EXHIBIT 10.37
STOCK PURCHASE AGREEMENT
between
OLYMPIC CASCADE FINANCIAL CORPORATION
and
LHF HOLDCO, LLC
Dated: as of August 31, 1998
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") dated as of August 31,
1998, is entered into by and among Olympic Cascade Financial Corporation, a
Delaware corporation ("Olympic") and LHF HoldCo, LLC, a California limited
liability company ("Purchaser").
RECITALS
WHEREAS, Olympic a holding company with wholly owned subsidiaries who
are broker-dealers duly registered with the Securities and Exchange
Commission (the "SEC") and are members in good standing with the National
Association of Securities Dealers, Inc. (the "NASD") engaged in the general
securities business;
WHEREAS, L.H. Friend, Weinress, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Inc., a California
corporation ("LHF") is a broker-dealer duly registered with the SEC and is a
member in good standing with the NASD engaged in the general securities
business;
WHEREAS, pursuant to that certain Exchange Agreement and Plan of
Reorganization (the "Exchange Agreement") executed by and among Olympic, LHF
and shareholders of LHF (the "Exchange Shareholders") on February 12, 1997,
Olympic acquired all of the issued and outstanding shares of capital stock of
LHF;
WHEREAS, Olympic desires to sell and transfer to Purchaser, and
Purchaser desires to purchase from Olympic all of the issued and outstanding
shares of capital stock of LHF on the terms and provisions hereof; and
WHEREAS, Purchaser desires to transfer to Olympic, and Olympic desires
to acquire from Purchaser, 55,503 shares of issued and outstanding capital
stock of Olympic on the terms and provisions hereof.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and subject to and
on the terms and conditions herein set forth, the parties hereto agree as
follows:
ARTICLE I
PURCHASE AND SALE OF STOCK OF LHF
1.1 SALE AND TRANSFER OF STOCK OF LHF. Subject to the terms and
conditions herein stated and in reliance upon the representations and
warranties herein set forth, at the Closing (as hereinafter defined in
Section 1.4), Olympic agrees to transfer, convey, assign and deliver to
Purchaser all of the shares of capital stock of LHF (collectively, the "LHF
Shares"), free and clear of all liens, claims, encumbrances, pledges,
options, security interests and any other adverse interests. On the Closing
Date, Olympic shall deliver to Purchaser all certificates representing the
LHF Shares duly endorsed or accompanied by a stock power duly executed in
form for transfer, which LHF Shares shall be duly authorized, fully paid and
non-assessable.
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1.2 CONSIDERATION FROM PURCHASER.
1.2.1 OLYMPIC SHARES. In consideration of Olympic's sale of the
LHF Shares to Purchaser, Purchaser covenants and agrees to deliver to Olympic
at Closing, 55,503 shares of Olympic's capital stock owned by Purchaser
(collectively, the "Olympic Shares"), free and clear of all liens, claims,
encumbrances, pledges, options, security interests and any other adverse
interests. On the Closing Date, Purchaser shall deliver to Olympic all
certificates representing the Olympic Shares duly endorsed or accompanied by
a stock power duly executed in form for transfer, which Olympic Shares shall
be duly authorized, fully paid and non-assessable.
1.2.2 ADDITIONAL CONSIDERATION.
(a) For the period of one (1) year after Closing,
Purchaser will provide Olympic real time access to all of the LHF
research to be distributed to a central entity. Olympic shall pay all
costs and expenses incurred by Purchaser associated with document
production, handling, copying and shipping in providing such access to
Olympic, in excess of twenty-four sets of such research materials.
(b) For the period of one (1) year after Closing,
Purchaser agrees to utilize Caravelle Travel for LHF's business travel
needs, provided that Caravelle Travel is the lowest cost provider of any
business travel contemplated by LHF and Caravelle Travel provides
services of a quality comparative to other travel agents. In return for
utilizing Caravelle Travel, Purchaser shall be entitled to receive, on a
pro rata basis calculated on LHF's utilization of Caravelle Travel,
those travel benefits and advantages distributed by Caravelle Travel to
Olympic based on LHF's utilization of Caravelle Travel.
(c) In further consideration for the sale of the LHF
Shares, Purchaser shall transfer, convey and assign to Olympic,
Purchaser's right, title and interest in and to certain assets as
specifically set forth on Exhibit A.
(d) For as long as Olympic remains party to the real
property lease governing that certain office space located at ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Purchaser grants Olympic a
three (3%) percent equity ownership in Purchaser (and any
successor-in-interest of Purchaser) (the "HoldCo Shares") as of the
Closing Date.
1.3 CONSIDERATION FROM OLYMPIC. In further consideration of
Purchaser's transfer of the Olympic Shares to Olympic, Olympic covenants and
agrees to terminate and discharge any and all outstanding liabilities due and
owing to Olympic by LHF at Closing.
1.4 CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place on August 31, 1998 or at such time
and place agreed upon by the parties hereto at the offices of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, on the first business day following the satisfaction or waiver of
all conditions to the obligations of the parties to consummate the
transactions contemplated hereby, or at such other time and date as the
parties hereto shall by written instrument designate, but in no event later
than September 15, 1998. Such time and date are herein referred to as the
"Closing Date."
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ARTICLE II
TRANSACTIONS PRECEDING THE CLOSING
2.1 TRANSFER OF ASSETS. Immediately prior to Closing, LHF shall
transfer as a distribution $500,000 by wire transfer to Olympic.
2.2 RELEASE AND ASSIGNMENT OF INDEMNIFICATION RIGHTS. Immediately
prior to Closing, Olympic hereby assigns, grants, conveys, transfers and
delivers to Purchaser Olympic's right to indemnification for the Exchange
Shareholder's surviving representations, warranties, covenants and agreements
as set forth in Sections 2.1, 2.3, 2.12 and 3.1 of the Exchange Agreement, a
copy of which is attached hereto as EXHIBIT B.
ARTICLE III
REPRESENTATIONS OF OLYMPIC
Olympic hereby represents and warrants to Purchaser that the
representations and warranties set forth below are true and accurate in all
material respects as of the date when made except as affected by the
transactions contemplated by this Agreement.
3.1 ORGANIZATION AND AUTHORITY OF OLYMPIC. Olympic (i) is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, (ii) has all requisite corporate power and
authority to carry on its business as it is now being conducted, and (iii)
has taken all corporate action necessary in order to execute, deliver and
perform its obligations under this Agreement. This Agreement has been duly
executed and delivered by the Company and is a legal, valid and binding
obligation of the Company, enforceable in accordance with its terms, subject
to bankruptcy, insolvency, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles.
3.2 NO CONFLICTS AND QUALIFICATION.
3.2.1 IN GENERAL. The execution, delivery and performance of
this Agreement by Olympic does not, and the consummation by Olympic of the
transactions contemplated hereby will not, constitute or result in (i) a
breach or violation of, or a default under, the certificate of incorporation
or bylaws of Olympic, (ii) a breach of, a default under, the acceleration of
any obligations or the creation of a lien, pledge, security interest or other
encumbrance on the assets of Olympic (with or without notice, lapse of time
or both) pursuant to, any contracts binding upon Olympic, or any change in
the rights or obligations of any party thereunder, or (iii) a violation of
any applicable law or governmental or non-governmental permit or license to
which Olympic is subject, except, in the case of clause (ii) or (iii) above,
for any breach, violation, default, acceleration, creation or change that,
individually or in the aggregate, is not reasonably likely to materially
delay or impair the ability of Olympic to consummate the transactions
contemplated by this Agreement. Olympic is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the conduct of
its business or the ownership or leasing of its assets makes such
qualification or licensing necessary, other than in jurisdictions where the
failure to be qualified or licensed, individually or in the aggregate, is not
reasonably likely to have a material adverse effect on the financial,
condition, assets, or results of operations of Olympic, taken as a whole.
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3.2.2 INVESTOR RIGHTS AGREEMENT. Prior to or commensurate with
the execution, delivery and performance of this Agreement, Olympic fulfilled
all obligations and requirements under Sections 8 and 9 of the Investor
Rights Agreement (as defined below) to sell the LHF Shares to Purchaser. The
Investor Rights Agreement is acknowledge to have been executed by Olympic in
conjunction with the Exchange Agreement; a copy of the Investor Rights
Agreement is attached hereto as EXHIBIT C.
3.2.3 OLYMPIC SHARES. Olympic's purchase of the Olympic Shares
from Purchaser will not, constitute or result in (i) a breach or violation
of, or a default under, the certificate of incorporation or bylaws of
Olympic, or (ii) a violation of any applicable law or governmental or
non-governmental permit or license to which Olympic is subject.
3.3 ORGANIZATION AND CAPITALIZATION OF LHF. LHF (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California, and (ii) has all requisite corporate power and authority
to carry on its business as it is now being conducted. The authorized
capital stock of LHF consists of 100,000 shares of common stock, no par
value, of which 18,250 shares are issued and outstanding. The LHF Shares
constitute one hundred percent (100%) of the issued and outstanding shares of
stock of all classes of LHF. All outstanding shares have been duly authorized
and validly issued and are fully paid and non-assessable.
3.4 OWNERSHIP OF LHF SHARES. Olympic owns all of the issued and
outstanding capital stock of LHF. There are no preemptive rights or other
outstanding rights, options, warrants, conversion rights, stock appreciation
rights, redemption rights, agreements, arrangements or commitments to issue
or sell any shares or any securities of LHF or obligations convertible or
exchangeable into or exercisable for, or giving any Person (as defined below)
the right to subscribe for or acquire any securities of LHF, and no
securities or obligations evidencing such rights are authorized, issued or
outstanding.
3.5 GOVERNING CORPORATE DOCUMENTS OF LHF. Since the Closing of the
Exchange Agreement, Olympic has not caused LHF to amend its articles of
incorporation or bylaws, nor has any Certificate of Amendment of Articles of
Incorporation been filed with the Secretary of State of California on behalf
of LHF.
3.6 FINANCIAL STATEMENTS AND NO MATERIAL CHANGES. Olympic has had
furnished to it from LHF copies of the statement of financial condition of
LHF as at July 31, 1998 (the "Balance Sheet") and the related statements of
income, changes in shareholders' equity, changes in liabilities subordinated
to the claims of general creditors, and cash flows for the ten (10) months
ended July 31, 1998 (the "Financial Statements"). Since July 31, 1998 (the
"Balance Sheet Date"), Olympic is not aware of any material adverse change in
the assets, liabilities, business, condition (financial or otherwise), or the
results of operations of LHF, except as contemplated by this Agreement.
3.7 NO CHANGES SINCE THE BALANCE SHEET DATE. Since the Balance Sheet
Date (a) except as specifically stated on SCHEDULE 3.14 or contemplated by
this Agreement, Olympic acknowledges and represents that it has not caused
LHF to (i) incur any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise), except in the ordinary course of
business, (ii) permitted any of the material assets of LHF (the "Assets") to
be subjected to any mortgage, pledge, lien, security interest, encumbrance,
restriction or
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charge of any kind, (iii) sold, transferred or otherwise disposed of any of
the Assets except in the ordinary course of business, (iv) made any
commitment for any capital expenditure, except in the ordinary course of
business, (v) written down the value of any work in process except
write-downs in the ordinary course of business, none of which, individually
or in the aggregate, is material to LHF, (vi) granted any increase in the
rate of wages, salaries, bonuses or other remuneration of any employee who
after giving effect to such increase or prior thereto receives compensation
at an annual rate of Fifty Thousand Dollars ($50,000) or more, (vii) made any
change in any method of accounting or auditing practice, (viii) otherwise
conducted its business or entered into any transaction, except in the usual
and ordinary manner and in the ordinary course of its business, (ix) amended
or terminated any agreement which is material to the business of LHF, (x)
renewed, extended or modified any lease of real property, or except in the
ordinary course of business, any lease of personal property, or (xi) agreed,
whether or not in writing, to do any of the foregoing, and (b) there has been
no material adverse change in the assets, liabilities, business, condition
(financial or otherwise), or the results of operations of LHF.
3.8 BOOKS AND RECORDS. Olympic acknowledges and represents that to the
extent that it keeps the accounts, books, ledgers and official and other
records material to the business of LHF, all such accounts, books, ledgers
and official and other records have been properly and accurately kept and
completed in all material respects, and there are no material inaccuracies or
discrepancies of any kind contained or reflected therein.
3.9 TITLE TO PROPERTIES: ENCUMBRANCES. Olympic makes no claim on nor
has Olympic granted any other party an interest in any Assets of LHF other
than the distribution provided for in Section 2.1 and the interests described
in Exhibit A.
3.10 LEASES. Olympic has no knowledge of any real property leases and
equipment leases to which LHF is a party (as sublessee, lessee or lessor),
except as set forth on SCHEDULE 3.10. As to those leases on SCHEDULE 3.10 to
which Olympic is a party, Olympic has no knowledge that each lease is not in
full force and effect; that all rents and additional rents due to date on
each such lease have not been paid, or that any waiver, indulgence or
postponement of the lessee' s or sublessee's obligations thereunder has been
granted by the lessor. Olympic has no knowledge that any consent of any
party to any leases listed on SCHEDULE 3.10 is required to consummate this
Agreement.
3.11 CONTRACTS. Olympic has neither caused nor is aware that LHF is a
party to or bound by (a) any agreement, contract or commitment relating to
any bonus, deferred compensation, pension, profit sharing, stock option,
employee stock purchase, retirement or other employee benefit plan, (b) any
agreement, indenture or other instrument which contains restrictions with
respect to payment of dividends or any other distribution in respect of its
capital stock, (c) any agreement, contract or commitment relating to capital
expenditures, (d) any loan or advance to, or investment in, any other person
or entity or any agreement, contract or commitment relating to the making of
any such loan advance or investment, (e) any guarantee or other contingent
liability in respect of any indebtedness or obligation of any other person or
entity (other than the endorsement of negotiable instruments for collection
in the ordinary course of business), (f) any management service, employment,
consulting or any other similar type of contract, (g) any agreement, contract
or commitment which involves Fifty Thousand Dollars ($50,000) or more and is
not cancelable without penalty within thirty
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(30) days, (h) any agreement with any officer or director of LHF, or (i) any
contract with Olympic as shareholder.
3.12 LITIGATION. Olympic has not received notice of any action, suit,
proceeding at law or in equity by any person, or any arbitration or any
administrative or other proceeding by or before any governmental or other
instrumentality or agency, pending or threatened, against or affecting LHF,
or its officers, directors, employees, registered representatives or
registered principals, or any of its properties or rights, which, if
adversely determined would have a material adverse effect on the assets,
liabilities, business, condition (financial or otherwise), or the results of
operations of LHF. Olympic knows of no judgment, order or decree entered in
any lawsuit or proceeding to which LHF is subject.
3.13 TAX MATTERS.
3.13.1 For the period commencing on March 1, 1997 through the
Closing, Olympic acknowledges and represents that (i) all Tax Returns that
are required to be filed by or with respect to LHF or to Olympic as it
relates to LHF have been duly filed, or, where not so filed, are covered
under an extension that has been obtained therefor, (ii) all such Tax Returns
are true, complete and correct, (iii) all Taxes due and payable by LHF or
Olympic as it relates to LHF have been paid in full, (iv) none of the Tax
Returns referred to in this Section 3.13 have been examined by the IRS or the
appropriate state, local or foreign taxing authority, (v) all deficiencies
asserted or assessments made as a result of such examinations have been paid
in full, (vi) no issues that have been raised by the relevant taxing
authority in connection with the examination of any of the Tax Returns
referred to in clause (i) are currently pending, (vii) no waivers of statutes
of limitation have been given by or requested with respect to any Taxes of
LHF or Olympic as it relates to LHF, (viii) there is no claim or assessment
threatened against LHF or Olympic as it relates to LHF, (ix) LHF or Olympic
as it relates to LHF have withheld and timely paid to the appropriate taxing
authority the required amounts in compliance with all tax withholding
provisions of applicable federal, state, local and foreign laws (including,
without limitation, income, social security and employment tax withholding),
(x) neither LHF nor Olympic as it relates to LHF have made any payments, and
is not a party to any agreement that could obligate it to make any payments
that would not be deductible, in whole or in part, under Section 280G or
162(m) of the Code, and (xi) LHF is not part of an affiliated group (within
the meaning Section 1504(a) of the Code) other than one in which Olympic is
the common parent.
3.13.2 The term "Tax" or collectively "Taxes" means (i) any and
all federal, state and local taxes, assessments and other governmental
charges, duties, impositions and liabilities, including taxes based upon or
measured by gross receipts, income, profits, franchise and excise taxes,
together with all interest, penalties and additions imposed with respect to
such amounts; (ii) any liability for the payment of any amounts of the type
described in clause (i) as a result of being a member of an affiliated,
consolidated, combined or unitary group for any period; and (iii) any
liability for the payment of any amounts of the type described in clause (i)
or (ii) as a result of any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any
liability for taxes of a predecessor entity.
3.13.3 The term "Tax Return" shall mean any return, declaration,
report, claim for refund, or information return or statement relating to
Taxes, including any schedule or attachment thereto, and including any
amendment thereof.
3.14 LIABILITIES. Except as set forth on SCHEDULE 3.14 and the Balance
Sheet, Olympic knows of no outstanding claims, liabilities or indebtedness,
contingent or otherwise of LHF, other than (i) liabilities incurred
subsequent to the Balance Sheet Date in the
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ordinary course of business not involving borrowing by LHF and which are
consistent with past practice and, individually or in the aggregate, are not
material to the business, operations, properties, or condition (financial or
otherwise) of LHF, (ii) liabilities set forth on any schedule hereto or which
are not required to be set forth on any schedule hereto because such
liabilities are specifically excluded from disclosure on the schedules
provided for by the provisions of this Agreement, or (iii) any other
liabilities provided for in this Agreement.
3.15 INTELLECTUAL PROPERTIES. SCHEDULE 3.15 contains a list of trade
names, trademarks, copyrights, service marks, trademark registrations and
applications (including those which are pending), service ▇▇▇▇ registrations
and applications, copyright registrations and applications (whether pending
or abandoned), described to Olympic by LHF as owned or used by LHF in the
operation of its business (collectively, the "Intellectual Property").
Olympic claims no interest in such Intellectual Property.
3.16 COMPLIANCE WITH LAWS. Olympic has no reason to believe that LHF is
not in compliance in any material respects with all applicable laws,
regulations, orders, judgments and decrees ("Requirements of Law"). LHF (i)
has not been charged with, (ii) is not under any investigation with respect
to, and (iii) has not been threatened with, any charge concerning any
violation of any Requirements of Law.
3.17 INVESTMENT INTENT. The HoldCo Shares being acquired by Olympic
hereunder are being acquired for such Olympic's own account and not with a
view to, or for resale in connection with, any distribution other than
resales made in compliance with the registration and prospectus delivery
requirements of Securities Act of 1933, as amended (the "Act"). Olympic
understands that the HoldCo Shares have not been registered under the Act by
reason of available exemptions from the registration and prospectus delivery
requirements of the Act, that such HoldCo Shares must be held indefinitely
unless such HoldCo Shares are registered under the Act or until any transfer
is exempt from registration, and that reliance of the Purchaser upon these
exemptions is predicated in part upon these representations and warranties by
Olympic.
3.18 QUALIFICATION AS AN INVESTOR.
3.18.1 Olympic hereby represents and warrants that Olympic has the
requisite knowledge and experience in financial and business matters to
assess the relative merits and risks of investment in the HoldCo Shares.
3.18.2 Olympic has received certain information concerning the
HoldCo Shares and has had the opportunity to obtain additional information as
desired in order to evaluate the merits and risks of holding the HoldCo
Shares, and is able to bear the economic risk and lack of liquidity inherent
in holding the HoldCo Shares. Furthermore, Olympic has had the full
opportunity to discuss with the Purchaser all material aspects of an
investment in the HoldCo Shares, including the opportunity to ask, and to
receive answers to Olympic's full satisfaction, regarding such questions as
Olympic has deemed necessary to evaluate Olympic's opportunity to invest.
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ARTICLE IV
REPRESENTATIONS OF PURCHASER
Purchaser hereby represents and warrants to Olympic that the
representations and warranties set forth below are true and accurate in all
material respects as of the date when made except as affected by the
transactions contemplated by this Agreement.
4.1 ORGANIZATION AND AUTHORITY OF PURCHASER. Purchaser (i) is a
limited liability company duly organized, validly existing and in good
standing under the laws of the State of California, (ii) has all requisite
corporate power and authority to carry on its business as it is now being
conducted, and (iii) has taken all action necessary in order to execute,
deliver and perform its obligations under this Agreement. This Agreement has
been duly executed and delivered by the Purchaser and is a legal, valid and
binding obligation of the Purchaser, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles.
4.2 NO CONFLICTS AND QUALIFICATION. The execution, delivery and
performance of this Agreement by Purchaser does not, and the consummation by
Purchaser of the transactions contemplated hereby will not, constitute or
result in (i) a breach or violation of, or a default under, the articles of
organization or operating agreement of Purchaser, (ii) a breach of, a default
under, the acceleration of any obligations or the creation of a lien, pledge,
security interest or other encumbrance on the assets of Purchaser (with or
without notice, lapse of time or both) pursuant to, any contracts binding
upon Purchaser, or any change in the rights or obligations of any party
thereunder, or (iii) a violation of any applicable law or governmental or
non-governmental permit or license to which Purchaser is subject, except, in
the case of clause (ii) or (iii) above, for any breach, violation, default,
acceleration, creation or change that, individually or in the aggregate, is
not reasonably likely to materially delay or impair the ability of Purchaser
to consummate the transactions contemplated by this Agreement. Purchaser
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the conduct of its business or the ownership or leasing
of its assets makes such qualification or licensing necessary, other than in
jurisdictions where the failure to be qualified or licensed, individually or
in the aggregate, is not reasonably likely to have a material adverse effect
on the financial, condition, assets, or results of operations of Purchaser,
taken as a whole.
4.3 OWNERSHIP OF OLYMPIC SHARES. Purchaser is the record and
beneficial owner of the Olympic Shares specified in Section 1.2.1, free and
clear of all liens, encumbrances, restrictions and claims of every kind other
than claims of Olympic under the Investors Rights Agreement. Purchaser has
necessary corporate power and authority to enter into this Agreement and has
full legal right, power and authority to transfer and convey the Olympic
Shares pursuant to this Agreement; the delivery by Purchaser of the Olympic
Shares pursuant to this Agreement will transfer to Olympic Purchaser's valid
title thereto, free and clear of all liens, encumbrances, restrictions and
claims of every kind.
4.4 INVESTMENT INTENT. The LHF Shares being acquired by Purchaser
hereunder are being acquired for such Purchaser's own account and not with a
view to, or for resale in connection with, any distribution other than
resales made in compliance with the registration and prospectus delivery
requirements of Securities Act of 1933, as amended (the "Act"). The
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Purchaser understands that the LHF Shares have not been registered under the
Act by reason of available exemptions from the registration and prospectus
delivery requirements of the Act, that such LHF Shares must be held
indefinitely unless such LHF Shares are registered under the Act or until any
transfer is exempt from registration, and that reliance of LHF upon these
exemptions is predicated in part upon these representations and warranties by
the Purchaser.
4.5 QUALIFICATION AS AN INVESTOR.
4.5.1 Purchaser hereby represents and warrants that the Purchaser
has the requisite knowledge and experience in financial and business matters
to assess the relative merits and risks of investment in the LHF Shares.
4.5.2 Purchaser has received certain information concerning LHF
and has had the opportunity to obtain additional information as desired in
order to evaluate the merits and risks of holding the LHF Shares, and is able
to bear the economic risk and lack of liquidity inherent in holding the LHF
Shares. Furthermore, Purchaser has had the full opportunity to discuss with
LHF all material aspects of an investment in the LHF Shares, including the
opportunity to ask, and to receive answers to Purchaser's full satisfaction,
regarding such questions as Purchaser has deemed necessary to evaluate
Purchaser's opportunity to invest.
4.6 LEGEND. Purchaser acknowledges that the following legend has been
placed on certificates for the LHF Shares delivered by Olympic:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO OLYMPIC CASCADE FINANCIAL CORPORATION THAT
SUCH REGISTRATION IS NOT REQUIRED."
4.7 SCOPE OF BUSINESS. Purchaser hereby represents and warrants to
Olympic that the deals listed on EXHIBIT A are a complete and accurate
description of those clients with whom LHF has entered into a contract and
whose financing is in progress as of the Closing Date (the "Deals"). The
dates listed on EXHIBIT A are Purchaser's best estimate of each Deal's
closing date. Purchaser does not guaranty or warrant that any Deal will close
or the date listed or at all.
4.8 CERTAIN WARRANTS GRANTED. Purchaser hereby acknowledges that
certain warrants will be granted to Olympic with respect to the prospective
and pending Deals listed in EXHIBIT A, if such Deals shall be consummated.
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4.9 UNRECORDED ASSETS. Purchaser hereby represents and warrants that
to the Purchaser's knowledge there are no unrecorded assets not reflected on
the July 31, 1998 Balance Sheet.
4.10 WARRANT RIGHTS TO OLYMPIC. Purchaser hereby acknowledges and
represents that the warrants listed on EXHIBIT D are a complete and accurate
description of those warrants to which Olympic is entitled and has the right
of assignment. Purchaser further acknowledges that certain warrants in the
Audio Book Club, Inc., Home Security International, Inc. and Riviera Tool
Company transactions will be directly granted to Olympic, or its affiliates,
and to certain other individuals.
ARTICLE V
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to consummate the transactions contemplated
herein shall be subject to the fulfillment, at or prior to the Closing, of
all of the conditions set forth below in this Article V. Purchaser may, by
written notice, waive any or all of these conditions in whole or in part
without prior notice, provided, however, that no such waiver shall constitute
a waiver by Purchaser of any other right or remedy if Olympic shall be in
default of any of its representations, warranties or covenants under this
Agreement.
5.1 NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date, Olympic
shall not have caused, except as provided for in this Agreement, any material
adverse change in the assets, liabilities, business, condition (financial or
otherwise), or the results of operations of LHF.
5.2 PERFORMANCE OF AGREEMENTS. Each and all of the agreements of
Olympic to be performed pursuant to the terms hereof on or before the Closing
Date shall have been duly performed in all material respects, and Olympic
shall have each delivered to Purchaser a certificate, dated the Closing Date,
to such effect.
5.3 RESOLUTIONS. Purchaser shall have received a copy of the
resolutions of the Board of Directors of Olympic approving the transactions
contemplated by this Agreement, certified by the Secretary of Olympic.
5.4 NO LITIGATION THREATENED. No action or proceedings shall have been
instituted against LHF or, to the knowledge of Olympic, shall have been
threatened, before a court or other governmental body or by any public
authority to restrain or prohibit Olympic or LHF from consummating any of the
transactions contemplated hereby, and a duly authorized officer of Olympic
shall have delivered to the Purchaser a certificate, dated the Closing Date,
to such effect.
5.5 DISTRIBUTIONS. Olympic shall have caused LHF to distribute to
Olympic the assets of LHF listed on Schedules 2.1(a)-(e) hereto and shall not
have caused LHF to distribute nor claim an interest in any other assets of
LHF at or after the Closing.
5.6 TAX AUTHORITY FILINGS. Olympic shall have prepared and filed all
required documents, submissions, notices, amended applications or similar
filings with federal, state and local taxing authorities required with
respect to (i) the transfer of the LHF Shares to
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Purchaser and (ii) that certain tax sharing agreement previously executed by
and between Olympic and LHF.
5.7 CERTAIN WARRANTS OUTSTANDING. Olympic hereby acknowledges that
certain warrants remain due and outstanding to LHF for transactions completed
by LHF on or prior to the Closing Date. These warrants that remain due and
outstanding to LHF include those warrants granted in the Audio Book Club,
Inc., Home Security International, Inc. and Riviera Tool Company
transactions. Furthermore, Olympic hereby represents and warrants that to
Olympic's knowledge there are no other warrants which remain due and
outstanding to LHF for transactions completed by LHF on or prior to the
Closing Date.
5.8 FURTHER ASSURANCES BY OLYMPIC. Olympic shall execute and deliver
such further documents and to do all matters and things which may be
convenient or necessary to more effectively and completely carry out the
intentions of this Agreement, including but not limited to, preparing and
filing all required documents, submissions, notices, amended applications or
similar filings with NASD to effect and give evidence of the purchase and
sale of the LHF Shares and to secure the approval of the Exchange and to
obtain the necessary state "blue sky" clearances, if any are required with
respect to the transfer of the LHF Shares to Purchaser. Any failure of
Olympic to perform under this Section 5.8 shall not void this Agreement nor
waive Purchaser's rights hereunder.
ARTICLE VI
CONDITIONS TO OLYMPIC'S OBLIGATIONS
The obligation of Olympic to consummate the transactions contemplated
herein shall be subject to the fulfillment, at or prior to the Closing, of
all of the conditions set forth below in this Article VI. Olympic may, by
written notice, waive any or all of these conditions in whole or in part
without prior notice, provided, however, that no such waiver shall constitute
a waiver by Olympic of any other right or remedy if Purchaser shall be in
default of any of its representations, warranties or covenants under this
Agreement.
6.1 PERFORMANCE OF AGREEMENTS. Each and all of the agreements of
Purchaser to be performed on or before Closing Date pursuant to the terms
hereof shall have been duly performed in all material respects, and Purchaser
shall have delivered to Olympic a certificate, dated the Closing Date, to
such effect.
6.2 NO LITIGATION THREATENED. No action or proceedings shall have been
instituted or, to the knowledge of Purchaser, shall have been threatened,
before a court or other governmental body or by any public authority to
restrain or prohibit Purchaser from consummating any of the transactions
contemplated hereby, and a duly authorized officer of Purchaser shall have
delivered to Olympic a certificate, dated the Closing Date, to such effect.
6.3 REGULATORY FILINGS. Purchaser shall have prepared and filed all
required documents, submissions, notices, amended applications or similar
filings with federal, state, and local regulatory authorities and the NASD to
effect and give evidence of the purchase and sale of the LHF Shares and to
secure the approval of the Exchange and to obtain the necessary state "blue
sky" clearances, if any are required with respect to the transfer of the LHF
Shares to Purchaser.
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6.4 FURTHER ASSURANCES BY PURCHASER. Purchaser shall execute and
deliver such further documents and to do all matters and things which may be
convenient or necessary to more effectively and completely carry out the
intentions of this Agreement, including but not limited to, preparing and
filing all required documents, submissions, notices, amended applications or
similar filings with federal, state and local taxing authorities if any are
required with respect to the transfer of the LHF Shares to Purchaser.
6.5 RESOLUTIONS. Olympic shall have received a copy of the
resolutions of the Board of Directors of the Purchaser approving the
transactions contemplated by this Agreement, certified by the Secretary of
the Purchaser
ARTICLE VII
SURVIVAL OF REPRESENTATIONS: INDEMNITY
AND OTHER POST-CLOSING COVENANTS
7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF OLYMPIC. Except as
otherwise provided in this Agreement, all representations, warranties,
covenants and agreements of Olympic made in this Agreement or in any
certificate delivered pursuant hereto or otherwise shall survive the
consummation of the transactions contemplated hereby for a period of one (1)
year following the Closing and after one (1) year shall be terminated and
extinguished (except for the representations and warranties made in Sections
3.4, which shall not expire, and the representations and warranties made in
Sections 3.1, 3.2, 3.3 and 3.13, which shall survive for a period of three
(3) years following the Closing), except as to matters as to which an
Indemnitee (as defined in Section 7.3.1) has made a claim for indemnification
or made a Claims Notice, pursuant to Section 7.3.1 hereafter, on or prior to
such date, in which case the rights to indemnification shall survive until
such claim is finally resolved and any obligations with respect thereto are
fully satisfied.
7.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. All
representations, warranties, covenants and agreements of Purchaser contained
in this Agreement shall survive the execution and delivery of this Agreement
and the Closing hereunder, and shall thereafter terminate and expire, except
for Purchaser's covenants in Section 4.3, and any claim based thereon shall
be brought one year from the Closing Date, except as to matters as to which
an Indemnitee (as defined in Section 7.3.1) has made a claim for
indemnification or given a Claims Notice under Section 7.3.1 hereafter on or
prior to such date, in which case the rights to indemnification shall survive
until such claim is finally resolved and any obligations with respect thereto
are fully satisfied, and except for the representations and warranties set
forth in Sections 4.3 which shall not expire.
7.3 NOTICE AND OPPORTUNITY TO DEFEND
7.3.1 NOTICE OF ASSERTED LIABILITY. Promptly after receipt by
any party hereto (the "Indemnitee") of notice of any demand, claim or
circumstances which, with the lapse of time, would or might give rise to a
claim or the commencement (or threatened commencement) of any action,
proceeding or investigation (an "Asserted Liability") that may result in any
Losses, the Indemnitee, shall promptly give notice thereof (a "Claims
Notice") to any other party obligated to provide indemnification pursuant to
the terms of this Agreement (the "Indemnifying Party"). The Claims Notice
shall describe the Asserted
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Liability in reasonable detail, and shall indicate the amount (estimated, if
necessary and to the extent feasible) of the Losses that have been or may be
suffered by the Indemnitee.
7.3.2 OPPORTUNITY TO DEFEND. The Indemnifying Party may elect to
compromise or defend, at its own expense and by its own counsel, any Asserted
Liability. If the Indemnifying Party elects to compromise or defend such
Asserted Liability, it shall within thirty (30) days (or sooner, if the
nature of the Asserted Liability so requires) notify the Indemnitee of its
intent to so, and the Indemnitee shall cooperate, at the expense of
Indemnifying Party, in the compromise of, or defense against, the Asserted
Liability. If the Indemnifying Party elects not to compromise or defend the
Asserted Liability, fails to notify Indemnitee of its election as herein
provided, or contests its obligation to indemnify under this Agreement, the
Indemnitee may pay, compromise or defend such Asserted Liability at the
expense of the Indemnifying Party. Subject to the limitations contained in
Section 8.6 on the obligations of the Indemnifying Party in respect of
proposed settlements, the Indemnitee shall have the right to employ its own
counsel with respect to any Asserted Liability, but the fees and expenses of
such counsel shall be at the expense of such Indemnitee unless (a) the
employment of such counsel shall have been authorized in writing by the
Indemnifying Party in connection with the defense of such action, or (b) such
Indemnifying Party shall not have, as provided above, promptly employed
counsel reasonably satisfactory to such Indemnitee to take charge of the
defense of such action, or (c) such Indemnitee shall have reasonably
concluded based on an opinion of counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to such Indemnifying Party, in any of which events such reasonable
fees and expenses shall be borne by the Indemnifying Party and the
Indemnifying Party shall not have the right to direct the defense of such
action on behalf of the Indemnitee in respect of such different or additional
defenses. If the Indemnifying Party chooses to defend any claim, the
Indemnitee shall make vailable to the Indemnifying Party any books, records
or other documents within its control that are necessary or appropriate for
such defense.
7.4 SETTLEMENT. Notwithstanding the provisions of Section 7.3.2,
neither the Indemnifying Party nor the Indemnitee may settle or compromise
any claim for which indemnification has been sought and is available
hereunder, over the objection of the other; provided, however, that consent
to settlement or compromise shall not be unreasonably withheld or delayed.
If, however, the Indemnitee refuses to consent to a bona fide offer of
settlement which the Indemnifying Party wishes to accept, the Indemnitee may
continue to pursue such matter, free of any participation by Indemnifying
Party, at the sole expense of the Indemnitee. In such event, the obligation
of the Indemnifying Party to the Indemnitee shall be equal to the lesser of
(i) the amount of the offer of settlement which the Indemnitee refused to
accept plus the costs and expenses of the Indemnitee prior to the date the
Indemnifying Party notified the Indemnitee of the offer of settlement, and
(ii) the actual out-of-pocket amount the Indemnitee is obligated to pay as a
result of the Indemnitee continuing to pursue such matter.
7.5 COMPUTATION OF LOSSES. For purposes of calculating any Losses
suffered by an indemnified party pursuant to this Article VII, the amount of
the Losses suffered by the indemnified party shall be the net amount of
damage so suffered after giving effect to any insurance proceeds and tax
benefit received with respect to such matter.
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7.6 APPROVALS. Any and all necessary consents to, or approvals of, the
transactions contemplated by this Agreement of any governmental agencies and
authorities, including, without limitation, approval of the NASD, shall have
been obtained and such approvals and the transactions contemplated hereby
shall not have been contested by any federal or state governmental authority
by formal proceeding and no party hereto shall have any knowledge of the
existence of any fact or the occurrence of any event forming the basis for a
reasonable belief that such approvals or the transactions contemplated hereby
will be contested by any federal or state governmental authority or by any
other third party by formal proceeding.
7.7 TRANSACTION ACCOUNTING. Upon the consummation and completion of
each transaction deal listed on EXHIBIT A, Purchaser shall cause to be
delivered to Olympic a full accounting of such transaction.
ARTICLE VIII
MISCELLANEOUS
8.1 EXPENSE. The parties hereto shall pay all of their own expenses
relating to the transactions contemplated by this Agreement, including,
without limitation, the fees and expenses of their respective counsel and
financial advisers.
8.2 GOVERNING LAW. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the laws of
the State of California without reference to any conflict of laws provisions.
8.3 JURISDICTION. Any judicial proceeding brought against any of the
parties to this Agreement on any dispute arising out of this Agreement or any
matter related hereto shall be brought in the courts of the State of
California in Orange County or in United States District Court located in
Santa Ana, California, and by execution and delivery of this Agreement, each
of the parties to this Agreement accepts for itself or himself the
jurisdiction of the aforesaid courts, irrevocably consents to the service of
any and all process in any action or proceeding by the mailing of copies of
such process to such party at its address as set forth below each parties'
signature, and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement. Each party hereto irrevocably
waives to fullest extent permitted by law any objection that it or he may now
or hereafter have to the laying of the venue of any judicial proceeding
brought in such courts and any claim that any such judicial proceeding has
been brought in an inconvenient forum. the foregoing consent to jurisdiction
shall not constitute general consent to service of process in the State of
California for any purpose except as provided above and shall not be deemed
to confer rights on any Person other than the respective parties to this
Agreement.
8.4 CAPTIONS. The article and section captions used herein are for
reference purposes only, and shall not in any way affect the meaning, or
interpretation of this Agreement.
8.5 NOTICES. Any notice or other communications required or permitted
hereunder shall be in writing and shall be deemed effective (a) upon personal
delivery, if delivered by hand, (b) three days after the date of deposit in
the mails, if mailed by certified or registered mail (return receipt
requested), or (c) on the next business day, if mailed by an
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overnight mail service to the parties or sent by facsimile transmission, and
in each case, postage prepaid, addressed to a party at its or his address set
forth on the signature page hereof, or such other address as shall be
furnished in writing by like notice by any such party.
8.6 TERMINATION. This Agreement may be terminated at any time prior to
the Closing Date:
8.6.1 By mutual agreement of Olympic and Purchaser;
8.6.2 By Purchaser if (i) there has been a material
misrepresentation, breach of warranty or breach of covenant by Olympic under
this Agreement or (ii) any of the conditions
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precedent to the Closing set forth in Article V and VI have not been
satisfied on the Closing Date, and, in each case, Purchaser is not then in
default of its obligations hereunder; and
8.6.3 By Olympic if (i) there has been a material
misrepresentation, breach of warranty or breach of covenant by Purchaser
under this Agreement or (ii) any of the conditions precedent to the Closing
set forth in Article VI has not been satisfied on the Closing Date, and, in
each case, Olympic is not in default of their obligations hereunder.
In the event of termination of this Agreement as provided in
Section 8.6.1, this Agreement shall become void and there shall be no
liability hereunder on the part of any party hereto. In the event of
termination of this Agreement as provided in Section 8.6.2, such termination
shall be without prejudice to any of the rights that the Purchaser may have
against Olympic or any other party under the terms of this Agreement or
otherwise. In the event of termination of this Agreement as provided in
Section 8.6.3, such termination shall be without prejudice to any of the
rights that Olympic may have against Purchaser or any other Person under the
terms of this Agreement or otherwise.
8.7 INTENTIONALLY OMITTED.
THE REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK
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8.8 ASSIGNMENTS. This Agreement may not be transferred, assigned,
pledged or hypothecated by any party hereto, other than by operation of law.
No assignment or transfer shall be effective unless the assignee agrees in
writing to assume such assignor's obligations under the Agreement. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, executors, administrators, successors and
assigns.
8.9 PRESS RELEASES AND ANNOUNCEMENTS. No party to this Agreement shall
issue any press release or public announcement relating to the subject matter
of this Agreement without the prior approval of the other parties to this
Agreement; provided, however, that any party to this Agreement may make any
public disclosure it believes in good faith is required by law or regulation,
including any state or federal securities laws (in which case the disclosing
party will advise the other parties prior to making the disclosure).
8.10 CONSTRUCTION. The language used in this Agreement will be deemed
to be the language chosen by all of the parties hereto to express their
mutual intent, and no rule of construction shall be specified against any
party.
8.11 SEVERABILITY. In the event any provision of this Agreement is
found to be void and unenforceable by a court of competent jurisdiction or
arbitration panel, the remaining provisions of this Agreement shall
nevertheless be binding upon the parties with the same effect as though the
void or unenforceable part had been severed and deleted.
8.12 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
8.13 ENTIRE AGREEMENT. This Agreement, including the documents referred
to herein which form a part hereof, contains entire understanding of the
parties hereto with respect to the subject matter contained herein and
therein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
8.14 AMENDMENTS. This Agreement may not be changed orally, but only by
an agreement in writing signed by Olympic and the Purchaser.
8.15 THIRD-PARTY BENEFICIARIES, Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person other than the parties hereto and their respective
affiliates, officers, directors, employees, agents, attorneys,
representatives, successors and assigns as permitted under Section 8.8.
8.16 CONFIDENTIALITY. Subject to any obligation to comply with any law,
rule or regulation of any governmental authority or any subpoena or other
legal process to make information available to the persons entitled thereto,
the parties hereto shall, and shall cause their affiliates, employees,
attorneys, accountants and representatives to keep confidential and such
party shall not use, or permit its affiliates, attorneys, accountants and
representatives to use, in any manner other than for the purpose of
evaluating the transaction contemplated herein any information obtained from
the other party, whether or not obtained or acquired pursuant to the terms of
this Agreement, unless such information is readily ascertainable from public
or published information, from trade sources, or is already known to the
receiving party.
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IN WITNESS WHEREOF, the parties hereto have executed this Purchase
Agreement as of the date first above written.
"OLYMPIC" OLYMPIC CASCADE FINANCIAL
CORPORATION, a Delaware corporation
By: ______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Chairman of the Board
Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: 312/▇▇▇-▇▇▇▇
"PURCHASER" LHF HOLDCO, LLC
By:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman of the
Board and Chief Executive Officer
Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax
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