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Exhibit 23.1
STOCK PURCHASE AGREEMENT
THIS AGREEMENT dated as of March 16,1998 between ACTION INDUSTRIES, INC., a
corporation organized under the laws of the Commonwealth of Pennsylvania with
offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (the "Purchaser"), and
GENERAL VISION SERVICES, INC., a corporation organized under the laws of
Delaware with offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the
"Seller");
W I T N E S S E T H :
WHEREAS, the parties agree that the Purchaser commence the acquisition of the
Seller as expeditiously as possible in a transaction which will not require
the approval of the stockholders of either party as an interim step leading to
the ultimate consummation of the acquisition of the Seller by the Merger
contemplated by the Merger Agreement between the Purchaser and the Seller; and
WHEREAS, there are 26,707,278 shares of capital stock of GVS (the "GVS Common
Stock") currently issued and outstanding; and
WHEREAS, in furtherance of the foregoing the parties intend that the Purchaser
purchase 26,800,000 shares of GVS Common Stock in exchange for the
consideration set forth in Section 1.2 below; and
WHEREAS, the parties hereto intend that this transaction shall constitute an
issuance of stock in consideration for the investment received and, accordingly,
constitute a transaction described in Section 1032 of the Internal Revenue Code
of 1986, as amended; and
WHEREAS, the Purchaser has strengthened its business by effecting a private
financing completed on or about August 18, 1997 (the "First Financing") in which
it received gross proceeds of $3.7 million and is effecting a private
financing to be completed in March 1998 (the "Second Financing") in which it may
receive gross proceeds of up to $300,000 (the First and second Financings
hereinafter sometimes referred to collectively as the "Financings" and the
purchasers in the Financings hereinafter referred to as the "Unit Purchasers");
and
WHEREAS, ▇. ▇▇▇▇▇▇▇ Securities, LLC ("▇▇▇▇▇▇▇") has acted as placement agent on
behalf of the Purchaser in effecting the Financings.
NOW, THEREFORE, in consideration of the premises and the covenants herein
contained, the parties hereto do hereby agree as follows:
ARTICLE I. PURCHASE AND SALE OF THE GVS SHARES
1.1 Transfer of the GVS Shares.
The Seller hereby sells to the Purchaser and the Purchaser hereby purchases from
the Seller 26,800,000 shares of GVS Common Stock (the "GVS Shares"). free and
clear of all security
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STOCK PURCHASE AGREEMENT BETWEEN ACTION
INDUSTRIES, INC. AND GENERAL VISION
SERVICES, INC. DATED AS OF MARCH 18, 1998
interests, pledges, liens, charges and encumbrances, and the Purchaser hereby
purchases and accepts the GVS Shares from the Seller.
1.2 Consideration.
Subject to the provisions of this Agreement, as consideration for the GVS Shares
sold, transferred and conveyed to the Purchaser, the Purchaser hereby pays to
the Seller, receipt of which is acknowledged by the Seller, an aggregate of
$5,197,582.15 which consists of the $2,697,582.15 previously advanced by the
Purchaser to the Seller from the proceeds of the First Financing which is
reflected in the notes dated June 13, 1997, July 20, 1997 and August 19, 1997
which notes are herewith delivered to the Seller marked paid in full, together
with the Purchaser's note (the "Purchaser's Note") in the principal amount of
$2.5 million in the form appended hereto as EXHIBIT A. The Purchaser's Note
shall be secured, subject to a superior lien to be granted to the Unit
Purchasers, as set forth in the form of security agreement appended hereto as
EXHIBIT B, which lien in favor of GVS shall be released, unless the Unit
Purchasers notes have previously been paid, in the event that the Merger or
other business combination pursuant to which Purchaser acquires not less than
90% of the voting securities of GVS is not consummated by December 31, 1998. The
Purchaser's Note and the Unit Purchaser's Notes shall also be secured by a
continuing lien on all of the Purchasers other assets, except for the proceeds
resulting from tax refunds or the issuance of debt of equity securities.
Anything to the contrary not withstanding, Seller acknowledges that Purchaser
may be unable to pay the GVS Note without obtaining additional financing,
Purchaser agrees to use its best efforts to obtain the financing to pay the
note.
1.3 Further Assurances.
The Seller shall from time to time after the date hereof, without further
consideration, execute and deliver such instruments of transfer, conveyance and
assignment and shall take such other action as the Purchaser may reasonably
request to more effectively transfer, convey and deliver the GVS Shares to the
Purchaser.
ARTICLE II. AMENDMENT TO MERGER AGREEMENT
The Merger Agreement is hereby amended as follows: (i) all releases required of
resigning officers and directors relating to any moneys owed to or employment,
consulting or other agreements with such resigning officers and directors shall
be given mutually in the form appended hereto as EXHIBIT C upon the execution of
this Agreement in consideration for which ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, is each hereby granted
options by the Purchaser to purchase 25,000 shares of the Purchaser's common
stock (the "Action Common Stock") for a period of five years at $1.00 per share
for 12,500 shares and $1.25 for the balance; (ii) the shares of GVS Common Stock
referred to in Section 1.02 of Article I shall exclude the GVS Shares; (iii) all
representations and warranties shall be true and correct as of the date hereof;
and (iv) the conditions of closing set forth in Section 5.03 of Article V is
hereby waived except that (A) neither party shall be obligated to proceed with
the Merger if the consummation thereof is enjoined by a court of competent
jurisdiction, (B) shareholder approval of both parties shall be required; and
(C) the calculation
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STOCK PURCHASE AGREEMENT BETWEEN ACTION
INDUSTRIES, INC. AND GENERAL VISION
SERVICES, INC. DATED AS OF MARCH 18, 1998
of the Purchaser's negative net worth for the purpose of issuing B Preferred
Stock shall be made as of December 31, 1997 and which is $(525,012) based upon
the statement of Net Worth annexed hereto as Schedule 2.1, (D) all of the
conditions set forth in 5.03(h), (o) and (p). Anything to the contrary not
withstanding, options and/or warrants held by resigning officers and directors
and all rights to indemnity and liability insurance coverage to which they are
entitled are not released.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Seller.
The Seller represents and warrants to the Purchaser all of the representations
and warranties set forth in Article II of the Merger Agreement as if fully set
forth herein. In addition, the Seller represents and warrants to the Purchaser
that (i) the GVS Shares have been duly authorized and are validly issued, fully
paid and non-assessable and the holders thereof will not be subject to personal
liability solely by reason of being such holders; (ii) none of the GVS Shares
are subject to the preemptive rights of any stockholder of the Seller; (iii) all
corporate action required to be taken for the authorization, issue and sale of
the GVS Shares has been duly and validly taken; and (iv) the GVS Shares
represent approximately 51% of the total of all shares of the Seller's capital
stock issued and outstanding as of the date hereof.
3.2 Representations and Warranties of the Purchaser.
The Purchaser represents and warrants to the Seller all of the representations
and warranties set forth in the Merger Agreement as if fully set forth herein.
3.3 Representations and Warranties of the Purchaser and the Seller.
The Purchaser and the Seller each represent and warrant to the other that (i) it
has due and proper authority to make and perform all duties and obligations set
forth and contemplated by this Agreement, and full power and authority to
execute and deliver this Agreement; (ii) the execution and delivery of this
Agreement will not result in the breach of or default under, with or without the
giving of notice and/or the passage of time, any other agreement, arrangement or
indenture to which it is a party or by which it may be bound, or the violation
of any law, statute, rule, decree, judgment or regulation binding upon it; and
(iii) upon the execution and delivery of this Agreement by it, such Agreement
shall constitute its valid and legally binding obligation enforceable in
accordance with the terms thereof.
ARTICLE IV. NATURE AND SURVIVAL OF
REPRESENTATIONS AND WARRANTIES
4.1 Nature of Statements.
All statements contained herein or in any schedule, exhibit, or certificate
delivered by or on behalf of the Seller or the Purchaser pursuant to this
Agreement, or in connection with the
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STOCK PURCHASE AGREEMENT BETWEEN ACTION
INDUSTRIES, INC. AND GENERAL VISION
SERVICES, INC. DATED AS OF MARCH 18, 1998
transactions contemplated hereby, shall be deemed representations and warranties
by the Seller or the Purchaser, as the case may be.
4.2 Survival of Representations and Warranties.
All covenants, agreements, representations and warranties made hereunder or
pursuant hereto or in connection with the transactions contemplated hereby shall
not survive the execution of this Agreement.
ARTICLE V. COVENANTS
5.1 Covenant of Purchaser. The Purchaser covenants and agrees that (i) upon
execution of this Agreement it shall obtain the resignation of its officers and
certain of its directors and appoint directors to replace them so that its board
of directors shall consist of the persons set forth on SCHEDULE 3.1; and (ii) it
shall vote the GVS Shares in favor of the Merger.
5.2 Covenant of Seller. The Seller covenants and agrees that it shall use the
proceeds it shall receive from the payment of the Purchaser's Note in accordance
with the Use of Proceeds Schedule appended hereto as SCHEDULE 3.2.
5.3 Covenants of Purchaser and Seller. The Purchaser and the Seller each
covenant and agree with the other that it will, concurrently with the change in
the Seller's board of directors referred to in SECTION 3.1 above, cause the
board to (i) appoint a special committee (the "Special Committee") composed of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇ ("Blank") (or ▇▇▇▇
▇▇▇▇▇ if Blank is unable to serve) with ▇▇▇▇ ▇▇▇▇▇ serving as a nonvoting
member, the unanimous approval which shall be required to (A) make any material
change in (1) the terms of the Merger Agreement, (2) this Stock Purchase
Agreement, (3) the Promissory Note annexed hereto as Exhibit A, (4) the
definition of Collateral contained in the annexed Security Agreements or (5) the
use of proceeds as set forth on SCHEDULE 3.2, or (B) permit the Seller to issue
any equity securities or securities convertible into equity securities prior to
the consummation of the Merger or ; and (ii) adopt the resolution in the form
appended hereto as EXHIBIT D and the by-law revision in the form appended hereto
as EXHIBIT E.
ARTICLE VI. CONDITIONS OF CLOSING
6.1 Conditions of Purchaser's Obligations to Close. The Purchaser's
obligation to executing this Agreement and closing this transaction shall be
subject to (i) the purchase by the Purchaser of three years of directors and
officers liability insurance in the coverage amount of $5.0 million for the
Purchaser's existing officers and directors; (ii) the Seller providing the
Purchaser's counsel with evidence, reasonably acceptable to such counsel, that
there are no more than 35 shareholders of the Seller who are "non accredited";
(iii) the Seller providing the Purchaser with a written agreement from ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇"), the beneficial owner of 11,755,600 shares of GVS Common
Stock, ▇▇▇ ▇▇▇▇▇▇▇▇▇, the beneficial owner of 7,244,078 shares of GVS Common
Stock, and ▇▇▇▇▇▇▇ ▇▇▇▇▇, the beneficial owner of 2,550,000 shares of GVS Common
Stock to vote their respective shares of GVS Common
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STOCK PURCHASE AGREEMENT BETWEEN ACTION
INDUSTRIES, INC. AND GENERAL VISION
SERVICES, INC. DATED AS OF MARCH 18, 1998
Stock in favor of the Merger; (iv) the execution by ▇▇▇▇▇▇▇▇▇ of an employment
agreement with the Seller which removes all obligations of the Seller to
repurchase, except with the proceeds of existing life insurance policies, any
equity securities from ▇▇▇▇▇▇▇▇▇; and (v) simultaneously with the execution of
this Agreement the payment of all professional fees then owed by the Purchaser.
6.2 Conditions of Seller's Obligations to Close. The Seller's obligation to
executing this Agreement and closing this transaction shall be subject to the
Purchaser providing the Seller with a written agreement from Blank, the
beneficial owner of 583,500 shares of Action Common Stock; ▇▇▇▇ ▇▇▇▇▇ and/or his
affiliates, collectively the beneficial owners of shares 673,400 of Action
Common Stock, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, the beneficial owner of 339,500 shares of
Action Common Stock to conclude the acquisition by voting their respective
shares of Action Common Stock in favor of the Merger.
6.3 Condition of both Parties' Obligation to Close. The obligation of both
parties to executing this Agreement and closing this transaction shall be
subject to ▇▇▇▇▇▇▇ obtaining the written consent of all Unit Purchasers to this
transaction.
ARTICLE VII. MISCELLANEOUS
7.1 Amendment.
This Agreement may be amended only by an instrument in writing executed by each
party hereto and with the unanimous consent of the special committee of the
Action Board of Directors.
7.2 Counterparts.
This Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which shall constitute the same instrument.
7.3 Entire Agreement.
This Agreement and any exhibits, schedules, certificates or documents referred
to herein, constitute the entire agreement of the parties hereto, and supersede
all prior understandings with respect to the subject matter hereof and thereof.
7.4 Expenses.
Each party shall be responsible for its own accounting and attorney's fees and
other expenses in connection with this agreement.
7.5 Governing Law.
This Agreement shall be construed and enforced under and in accordance with and
governed by the law of the State of New York.
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STOCK PURCHASE AGREEMENT BETWEEN ACTION
INDUSTRIES, INC. AND GENERAL VISION
SERVICES, INC. DATED AS OF MARCH 18, 1998
7.6 Notices.
All notices, requests, consents and other communications hereunder shall be in
writing and shall be deemed to have been given if personally delivered, if sent
by overnight express service or if mailed, first class, registered or certified
mail, postage prepaid to the parties at their respective addresses as set forth
above or to such other address as shall be given in writing by either party to
the other.
7.7 Section and Paragraph Headings.
The section and paragraph headings in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement.
7.8 Successors Bound.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
as of the date first above written.
THE PURCHASER:
ACTION INDUSTRIES, INC.
BY: /s/ T. ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
T. ▇▇▇▇▇▇ ▇▇▇▇▇▇, President
THE SELLER:
GENERAL VISION SERVICES, INC.
BY: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President and CEO
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STOCK PURCHASE AGREEMENT BETWEEN ACTION
INDUSTRIES, INC. AND GENERAL VISION
SERVICES, INC. DATED AS OF MARCH 18, 1998
SCHEDULE 2.1
STATEMENT OF NET WORTH
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SCHEDULE 3.1
APPENDED TO
STOCK PURCHASE AGREEMENT
(THE "AGREEMENT")
BETWEEN
ACTION INDUSTRIES, INC.
AND
GENERAL VISION SERVICES, INC.
DATED AS OF MARCH 18,1998
SCHEDULE OF RESIGNING
AND
REPLACEMENT DIRECTORS
The following directors of the Purchaser shall resign upon the execution of the
Agreement: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇. The following individuals shall be appointed as directors of
the Purchaser to replace the resigning directors: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, H. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇. ▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇ shall remain as directors of the Purchaser.
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SCHEDULE 3.2
APPENDED TO
STOCK PURCHASE AGREEMENT
(THE "AGREEMENT")
BETWEEN
ACTION INDUSTRIES, INC.
AND
GENERAL VISION SERVICES, INC.
DATED AS OF MARCH 16, 1998
SCHEDULE OF
USE OF PROCEEDS
The Seller shall use the proceeds (the "Proceeds") it shall receive from the
payment of the Purchaser's Note and/or the contemplated $2 million financing for
store refurbishment, purchase of inventory, general and administrative expenses,
working capital, and such other purposes as the Seller's management shall deem
necessary for the support, maintenance and operation of the Seller's business.
Anything to the contrary not withstanding, the Seller agrees that no portion of
the Proceeds will be used to repurchase any of its securities or repay
indebtedness to any of its officers, directors, stockholders or other affiliates
except for scheduled payments to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇▇ arising
from advances or joint venture profit distributions, or the $75,000 payment due
to ▇▇▇▇▇▇ Ventures Corp, in accordance the terms of the settlement agreement
between the Seller and ▇▇▇▇▇▇.
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SCHEDULE 3.2
APPENDED TO
STOCK PURCHASE AGREEMENT
(THE "AGREEMENT")
BETWEEN
ACTION INDUSTRIES, INC.
AND
GENERAL VISION SERVICES, INC.
DATED AS OF MARCH 16, 1998
SCHEDULE OF
USE OF PROCEEDS
The Seller shall use the proceeds (the "Proceeds") it shall receive from the
payment of the Purchaser's Note and/or the contemplated $2 million financing for
store refurbishment, purchase of inventory, general and administrative expenses,
working capital, and such other purposes as the Seller's management shall deem
necessary for the support, maintenance and operation of the Seller's business.
Anything to the contrary not withstanding, the Seller agrees that no portion of
the Proceeds will be used to repurchase any of its securities or repay
indebtedness to any of its officers, directors, stockholders or other affiliates
except for scheduled payments to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇▇ arising
from advances or joint venture profit distributions, or the $75,000 payment due
to ▇▇▇▇▇▇ Ventures Corp. in accordance the terms of the settlement agreement
between the Seller and ▇▇▇▇▇▇.