and correct on the Closing
Date and that all covenants and agreements required
herein to have been performed by them by Closing have
been performed; and
(3) Any and all other instruments and documents that may
be reasonably necessary to effectuate the obligations
of the Buyers and the Company hereunder.
SECTION 7. INDEMNIFICATION
7.1 Indemnification of Buyers. Seller shall indemnify and
hold the Buyers harmless against any and all loss, cost or expense
(including costs and expenses, including reasonable counsel fees,
incident to any and all actions, suits, demands, assessments or
judgments relating to any claim made hereunder) resulting from any
error or misrepresentation or breach of warranty or agreement of Seller
contained herein or in any certificate, instrument or schedule delivered
pursuant hereto.
7.2 Indemnification of Seller. Each Buyer shall indemnify
and hold Seller harmless against any and all loss, cost or expense
(including costs and expenses, including reasonable counsel fees,
incident to any and all actions, suits, demands, assessments or
judgments relating to any claim made hereunder) resulting from any
error or misrepresentation or breach of warranty or agreement of
such Buyer (but not the other Buyers) contained herein or in any
certificate, instrument or schedule delivered pursuant hereto.
SECTION 8. PLEDGE OF STOCK
8
8.1 Pledge of Stock. To secure the payment of all amounts
owed under the Note, and the prompt and complete performance by the
Buyers under the Note and under this Agreement (collectively, the
"Obligations"), each Buyer on his own behalf, hereby grants to
Seller a security interest in all Shares purchased by him hereunder
(the "Pledged Stock"). Certificates representing the Pledged Stock
shall be delivered to Seller upon execution hereof, duly endorsed
in blank or together with stock powers duly endorsed in blank.
Notwithstanding the pledge of the Pledged Stock or anything to the
contrary herein, the Buyers shall not be personally liable for the
obligations under the Note (except to the extent of the Pledged Stock).
8.2 Covenants Regarding the Pledged Stock. In addition
to all covenants and agreements of the Company contained herein, the
Buyers agree as follows:
(a) Preservation of Pledged Stock. To do all acts that may be
necessary to maintain, preserve, and protect Buyer's and Seller's
interest in the Pledged Stock.
(b) Defense of Litigation. To appear in and defend any
action or proceeding that may affect its title to or Buyer's interest in
the Pledged Stock.
(c) Possession of Pledged Stock. Not to surrender or lose
possession of, sell, encumber, lease, rent, or otherwise dispose of
or transfer any Pledged Stock or right or interest therein except
as hereinafter provided, and to keep the Pledged Stock or right
or interest therein except as hereinafter provided, free of all levies
and security interests or other liens or charges.
SECTION 9. MISCELLANEOUS
9.1 Survival of Representations, Warranties and
Agreements. All representations, warranties, covenants and
agreements of the parties hereto shall survive the execution, delivery
and performance of this Agreement for one year. As used in this
Section, any reference to a representation, warranty or covenant
contained in any Section of this Agreement shall include the schedule
relating to such Section.
9.2 Termination. (a) This Agreement may be terminated at
any time prior to the Closing Date as follows:
(i) by the mutual consent of (i) a Majority of the
Buyers and (ii) the Seller;
(ii) as set forth in Section 1.3 hereof; or
(iii) by the aggrieved party, if a material default
has occurred with respect to covenants, representations or
warranties contained herein, and such default shall not have
been cured within 15 days after receipt of notice
specifying particularly such default, provided that if such
default shall not have been cured, but such fifteen (15) day
period shall not have expired, on or prior to the Closing Date,
the Closing Date shall be extended accordingly.
9.3 Waiver or Modification of Agreement. No provision of
this Agreement may be amended, waived or otherwise modified except by
an instrument in writing signed by the parties hereto; provided,
however, that any party hereto which is entitled to the benefits
of this Agreement may, and has the right to, waive or modify in
writing any term or condition hereof for his or its benefit at any time
on or prior to the Closing Date.
9.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of South Carolina.
9
9.5 Notices. All notices, requests, demands and other
communications hereunder shall be given in writing (which includes
telex, telegraph and other wire transmission):
(a) if to Seller, to: Emergent Group, Inc.
Xxxx Xxxxxx Xxx 00000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxx, Xx.
(tel) 000-000-0000 (fax) 000-000-0000
(b) if to Buyers, to: Xxxxxx X. Xxxxx
Young Generations, Inc.
Xxxx Xxxxxx Xxx 0000
Xxxxxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
(tel) 000-000-0000 (fax) 000-000-0000
Xxxxx Xxxxxxxxx
Young Generations, Inc.
Xxxx Xxxxxx Xxx 0000
Xxxxxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
(tel) 000-000-0000 (fax) 000-000-0000
(or to such other address as such person shall specify by notice
hereunder), and shall be deemed to be effective when actually
received (as evidenced by reasonable proof thereof). Messrs. Varat
and Xxxxxxxxx shall forward any notices received hereunder to the
other Buyers in a reasonably prompt manner at such addresses as shall be
provided by the other Buyers to Messrs. Varat and Xxxxxxxxx in writing.
9.6 Section and Paragraph Headings. The section and
paragraph headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
9.8 Successors and Assigns. The respective rights and
obligations of the parties hereto shall not be assignable without the
prior written consent of the other parties. This Agreement shall be
binding upon and inure to the benefit of the heirs, distributees,
successors and assigns of the parties hereto. Nothing herein contained
is intended to confer upon any person, other than the parties hereto
and their respective permitted successors, assigns and nominees,
any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
NEXT PAGE IS SIGNATURE PAGE
10
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
_____________________ EMERGENT GROUP, INC.
_____________________ By: _____________________________
President
XXXXXX X. XXXXX XXXXX XXXXXXXXX
_____________________ _____________________________
A South Carolina resident A South Carolina resident
XXXXX XXXXX XXXXXXXX XXXXXXX
_____________________ _____________________________
A North Carolina resident A North Carolina resident
XXXXXX XXXXXXXX XXXXX XXXXXX
_____________________ _____________________________
A North Carolina resident A North Carolina resident
XXXXX XXXX XXXX XXXX
_____________________ _____________________________
A North Carolina resident A North Carolina resident
XXXXX XXXXXXX XXXXX XXXXXXXXX
_____________________ _____________________________
A North Carolina resident A South Carolina resident
XXXXXXX XXXXXX XXXX XXXXX
_____________________ _____________________________
A North Carolina resident A North Carolina resident
XXXXX XXXX XXXXXX XXXXXXXX
_____________________ _____________________________
A North Carolina resident A North Carolina resident
XXXXXXX XXXXXXXX
_____________________________
A North Carolina resident
11
EXHIBIT A
NONRECOURSE NOTE
$600,000 September 30, 1995
FOR VALUE RECEIVED, the undersigned individuals,
(hereinafter collectively referred to as the "Makers"), pro rata in
accordance with their stock ownership set forth below, promise to pay to
the order of Emergent Group, Inc. (hereinafter referred to as the
"Holder"), at Holder's principal executive offices in Greenville, South
Carolina or at such other place as Holder may from time to time
designate in writing, the principal sum of Six Hundred Thousand Dollars
(U.S. $600,000) in lawful money of the United States.
Principal shall be payable in full on September 30,
2000. Interest on the principal balance outstanding hereunder shall
accrue at a rate of 10% per annum (calculated on a simple interest
basis)and shall be payable in full on September 30, 2000. In no
contingency or event whatsoever shall the interest rate charged
pursuant to the terms of this Note exceed the highest rate
permissible under any law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto. In the event
that such a court determines that Holder has received interest
hereunder in excess of the highest applicable rate, Holder shall
promptly refund such excess interest to Maker.
This Note is given in connection with the transactions
contemplated in that certain Stock Purchase Agreement, dated as of
September 30, 1995 and entered into by and among the Makers, Young
Generations, Inc., and the Holder (the "Stock Purchase Agreement"),
the terms of which are incorporated herein. Payment of this Note is
secured by the "Pledged Stock" (as such term is defined in the Stock
Purchase Agreement).
Capitalized terms, not otherwise defined herein, shall have
the meaning ascribed to such terms in the Stock Purchase Agreement.
Amounts owed hereunder shall be reduced as set forth below to
the extent that the full principal of the Initial Loan (as that term
is defined in that certain Loan and Security Agreement dated as of
September 30, 1995 and entered into between the Holder and the Company)
is repaid on or before the date indicated:
Repayment of all principal Percentage of principal and accrued
of Initial Loan on or before: interest thereon of this Note forgiven:
September 30, 1996 100%
September 30, 1997 80%
September 30, 1998 60%
September 30, 1999 40%
September 30, 2000 20%
A Maker shall be in default under this Note on the
happening of any of the following events or conditions, in which case,
all amounts owed hereunder by the breaching party shall become
immediately due and payable:
(a) The failure in the payment or performance of
any obligation, covenant, or liability contained or referred
to herein, or default in any other obligation, covenant, or
liability of a Maker to Emergent (including, without
limitation, any such default of a Maker under the Stock
Purchase Agreement); provided, however, that a Maker shall
have ten (10) business days after written or oral notice to
cure any such default, including a default in a payment
demanded under this Note.
(b) Dissolution, termination of existence,
insolvency, business failure, appointment of a receiver of any
part of the property of, assignment for the benefit of
creditors by, or commencement
12
of any proceeding under any bankruptcy or insolvency laws by,
or against a Maker.
(c) Entry of any judgment against a Maker which
results in any levy on, or seizure or attachment of the Pledged
Stock.
All Makers shall be in default under this Note upon the
happening of any of the following events or conditions, in which case,
all amounts owed hereunder by the Makers shall become immediately due
and payable:
(a) upon the occurrence of an "Event of Default,"
as defined in Section 6 of that certain Loan and Security
Agreement dated as of September 30, 1995 and entered into
between the Company and Holder;
(b) upon the occurrence of any event of default
under any agreement of the Company which results in an
acceleration event of any obligation of the Company in excess
of $100,000 (including, without limitation, the Company's
borrowings with Carolina First Bank); or
(c) upon the dissolution, termination of
existence, insolvency, business failure, appointment of a
receiver of any part of the property of, assignment for the
benefit of creditors by, or commencement of any proceeding
under any bankruptcy or insolvency laws by, or against the
Company (or any guarantor or surety for the Company).
In the event that all or any portion of the indebtedness
evidenced hereby shall be collected by or through an attorney-at-law,
Holder shall be entitled to collect from Makers all costs of
collection, including reasonable attorneys' fees.
Notwithstanding anything to the contrary herein, so long as a
particular Maker is not in default of his obligations under this
Note (regardless of whether other Makers are in default or whether
Holder has taken possession of other Maker's Shares as a result
of any default), Maker shall be entitled to retain ownership of his
Shares.
This Note shall be nonrecourse to the Makers and
notwithstanding anything to the contrary contained herein or in any
document executed by the Makers on the date hereof in connection
herewith, Maker shall have no personal monetary liability for the
$600,000 principal amount owed hereunder and any interest owed
thereon, except to the extent of the Maker's Pledged Stock.
The Makers hereby waive presentment, demand for payment,
protest and notice of protest, notice of dishonor and all other notices
in connection with this Note. This Note shall be payable without right
of set off, any defense of want or failure of consideration,
nonperformance of any condition precedent, nondelivery or delivery for a
special purpose or any other defense of any nature whatsoever.
This Note and the rights and obligations of the parties
hereunder and thereunder, shall be governed by, and construed in
accordance with, the laws of the state of South Carolina (without regard
to principles of conflicts of law).
13
IN WITNESS WHEREOF, the undersigned Makers have caused this
Note to be executed as of the day and year first written above.
______________________ __________________________ ________________________
Xxxxxx X. Xxxxx Xxxxx Xxxxxxxxx Xxxxx Xxxxx
161,768 shares 15,860 shares 15,860 shares
______________________ __________________________ ________________________
Xxxxxxxx Xxxxxxx Xxxxxx XxXxxxxx Xxxxx Xxxxxx
15,860 shares 9,804 shares 9,804 shares
______________________ __________________________ ________________________
Xxxxx Xxxx Xxxx Xxxx Xxxxx Xxxxxxx
9,804 shares 9,804 shares 9,804 shares
______________________ __________________________ ________________________
Xxxxx Xxxxxxxxx Xxxxxxx Xxxxxx Xxxx Xxxxx
9,804 shares 9,804 shares 9,804 shares
______________________ __________________________ ________________________
Xxxxx Xxxx Xxxxxx XxXxxxxx Dot Xxxxxxxx
9,804 shares 9,804 shares 9,804 shares
14
WAIVER OF CONDITION
The undersigned, the Buyers and Seller under that certain
Stock Purchase Agreement entered into as of September 30, 1995 by and
among the undersigned, hereby take the following action as of September
30, 1995:
The undersigned waive the requirement that the certificates
required by Sections 5.3(1) and 6.3(2) be delivered at closing.
EMERGENT GROUP, INC.
By: _____________________________
President
Xxxxxx X. Xxxxx Xxxxx Xxxxxxxxx
_____________________ _____________________________
A South Carolina Resident A South Carolina Resident
Xxxxx Xxxxx Xxxxxxxx Xxxxxxx
_____________________ _____________________________
A North Carolina Resident A North Carolina Resident
Xxxxxx Xxxxxxxx Xxxxx Xxxxxx
_____________________ _____________________________
A North Carolina Resident A North Carolina Resident
Xxxxx Xxxx Xxxx Xxxx
_____________________ _____________________________
A North Carolina Resident A North Carolina Resident
Xxxxx Xxxxxxx Xxxxx Xxxxxxxxx
_____________________ _____________________________
A North Carolina Resident A South Carolina Resident
Xxxxxxx Xxxxxx Xxxx Xxxxx
_____________________ _____________________________
A North Carolina Resident A North Carolina Resident
Xxxxx Xxxx Xxxxxx Xxxxxxxx
_____________________ _____________________________
A North Carolina Resident A North Carolina Resident
Xxxxxxx Xxxxxxxx
_____________________________
A North Carolina Resident
