|
STOCK PURCHASE AGREEMENT between FORTUNE
INDUSTRIES, INC. AND FORTUNE INDUSTRIES II, INC.
STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE
AGREEMENT (this "Agreement") is entered into effective as of the
30th day of November 2008 (“Effective Date”) by
and among Fortune Industries, Inc. (“the
Seller”) and Fortune Industries II, Inc. ("the Buyer").
BACKGROUND James H Drew Corporation, Nor-Cote
International, Inc. and Fortune Wireless, Inc. (the
“Companies”) are currently subsidiaries of the
Seller. The parties hereto desire to provide for the
acquisition by the Buyer of the Companies through the sale by the
Seller to the Buyer of all the outstanding shares of capital stock
of the Companies, which are owned beneficially and of record by the
Seller, all on the terms and conditions set forth in this
Agreement.
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements herein
contained, the parties hereto, intending to be legally bound, agree
as follows: SECTION 1. ACQUISITION OF SHARES.
1.1 Sale and
Purchase of Shares of the Companies. Subject to the
terms and conditions of this Agreement, at the Closing (as herein
defined), the Seller shall sell, transfer and deliver to the Buyer
660 shares of the common stock, no par value, of the James H Drew
Corporation, 100 shares of the common stock, no par value, of
Nor-Cote International, Inc. and 100 shares of the common stock, no
par value, of Fortune Wireless, Inc. constituting all of the
outstanding shares of the Companies’ capital stock (the
“Shares”), and the Buyer shall purchase the
Shares for the consideration set forth in Section 1.2.
1.2 Purchase
Price. Subject to the adjustment described in Section
1.3, the purchase price (the “Purchase Price”)
for the Shares shall be Thirteen Million and 00/100 Dollars
($13,000,000.00). The Seller, the Buyer, Carter Fortune
and John Fisbeck (pursuant to the Consent to Setoff attached as
Exhibit 1.2(a)) agreed that Nine Million Five Hundred Thousand and
00/100 Dollars ($9,500,000.00) of the Purchase Price will be paid
as an offset against part of the Ten Million and 00/100 Dollar
($10,000,000.00) principal payment to be made effective the
Effective Date by the Seller to Carter Fortune. The
$10,000,000.00 principal payment to be made is a payment on the
Term Loan Note between the Seller and Carter Fortune dated
May 30, 2008. The balance of the Purchase Price
($3,500,000.00) shall be paid pursuant to the terms of a Promissory
Note, a copy of which is attached as Exhibit 1.2(b). As
additional consideration, the Buyer shall cause Carter Fortune and
John Fisbeck to execute and deliver to the Seller the Debt Payment
and Stock Conversion Agreement, a copy of which is attached as
Exhibit 1.2(c).
1.3 Purchase
Price Adjustment. As of the Effective Date, the
Companies and Commercial Solutions, Inc. (collectively, the
“Acquired Companies”) must have a total net
worth (total assets minus total liabilities) determined in
accordance with United States generally accepted accounting
principles, consistent with past practice in an amount equal to
Thirteen Million Five Hundred Thousand Dollars
($13,500,000.00). If the Acquired Companies have a total
net worth in excess of Thirteen Million Five Hundred Thousand
Dollars ($13,500,000.00), the Purchase Price shall be increased
dollar-for-dollar in the amount of the excess. If the
Acquired Companies have a total net worth that is less than
Thirteen Million Five Hundred Thousand Dollars ($13,500,000.00),
the Purchase Price shall be reduced dollar-for-dollar in the amount
of the deficiency (collectively the “Purchase Price
Adjustment”). The Seller shall cause its outside
accountants to review the Acquired Companies’ books and
records as soon as reasonably possible following the Closing (as
herein defined). As part of the review, the outside
accountants will calculate the Acquired Companies’ total
net worth as of November 30, 2008 in accordance with United States
generally accepted accounting principles in a manner consistent
with those principles used by the Seller. The outside
accountants’ calculation of the Acquired
Companies’ net worth shall be final and binding upon the
parties unless the Buyer objects to such calculation within fifteen
(15) days of the receipt thereof, in which case, the Buyer and the
Seller shall follow the procedures described in Section 9.4 to
resolve the disagreement. Promptly upon the calculation of
the Purchase Price Adjustment, the Seller and the Buyer shall
cancel the original Promissory Note and the Buyer shall execute and
deliver a new Promissory Note to the Seller. The new
Promissory Note shall contain all of the terms of the original
Promissory Note except the principal amount shall be adjusted to
reflect the Purchase Price Adjustment. SECTION 2.
REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER.
The Seller hereby represents and warrants to the Buyer as follows:
2.1 Organization
and Good Standing. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Indiana and has all necessary corporate power and
authority to carry on its business as presently conducted, to own
and lease the assets which it owns and leases and to perform all
its obligations under each agreement and instrument by which it is
bound. - 2 -
2.2 Power and
Authorization. The Seller has full capacity, legal
right, power and authority to enter into and perform its
obligations under this Agreement and under the other agreements and
documents (collectively "the Seller Transaction Documents")
required to be executed and delivered by it prior to or at the
Closing. The execution, delivery and performance by the Seller of
the Seller Transaction Documents have been duly authorized by all
necessary corporate action. The Seller Transaction
Documents have been duly and validly executed and delivered by the
Seller and constitutes the legal, valid and binding obligation of
the Seller enforceable against the Seller in accordance with its
terms except as the same may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other laws
affecting the enforcement of creditor's rights in general, and
except that the enforceability of the Seller Transaction Documents
is subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or law)
and of public policy. When executed and delivered as
contemplated herein, and assuming enforceability thereof against
all other parties, each of the Seller Transaction Documents shall
constitute the legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms except
as the same may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other laws
affecting the enforcement of creditor's rights in general, and
except that the enforceability of the Seller Transaction Documents
is subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or law)
and of public policy.
2.3 No
Conflicts.
(a) The
execution, delivery and performance of this Agreement and the
Seller Transaction Documents do not and will not (with or without
the passage of time or the giving of notice):
(i) violate or
conflict with the Articles of Incorporation or Bylaws of the Seller
or any law binding upon the Seller;
(ii) violate
or conflict with, result in a breach of, or constitute a default or
otherwise cause any loss of benefit under any material agreement or
other material obligation to which the Seller is a party or by
which it or any of its assets are bound, or give to others any
rights (including rights of termination, foreclosure, cancellation
or acceleration), in or with respect to the Seller or any of its
assets, including, without limitation, any of the Shares;
(iii) result
in, require or permit the creation or imposition of any
restriction, mortgage, deed of trust, pledge, lien, security
interest or other charge, claim or encumbrance of any nature upon
or with respect to the Shares; or
(iv) violate
any resolution adopted by the board of directors or stockholders of
the Seller.
(b) Each
consent or approval of, or registration, notification, filing
and/or declaration with, any court, government or governmental
agency or instrumentality, creditor, lessor or other person
required to be given or made by the Seller in connection with the
execution, delivery and performance of the Seller Transaction
Documents which are to be obtained or made in order for transfer of
the Shares to be effective as contemplated herein, has been
obtained or made, or will be obtained or made prior to the Closing.
- 3 -
(c) There are
no judicial, administrative or other governmental actions,
proceedings or investigations pending or, to the knowledge of the
Seller, threatened, that question any of the transactions
contemplated by, or the validity of the Seller Transaction
Documents or which, if adversely determined, would materially
interfere with the Seller’s ability to enter into or
perform its obligations under the Seller Transaction
Documents. The Seller has not received any request from
any governmental agency or instrumentality for information with
respect to the transactions contemplated hereby.
2.4 Ownership
of the Shares. The Seller owns the Shares beneficially
and of record, free and clear of any restriction, mortgage, deed of
trust, pledge, lien, security interest or other charge, claim or
encumbrance. There are no shareholder or other
agreements affecting the right of the Seller to convey the Shares
to the Buyer or any other right of the Seller with respect to the
Shares, and the Seller has the right, authority, power and capacity
to sell, assign and transfer the Shares to the Buyer free and clear
of any restriction, mortgage, deed of trust, pledge, lien, security
interest or other charge, claim or encumbrance (except for
restrictions imposed generally by applicable securities
laws). Upon delivery to the Buyer of the certificates
for the Shares at the Closing, the Seller will transfer good, valid
and marketable title to the Shares, free and clear of any
restriction, mortgage, deed of trust, pledge, lien, security
interest or other charge, claim or encumbrance.
2.5 Brokers. No
person acting on behalf of the Seller or under the authority of the
Seller is or will be entitled to any brokers' or finders' fee or
any other commission or similar fee, directly or indirectly, from
any of such parties in connection with any of the transactions
contemplated by this Agreement.
2.6 Full
Disclosure. All documents and other papers (or copies
thereof) delivered by or on behalf of the Seller in connection with
the transactions contemplated by this Agreement are in the same
form as maintained by the Seller, without alteration and are
accurate and complete as to items in the custody of the Seller.
SECTION 3. REPRESENTATIONS AND WARRANTIES REGARDING THE
COMPANIES
The Seller hereby represents and warrants to the Buyer as follows:
3.1 Organization
and Good Standing. Each of the Companies are
corporations duly organized and validly existing and in good
standing under the laws of the State of Indiana and have all
necessary corporate power and authority to carry on its business as
presently conducted, to own and lease the assets which it owns and
leases and to perform all of its obligations under each agreement
and instrument by which it is bound.
3.2 No
Conflicts.
(a) The
execution, delivery and performance of the Seller Transaction
Documents do not and will not (with or without the passage of time
or the giving of notice): - 4 -
(i) violate or
conflict with the Articles of Incorporation or Bylaws of any of the
Companies or any law binding upon any of the Companies;
(ii) violate
or conflict with, result in a breach of, or constitute a default or
otherwise cause any loss of benefit under any material agreement or
other material obligation to which any of the Companies is a party
or by which it or its assets are bound, or give to others any
rights (including rights of termination, foreclosure, cancellation
or acceleration), in or with respect to any of the Companies or any
of its assets;
(iii) result
in, require or permit the creation or imposition of any
restriction, mortgage, deed of trust, pledge, lien, security
interest or other charge, claim or encumbrance of any nature upon
or with respect to the Shares or, upon or with respect to any of
the Companies or any of the Companies' assets; or
(iv) violate
any resolution adopted by the board of directors or stockholders of
the Company.
(b) Each
consent or approval of, or registration, notification, filing
and/or declaration with, any court, government or governmental
agency or instrumentality, creditor, lessor or other person
required to be given or made by each of the Companies in connection
with the execution, delivery and performance of the Seller
Transaction Documents has been obtained or made, or will be
obtained or made prior to the Closing.
(c) There
are no judicial, administrative or other governmental actions,
proceedings or investigations pending or, to the knowledge of the
Seller, threatened that question any of the transactions
contemplated by, or the validity of, the Seller Transaction
Documents or which, if adversely determined, would materially
interfere with the Companies' ability to enter into or perform its
obligations under the Seller Transaction Documents. None
of the Companies have received any request from any governmental
agency or instrumentality for information with respect to the
transactions contemplated hereby.
3.3 Capitalization. Schedule
3.3 fully and accurately describes the authorized, issued and
outstanding capital stock and other securities of each of the
Companies. No person has any preemptive or other right
with respect to any such equity interests or other
securities. There are no offers, options, warrants,
rights, agreements or commitments of any kind (contingent or
otherwise) relating to the issuance, conversion, registration,
voting, sale or transfer of any equity interests or other
securities of any of the Companies (including, without limitation,
the Shares) or obligating any of the Companies or any other person
to purchase or redeem any such equity interests or other
securities. The Shares constitute all of the issued and
outstanding shares of capital stock of each of the Companies and
have been duly authorized and are validly issued and outstanding,
fully paid and nonassessable, and have been issued in compliance
with applicable securities and other laws. - 5 -
3.4 Investments
and Subsidiaries. Except as described on Schedule 3.4,
the business of each of the Companies is and has been conducted
solely by and through each of the Companies and no other
person. Except as described on Schedule 3.4, the
Companies do not directly or indirectly own, control or have any
investment or other interest in any corporation, partnership, joint
venture, business trust or other entity.
3.5
|
