STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of
September 22, 2003 (the "Effective Date"), by and among Solico
International, Inc., a Texas corporation (such corporation and/or
its assignees, "Purchaser"), and Xxxxxx X. Xxxxxx ("Seller").
Purchaser and Seller are sometimes collectively referred to
herein as the "Parties" and individually as a "Party."
RECITALS
Seller owns 1,189,718 shares (the "Shares") of the issued
and outstanding shares of common stock, par value $.01 per share
(the "Common Stock") of American Building Control, Inc., a
Delaware corporation (the "Company").
Purchaser desires to acquire, and Seller desires to sell,
all right, title and interest of Seller in and to 775,000 of the
Shares on the terms and conditions set forth herein.
AGREEMENT
The parties, in consideration of the mutual covenants,
agreements and understandings herein contained, and intending to
be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
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For purposes of this Agreement, the following terms have the
meanings specified or referred to in this Article I:
"Agreement" has the meaning set forth in the preamble
hereto.
"Best Efforts" means the efforts that a prudent Person
desirous of achieving a result would use in similar circumstances
to ensure that such result is achieved as expeditiously as
possible.
"Breach" means, with respect to a representation, warranty,
covenant, obligation, or other provision of this Agreement or any
Transaction Document or other certificate or instrument delivered
pursuant to this Agreement, any inaccuracy in or breach of, or
any failure to perform or comply with, such representation,
warranty, covenant, obligation, or other provision.
"Closing" has the meaning set forth in Section 2.4.
"Closing Date" means the date and time as of which the First
Closing, Second Closing, Third Closing or Purchase Option Closing
actually takes place.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preamble hereto.
"Company Transactions" has the meaning set forth in Section
5.4.
"Consent" means any approval, consent, ratification, waiver
or other authorization (including any Governmental
Authorization).
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"Contemplated Transactions" means all of the transactions
contemplated by this Agreement, including, without limitation:
(a) the delivery of the Purchase Price in exchange for the
Shares, and Purchaser's ownership and control of the Shares;
(b) the execution, delivery and performance of the other
Transaction Documents;
(c) the execution, delivery and performance of the Loan
Documents and consummation of the Conversion Transaction;
(d) the satisfaction of all conditions set forth in Articles VI
and VII; and
(e) the performance by Purchaser and Seller of their respective
covenants and obligations under this Agreement.
"Contract" means any agreement, contract, obligation,
promise, or undertaking (whether written or oral and whether
express or implied) that is legally binding.
"Conversion Transaction" has the meaning set forth in
Section 2.2.
"Damages" has the meaning set forth in Section 9.2.
"Effective Date" has the meaning set forth in the preamble
hereto.
"Encumbrance" means any charge, claim, community property
interest, condition, equitable interest, lien, option, pledge,
security interest, right of first refusal or restriction of any
kind, including any restriction on use, voting, transfer, receipt
of income or exercise of any other attribute of ownership other
than (a) mechanic's, materialmen's and similar liens, (b) liens
for Taxes not yet due and payable or for Taxes that a taxpayer is
contesting in good faith through appropriate Proceedings, (c)
purchase money liens and liens securing rental payments under
capital lease arrangements and (d) other liens arising in the
Ordinary Course of Business and not incurred in connection with
the borrowing of money.
"Escrow Agreement" has the meaning set forth in Section 2.6.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor law, and regulations and rules issued
pursuant to that act or any successor law.
"First Closing" has the meaning set forth in Section 2.1(a).
"First Closing Shares" has the meaning set forth in Section
2.1(a).
"First Purchase Price" has the meaning set forth in Section
2.1(a).
"GKB Group" has the meaning set forth in Section 7.3.
"GKB Group Shares" has the meaning set forth in Section 7.3.
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"GKB Group Purchase Agreement" has the meaning set forth in
Section 7.3.
"Governmental Authorization" means any approval, consent,
license, permit, waiver, or other authorization issued, granted,
given or otherwise made available by or under the authority of
any Governmental Body or pursuant to any Legal Requirement.
"Governmental Body" means any nation, state or other
jurisdiction, or federal, state, local or foreign government, or
governmental or quasi-governmental authority of any nature
(including any agency, court or other tribunal) or body
exercising any administrative, executive, judicial, legislative,
police, regulatory, or taxing authority or power of any nature.
"Indemnifying Party" has the meaning set forth in Section
9.2.
"Indemnified Persons" has the meaning set forth in Section
9.2.
"Joint Defense Proceeding" has the meaning set forth in
Section 9.3.
"Knowledge" means, with respect to an individual, such
individual being actually aware of such fact; with respect to a
Person other than an individual, such Person will be deemed to
have "Knowledge" of a particular fact if any individual who is
serving as a director, officer, partner, executor or trustee of
such Person (or in any similar capacity) has Knowledge of such
fact.
"Legal Requirement" means any federal, state, local,
municipal, foreign, international, multinational, or other
administrative order, constitution, law, ordinance, principle of
common law, regulation, statute, or treaty.
"Loan Documents" means, collectively, the Note, the Stock
Pledge Agreement, and all other documents and instruments
contemplated thereby to be executed by one or more of the parties
thereto in connection with the consummation of the transactions
contemplated therein.
"Material Adverse Effect" means a material and adverse
effect upon the Contemplated Transactions or upon the business,
assets, liabilities, condition (financial or otherwise),
operating results, employee, customer or supplier relations,
business prospects, cash flow or working capital of the Company.
"Xxxxx" has the meaning set forth in Section 2.2.
"Xxxxx Shares" has the meaning set forth in Section 2.2.
"Note" has the meaning set forth in Section 2.2.
"Option Shares" has the meaning set forth in Section 2.3(a).
"Order" means any award, decision, injunction, judgment,
order, ruling, subpoena or verdict entered, issued, made or
rendered by any court, administrative agency or other
Governmental Body or by any arbitrator.
"Ordinary Course of Business" means an action taken by a
Person that is consistent with the past practices of such Person,
is taken in the ordinary course of the normal day-to-day
operations of such Person, and is not required to be authorized
by the board of directors or other governing body of such Person.
"Party" has the meaning set forth in the preamble hereto.
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"Person" means any individual, corporation (including any
non-profit corporation), general or limited partnership, limited
liability company, joint venture, estate, trust, association,
organization, labor union or other entity or Governmental Body.
"Purchase Option" has the meaning set forth in Section
2.3(a).
"Purchase Option Closing" has the meaning set forth in
Section 2.3(c).
"Purchase Option Expiration Date" has the meaning set forth
in Section 2.3(a).
"Purchase Option Purchase Price" has the meaning set forth
in Section 2.3(a).
"Purchase Price" has the meaning set forth in Section 2.1.
"Purchased Shares" has the meaning set forth in Section 2.1.
"Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal,
administrative, investigative or informal) commenced, conducted
or heard by or before any Governmental Body or arbitrator.
"Purchase Price" has the meaning set forth in Section 2.1.
"Purchaser" has the meaning set forth in the preamble
hereto.
"Purchaser Disclosure Schedule" has the meaning set forth in
the preamble to Article IV.
"Put Option" has the meaning set forth in Section 2.2.
"Put Option Closing" has the meaning set forth in Section
2.2.
"Put Price" has the meaning set forth in Section 2.2.
"SEC" means Securities and Exchange Commission.
"Second Closing" has the meaning set forth in Section
2.1(b).
"Second Closing Shares" has the meaning set forth in Section
2.1(b).
"Second Purchase Price" has the meaning set forth in Section
2.1(b).
"Securities Act" means the Securities Act of 1933, as
amended, or any successor law, and regulations and rules issued
pursuant to that act or any successor law.
"Seller" has the meaning set forth in the preamble hereto.
"Seller Compliance Certificate" has the meaning set forth in
Section 2.4(a)(iii).
"Seller Disclosure Schedule" has the meaning set forth in
the preamble to Article III.
"Shares" has the meaning set forth in the recitals hereto.
"Stock Pledge Agreement" has the meaning set forth in
Section 2.2.
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"Tax" or "Taxes" means all federal, state, local, foreign
and other taxes, charges, fees, duties, levies, imposts, customs
or other assessments, including, without limitation, all net
income, gross income, gross receipts, sales, use, ad valorem,
transfer, franchise, profits, profit sharing, license, lease,
service, service use, value added, withholding, payroll,
employment, excise, estimated, severance, stamp, recording,
occupation, premium, property, windfall profits, or other taxes,
fees, assessments, customs, duties, levies, imposts, or charges
of any kind whatsoever, together with any interest, penalties,
additions to tax, fines or other additional amounts imposed
thereon or related thereto, and the term "Tax" means any one of
the foregoing Taxes.
"Transaction Documents" means, collectively, this Agreement
and all other documents and instruments contemplated by this
Agreement to be executed by one or more of the Parties in
connection with the consummation of the transactions contemplated
herein.
ARTICLE II
STOCK PURCHASE
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2.1 Transactions. On the basis of the representations,
warranties, covenants and agreements and subject to the
satisfaction or waiver of the conditions set forth herein, Seller
agrees to sell to Purchaser, and Purchaser agrees to purchase
from Seller, 475,000 of the Shares (the "Purchased Shares") for
an aggregate purchase price of $1,075,000 (the "Purchase Price"),
as follows:
(a) First Closing. The closing (the "First Closing") of the
purchase and sale of 275,000 of the Purchased Shares (the "First
Closing Shares"), for an aggregate purchase price of $400,000
(the "First Purchase Price"), will take place at 11:00 a.m.
Central, on or before October 15, 2003, at the offices of Xxxxxxx
& Xxxxx L.L.P., 000 Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx
00000, or at such other time and place as the Parties may agree.
(b) Second Closing. The closing (the "Second Closing") of the
purchase of 200,000 Purchased Shares (the "Second Closing
Shares"), for an aggregate purchase price of $675,000 (the
"Second Purchase Price"), will take place at 11:00 a.m. Central,
on December 15, 2003 at the offices of Xxxxxxx & Xxxxx L.L.P.,
000 Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, or at such
other time and place as the Parties may agree.
2.2 Loan Transaction. Concurrently with the execution of this
Agreement, Xxxxx X. Xxxxx ("Xxxxx") has advanced to Seller
$200,000, evidenced by that certain Note Secured By Stock Pledge
Agreement dated of even date herewith in the original principal
amount of $200,000 (the "Note"), and secured by a pledge of
400,000 of the Shares to Xxxxx pursuant to that certain Stock
Pledge Agreement, dated of event date herewith, by and between
Xxxxx and Seller (the "Stock Pledge Agreement"). Pursuant to the
terms of the Note and Stock Pledge Agreement, upon consummation
of the First Closing, the Note will be paid by Seller by delivery
to Xxxxx of 125,000 of the Shares (the "Xxxxx Shares") in full
satisfaction of all amounts due and owing thereunder (the
"Conversion Transaction").
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2.3 Purchase Option.
(a) Option. Purchaser shall have the right, but not the
obligation, to purchase 300,000 of the remaining Shares owned by
Seller after the Second Closing (the "Option Shares"), at any
time after the Second Closing and on or before June 30, 2004 (the
"Purchase Option Expiration Date"), for a purchase price of $2.75
per share (the "Purchase Option Purchase Price").
(b) Exercise. Purchaser may exercise the Purchase Option by
delivery of written notice to Seller of its election to exercise
the Purchase Option on or before the Purchase Option Expiration
Date.
(c) Purchase Option Closing. The closing of the purchase and
sale of the Option Shares pursuant to the exercise of the
Purchase Option by Purchaser (the "Purchase Option Closing") will
take place at 11:00 a.m. Central no later than ten (10) business
days following the date of delivery to Seller of Purchaser's
notice of exercise pursuant to Section 2.3(b) above, at the
offices of Xxxxxxx & Xxxxx L.L.P., 000 Xxxxxxxx Xxxxxx, Xxxxx
0000, Xxxxxx, Xxxxx 00000, or at such other time and place as the
Parties may agree.
2.4 Closing Deliveries. At the First Closing, Second Closing,
and Purchase Option Closing, if any (each, a "Closing"):
(a) Seller will:
(i) deliver to Purchaser all certificates representing the
Shares to be purchased at such Closing, duly endorsed (or
accompanied by duly executed stock powers) for transfer to
Purchaser;
(ii) deliver to Purchaser a certificate executed by Seller
stating that (A) each of Seller's representations and warranties
in this Agreement was accurate in all respects as of the
Effective Date and is accurate in all respects as of such Closing
Date as if made on such Closing Date, and (B) the conditions set
forth in Articles VI and VII have been fulfilled (the "Seller
Compliance Certificate"); and
(iii) deliver to Purchaser the other certificates,
instruments and documents referred to in Article VII below and
required to be delivered by Seller on or prior to such Closing
Date.
(b) Purchaser will:
(i) deliver to Seller the portion of the Purchase Price for the
Shares to be purchased at such Closing, or the Purchase Option
Price in the case of the Purchase Option Closing, by wire
transfer of immediately available funds to an account designated
by Seller; and
(ii) deliver to Seller a certificate executed by Purchaser
stating that each of Purchaser's representations and warranties
in this Agreement was accurate in all respects as of the
Effective Date and is accurate in all respects as of such Closing
Date as if made on such Closing Date; and
(iii) deliver to Seller the other certificates, instruments
and documents referred to in Article VII below and required to be
delivered by Purchaser on or prior to such Closing Date.
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2.5 Voting Rights; Irrevocable Proxy. From and after the First
Closing until July 15, 2004, the Parties agree that Purchaser
alone shall exercise all voting rights with respect to all of the
Purchased Shares and Option Shares owned by Seller (the "Voting
Shares"). Accordingly, Seller hereby grants to Purchaser,
effective as of First Closing Date, an irrevocable special power
of attorney to act as Seller's attorney-in-fact to vote on behalf
of Seller, and to execute any resolution or consent evidencing
Seller's vote, approval or consent of any action submitted to the
vote, approval or consent, and to execute on behalf of Seller
and deliver any documentation deemed necessary by Purchaser in
connection with any matter or action to be taken in respect of
the Voting Shares, including, without limitation, taking action
with respect to any matter submitted to the vote of the holders
of Common Stock of the Company. Seller hereby agrees to execute
all resolutions, consents, agreements and other documents deemed
necessary by Purchaser to effect and/or evidence the foregoing,
and Seller agrees not to raise any objection to any action so
taken by Purchaser in respect of the Voting Shares. Seller
hereby waives any appraisal rights or rights to dissent under
applicable Legal Requirements arising due to Seller's ownership
of any Voting Shares. Notwithstanding the foregoing, in the
event that the Second Closing is not consummated on or before
December 15, 2003, and the date of such Second Closing has not
been extended by the mutual agreement of the Parties, then the
proxy set forth in this Section 2.5 shall terminate and be of no
further force or effect.
2.6 Escrow. Concurrently with the consummation of the First
Closing, the Parties agree that 100,000 of the First Closing
Shares shall be deposited into escrow pursuant to the terms of an
escrow agreement, substantially in the form attached hereto as
Exhibit A (the "Escrow Agreement").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS.
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Seller represents and warrants to Purchaser as of the date
of this Agreement and as of each Closing Date that, except as
otherwise set forth on the Seller Disclosure Schedule attached
hereto (the "Seller Disclosure Schedule"):
3.1 Authority. Seller has full power and authority to execute
and deliver this Agreement and to perform his obligations
hereunder.
3.2 Enforceability; No Conflict.
(a) Upon the execution and delivery by Seller of the Transaction
Documents to which Seller is a party, each such Transaction
Document will constitute the legal, valid and binding obligation
of Seller, enforceable against Seller in accordance with its
terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally
and (ii) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable
remedies.
(b) Seller will not be required to give any notice to
or obtain any Consent from any Person in connection with the execution
and delivery of the Transaction Documents or the consummation or
performance of any of the Contemplated Transactions, and neither
the execution and delivery of the Transaction Documents or the
Loan Documents, nor the consummation or performance of any of the
Contemplated Transactions, will, directly or indirectly (with or
without notice or lapse of time):
(i) contravene, conflict with or result in a violation of any
Legal Requirement or any Order to which Seller or any of the
assets owned or used by Seller is subject;
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(ii) contravene, conflict with or result in a violation of any of
the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate or modify,
any Governmental Authorization that is held by Seller or that
otherwise relates to its business or any of the assets owned or
used by it;
(iii) contravene, conflict with or result in a violation or
breach of any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate
the maturity or performance of, or to cancel, terminate or
modify, any Contract, or result in the imposition or creation of
any Encumbrance upon or with respect to any of the assets owned
or used by it.
3.3 Title to Shares. Seller is and will be (i) on the Effective
Date, the record and beneficial owner and holder of all of the
Shares (including the Xxxxx Shares, First Closing Shares, Second
Closing Shares and Option Shares), (ii) on the First Closing Date
the record and beneficial owner and holder of the First Closing
Shares, Second Closing Shares and Option Shares, (iii) on the
Second Closing Date, the owner and holder of the Second Closing
Shares and the Option Shares, and (iv) on the Purchase Option
Closing Date the record and beneficial owner and holder of the
Option Shares, in each case free and clear of all Encumbrances
other than any restrictions on transfer under applicable federal
or state securities laws or under the Transaction Documents and
the Loan Documents. No legend or other reference to any
purported Encumbrance appears upon any certificate representing
the Shares other than any restrictions on transfer under
applicable federal or state securities laws. There are no oral
or written agreements relating to the issuance, sale or transfer
by Seller of any right or interest in the Shares.
3.4 Legal Proceedings; Orders.
(a) There is no pending Proceeding that challenges, or that may
have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the Contemplated Transactions.
To the Knowledge of Seller, no such Proceeding has been
threatened and no event has occurred or circumstance exists that
may give rise to or serve as a basis for the commencement of any
such Proceeding.
(b) There is no Order to which Seller, or any of the assets
owned or used by Seller, is subject that may have the effect of
preventing, delaying, making illegal, or otherwise interfering
with, any of the Contemplated Transactions.
(c) Seller is not subject to any Order that relates to the
business of, or any of the assets owned or used by, the Company.
3.5 Company Transactions. Except as otherwise disclosed in
publicly-available filings made by the Company or Seller with the
SEC, neither Seller nor any Person related to Seller is a party
to or bound by any Contract with respect to a Company Transaction
other than this Agreement, the other Transaction Documents and
the Loan Documents, and the Seller and all Persons related to
Seller have terminated all discussions with third parties
regarding Company Transactions. Except as otherwise disclosed in
publicly-available filings made by the Company or Seller with the
SEC, neither Seller nor any Person related to Seller has or may
acquire any rights under, or is bound by or has or may become
subject to any obligation or liability under, any Contract that
relates to the business of, or any of the assets owned or used
by, the Company. Except as otherwise disclosed in publicly-
available filings made by the Company or Seller with the SEC,
neither Seller nor any shareholder, director, officer, employee
or other Person related to Seller is indebted to the Company, nor
is the Company indebted (or committed to make loans or extent or
guarantee credit) to any of them. None of such persons has any
direct or indirect ownership interest in any Person with which
the Company is affiliated or with which the Company has a
business relationship, or any Person that competes with the
Company, except for stock in a publicly traded company owned by
such persons representing less than five percent (5%) of the
outstanding capital stock of such company.
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3.6 GKB Group. Seller represents and warrants that the Persons
comprising the GKB Group (as defined in Section 7.3(a) below)
will fully perform their obligations under the GKB Group Purchase
Agreement.
3.7 Brokerage. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the
Contemplated Transactions based on any arrangement or agreement
binding upon Seller. Seller shall pay, and hold Purchaser
harmless against, any liability, loss or expense (including,
without limitation, reasonable attorneys' fees and out-of-pocket
expenses) arising in connection with any such claim.
3.8 Disclosure. No representation or warranty of Seller in this
Agreement and no statement in the Seller Disclosure Schedule or
any instrument, certificate or document delivered in connection
with the Contemplated Transactions contains any untrue statement
of a material fact or omits to state a material fact necessary to
make the statements herein or therein, in light of the
circumstances in which they were made, not misleading. There is
no fact known to Seller that has specific application to either
Seller or the Company (other than general economic or industry
conditions) and that could have a Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
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Purchaser represents and warrants to Seller as of the date
of this Agreement and as of each Closing Date that, except as set
forth on the Purchaser Disclosure Schedule attached hereto (the
"Purchaser Disclosure Schedule"):
4.1 Organization; Corporate Authority; Good Standing. Purchaser
is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation, with
full corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder.
4.2 Authority. Upon the execution and delivery of the
Transaction Documents, each of the Transaction Documents will
constitute the legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) as
limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
4.3 Brokerage. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the
Contemplated Transactions based on any arrangement or agreement
binding upon Purchaser. Purchaser shall pay, and hold Seller
harmless against, any liability, loss or expense (including,
without limitation, reasonable attorneys' fees and out-of-pocket
expenses) arising in connection with any such claim.
4.4 Disclosure. No representation or warranty of Purchaser in
this Agreement and no statement in the Purchaser Disclosure
Schedule or any instrument, certificate or document delivered in
connection with the Contemplated Transactions contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading.
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ARTICLE V
COVENANTS
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5.1 Best Efforts. Until the first to occur of (y) the Purchase
Option Closing Date (if Purchaser exercises the Purchase Option),
and (z) the Purchase Option Expiration Date, each of the Parties
will use its reasonable Best Efforts to take all actions and do
all things necessary, proper or advisable in order to consummate
and make effective the Contemplated Transactions (including
satisfaction, but not waiver, of the conditions set forth in
Articles VI and VII); provided, that nothing set forth herein
shall obligate Purchaser to exercise either Option hereunder.
5.2 Required Approvals. As promptly as practicable after the
Effective Date, Seller will, and together with Purchaser, will
use its reasonable Best Efforts to cause the Company to, make all
filings required by Legal Requirements to be made by them in
order to consummate the Contemplated Transactions. Seller will,
and together with Purchaser, will use its reasonable Best Efforts
to cause the Company to, (a) cooperate with Purchaser with
respect to all filings that Purchaser elects to make or is
required by Legal Requirements to make in connection with the
Contemplated Transactions, (b) give required notices to third
parties, (c) obtain any required third party consents and (d)
take any actions reasonably requested by a third party, in each
case, in connection with the Contemplated Transactions.
5.3 Notification. Until the first to occur of (y) the Purchase
Option Closing Date (if Purchaser exercises the Purchase Option),
and (z) the Purchase Option Expiration Date, each Party will give
prompt written notice to the other Party (a) if it becomes aware
that any representation or warranty made by such Party herein as
of the Effective Date has, to the best Knowledge of such Party,
subsequently become untrue, (b) of the beach of any covenant
hereunder by any Party and (c) of any other material development
that in its reasonable judgment adversely affects its ability to
consummate the Contemplated Transactions.
5.4 Exclusivity. Until the first to occur of (x) the Purchase
Option Closing Date (if Purchaser exercises the Purchase Option),
(y) the Purchase Option Expiration Date, or (z) December 15,
2003, if the Second Closing has not been consummated by such date
and the Parties have not agreed to a later date for such Second
Closing, Seller shall not, directly or indirectly, (a) submit,
solicit, initiate, encourage, vote for or consent to any proposal
or offer from any Person or enter into any Contract or accept any
offer relating to any (i) reorganization, liquidation or
recapitalization of the Company, (ii) merger or consolidation
involving the Company, (iii) purchase or sale of any assets or
capital stock (other than a purchase or sale of equipment in the
Ordinary Course of Business) of the Company or (iv) similar
transaction or business combination involving the Company or the
assets of the Company (each of the foregoing actions described in
clauses (i) through (iv), a "Company Transaction"), or (b)
furnish any information with respect to, assist or participate in
or facilitate in any other manner any effort or attempt to do or
seek to do any of the foregoing.
5.5 Actions with Respect to Shares. Until the first to occur of
(y) the Purchase Option Closing Date (if Purchaser exercises the
Purchase Option), and (z) the Purchase Option Expiration Date,
Seller agrees that it will not (a) sell, redeem, convert, assign,
exchange, transfer, pledge or otherwise dispose of any of
Seller's right, title and interest in and to any of the Shares,
except as expressly permitted by this Agreement, or (b) enter
into any other transaction or Contract with the Company without
Purchaser's prior written consent, which written consent may be
withheld in Purchaser's sole discretion.
5.6 Exchange Act Filings. Each Party shall make all filings as
and when required to be made with the SEC pursuant to the
Exchange Act as a result of the execution of this Agreement and
the consummation of the Contemplated Transactions. Without
limiting the foregoing, the Parties shall make the following
filings:
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(a) all filings required pursuant to Section 16(a) of the
Exchange Act, including, without limitation, any Form 3 Initial
Statement of Beneficial Ownership of Securities required to be
filed by Purchaser and its affiliates and any Form 4 Statement of
Changes in Beneficial Ownership required to be filed by Seller;
and
(b) all filings required to pursuant to Rule 13(d)-1(a)
of the Exchange Act, including, without limitation, any Schedule 13D
required to be filed by Purchaser and/or Seller.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATION TO CLOSE
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Each Party's obligation to take the actions required to be
taken by such Party at the First Closing and the Second Closing
is subject to the satisfaction, at or prior to such Closing, of
each of the following conditions (any of which may be waived by
it in writing, in whole or in part):
6.1 Accuracy of Representations. All of the other Party's
representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties
(considered individually), must have been accurate as of the
Effective Date, and must be accurate as of such Closing Date as
if made on such Closing Date.
6.2 Performance.
(a) All of the covenants and obligations that the other Party is
required to perform or to comply with pursuant to this Agreement
at or prior to such Closing (considered collectively), and each
of these covenants and obligations (considered individually),
must have been duly performed and complied with.
(b) Each document required to be delivered by the other Party
pursuant to Section 2.3 must have been delivered, and each of the
other Party's covenants and obligations contained in this
Agreement must have been performed and complied with.
6.3 No Proceedings. There must not be pending against such
Party, or against any Person affiliated with such Party, any
Proceeding (a) involving any challenge to, or seeking damages or
other relief in connection with, any of the Contemplated
Transactions, or (b) that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with any of
the Contemplated Transactions.
6.4 No Prohibition. Neither the consummation nor the
performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time),
materially contravene, or conflict with, or result in a material
violation of, or cause the Party or any Person affiliated with
the Party to suffer any material adverse consequence under, (a)
any applicable Legal Requirement or Order, or (b) any Legal
Requirement or Order that has been published, introduced, or
otherwise proposed by or before any Governmental Body.
ARTICLE VII
CONDITION PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
------------------------------------------------------
In addition to the conditions set forth in Article VI,
Purchaser's obligation to purchase the Shares and to take the
other actions required to be taken by Purchaser at the First
Closing and the Second Closing is subject to the satisfaction, at
or prior to such Closing, of each of the following conditions
(any of which may be waived in writing by Purchaser, in whole or
in part):
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7.1 No Claim Regarding Stock Ownership or Sale Proceeds. There
must not be pending any claim by any Person against the Company
or Seller asserting that such Person (a) is the holder or the
beneficial owner of, or has the right to acquire or to obtain
beneficial ownership of, any of the Shares, or (b) is entitled to
all or any portion of the consideration payable for the Shares.
7.2 Material Adverse Effect. There shall not have occurred or
be reasonably expected to occur any Material Adverse Effect.
7.3 Other Stock Purchase Transactions.
(a) Purchaser and certain shareholders of the Company affiliated
with Seller (excluding Seller, the "GKB Group") shall have
entered into a definitive, binding agreement (the "GKB Group
Purchase Agreement"), satisfactory to Purchaser and its counsel,
pursuant to which Purchaser shall acquire (or have the right to
acquire) a minimum of 750,432 shares (the "GKB Group Shares") of
Common Stock owned by the GKB Group; and
(b) all conditions precedent to the obligations of Purchaser to
purchase the GKB Group Shares and perform its obligations under
the GKB Purchase Agreement shall have been satisfied or waived by
Purchaser in writing.
7.4 Resignation of Director. The size of the board of directors
of the Company shall be five (5) directors, and there shall be at
least one vacancy on the board of directors of the Company as a
result of the resignation of at least one director in accordance
with the Company's bylaws, such resignation to be effective upon
or prior to the consummation of the First Closing.
7.5 Approval of Board of Directors. The Company shall have
delivered copies certified as true, correct and complete by the
Secretary of the Company of resolutions (in a form reasonably
satisfactory to Purchaser and its counsel) duly adopted by the
board of directors of the Company, appointing at least one Person
designated by Purchaser to the Company's board of directors in
accordance with the Company's bylaws.
7.6 Operation of Business. The Company will not have since the
Effective Date (a) entered into any transaction, arrangement or
Contract except on an arm's-length basis in the Ordinary Course
of Business, (b) increased any officer's or employee's
compensation, incentive arrangements or other benefits out of the
Ordinary Course of Business, (c) redeemed, purchased or otherwise
acquired, directly or indirectly, any of the Company's issued and
outstanding capital stock or equity interests, or any outstanding
rights or securities exercisable or exchangeable for or
convertible into capital stock of the Company, (d) amended its
certificate of incorporation or bylaws, or (e) submitted,
solicited, initiated, voted for or consented to any proposal or
offer from any Person or entered into any Contract or accepted
any offer relating to, any Company Transaction.
7.7 Proceedings. All corporate and other required or necessary
to be taken by the Company or Seller in connection with the
Contemplated Transactions shall have been taken at or prior to
such Closing and all documents incident thereto shall be
satisfactory in form and substance to Purchaser and its counsel.
7.8 Filings. The Company and Seller shall have made all filings
required to be made by the Company and Seller under all
applicable Legal Requirements, including, without limitations,
federal and state securities laws, to consummate the Contemplated
Transactions.
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7.9 Consents and Approvals. All Consents and Governmental
Authorizations by any Governmental Body or other Person that are
required for the consummation of the Contemplated Transactions or
in order to prevent a breach of, or default under, or a
termination, change in the terms or conditions or modification
of, any Contract to which the Company or Seller is a party, will
have been obtained on terms and conditions satisfactory to
Purchaser.
7.10 Capital Structure. Between the Effective Date and such
Closing Date, without the prior written consent of Purchaser, the
Company will not have issued or entered into any Contract to
issue any shares of its capital stock or options, warrants or
securities convertible into or exercisable for shares of its
capital stock other than shares issuable upon the exercise of
options, warrants or securities convertible into or exercisable
for shares of its capital stock that are outstanding as of the
Effective Date or granted prior to Closing under existing option
plans on an arm's-length basis in the Ordinary Course of
Business.
7.11 Closing Documents. At such Closing, Seller shall have
delivered to Purchaser all of the following documents:
(a) a Seller Compliance Certificate;
(b) copies of all third party and governmental Consents and
filings required in connection with the consummation of the
Contemplated Transactions (including, without limitation, all
blue sky filings and waivers of all preemptive rights and rights
of first refusal); and
(c) such other documents relating to the Contemplated
Transactions as Purchaser or its counsel may reasonably request.
ARTICLE VIII
TERMINATION
-----------
8.1 Termination Events. This Agreement may, by notice given
prior to the Purchase Option Closing Date (if any) or Purchase
Option Expiration Date (if not exercised), be terminated:
(a) by either Purchaser or Seller if a material Breach of any
provision of this Agreement has been committed by the other party
and such Breach has not been waived by the non-breaching Party;
(b) by either Party if any of the conditions in Article VI has
not been satisfied as of a Closing Date or if satisfaction of
such a condition is or becomes impossible, and the other Party
has not waived such condition on or before a Closing Date, unless
the Party seeking to terminate this Agreement has caused,
directly or indirectly, such condition to be unsatisfied or
become impossible;
(c) by Purchaser if any of the conditions in Article VII has not
been satisfied as of a Closing Date or if satisfaction of such a
condition is or becomes impossible, and Purchaser has not waived
such condition on or before such Closing Date, unless Purchaser
has caused, directly or indirectly, such condition to be
unsatisfied or become impossible;
(d) by mutual consent of Purchaser and Seller;
(e) by either Purchaser or Seller if the First Closing has not
occurred on or before October 30, 2003, or such later date as the
parties may agree upon; or
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(f) by Purchaser upon the occurrence of an Event of Default
under the Loan Documents.
8.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 8.1, all further obligations of the Parties
under this Agreement will terminate, except for the rights and
obligations set forth in Section 2.2, Article IX and Sections
10.1 and 10.2, and for liability for any Breach of this Agreement
prior to the time of such termination, all of which shall survive
any termination of this Agreement. Notwithstanding the
foregoing, if this Agreement is terminated by a Party under
Section 8.1 because one or more of the conditions to any Closing
is not satisfied as a result of the other Party's intentional or
deliberate actions, the terminating Party will be entitled to
pursue all legal remedies, including, but not limited to actual
damages, which right will survive such termination unimpaired.
ARTICLE IX
INDEMNIFICATION; REMEDIES
-------------------------
9.1 Survival; Right to Indemnification not Affected by
Knowledge. All representations, warranties, covenants, and
obligations in this Agreement and the certificates and other
Transaction Documents delivered pursuant to Section 2.3 will
survive until twelve (12) months following the Purchase Option
Expiration Date; provided, the representations, warranties and
covenants made under Section 3.3 (Title to Shares) shall survive
indefinitely. The right to indemnification, payment of Damages
or other remedy based on such representations, warranties,
covenants, and obligations will not be affected by any
investigation conducted with respect to, or any Knowledge
acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement or
before or after any Closing Date, with respect to the accuracy or
inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation. The waiver of any condition
based on the accuracy of any representation or warranty, or on
the performance of or compliance with any covenant or obligation,
will not affect the right to indemnification, payment of Damages,
or other remedy based on such representations, warranties,
covenants and obligations.
9.2 Indemnification. Subject to the limitations set forth in
Section 9.3 below, each Party (the "Indemnifying Party") will
indemnify and hold harmless the other Party and its respective
representatives, shareholders, controlling persons and affiliates
(collectively, the "Indemnified Persons") for, and will pay to
the Indemnified Persons the amount of, any loss, liability,
claim, damage (including incidental and consequential damages),
expense (including costs of investigation and defense and
reasonable attorneys' fees) or diminution of value, whether or
not involving a third-party claim (collectively, "Damages"),
arising, directly or indirectly, from or in connection with any
Breach of any representation, warranty, covenant or agreement
made by the Indemnifying Party in this Agreement or any
Transaction Document (including the schedules and exhibits
attached hereto or thereto). The remedies provided in this
Section 9.2 will not be exclusive of or limit any other remedies
that may be available to the Parties.
9.3 Defense of Claims. An Indemnified Person seeking
indemnification under this Article IX shall give written notice
to the Indemnifying Party of the facts and circumstances giving
rise to the claim. In that regard, if any Proceeding shall be
brought or asserted by any third party which, if adversely
determined, would entitle the Indemnified Person to indemnity
pursuant to this Article IX, the Indemnified Person shall within
thirty (30) days notify the Indemnifying Party of the same in
writing, specifying in detail the basis of such claim and the
facts pertaining thereto; provided that the failure to so notify
an Indemnifying Party shall not relieve the Indemnifying Party of
its obligations hereunder except to the extent such failure shall
have harmed the Indemnifying Party. The Indemnifying Party, if
it so elects, shall assume and control the defense of such
Proceeding (and shall consult with the Indemnified Person with
respect thereto), including the employment of counsel reasonably
satisfactory to the Indemnified Person and the payment of
expenses; provided that in the event any Proceeding shall be
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brought or asserted by any third party which, if adversely
determined, would not entitle the Indemnified Person to full
indemnity pursuant to this Article IX, the Indemnified Person may
elect to participate in the joint defense of such Proceeding (a
"Joint Defense Proceeding") for which the expenses of such joint
defense will be shares equally by such parties and the employment
of counsel shall be reasonably satisfactory to both parties. If
the Indemnifying Party elects to assume and control the defense
of a Proceeding, it will provide notice thereof within thirty
(30) days after the Indemnified Person has given notice of the
matter and if such Proceeding is not a Joint Defense Proceeding,
the Indemnified Person shall have the right to employ counsel
separate from counsel employed by the Indemnifying Party in any
such action and to participate in the defense thereof, but the
fees and expenses of such counsel employed by the Indemnified
Person shall be at the expense of the Indemnified Person unless
(a) the employment thereof has been specifically authorized by
the Indemnifying Party in writing or (b) the Indemnifying Party
has failed to assume the defense and employ counsel reasonably
satisfactory to the Indemnified Person. Neither the Indemnified
Person nor the Indemnifying Party may consent to the entry of any
judgment with respect to the matter or enter into any settlement
with respect to the matter which judgment or settlement does not
release the other Party from all liability to the third party
with respect thereto without the consent of the other Party,
which consent shall not be unreasonably withheld (it being
understood that the extent to which any Party will be obligated
to pay for Damages resulting from such matter as compared to the
other Party shall be considered in determining whether it is
reasonable for such Party to withhold its consent from the entry
of any judgment or settlement with respect to such matter);
provided that no settlement of a Joint Defense Proceeding may be
effected without the consent of both parties. If there shall be
a settlement to which the Indemnifying Party consents or a final
judgment for the plaintiff in any Proceeding, the defense of
which the Indemnifying Party elected to assume, the Indemnifying
Party shall indemnify the Indemnified Person with respect to the
settlement or judgment.
9.4 Payment of Indemnification Damages. Any payment pursuant to
a claim for indemnification shall be made not later than thirty
(30) days after receipt by the Indemnifying Party of written
notice from the Indemnified Person stating the amount of the
claim, unless the claim is subject to a defense as provided in
Section 9.3, in which case payment shall be made not later than
thirty (30) days after the amount of the claim is finally
determined. Any payment required under this Section 9.4 shall
bear interest at the rate of eighteen percent (18%) per annum,
or, if less, the maximum rate permitted by applicable usury laws
from the date that the Indemnified Person incurred the Damages
for which indemnification is sought. Interest on any unpaid
amount shall be compounded monthly, computed on the basis of a
365-day year and shall be payable on demand. In addition, such
Party shall reimburse the other Party for any and all costs and
expenses of any nature or kind whatsoever (including, without
limitation, all attorneys' fees) incurred in seeking to collect
such Damages following repeated refusal by the owing Party to pay
such Damages and the non-existence of any good faith defense to
payment.
9.5 Limitation on Indemnification. Anything to the contrary
contained in this Article IX notwithstanding, in no event shall
the aggregate liability of Seller under this Article IX exceed
the aggregate amounts received by Seller at the First Closing,
the Second Closing, and, if applicable, the Purchase Option
Closing.
ARTICLE X
GENERAL PROVISIONS
------------------
10.1 Expenses. Except as otherwise expressly provided in this
Agreement, each Party to this Agreement will bear its respective
expenses incurred in connection with the preparation, execution,
and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents,
representatives, counsel and representatives, and accountants
unless such Party is entitled to indemnification therefore
pursuant to Article IX above.
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10.2 Confidentiality. Purchaser and Seller will maintain in
confidence, and will cause the directors, officers, employees,
agents, and advisors of Purchaser, Seller and the Company to
maintain in confidence, any written, oral, or other information
obtained in confidence from another party or from Purchaser,
Seller or the Company in connection with this Agreement or the
Contemplated Transactions, unless (a) such information is already
known to such party or to others not bound by a duty of
confidentiality or such information becomes publicly available
through no fault of such party, (b) the use of such information
is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the
Contemplated Transactions, or (c) the furnishing or use of such
information is required by or necessary in connection with legal
Proceedings.
10.3 Press Releases and Announcements. No Party shall issue any
press release or make any public announcement relating to the
subject matter of this Agreement or the Contemplated Transactions
(other than those required by applicable Legal Requirements or by
Order), nor instruct or cause any other Person (including,
without limitation, the Company) to effect the same without the
express written consent of the other Party.
10.4 Notices. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will
be deemed to have been duly given when (a) delivered by hand
(with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of transmission), provided that a copy
is mailed by registered mail, return receipt requested, or (c)
when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and telecopier numbers set
forth below (or to such other addresses and telecopier numbers as
a party may designate by notice to the other parties):
if to Seller:
Xxxxxx X. Xxxxxx
Xxxxxx Xxxxx #000
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
if to Purchaser:
Solico International, Inc.
000 Xxxx
Xxx Xxxxxxx, Xxxxx 00000
Attn: X. Xxxxxxx Xxxxxx
with a copy (which shall not constitute notice) to:
Xxxxxxx & Xxxxx L.L.P.
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxxxx Xxxxxxx
Telecopy: (000) 000-0000
10.5 Governing Law; Jurisdiction; Service of Process. This
Agreement shall be deemed to have been made in, and shall be
construed in accordance with the laws of the State of Texas,
U.S.A. and its validity, construction, interpretation and legal
effect shall be governed by the laws of the State of Texas,
U.S.A. applicable to contracts entered into and performed
entirely therein. The Parties hereby
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agree that any dispute which may arise between or among them in
connection with this Agreement shall be adjudicated before a
court located in San Antonio, Texas, and they hereby submit to
the exclusive personal jurisdiction of the courts of the State of
Texas located in San Antonio, Texas and of the federal district
courts in or for disputes arising in San Antonio, Texas with
respect to any action or legal Proceeding commenced by any Party.
Each of the Parties irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such Proceeding brought in
such a court and any claim that any such Proceeding brought in
such a court has been brought in an inconvenient forum. Each of
the Parties hereby consents to the service of process in any such
action or legal Proceeding on any party anywhere in the world.
10.6 Further Assurance. The Parties agree (a) to furnish upon
request to each other such further information, (b) to execute
and deliver to each other such other documents, and (c) to do
such other acts and things, all as the other Party may reasonably
request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
10.7 Waiver. Except to the extent otherwise specified in this
Agreement, the rights and remedies of the Parties hereto are
cumulative and not alternative. Neither the failure nor any delay
by any Party in exercising any right, power, or privilege under
this Agreement or the documents referred to in this Agreement
will operate as a waiver of such right, power, or privilege, and
no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such
right, power, or privilege or the exercise of any other right,
power, or privilege. To the maximum extent permitted by
applicable law, (a) no claim or right arising out of this
Agreement or the documents referred to in this Agreement can be
discharged by one Party, in whole or in part, by a waiver or
renunciation of the claim or right u7nless in writing signed by
the other Party; (b) no waiver that may be given by a Party will
be applicable except in the specific instance for which it is
given; and (c) no notice to or demand on one Party will be deemed
to be a waiver of any obligation of such Party or of the right of
the Party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.
10.8 Entire Agreement and Modification. This Agreement and the
schedule and exhibits attached hereto, together with the other
Transaction Documents, supersedes all prior agreements between
the parties with respect to its subject matter (including,
without limitation, the letter agreement dated as of August 1,
2003) and constitutes (along with the other Transaction
Documents) a complete and exclusive statement of the terms of the
agreement between the Parties with respect to its subject matter.
This Agreement may not be amended except by a written agreement
executed by the Party to be charged with the amendment.
10.9 Schedules. The disclosures in the Seller Disclosure
Schedule and Purchaser Disclosure Schedule hereto, each of which
are incorporated into this Agreement by this reference and made a
part hereof, relate only to the representations and warranties in
the Section of the Agreement to which they expressly relate and
not to any other representation or warranty in this Agreement.
Seller and Purchaser may revise or supplement the Seller
Disclosure Schedule or Purchaser Disclosure Schedule,
respectively, or otherwise amend or modify its representations
and warranties hereunder, at any time at or prior to the a
Closing Date and the Purchase Option Closing Date, if any, to
reflect information that came into existence after the Effective
Date and that would have been required to be disclosed on such
schedules or reflected in such representations or warranties if
such information was in existence as of the Effective Date; it
being understood that prior to each Closing, each Party, as its
sole remedy for the receipt of additional materially adverse
information on the Disclosure Schedule of the other Party, shall
be entitled to terminate this Agreement with the consequences
specified in Section 8.2 above; provided, however, that such
disclosure shall not cure any default or limit any liability
resulting from a Breach of any covenants contained in this
Agreement.
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10.10 Assignments, Successors, and No Third-Party Rights.
Seller may not assign any of its rights under this Agreement
without the prior consent of the other Party. Purchaser may
assign its rights under this Agreement to any one or more
affiliates or related Persons of Purchaser. Subject to the
preceding sentences, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and
permitted assigns of the Parties. Nothing expressed or referred
to in this Agreement will be construed to give any Person other
than the Parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any
provision of this Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit
of the Parties to this Agreement and their successors and
assigns.
10.11 Severability. If any provision of this Agreement is
held invalid or unenforceable by any court of competent
jurisdiction, the other provisions of this Agreement will remain
in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or
unenforceable.
10.12 Section Headings; Construction. The headings of
Sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding
Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the
word "including" does not limit the preceding words or terms.
10.13 Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original
copy of this Agreement and all of which, when taken together,
will be deemed to constitute one and the same agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
SOLICO INTERNATIONAL, INC.,
a Texas corporation
By: /s/ X. XXXXXXX XXXXXX
-------------------------------
Name: X. Xxxxxxx Sparks
-----------------------------
Title: President
----------------------------
/s/ XXXXXX X. XXXXXX
----------------------------------
Xxxxxx X. Xxxxxx
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