STOCK PURCHASE AGREEMENT
Relating to the Acquisition of
▇▇▇▇▇▇▇▇ Construction Co.
and
T. Sisters Leasing, L.L. C.
by
▇▇▇▇▇▇▇▇ Corporation
THIS STOCK PURCHASE AGREEMENT is made and entered into this 16th day of
May 1998 by and among ▇▇▇▇▇▇▇▇ Construction Co., a corporation organized under
the laws of Texas, ("▇▇▇▇▇▇▇▇"), T. Sisters Leasing, L. L. C., a Texas limited
liability company ("Sisters"), the individuals listed on Schedule A hereto
("Stockholders") being the owners of all the issued and outstanding shares of
capital stock of ▇▇▇▇▇▇▇▇ and Membership Interests of Sisters and ▇▇▇▇▇▇▇▇
Corporation("Newco"), a Texas corporation.
RECITALS:
A. The Stockholders own all of the outstanding capital stock of ▇▇▇▇▇▇▇▇
and Membership Interests of Sisters. The number of shares of common
stock of ▇▇▇▇▇▇▇▇ and Membership Interests of Sisters owned by each of
the Stockholders is listed on Schedule A hereto, the aggregate amount
of such stock being sometimes referred to as the "▇▇▇▇▇▇▇▇ Stock or the
"Sisters Interests" as required.
B. The Stockholders desire to sell all of the ▇▇▇▇▇▇▇▇ Stock and the
Sisters Interests owned by them to Newco in exchange for cash and
common stock, $.01 par value, of Newco (the "Newco Stock") upon and
subject to the terms and conditions hereinafter set forth.
1. NOW THEREFORE, in consideration of the recitals and of the respective
covenants, representations and agreements herein contained, it is
hereby covenanted and agreed by and among the parties that they shall
carry out and consummate the following Stock Purchase Agreement (the
"Agreement"):
1. Purchase and Sale of Stock. The Stockholders, in reliance upon the
representations, warranties, and covenants of Newco contained herein and subject
to the terms and conditions of this agreement, shall exchange all of the shares
of the ▇▇▇▇▇▇▇▇ Stock and Sisters Interests which they own for the Purchase
Price set forth below. Newco, in reliance upon the representations, warranties
and covenants of the Stockholders contained herein and subject to the terms and
conditions of this Agreement, shall purchase the ▇▇▇▇▇▇▇▇ Stock and the Sisters
Interests for the aggregate purchase price of $8,000,000 (the "Purchase Price"),
which shall be paid as follows: $6,000,000 in cash and $2,000,000 in common
stock of Newco. The $6,000,000 cash consideration shall be payable out of the
proceeds of a public offering of Newco units, consisting of common stock and
warrants in a firm commitment underwriting (the "Public Offering). The cash
consideration shall be due and payable at the closing of the Public Offering.
The common stock of Newco shall be issued to the Stockholders at the closing of
the Public Offering. The number of shares of common stock of Newco to be
received by the Stockholders shall be determined by dividing $2,000,000 by the
offering price of the Newco Stock in the Public Offering as reflected in the
final Prospectus of Newco filed with the Securities and Exchange Commission.
2. Closing. The execution of this Agreement shall take place at the
offices of Newco, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ at 10:00 a. m. on
May 16, 1998. The exchange of the ▇▇▇▇▇▇▇▇ Stock and the Sisters Interests for
the cash consideration and Newco Stock shall take place at the closing of the
Public Offering (the "Closing").
At the Closing, the Stockholders shall deliver, free and clear of all
liens and encumbrances, claims and other charges thereon of every kind, the
certificate(s) for the shares of the ▇▇▇▇▇▇▇▇ Stock and the Sisters Interests in
negotiable form, duly endorsed in blank or with separate stock transfer powers
attached with signatures guaranteed by a bank or trust company, to Newco upon
delivery by Newco to the Stockholders of the cash consideration and the Newco
Common Stock on the basis as provided in Section 1 hereof.
3. Default at Closing. Notwithstanding the provisions of Section 3.1
hereof, if the Stockholders shall fail or refuse to deliver any of the ▇▇▇▇▇▇▇▇
Stock and the Sisters Interests as provided in Section 2 hereof, or if the
Stockholders shall fail or refuse to consummate the transactions described in
this Agreement prior to the Closing Date, Newco at its option, may refuse to
make such acquisition and thereby terminate all of its obligations hereunder.
The Stockholders acknowledge that the ▇▇▇▇▇▇▇▇ Stock and the Sisters Interests
are unique and otherwise not available and agree that in addition to any other
remedies, Newco may invoke any equitable remedies to enforce performance
hereunder including, without limitation, an action for specific performance.
3.1 Damages. Each of the parties hereto shall be liable to each other party for
a material breach of its representations, warranties and covenants which results
in a failure to perform under Sections 1 and 2 hereof, but then only to the
extent of the expenses incurred by the other parties in connection with the
transactions contemplated by this Agreement.
4. Representations and Warranties of ▇▇▇▇▇▇▇▇ and Stockholders.
▇▇▇▇▇▇▇▇ and the Stockholders represent and warrant to Newco as follows:
4.1 Organization, Standing, Qualification and Capitalization. ▇▇▇▇▇▇▇▇
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Texas and has the corporate power to perform its business
as presently conducted and to own and lease the properties used in connection
therewith. Sisters is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Texas and has the
corporate power to perform its business as presently conducted and to own and
lease the properties used in connection therewith. A complete and correct copy
of the Articles of Incorporation and all amendments thereto of ▇▇▇▇▇▇▇▇ and
Sisters certified by the Secretary of State of Texas and a complete and correct
copy of the By-laws of ▇▇▇▇▇▇▇▇ and the Regulations of Sisters and all
amendments thereto, certified by their Secretaries or counterpart, will be
delivered to Newco within ten days from the date hereof. ▇▇▇▇▇▇▇▇ is duly
qualified to do business and is in good standing in all jurisdictions in which
its business or the ownership of its property requires such qualification.
4.2 The total authorized capital stock of ▇▇▇▇▇▇▇▇ consists of 200,000
shares of common stock, $1.00 par value. There are currently 79,456 shares of
common stock issued and outstanding, all of which are validly issued, fully paid
and non-assessable. Sisters has no capital stock authorized or outstanding but
its Sisters Interests are owned by the persons listed on Schedule A hereto.
Neither ▇▇▇▇▇▇▇▇ nor the Stockholders, at the Closing, will be a party to or
bound by any written or oral contract or agreement which grants to any person an
option or right of first refusal or other right of any character to acquire at
any time, or upon the happening of any stated events, shares of common stock of
▇▇▇▇▇▇▇▇ or membership interests of Sisters, whether or not presently issued and
outstanding.
4.2 Stock Ownership. The Stockholders are the lawful ownersof the ▇▇▇▇▇▇▇▇ Stock
and the Sisters Interests and own beneficially the number of shares of ▇▇▇▇▇▇▇▇
Stock and Sisters Interests set forth on Schedule A hereto, free and clear of
all liens and encumbrances, claims and charges of every kind, and the
Stockholders have full legal power and all authorization required by law to
transfer and deliver said shares in accordance with this Agreement.
4.3 Subsidiaries. ▇▇▇▇▇▇▇▇ and Sisters have no subsidiaries.
4.4 Financial Statements. The Stockholders have delivered to Newco copies of the
following financial statements, all of which have been prepared in accordance
with generally accepted accounting principles except as otherwise disclosed
therein applied on a basis consistent with that of the preceding fiscal year:
(a) Balance sheets. Balance sheets of ▇▇▇▇▇▇▇▇ as of October 31,
1997 and October 31, 1996, certified by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co, certified
public accountants, which balance sheets together with any notes to
the respective balance sheets present fairly the financial condition
and assets and liabilities of ▇▇▇▇▇▇▇▇ as of their respective dates.
The balance sheet as of October 31, 1997 is hereinafter referred to as
the "1997 Balance Sheet." Unaudited balance sheets of Sisters as of
October 31, 1996 and October 31, 1997, which balance sheets together
with any notes to the respective balance sheets present fairly the
financial condition and assets and liabilities of ▇▇▇▇▇▇▇▇ as of their
respective dates. The balance sheet as of October 31, 1997 is referred
to as the "Sisters Balance Sheet."
(b) Statements of Operations. Statements of operations of ▇▇▇▇▇▇▇▇
for the fiscal years ended October 31, 1997 and October 31,
1996 certified by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co. which statements,
together with any notes to the respective statements of income
present fairly the results of operations of ▇▇▇▇▇▇▇▇ for the
said periods. Unaudited statements of operations of Sisters
for the fiscal years ended October 31, 1997 and October 31,
1996 which statements, together with any notes to the
respective statements of income present fairly the results of
operations of Sisters for the said periods.
(c) Accounts Receivable. The accounts receivable of ▇▇▇▇▇▇▇▇ and
Sisters as set forth on the 1997 Balance Sheet and the Sisters
Balance Sheet and all accounts receivable acquired by ▇▇▇▇▇▇▇▇
and Sisters or arising subsequent to October 31, 1997 are
collectible in full in the ordinary course of business in the
aggregate reported amounts less reserves reflected on the 1997
Balance Sheet and the Sisters Balance Sheet.
(d) Inventory. All inventory of ▇▇▇▇▇▇▇▇ and Sisters as set forth
in the 1997 Balance Sheet, and the Sisters Balance sheet,
consisted, and all such inventory as of the Closing Date will
consist of, a quality usable or salable in the ordinary course
of business of ▇▇▇▇▇▇▇▇ and Sisters. The value at which
inventories were reflected in the 1997 Balance Sheet and the
Sisters Balance sheet was the lower of cost (defined as
invoice cost) or replacement market value and with adequate
provisions for obsolete material, all in accordance with
generally accepted accounting principles applied on a basis
consistent with that of the prior fiscal year.
(e) Other Assets. The prepaid expenses and other assets of
▇▇▇▇▇▇▇▇ and Sisters as shown on the 1997 Balance Sheet and
the Sisters Balance sheet or arising thereafter prior to
Closing represent amounts which will benefit ▇▇▇▇▇▇▇▇ and
sisters in future periods. All material tangible assets owned
and used by ▇▇▇▇▇▇▇▇ and Sisters in their future operations
were reflected in the 1997 Balance Sheet and the Sisters
Balance sheet.
(f) Fixed Assets. The fixed assets of ▇▇▇▇▇▇▇▇ and Sisters are
stated at cost in the 1997 Balance Sheet and the Sisters
Balance Sheet. The reserves for depreciation and amortization
provided against these assets have been established in
accordance with the notes to the financial statements and are
adequate to reduce any idle fixed assets to net realizable
value.
4.5 Title to Properties. ▇▇▇▇▇▇▇▇ and Sisters have good and marketable
title to all of their properties and assets reflected in the 1997 Balance Sheet
and the Sisters Balance Sheet (except properties and assets sold or otherwise
disposed of since October 31, 1997 in the normal and ordinary course of
business), free and clear of all mortgages, liens, pledges, charges or other
encumbrances of any nature whatsoever; except (i) any mortgages, liens, pledges,
charges or other encumbrances disclosed in the 1997 Balance Sheet or the Sisters
Balance Sheet or (ii) liens for current taxes not yet due and payable. ▇▇▇▇▇▇▇▇
and sisters have valid and enforceable title insurance coverage on all real
property reflected in the 1997 Balance Sheet and Sisters Balance Sheet and will
deliver a true and correct copy of any such policy or policies of such insurance
within 10 days from the date hereof. All plants, structures and equipment owned
or used by ▇▇▇▇▇▇▇▇ and Sisters are, with minor exceptions, in good operating
repair.
4.6 Tax Matters. The amounts set up as provisions for taxes on the 1997
Balance Sheet and Sisters Balance Sheet are sufficient for the payment of all
foreign, federal, state, county and local taxes, and all employment and payroll
related taxes, including any penalties or interest thereon, whether disputed or
not, of ▇▇▇▇▇▇▇▇ accrued for or applicable to all periods ended on or prior to
March 31, 1998. ▇▇▇▇▇▇▇▇ and Sisters did not and will not realize any gain or
income of any kind with respect to activities subsequent to October 31, 1997 and
through the Closing Date except gain and income incurred in the ordinary course
of business subsequent to October 31, 1997. ▇▇▇▇▇▇▇▇ has duly made all deposits
required by law to be made with respect to employees' withholding taxes.
▇▇▇▇▇▇▇▇ and Sisters have duly filed all income, foreign, franchise, excise,
employment and payroll related, real and personal property, sales and gross
receipts tax returns and all other tax returns which were required to be filed
by it, and has paid or set up adequate reserves for the payment of, all taxes
shown on such returns. All federal income tax returns filed by ▇▇▇▇▇▇▇▇ and
Sisters have been filed with the Internal Revenue Service and no agreement for
the extension of time for the assessment of any deficiencies or adjustment with
respect to any tax return filed by ▇▇▇▇▇▇▇▇ or Sisters has been assessed, and
the Stockholders have no knowledge of any unassessed tax deficiency proposed or
threatened against ▇▇▇▇▇▇▇▇.
4.7. Litigation and Labor Matters. Except as provided for or
disclosed in the 1997 Balance Sheet or the Sisters Balance Sheet or in Schedule
B hereto:
(a) There is no litigation, proceeding or governmental
investigation pending or to the knowledge of the Stockholders
threatened, against ▇▇▇▇▇▇▇▇ or Sisters or their properties or
business;
(b) ▇▇▇▇▇▇▇▇ and Sisters are not in default with respect to any
order, writ, injunction or decree of any court or federal,
state, municipal or governmental department, commission,
board, bureau, agency or instrumentality; and
(c) ▇▇▇▇▇▇▇▇ and Sisters have not committed, and neither the
Stockholders nor ▇▇▇▇▇▇▇▇ nor Sisters has received any notice
of or claim that ▇▇▇▇▇▇▇▇ or Sisters has committed any unfair
labor practice under applicable federal or state law.
4.8. Insurance. ▇▇▇▇▇▇▇▇ and Sisters are insured under various policies of fire,
liability and other forms of insurance, as set forth in Schedule D hereto, which
policies are valid and enforceable in accordance with their terms and provide
adequate insurance for the business of ▇▇▇▇▇▇▇▇ and Sisters and its assets and
properties. ▇▇▇▇▇▇▇▇ and Sisters shall continue to carry such policies or
similar policies during the pendency of this Agreement, and all outstanding
claims under such policies are described in Schedule C. There is no liability
for retrospective insurance premium adjustments for any period prior to the date
hereof.
4.9. Patents, Trademarks, and Copyrights. Schedule E attached hereto
sets forth all patents, patent applications, registered trademarks, registered
service marks, trademarks and service ▇▇▇▇ applications, unregistered trademarks
and service marks, copyrights and copyright applications, owned or filed by
▇▇▇▇▇▇▇▇ or Sisters or in which ▇▇▇▇▇▇▇▇ or Sisters have an interest and the
nature of such interest. No other patent, trademark, or service ▇▇▇▇, copyright
or license is necessary to permit the business of ▇▇▇▇▇▇▇▇ or Sisters to be
conducted as it is now conducted or as heretofore or proposed to be conducted.
No person, firm or corporation has any proprietary, financial or other interest
in any such patents, patent applications, registered trademarks, registered
service marks, trademarks and service ▇▇▇▇ applications, unregistered trademarks
and service marks, copyrights and copyright applications, and there are no
violations by others of any rights of ▇▇▇▇▇▇▇▇ or Sisters thereunder. ▇▇▇▇▇▇▇▇
and Sisters are not infringing on any patent, trademark, or service ▇▇▇▇, or
copyright or otherwise violating the rights, of any third party, and no
proceedings have been instituted or are pending, or to the knowledge of the
Stockholders or ▇▇▇▇▇▇▇▇ orSisters are threatened, and no claim has been
received by ▇▇▇▇▇▇▇▇ or Sisters, alleging any such violation. Neither ▇▇▇▇▇▇▇▇
nor Sisters is a party to or bound by any license agreement requiring the
payment by ▇▇▇▇▇▇▇▇ or Sisters of any royalty payment, except as set forth in
Schedule D hereto.
4.10 Contracts and Commitments. Except as listed and identified in
Schedule F hereto or contemplated by this Agreement, Neither ▇▇▇▇▇▇▇▇ nor
Sisters is a party to any written or oral:
(a) contract or commitment with any person or former director or
employee or consultant; (b) contract or commitment with any labor union
or employee group; (c) contract or commitment for the future purchase
of, or payment for, raw materials, supplies or
products, involving in any case $10,000 or more;
(d) contract or commitment to sell or supply products or to
perform services for a specific price involving $10,000 or
more without the ability on the part of ▇▇▇▇▇▇▇▇ or Sisters to
increase such price or to cancel the contract or commitment
without any liability on the part of ▇▇▇▇▇▇▇▇ or Sisters;
(e) contract or commitment continuing over a period of more than
six months from the date of this Agreement;
(f) representative or sales agency contract or commitment;
(g) lease under which it is either lessor or lessee;
(h) bonus, pension, profit sharing, retirement, stock purchase,
stock option hospitalization, insurance, vacation pay or any
similar plan or practice, including but not limited to any
welfare benefit plan as defined in Section 3.1 of the Employee
Retirement Income Security Act, formal or informal, in effect
with respect to any of ▇▇▇▇▇▇▇▇ or Sisters's employees or
former employees;
(i) contract or commitment for the borrowing of money or other
agreement or arrangement for a line of credit;
(j) contract or commitment for any charitable contribution; (k)
contract or commitment for capital expenditures in excess of $10,000;
(l) contract or commitment for limiting or restraining it from engaging
in any lines of business
with any person, firm, corporation or any other entity; or
(m) contract not made in the ordinary course of business.
Except as stated in Schedule F hereto and for delays, minor failures to
meet specifications or other minor defaults which are normal in the conduct of
the business between ▇▇▇▇▇▇▇▇ and Sisters and other parties to the above
contracts, all parties to the above contracts have complied with the provisions
thereof, no party is in default thereunder, and no event has occurred which but
for the passage of time or the giving of notice would constitute a default
thereunder.
4.11. Absence of Undisclosed Liabilities. There are no liabilities or
obligations of ▇▇▇▇▇▇▇▇ or Sisters either accrued, absolute, contingent or
otherwise, including, but not limited to, any tax liabilities due or to become
due, except:
(a) to the extent reflected in the 1997 Balance Sheet and the sisters
Balance sheet and not heretofore paid or discharged, and
(b) those incurred, consistently with past business practice, in or as
a result of the normal and ordinary course of business since
October 31, 1997.
4.12. Absence of Default. Neither ▇▇▇▇▇▇▇▇ nor Sisters is in default in
the performance of, observance or fulfillment of any material obligation,
covenant or condition contained in any debenture or note, or contained in any
conditional sale or equipment trust agreement, or loan or other borrowing
agreement to which ▇▇▇▇▇▇▇▇ or Sisters is a party.
4.13. Existing Condition. Except as disclose in Schedule F hereto,
since October 31, 1997, there has not been (i) any material adverse change in
the financial condition or in the combined operations, business or properties of
▇▇▇▇▇▇▇▇ or Sisters; (ii) any damage, destruction or loss, whether covered by
insurance or not, materially and adversely affecting the operations, business or
properties of ▇▇▇▇▇▇▇▇ or Sisters; (iii) any declaration, setting aside or
payment of any dividend, or any distribution in respect of capital stock of
▇▇▇▇▇▇▇▇ or Sisters, or any redemption, purchase of other acquisition of any
kind of any shares of ▇▇▇▇▇▇▇▇ or Membership Interests of Sisters; (iv) any
increase in the compensation payable by ▇▇▇▇▇▇▇▇ or Sisters to any of their
officers, directors or employees; (v) any change in the terms of any bonus,
insurance, pension or other benefit plan for or with any officer, directors or
employees which increase amounts paid, payable to or to become payable
thereunder; or (vi) any complaints or other concerns which have been brought to
the attention of the Stockholders and which relate to ▇▇▇▇▇▇▇▇ or Sisters's
labor relations.
4.14. Validity of Contemplated Transactions. Neither the execution and
delivery of this Agreement nor the consummation of the transactions provided for
herein will violate any agreement to which ▇▇▇▇▇▇▇▇ or Sisters or the
Stockholders are a party or by which it or any of them is bound or any law,
order or decree or any provision of the Articles of Incorporation, Charter or
By-laws of ▇▇▇▇▇▇▇▇ or Sisters. The Stockholders has full legal authority to
execute and deliver this Agreement and to consummate and perform the
transactions contemplated hereby, and this Agreement constitutes the valid
obligation of the Stockholders legally binding upon him in accordance with its
terms.
4.15. Restrictions. Neither ▇▇▇▇▇▇▇▇ and Sisters is subject to any
Charter or any other corporate restriction or any judgment, order writ,
injunction or decree, which materially and adversely affects or, so far as the
Stockholders can now foresee, may in the future materially and adversely affect,
the business, operations prospect, properties, assets, or condition, financial
or otherwise, of ▇▇▇▇▇▇▇▇ and Sisters.
4.16. Compliance with Laws. ▇▇▇▇▇▇▇▇ and Sisters have complied with and
are not in default under, or in violation of, any laws, ordinances, rules,
regulations or orders (including without limitation any safety, health or trade
laws, ordinances, rules, regulations or orders) applicable to the operations,
business or properties of ▇▇▇▇▇▇▇▇ or Sisters which materially and adversely
affect or, so far as the Stockholders can now foresee, may in the future
materially affect, the business, operations, prospects, properties or assets or
condition, financial or otherwise, of ▇▇▇▇▇▇▇▇ or Sisters.
4.17. Disclosure. No representation by ▇▇▇▇▇▇▇▇ or Sisters or the
Stockholders in this Agreement contains any untrue statement of a material fact
or omits to state any material fact necessary to make any statement herein not
misleading.
4.18. Transactions with Affiliates. No director, officer or
Stockholders of ▇▇▇▇▇▇▇▇ or Sisters owns or during the last two years has owned,
directly or indirectly, or has, or during the last two years has had, an
ownership interest in any business, corporate or otherwise, which is a party to,
or in any property which is the subject of, any business arrangement or
relationship of any kind with ▇▇▇▇▇▇▇▇ or Sisters except as described in
Schedule G hereto.
4.19. Bank Accounts and Officers. Schedule H hereto contains a true and correct
list of the name and location of each bank in which ▇▇▇▇▇▇▇▇ and Sisters have an
account, each safety deposit box or custody agreement and the names of the
persons authorized to draw thereon or to withdraw therefrom, and also sets forth
the names of all directors and officers of ▇▇▇▇▇▇▇▇ and Sisters.
4.20. Investment Representations. The Stockholders represent and warrant to
Newco that they are acquiring the Newco Stock hereunder for their own account
for investment, with no present intention of reselling or otherwise distributing
the same, except (i) pursuant to an offering of shares duly registered under the
Securities Act of 1933, as amended, (the "Securities Act") or (ii) under other
circumstances which in the opinion of counsel to Newco at the time does not
require registration under the Securities Act. The Stockholders further covenant
and represent that none of the Newco Stock that will be issued to them pursuant
to this Agreement will be offered, sold, assigned, pledged, transferred, or
otherwise disposed of by them except after full compliance with all of the
applicable provisions of the Securities Act and the rules and regulations
thereunder. The Stockholders hereby confer full authority upon Newco to instruct
its transfer agent not to transfer any of the Newco Stock until it has received
written approval from Newco to the effect that the provisions of this Section
have been satisfied. The Stockholders acknowledge that Newco shall place a stop
transfer order against the transfer of the Newco Stock owned by them until they
satisfy one of the conditions set forth in this Section. All stock certificates
representing the Newco Stock shall be endorsed with the following restrictive
legend:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAW BUT HAVE BEEN ACQUIRED FOR THE PRIVATE
INVESTMENT OF THE HOLDER HEREOF AND MAY NOT BE OFFERED, SOLD OR
TRANSFERRED UNTIL EITHER (i) A REGISTRATION STATEMENT UNDER SUCH
SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE
BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) THE CORPORATION HAS
RECEIVED AN OPINION OF COUNSEL ACCEPTABLE TO THE CORPORATION AND ITS
COUNSEL THAT REGISTRATION UNDER SUCH SECURITIES ACT OR SUCH APPLICABLE
STATE SECURITIES LAWS IS NOT REQIJIRED IN CONNECTION WITH SUCH PROPOSED
OFFER, SALE OR TRANSFER."
5. Representations and Warranties of Newco. Newco represents and
warrants to the Stockholders that:
5.1 Organization, Good Standing and Authority. Newco is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Texas and has full corporate power and authority to own its properties
and assets and to carry on its business as it has been and is conducted. The
execution of this Agreement and the consummation of the transactions
contemplated hereby are within the corporate power of Newco and have been duly
authorized by all necessary corporate and other action. This Agreement
constitutes, and will constitute when delivered in accordance with the terms
hereof, the valid obligation of Newco legally binding upon it in accordance with
its terms. The Newco Stock to be delivered to the Stockholders in payment of the
Purchase Price when issued and delivered will be validly issued, fully paid and
non assessable.
5.2. Validity of Contemplated Transaction. Neither the execution and
delivery of this Agreement nor the consummation of the transactions provided for
herein will violate any agreement to which Newco is a party or by which it is
bound, or any law, order or decree or any provisions of its Articles of
Incorporation or By-laws.
5.3. Investment Representations. The ▇▇▇▇▇▇▇▇ Stock and the Sisters
Interests being delivered pursuant to this Agreement will be held by Newco for
its own account and not with a view to, or for, resale in connection with a
distribution thereof.
5.4. Litigation
(a) There is no litigation, proceeding or governmental
investigation pending, or to the knowledge of the officers and
directors of Newco, against or relating to Newco, or its
properties or business, and
(b) Newco is not knowingly in default with respect to any order,
writ, injunction or decree of any court or federal, state,
provincial, municipal or governmental department, commission,
board, bureau, agency or instrumentality.
6. Conduct of Business Pending Closing. ▇▇▇▇▇▇▇▇ and Sisters and the
Stockholders represent, warrant and agree with respect to ▇▇▇▇▇▇▇▇ and Sisters
that, pending the Closing and except as otherwise approved by Newco:
6.1. Business in the Ordinary Course. ▇▇▇▇▇▇▇▇ and Sisters shall
refrain from engaging in transactions other than in the ordinary course of
business. ▇▇▇▇▇▇▇▇ and Sisters shall also refrain from entering into any
transaction involving a capital expenditure (including any borrowings in
connection with such transaction) of more than $10,000 (other than in the
ordinary course of business) or the disposal of any property or asset (other
than in the ordinary course of business) with a value of more than $10,000 or
the disposal of any property or asset (other than inventory in the ordinary
course of business) with a value of more than $10,000.
6.2. Accounting and Credit Changes. ▇▇▇▇▇▇▇▇ and Sisters shall not make
any changes in its accounting procedures and practices or its credit criteria
from those in existence at October 31, 1997.
6.3. Capitalization, Options and Dividends. No changes shall be made in the
Articles of Incorporation of ▇▇▇▇▇▇▇▇ or Articles of Organization of Sisters,
they shall not issue or reclassify or alter any shares of outstanding or
unissued shares of its capital stock; it shall not grant options, warrants, or
other rights of any kind to purchase, or agree to issue any shares of its
capital stock; it shall not purchase or redeem or otherwise acquire for a
consideration any shares of its capital stock and shall not declare, pay, set
aside or make any dividends or other distributions or payments in respect of its
capital stock.
6.4. Encumbrance of Assets. No mortgage, pledge or encumbrance of any of
the properties or assets of ▇▇▇▇▇▇▇▇ or Sisters shall be made.
6.5. Employment Agreements. Except as contemplated by this Agreement,
▇▇▇▇▇▇▇▇ and Sisters shall refrain from entering into any employment agreements,
and shall keep in effect its present salary administration program (including
pension plans and other fringe benefits).
6.6. Real Property Acquisitions, Dispositions and Leases. ▇▇▇▇▇▇▇▇ and
Sisters shall refrain from acquiring or agreeing to acquire, or disposing or
agreeing to dispose of, real estate and from entering into or agreeing to enter
into leases of real estate or equipment for a period in excess of one year.
6.7 Litigation During Interim Period. ▇▇▇▇▇▇▇▇ and Sisters will
promptly advise Newco in writing of the commencement or threat against ▇▇▇▇▇▇▇▇
and Sisters of any claim, litigation, proceeding or tax audit not covered by
insurance when the amount claimed is in excess of $10,000.
6.8. Access. Newco and its officers, attorneys, accountants and
representatives shall be permitted to examine the property, books and records of
▇▇▇▇▇▇▇▇ and Sisters, and their title to any real estate, and such officers,
attorneys, accountants and representatives shall be afforded access to such
property, books, records and titles, and the Stockholders will upon request
furnish Newco with any information reasonably required in respect to ▇▇▇▇▇▇▇▇
and Sisters's property, assets, and business and will provide Newco with copies
of any contract, document or instrument listed in any Schedule hereto.
6.9. Good Will. ▇▇▇▇▇▇▇▇ and Sisters will use their best efforts to
preserve the good will of their customers and suppliers and others having
business relations with it.
7. Due Diligence; Termination. Upon execution of this Agreement, Newco will
complete its due diligence review of the books and records of ▇▇▇▇▇▇▇▇ and
Sisters. If the revenues and profits of ▇▇▇▇▇▇▇▇ and Sisters t are not as
represented to Newco by ▇▇▇▇▇▇▇▇ and Sisters in negotiations leading to this
Agreement, then notwithstanding any other provision of this Agreement to the
contrary, Newco shall have the right to terminate all obligations hereunder and
shall notify the Stockholders of any decision to so terminate within 3 days of
Newco's decision to terminate.
8. Covenants of Newco and the Stockholders.
8.1. Benefit Plans. Newco agrees that it will take no action after the Closing
which would result in an adverse change in the benefits to the employees covered
by ▇▇▇▇▇▇▇▇ and Sister's current employee benefit plans described in Schedule E.
Newco agrees to make available to ▇▇▇▇▇▇▇▇ and Sister's employees participation
in Newco's Employee Stock Option Plan and other benefit plans, subject to
applicable securities regulations.
8.2 Exclusive Rights to Newco. The Stockholders agree that they will
not enter into discussions or negotiations with any other party with a view to
(i) the sale of the ▇▇▇▇▇▇▇▇ Stock and the Sisters Interests, (ii) a merger
between ▇▇▇▇▇▇▇▇ and Sisters and another party or, (iii) a sale of all or
substantially all of the assets of ▇▇▇▇▇▇▇▇ and/or Sisters for a period of 60
days from the date of execution of this Agreement without prior notice to and
the consent of Newco.
8.4 Covenant Not to Compete. The Stockholders agrees that for a period
of five years from and after the date of Closing, they will not, unless acting
as an employee or consultant to Newco or ▇▇▇▇▇▇▇▇ or Sisters or with Newco's
written consent, directly or indirectly, own, manage, operate, join, control or
participate in the ownership of, or be connected as an officer, employee,
partner or otherwise with, any business engaged in any of the business which are
presently conducted by ▇▇▇▇▇▇▇▇ or Sisters within any state or province in which
▇▇▇▇▇▇▇▇ or Sisters presently maintain an office, other than by owning not more
than 5% of a class of securities registered under Section 12 of the Securities
Exchange Act of 1934 or traded on a national securities exchange. Each person
agrees that the remedy at law for any breach of the foregoing will be inadequate
and that ▇▇▇▇▇▇▇▇ or Sisters and Newco shall be entitled, inter alia, to
temporary and permanent injunctive relief without the necessity of proving
actual damage to ▇▇▇▇▇▇▇▇ or Sisters or Newco.
9. Liability and Responsibility of and Indemnification by Stockholders.
9.1 Subject to other subsections of this Section 9, the Stockholders shall
indemnify and hold harmless Newco and ▇▇▇▇▇▇▇▇ and Sisters against any
and in respect of any and all liability, damage, loss, cost and
expenses arising out of or otherwise in respect of:
(a) any misrepresentation, breach or warranty or non-fulfillment
of any agreement or covenant or from any misrepresentation in
or omission from any Schedule or list contained in this
Agreement, certificate or other instrument furnished by the
Stockholders, and
(b) any and all actions, suits, proceedings, audits, judgments,
costs and legal and other expenses incident to any of the
foregoing or to the enforcement of this Section 9;
provided, however, that the Stockholders shall not be liable to Newco under this
Agreement for any matter, other than matters relating to taxes, which was not
set forth in a claim presented in writing to the Stockholders pursuant to
Section 21 within four years from the Closing Date. Notwithstanding anything to
the contrary herein, the Stockholders shall be liable, responsible or obligated
to indemnify Newco for claims under this Section 9, only if the aggregate amount
of such claims exceeds $100,000. The total liability and responsibility of the
Stockholders under this Section 9 shall be limited to the aggregate purchase
price received under this Agreement.
9.2 Promptly after the receipt by any party hereto of notice of any
claim or the commencement of any action or proceeding, such party will, if a
claim with respect thereto is to be made against any party obligated to provide
indemnification (the "Indemnifying Party") pursuant to this Section 9, give such
Indemnifying Party written notice of such claim or the commencement of such
action or proceeding. Such Indemnifying Party shall have the right, at its
option and upon posting a bond or other security equal to such claims, to
compromise or defend, at its own expense and by its counsel, any matter
involving the asserted liability of the party seeking such indemnification. Such
notice, and opportunity to defend, shall be a condition precedent to any
liability of the Indemnifying Party under the indemnification agreements
contained in this Section 9. If any Indemnifying Party shall undertake to
compromise or defend any such asserted liability, it shall promptly notify the
party seeking indemnification of its intention to do so, and the party seeking
indemnification agrees to cooperate fully with the Indemnifying Party and its
counsel in the compromise of, or defense against any such asserted liability. In
any event, the indemnified party shall have the right at its own expense to
participate in the defense of such asserted liability.
10. Conditions Precedent to Newco's Obligations. All obligations of Newco under
this Agreement are subject to the fulfillment, prior to or at the Closing, of
each of the following conditions:
10.1 Representations and Warranties. The Stockholders' representations and
warranties contained in this Agreement or in any Schedule, list, certificate or
document delivered pursuant to the provisions hereof shall be true at and as of
the time of Closing as though made at and as of such time (except to the extent
that they are stated therein to be true as of some other date) and the
Stockholders shall have delivered to Newco a certificate dated the Closing Date
and signed by them to such effect.
10.2 Compliance with Agreements. The Stockholders and ▇▇▇▇▇▇▇▇ and Sisters shall
have complied with all agreements and conditions required by this Agreement to
be performed by them prior to or at the Closing, and the Stockholders shall have
delivered to Newco a certificate dated the Closing Date and signed by him to
such effect.
10.3 Opinion of Counsel. The Stockholders shall have delivered to Newco an
opinion of their counsel Hollmann, Lyon, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Inc. dated the
Closing Date and in form and substance satisfactory to Newco to the effect that:
(a) The Stockholders are the lawful owner of record and
beneficially of all the number of shares of ▇▇▇▇▇▇▇▇ Stock and
Sisters Interests set forth beside their names in Schedule A,
free and clear of any liens and encumbrances, equities and
claims and each Stockholder has full legal power and all
authorization required by law to transfer and deliver said
shares in accordance with this Agreement and by delivery of a
certificate or certificates therefor will transfer to Newco
said shares, free and clear of any liens, encumbrances,
equities and claims.
(b) This Agreement constitutes the valid obligations of the
Stockholders legally binding upon them in accordance with its
terms.
(c) Neither ▇▇▇▇▇▇▇▇ nor Sisters is a party to, or bound by any
written or oral contract or agreement which grants to any
person an option or right of first refusal or other right to
acquire at any time, or upon the happening of any stated
events, shares of the capital stock of ▇▇▇▇▇▇▇▇ or membership
interests in Sisters.
HollomanHolloman's authorized capital stock consists of 200,000 shares
of common stock $1.00par value, of which 79,456 shares have
been validly issued, are presently outstanding, and are fully
paid and non-assessable. The only owners of membership
interests in Sisters are listed on `schedule A hereto.
HollomanHolloman is a corporation duly organized, validly existing and
in good standing under the laws of the State of Texas, and has
the corporate power to perform its business as presently
conducted and to own and lease the properties used in
connection therewith. ▇▇▇▇▇▇▇▇ is duly qualified to do
business and is in good standing in all jurisdictions in which
its business or the ownership of its property requires such
qualification. Sisters is a limited liability corporation duly
organized, validly existing and in good standing under the
laws of the State of Texas, and has the corporate power to
perform its business as presently conducted and to own and
lease the properties used in connection therewith. Sisters is
duly qualified to do business and is in good standing in all
jurisdictions in which its business or the ownership of its
property requires such qualification
(f) The consummation of the transactions contemplated by this
Agreement will not result in a breach of any term of or
constitute a default under the Articles of Incorporation or
Charter or By-laws of ▇▇▇▇▇▇▇▇ or the Articles of Organization
of Sisters, or any indenture, agreement, instrument or
understanding known to such counsel to which ▇▇▇▇▇▇▇▇ and
Sisters or the Stockholders are a party or by which it or any
of them is bound.
HollomanHolloman and Sisters have good and marketable title to the
properties described in Subsection 4.5 hereof subject to no
liens or other encumbrances except those listed in phrases (i)
and (ii) of said Subsection 4.5. The opinion required by this
Subsection shall be based solely upon matters which have come
to such counsel's attention and which are contained in a title
insurance policy and any judgment, federal tax lien or
financing statement searches in respect of ▇▇▇▇▇▇▇▇ and
Sisters.
10.4 Directors. The Stockholders shall have taken action by Unanimous Consent or
at a meeting duly called to elect to the board of directors of ▇▇▇▇▇▇▇▇ the
persons designated by Newco prior to the Closing date.
10.5 Material Damage. The business and properties of ▇▇▇▇▇▇▇▇ and Sisters, taken
as a whole, shall not have been and shall not be threatened to be materially
adversely affected in any way as a result of fire, explosion, earthquake,
disaster, accident, labor dispute, flood, drought, embargo, riot, civil
disturbance, uprising, activity of armed forces or act of God or public enemy.
Approval of Counsel. All steps to be taken and all resolutions, papers
and documents to be executed, and all other legal matters in connection with the
purchase and sale of stock and related matters, including compliance with
applicable state and provincial securities laws shall be subject to the
reasonable approval of Newco's counsel.
10.7 Use of Name. Newco wishes to avail itself of the good name and
reputation of ▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇ and the Stockholders hereby agree to the use of
the name "▇▇▇▇▇▇▇▇" by Newco and agree to execute such documents or consents as
may enable Newco to use the name "▇▇▇▇▇▇▇▇" name as set forth herein.
11. Conditions Precedent to Stockholders' Obligations. All obligations
of the Stockholders under this Agreement are subject to the fulfillment, prior
to or at the Closing, of each of the following conditions:
11.1 Representations and Warranties. Newco's representations and warranties
contained in this Agreement or in any certificate or document delivered pursuant
to the provisions hereof shall be true at and as of the time of Closing as
though made at and as of such time (except to the extent that they are stated
therein to be true as of some other date) and Newco shall have delivered to the
Stockholders a certificate dated the Closing Date and signed by its Chairman or
President to such effect.
11.2. Compliance with Agreements. Newco shall have performed and
complied with all agreements and conditions required by this Agreement to be
performed by it prior to or at the Closing, and shall have delivered to the
Stockholders a certificate dated the Closing Date and signed by signed by its
Chairman or President to such effect.
11.3. Opinion of Counsel. Newco shall have delivered to the
Stockholders an opinion of its counsel, dated the Closing Date and in form and
substance satisfactory to the Stockholders with respect to the matters referred
to in Subsections 5.1 and 5.2 hereof.
11.4. Material Damage. The business and properties of Newco, taken as a
whole, shall not have been and shall not be threatened to be, affected in any
way materially adverse to the enterprise of Newco as a result of fire,
explosion, earthquake, disaster, accident, labor dispute, flood, drought,
embargo, riot, civil disturbance, uprising, activity of armed forces or act of
God or public enemy.
12. Broker and Finder's Fees. The Stockholders represent and warrant to
Newco that they have not engaged or dealt with any broker for a fee or
commission in respect to the execution of this Agreement or the consummation of
the transactions contemplated hereby. Newco represents and warrants to the
Stockholders, ▇▇▇▇▇▇▇▇ and Sisters that neither it nor any corporate affiliate
has engaged or dealt with any broker or other person who may be entitled to any
brokerage fee or commission in respect of the execution of this Agreement or the
consummation of the transactions contemplated hereby.
Each of the parties hereto shall indemnify and hold the others
harmless against any and all claims, losses, liabilities or expenses which may
be asserted against such other parties as a result of such first mentioned
party's dealings, arrangements or agreements with any such broker or person.
13. Survival of Representations and Warranties. All representations,
warranties and agreements, made by Newco, ▇▇▇▇▇▇▇▇ and Sisters and the
Stockholders in this Agreement or pursuant hereto shall survive the Closing for
a period of not to exceed four years, except for representations, warranties and
agreements relating to taxes of all kinds which shall survive until all claims
based thereon shall have been barred by the relevant statutes of limitations.
Notwithstanding any investigations or audit conducted before or after the
Closing Date, the parties shall be entitled to rely upon the representations and
warranties set forth in this Agreement.
14. Expenses. Except as provided in Section 3.1, ▇▇▇▇▇▇▇▇ and Sisters
shall bear the expenses of ▇▇▇▇▇▇▇▇, sisters and the Stockholders, and Newco
shall bear its expenses, in connection with the transactions contemplated
thereby.
15. Announcements. Newco and the Stockholders will, and the
Stockholders will cause ▇▇▇▇▇▇▇▇ and Sisters to, cooperate with each other as to
the timing and content of any announcements of the transactions contemplated
hereby to the general public or to employees, customers and suppliers.
16. Further Actions and Assurances. Newco, ▇▇▇▇▇▇▇▇ and Sisters and the
Stockholders will execute and deliver any and all documents, and will cause any
and all other action to be taken, either before or after Closing, which may be
necessary or proper to effect or evidence the provisions of this Agreement and
the transactions contemplated hereby and by the Public Offering.
17. Counterparts. This Agreement may be executed in several
counterparts, each of which is an original and the Stockholders may become a
party hereto by executing a counterpart hereof. This Agreement and any
counterpart so executed shall be deemed to be one and the same instrument. It
shall not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.
18. Contents of Agreement; Parties in Interest. This Agreement sets
forth the entire understanding of the parties. Any previous agreements or
understandings between the parties regarding the subject matter hereof are
merged into and superceded by this Agreement. All representations, warranties,
covenants, terms, conditions and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective heirs,
legal representatives, successors and assigns of the Stockholders and Newco.
19. Texas Law to Govern. This Agreement is being delivered and is
intended to be performed in the State of Texas and shall be construed and
enforced in accordance with the laws thereof.
20. Section Headings and Gender. The section headings herein have been
inserted for convenience of reference only and shall in no way modify or
restrict the terms or provisions hereof. The use of the masculine pronoun herein
when referring to any party has been for convenience only and shall be deemed to
refer to the particular party intended regardless of the actual gender or such
party.
21. Schedules. All Schedules referred to in this Agreement are intended
to be and are hereby specifically made a part of this agreement.
22. Notices. All notices, requests and other communications which are
required or permitted hereunder shall be sufficient if given in writing and
delivered personally or by registered or certified mail, postage prepaid, or by
facsimilie followed by an original signed copy, as follows: (or to such other
addressee as shall be set forth in a notice given in the same manner):
If to Newco: ▇▇▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimilie No. (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇▇▇▇ and Sisters
or Stockholders: ▇/▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇
Facsimilie No.
23. Confidential Information. Notwithstanding any termination of this
Agreement, Newco and its corporate affiliates and its representatives agree to
hold in confidence any information not generally available to the public or
trade received by them from ▇▇▇▇▇▇▇▇ and Sisters or the Stockholders pursuant to
the terms of this Agreement. If this Agreement is terminated for any reason,
Newco, its corporate affiliates and its representatives will continue to hold
such information in confidence and will, to the extent requested by ▇▇▇▇▇▇▇▇ and
Sisters , promptly return to ▇▇▇▇▇▇▇▇ and Sisters all written materials
furnished to Newco, its corporate affiliates or representatives pursuant hereto.
IN WITNESS WHEREOF, this agreement has been executed as of the day and
year first above written.
▇▇▇▇▇▇▇▇ Corporation
By:/S/ ▇▇▇▇▇ Lucas________
▇▇▇▇▇ ▇▇▇▇▇, Senior Vice President
T. Sisters Leasing , L. L. C. ▇▇▇▇▇▇▇▇ Construction Co.
By:/s/ ▇▇▇ Holloman___ By:/s/ ▇▇▇ ▇▇▇▇▇▇▇▇
Name and Title ▇▇▇ ▇▇▇▇▇▇▇▇, President
▇▇▇▇▇▇▇▇ Construction Co. Stockholders:
H. C. Stock, Ltd.
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇ By: Western Sunset Estates, Inc.,General Partner
▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇, President
▇▇▇▇▇▇▇▇ Construction Co.
Employee Stock Ownership Plan ▇▇▇▇▇▇▇▇ Chaitable Remainder Unitrust
By:/s/ ▇▇▇ ▇▇▇▇▇▇▇▇ By:/s/ ▇▇▇ Holloman_
▇▇▇ ▇▇▇▇▇▇▇▇, Trustee ▇▇▇ ▇▇▇▇▇▇▇▇, Trustee
T. Sisters Leasing L. L. C. Members
------------------
Lakwest Ltd.
By: Western Sunset Estates, Inc.,General Partner
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇
By:/s/ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇, President
List of Schedules and Exhibits
Schedule A List of Stockholderss and the number of shares of the Common
Stock of ▇▇▇▇▇▇▇▇ and Sisters owned by each
Stockholders-Recital A, Section 4.2 [To be prepared by the
Stockholders]
Schedule B Litigation-Section 4.7 [To be prepared by Stockholders]
Schedule C Insurance Section 4.8 [To be prepared by Stockholders]
Schedule D Patents, Trademarks, and Copyrights-Section 4.9
[To be prepared by Stockholders]
Schedule E Contracts and Commitments-Section 4.10 [To be prepared
by Stockholders]
Schedule F Existing Condition Section 4.13
[To be prepared by Stockholders]
Schedule G Transactions with Affiliates 4.16
[To be prepared by Stockholders]
Schedule H Bank Account Information 4.19 [To be prepared by Stockholders]