SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
September 10, 1996
Date of Report (Date of earliest event reported) _______________________________
S.O.I. INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
1-12572 59-2158586
- --------------------------------- -----------------------------------
(Commission File Number) (IRS Employer Identification No.)
16910 Dallas Parkway, Suite 100, Dallas, Texas 75248
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
AC 972/248-1922
Registrant's telephone number, including area code ____________________
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 10, 1996, the Registrant sold and transferred all of the issued and
outstanding capital stock of its wholly-owned subsidiary American Quality
Manufacturing Corporation ("AQM"), a Delaware corporation to Olympus Sales Co.
(the "Buyer"). The transfer of AQM stock to the Buyer relieved the Registrant of
the net liabilities of AQM upon consolidation. As part of the transaction, the
Registrant forgave approximately $2,300,000 of intercompany debt related to
advances made by the Registrant to AQM and unpaid management fees due from AQM.
The transaction also included the release of the Company's guaranty liability
associated with AQM's credit facilities with NBD Bank, N.A. and with guarantees
given to certain of AQM's trade creditors. The terms of the transaction were
negotiated in an arms length transaction and there was no relationship between
the Registrant and its affiliates and the Buyer.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro Forma Financial Information
-------------------------------
The pro forma financial statements of the Registrant are included
herein.
(c) Exhibits
--------
2.1 Agreement for Purchase and Sale of Stock between S.O.I.
Industries, Inc. and Olympus Sales Co., dated as of September 10,
1996.
2
<PAGE>
S.O.I. INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED FINANCIAL DATA
(Unaudited)
The following unaudited pro forma consolidated balance sheet and unaudited pro
forma consolidated statements of operations have been derived from the balance
sheet and statements of operations of the Company as of March 31, 1996, for the
nine month period ended March 31, 1996 and for the year ended June 30, 1995. The
historical balance sheet is adjusted to give effect to the sale of 100% of the
common stock of AQM as if the sale had occurred on March 31, 1996. The
historical statements of operations are adjusted to give effect to the sale of
AQM as if the sale had occurred on July 1, 1994.
The sale of 100% of the common stock of AQM was effective on August 31, 1996.
The sale of AQM's common stock relieved the Registrant of AQM's net liabilities
at the sale date. As part of the sale agreement, the Company forgave
approximately $2,300,000 in intercompany advances and unpaid management fees.
This intercompany debt had been eliminated upon consolidation for all of the
Company's previously reported financial information. Other terms of the
agreement included the release of the Registrant's guarantee liability
associated with AQM's bank debt and trade debt with certain of AQM's creditors.
The pro forma balance sheet and pro forma statements of operations are presented
for informational purposes only and do not purport to be indicative of the
financial condition or results of operations that actually would have resulted
if the sale of AQM had occurred on the dates indicated above nor which may
result from future operations.
Due to seasonal fluctuations in sales, results of operations in individual
quarters are not necessarily indicative of results which may be expected for an
entire fiscal year. The pro forma consolidated balance sheet and pro forma
consolidated statements of operations should be read in conjunction with the
notes thereto and the Company's consolidated financial statements and notes
thereto filed in the Company's Form 10-KSB and Forms 10-QSB.
<PAGE>
S.O.I. Industries, Inc. and Subsidiaries
Condensed Pro Forma Consolidated Balance Sheet
March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Historical Adjustments Pro Forma
----------------- ----------------- ----------------
ASSETS
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents, including
restricted cash of $500,000 $ 764,727 $ (565,206) (a) $ 199,521
Accounts receivable 4,225,055 (4,180,278) (a) 44,777
Inventories 1,841,866 (1,733,997) (a) 107,869
Other current assets 563,331 (51,132) (a) 512,199
----------------- ----------------
Total current assets 7,394,979 864,366
----------------- ----------------
Property, plant and equipment, net 2,131,535 (2,114,366) (a) 17,169
Goodwill, net 1,987,169 (1,987,169) (a) 0
Other 1,886,436 (400,118) (a) 1,486,318
================= ================
$ 13,400,119 $ 2,367,853
================= ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving lines of credit $ 4,434,573 (4,434,573) (a) $ 0
Trade accounts payable 3,445,357 (3,314,573) (a) 130,784
Other current liabilities 1,604,690 (1,602,009) (a) 2,681
----------------- ----------------
Total current liabilities 9,484,620 133,465
----------------- ----------------
Long-term debt, net of current maturities 733,509 (733,509) (a) 0
Other 752,465 (567,741) (a) 184,724
Stockholders' equity:
Common stock, par value $0.0002;
20,000,000 shares authorized,
1,717,041 shares outstanding 342 342
Additional paid-in capital 6,348,166 6,348,166
Accumulated deficit (3,918,983) (379,861) (a) (4,298,844)
----------------- ----------------
Total stockholders' equity 2,429,525 2,049,664
----------------- ----------------
Total liabilities and
stockholders' equity $ 13,400,119 $ 2,367,853
================= ================
</TABLE>
See Notes to Pro Forma Consolidated Financial Data
<PAGE>
S.O.I. Industries, Inc. and Subsidiaries
Condensed Pro Forma Consolidated Statements of Operations
for the nine months ended March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Historical Adjustments Pro Forma
------------- --------------- -------------
<S> <C> <C> <C>
Net sales $ 14,851,565 $ (14,313,717) (b) $ 537,848
------------- -------------
Costs and expenses:
Cost of goods sold 13,470,697 (13,212,136) (b) 258,561
Selling expenses 974,053 (935,774) (b) 38,279
General and administrative expenses 1,889,329 (878,864) (b) 1,010,465
------------- -------------
Total costs and expenses 16,334,079 1,307,305
------------- -------------
Operating loss (1,482,514) (769,457)
------------- -------------
Other expense:
Loss on sales of securities (148,644) (148,644)
Loss on sale of investment in Digital
Communications Technology
Corporation (511,426) (511,426)
Interest expense and other (440,868) 672,890 (b) 232,022
------------- -------------
(1,100,938) (428,048)
------------- -------------
Loss from continuing operations
before provision for income taxes (2,583,452) (1,197,505)
Provision for income taxes - -
------------- -------------
Loss from continuing operations $ (2,583,452) $ (1,197,505)
============= =============
Weighted average shares of common
stock outstanding 1,665,750 1,666,300
============= =============
Loss per share from continuing
operations $ (1.55) $ (0.72)
============= =============
</TABLE>
See Notes to Pro Forma Consolidated Financial Data
<PAGE>
S.O.I. Industries, Inc. and Subsidiaries
Condensed Pro Forma Consolidated Statements of Operations
for the year ended June 30, 1995
<TABLE>
<CAPTION>
Adjustments Pro Forma
per Form 8-K per Form 8-K
filed on filed on
March 22, March 22,
Historical 1996 1996 Adjustments Pro Forma
------------ -------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Net sales $ 23,279,817 $ (4,361,715) (c) $ 18,918,102 $ (18,410,778) (b) $ 507,324
------------ -------------- ------------
Costs and expenses:
Cost of goods sold 21,622,368 (3,498,542) (c) 18,123,826 (17,785,179) (b) 338,647
Selling expenses 2,333,607 (585,108) (c) 1,748,499 (1,696,610) (b) 51,889
General and administrative expenses 3,116,964 (430,949) (c)
355,089 (c) 3,041,104 (2,251,034) (b) 790,070
--------------- ------------
Total costs and expenses 27,072,939 22,913,429 1,180,606
------------ --------------- ------------
Operating loss (3,793,122) (3,995,327) (673,282)
------------ --------------- ------------
Other income (expense):
Gain on sales of securities 355,348 355,348 355,348
Gain on sale of investment in Digital
Communications Technology
Corporation 228,728 228,728 228,728
Interest expense and other (925) 51,884 (c)
42,776 (c) 93,735 567,335 (b) 661,070
------------ --------------- -------------
583,151 677,811 1,245,146
------------ --------------- -------------
(Loss) income from continuing operations
before provision for income taxes (3,209,971) (3,317,516) 571,864
Benefit (provision) for income taxes 562,320 (51,997) (c)
(17,110) (c) 493,213 (932,061) (b)(d) (438,848)
------------ --------------- --------------
(Loss) income from continuing operations $ (2,647,651) $ (2,824,303) $ 133,016
============ =============== ==============
Weighted average shares of common
stock outstanding 12,541,468 12,541,468 12,541,468
============ =============== ==============
(Loss) income per share from continuing
operations $ (0.21) $ (0.23) $ 0.01
============ =============== ==============
</TABLE>
See Notes to Pro Forma Consolidated Financial Data
<PAGE>
S.O.I. INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Pro Forma Consolidated Financial Data
(unaudited)
(a) To eliminate the historical assets and liabilities of AQM as of March
31, 1996, as if the sale of 100% of the common stock of AQM had
occurred on March 31, 1996. At March 31, 1996, AQM's book value,
adjusted for the pro-forma effect of the forgiveness of intercompany
debt, was in excess of the selling price by $379,861, and is reflected
as a loss (increase in accumulated deficit).
(b) To eliminate the historical income and expense of AQM for the
respective periods presented, as if the sale of 100% of the common
stock of AQM had occurred on July 1, 1994.
(c) On March 22, 1996, the Company sold 100% of the common stock of Tempo
Lighting, Inc. and filed a Form 8-K related thereto. These pro forma
adjustments to the historical statement of operations for the year
ended June 30, 1995 are discussed in that document.
(d) The tax effect of pro forma adjustments to earnings before income taxes
is based on the estimated federal and state statutory tax rate.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
S.O.I. INDUSTRIES, INC.
/s/ Kevin B. Halter
By: _________________________________
Kevin B. Halter, President
Dated: September 20, 1996
3
<PAGE>
EXHIBIT INDEX
Exhibit No.
- -----------
2.1 Agreement for Purchase and Sale of Stock between S.O.I. Industries, Inc.
and Olympus Sales Co., dated as of September 10, 1996.
4
<PAGE>
EXHIBIT 2.1
5
<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
This Stock Purchase Agreement (the "Agreement") is made on this, the
6th day of September, 1996, by and between Olympus Sales Co. a Delaware
corporation ("Purchaser"), and S.O.I. Industries, Inc.("Seller"), being the sole
common stock shareholder of American Quality Manufacturing Corporation d/b/a
American Cabinet, Inc., a Delaware corporation ("Company").
WHEREAS, the Seller owns, in the aggregate, 6,000,000 shares of the
common stock, $0.00001 par value per share, said shares constituting all of the
issued and outstanding shares of the common stock of the Company (the "Shares"),
and the Seller desires to sell to Purchaser, and Purchaser desires to purchase
from the Seller, the Shares on the terms and conditions herein set forth;
NOW, THEREFORE, the Seller and the Purchaser mutually covenant and
agree as follows:
I.
TRANSFER OF THE SHARES AND PURCHASE PRICE
1.1 PURCHASE PRICE. Subject to the terms, conditions and provisions hereof,
and based upon the warranties, representations, covenants and agreements
contained herein, Purchaser agrees to provide Seller with the following
consideration in full and final payment for the Shares of the Company purchased
form Seller under this Agreement:
A. Written releases of Seller's guaranty liability to NBD Bank, N. A. and
J. T. Shannon Lumber Company, Inc. for the indebtedness, liabilities and/or
obligations of the Company; and
B. Either (i) written releases of Seller's guaranties to Columbia Forest
Products, Inc., Distribution Service, Inc., C. Bean Transport, Inc.; Knape and
Vogt Manufacturing Company and Conway Corporation (the "Company Vendors") for
all indebtedness, liability and/or obligations of the Company to the Company
Vendors, or (ii) proof of payment in full by the Company of all outstanding and
valid invoices owing by the Company to the Company Vendors, as disclosed and set
forth in the account payable schedule provided in Section 4.9 (m) hereof;
C. A written release of Seller's guarantee of the payment and performance
of the Company's liabilities under its lease of the Conway, Arkansas facility or
if such release can not be obtained by December 1, 1996, Purchaser will furnish
Seller with an agreement to indemnify Seller from any payments Seller is
required to make to the landlord under its guarantee because and by reason of
the Company's default of its lease obligations;
provided, however, in no event shall Purchaser be responsible for obtaining the
release of Seller's guaranty of indebtedness or causing the Company to pay
guaranteed indebtedness which exceeds in the aggregate more than $5,500,000.00
as of the date of Closing. Subject to such limitation, Purchaser shall furnish
the original or facsimile of a release from NBD Bank, N. A. and a release from
<PAGE>
J. T. Shannon Lumber Company, Inc. at Closing. Subject to the aforementioned
limitation, the Seller's guaranty liability or proof of payment of the Company's
indebtedness to the Company Vendors guaranteed by Seller shall be furnished by
Purchaser to Seller no later than December 31, 1996. Seller shall be solely
responsible for notifying the Company Vendors that Seller is terminating its
guaranty with respect to any future indebtedness, liability or obligation of the
Company to the Company Vendors.
II.
THE CLOSING
2.1 THE CLOSING. The Closing under this Agreement shall occur at the
offices of S.O.I. Industries, Inc., in Dallas, Texas at 10:00 a.m., on the 10th
day of September, 1996, or on such later date on which the Seller and Purchaser
agree (the "Closing").
2.2 DELIVERY OF CERTIFICATES. At the Closing, the Seller will deliver
to Purchaser the original stock certificates representing the Shares, endorsed
in blank or accompanied by stock powers duly endorsed in blank, plus the
documents referred to in Section 4.9 hereof, in exchange for delivery by
Purchaser to the Seller of the documents required by Section 1.1 hereof to be
delivered at Closing.
2.3 DELIVERY OF CASHIERS CHECKS. Seller shall cause to be delivered to
Purchaser cashiers check(s) payable to the Company in the amount of $280,000 at
Closing, representing recision of certain payments of AQM indebtedness.
III.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Seller as of the date hereof and of the
date of Closing as follows:
3.1 INCORPORATION. Purchaser is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
3.2 EXECUTION AND DELIVERY OF AGREEMENT. The execution and delivery of
this Agreement, and the performance of the transactions contemplated hereby have
been duly and validly authorized by the shareholders and directors of Purchaser.
3.3 ABSENCE OF ADVERSE AGREEMENTS. The execution and delivery of this
Agreement, and the consummation of the transactions contemplated hereby will not
constitute a default under or result in a material breach of any term, condition
or provision of the articles of incorporation or bylaws of Purchaser, or any
loan agreement or instrument to which Purchaser is a party, except as may have
been disclosed in writing to or waived in writing by the Seller.
<PAGE>
3.4 VALIDITY OF AGREEMENT. The Agreement, when executed and delivered
pursuant hereto, will constitute the legal, valid and binding obligation of
Purchaser, enforceable in accordance with its terms, subject to any applicable
bankruptcy, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally, rights of offset and principles of
equity.
3.5 INVESTMENT INTENT. Purchaser is acquiring the Shares for its own
account and not with the view to the distribution thereof in violation of any
applicable securities laws. Purchaser intends to provide the Company with
additional capital and raw materials supply, which Purchaser, in its business
judgment and discretion, deems appropriate under the circumstances with a view
toward making the Company a viable business and going concern.
IV.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER
The Seller represents and warrants to the Purchaser, and covenants and
agrees with Purchaser, as of the date hereof and as of the date of Closing, as
follows:
4.1 EXECUTION AND DELIVERY OF AGREEMENT. The execution and delivery of this
Agreement, and the performance of the transactions contemplated hereby have been
duly and validly authorized by Seller's shareholders and directors.
4.2 ABSENCE OF ADVERSE AGREEMENTS. The execution and delivery of this
Agreement, and the consummation of the transactions contemplated hereby will not
constitute a default under or result in a material breach of any term, condition
or provision of the articles of Incorporation or bylaws of Seller, or any loan
agreement or Instrument to which Seller is a party, except as may have been
disclosed in writing to or waived in writing by the Purchaser.
4.3 VALIDITY OF AGREEMENT. The Agreement, when executed and delivered
pursuant hereto, will constitute the legal, valid and binding obligation of
Seller, enforceable in accordance with its terms, subject to any applicable
bankruptcy, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally, rights of offset and principles of
equity.
4.4 INCORPORATION. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of Delaware and in
each state in which it is doing business. The Company has full corporate power
and authority and all necessary federal, state and local governmental
franchises, licenses and authorizations to own all of its respective properties
and assets and to conduct the business currently being conducted. The Company
does not have any subsidiaries.
4.5 CAPITALIZATION. The authorized capitalization of the Company consists
of (a.) 25,000,000 shares of common stock $0.00001 par value, consisting of
6,000,000 shares of common stock owned by the Seller, and the balance being
unissued stock and (b.) 10,000,000 shares of preferred stock $0.00001 par value
noncumulative, of which none is issued or outstanding. Said 6,000,000 common
<PAGE>
shares are all of the issued and outstanding shares of capital stock or other
equity interests or rights in or of the Company. The Shares are validly issued,
fully paid and non-assessable, and have not been issued in violation of the
preemptive rights of any person.
4.6 TITLE TO THE SHARES. The Shares are owned of record and beneficially by
Seller, and Seller holds good, valid and indefeasible title to the Shares. There
are in existence no subscriptions, preemptive rights, calls, options, warrants,
agreements, restrictions, encumbrances, voting limitations, understandings,
commitments or rights of first refusal, or similar rights or any other
agreements to which the Company or the Seller is a party or by which the Company
or Seller is bound, or which the shares are subject, relating to the issuance,
redemption, voting or equity rights, transfer, purchase or sale by any of them
of any of the Company's capital stock, or any other securities of the Company
convertible into capital stock or other securities of the Company. The Seller
possesses full authority and legal right to sell, transfer and assign and at
closing shall sell transfer and assign to Purchaser the entire legal and
beneficial ownership of the Shares, free and clear of all liens, encumbrances,
pledges, charges, claims, restrictions, rights of first refusal, voting trust,
voting agreements, buy/sell agreements, preemptive rights, proxies or other
interests of any nature of any person. Upon Seller's transfer of the Shares to
Purchaser hereunder at the closing, Purchaser will own the entire legal and
beneficial interest in the Shares, free and clear of any and all liens, claims
and encumbrances of any kind, and subject to no legal or equitable restrictions
of any kind.
4.7 FINANCIAL STATEMENTS. The financial Statements of the Company for the
period ending June 30, 1996 (the "Latest Balance Sheet"), which have been
delivered to Purchaser, are complete and correct in all material respects, have
been prepared on a basis consistent with that of prior periods, and present
fairly the financial condition and results of operations of the Company as of
and for the periods indicated, in accordance with generally accepted accounting
practices ("GAAP"). As of June 30, 1996, the Company had no material
liabilities, whether contingent, accrued, disputed, or otherwise, and no
material assets, other than as detailed and explained in the Latest Balance
Sheet (Schedule "1"). All Company guaranties, judgments, direct or indirect
liabilities, capital leases and other material obligations are shown on Schedule
1, whether or not same is required by GAAP. All accounts receivable on the books
of the Company at the Closing will be collectible within ninety (90) days after
the Closing at the face amount thereof and are not subject to contra accounts,
offsets or material disputes.
4.8 TAXES. All federal, state and local tax returns, estimates and reports
have been timely filed for the Company in correct form showing the correct
amount of tax owed for all periods in which such were due. All taxes shown
thereby to be payable have been timely paid or if not yet due, adequate
provision has been made therefor. Any additional tax liability asserted by the
Internal Revenue Service or any other governmental authority as a result of any
examinations has been paid unless contested and disclosed to Purchaser in
writing prior to Closing. The provisions for taxes shown on the Latest Balance
Sheet are adequate to cover the liabilities of the Company for all taxes
(including, but not limited to, employee income tax withholding, social
security, franchise, value added, sales, use, ad valorem and unemployment taxes)
to the date thereof. All withholding taxes or other taxes the Company is
obligated to collect have been withheld, collected and timely deposited. Neither
the Seller nor the Company has made or filed any income tax elections to be
taxable as a DISC or under Subchapter S of the Internal Revenue Code, nor any
consents or waivers of statutes
<PAGE>
of limitation with respect to any tax claims asserted against the Company. There
are no tax liens or levies against the Company from any federal, state, or local
taxing authorities and the Company has not received any notice for any unpaid
taxes, unfiled tax returns or other noncompliance or delinquency with respect to
any tax law and regulations.
4.9 SCHEDULES. The Seller will furnish to Purchaser at Closing the
following documents (originals where available) which will then be initialed by
both parties and marked for identification, certified as complete, true and
correct, and certified by the Company's President and Chief Financial Officer as
complete true and correct to the best of their knowledge, which constitute the
Schedules ( the "Schedules") reflecting information as of the date hereof, and
which Schedules shall be subject to the approval of Purchaser.
Schedule (a). A list and brief description of all real and personal
property owned or leased by the Company (showing whether such property is owned
or leased) and of all leases or agreements under which the Company is lessor or
lessee or holds or operates any property, real or personal. The Seller may
exclude therefrom miscellaneous personal property having a current value of less
than $5,000.00 in the aggregate.
Schedule (b). A list of all contracts between the Company and any labor
organization, including Collective Bargaining Agreements, memoranda of
understanding, and any other similar agreements including promises of future
benefits to Company employees and all employment, consulting, retirement,
employee benefit, employee stock option and deferred compensation agreements,
(including a statement that all pension plans are either fully funded and fully
paid, or provision has been made to fund or pay said plans) entered into by the
Company with its officers, directors or employees and any handbooks or manuals
for the employees.
Schedule (c). A copy of all loans, notes, instruments of debt, mortgages,
liens,(including mechanics and materialman's lien notices) conditional sale or
lease purchase agreements, security agreements, guaranties, including agreements
and other material indebtedness or obligation of the Company or encumbrance of
its property not fully satisfied.
Schedule (d). A list of all other contracts [not referred to in Schedules
(a), (b), (c), (f) or (g)] to which the Company is a party or by which it is
bound and which are in effect in respect of which there is or can be an
obligation of more than $5,000.00.
Schedule (e). A list of all bank deposit, checking and money market
accounts, certificates of deposits and letters of credit including current
balances, safe deposit boxes and securities owned by the Company and investments
of the Company and amounts thereof, accompanied by a list of names of all
persons authorized to draw thereon or to have access thereto.
Schedule (f), A list of all patents (and copies thereof), and of all
trademarks, service marks, trade names, copyrights and similar rights, names,
assumed names, or marks used by the Company, which are owned by the Company or
the Seller, designating the owner(s) thereof.
Schedule (g). A copy of any of the most recent reports filed by the Company
with any federal,
<PAGE>
state or local administrative or governmental agency, and a copy of the most
recent reports or communications received by the Company from such agencies.
Schedule (h). A copy of the income tax returns of the Company, including
all schedules and attachments thereto, for the fiscal years 1994 and later which
have been filed with the Internal Revenue Service.
Schedule (i). A copy of all insurance policies of the Company, including
schedules and attachments thereto, from 1995 until present, including any loss
ratings, finance agreements and experience ratings, including a certificate from
the current employee health benefit provider that all premiums due and owing
have been paid current or provision has been made to insure continued employee
coverage under the plan.
Schedule (j). A complete inventory of the Company, itemized by finished
goods and raw materials as of August 31, 1996. Said inventory to be marked and
identified with all product on the books of Company in total and by category as
of August 31, 1996. The Seller and Company are not able to produce an itemized
inventory of work in process as of August 31, 1996.
Schedule (k). A letter from the Seller and its subsidiaries, officers and
directors to the Company, executed by its Chief Executive Officer and ratified
by its Board of Directors, stating that all debt owed to them by the Company is
assigned to Purchaser without warranty or recourse as of the date of closing,
including any unpaid and accrued interest, management fees, travel expenses, and
or services, so that as of the date of closing, there arc no monies whatsoever
due from the Company to Seller.
Schedule (l). A complete listing of the Company's aged Accounts Receivable,
notes and chattel paper as of September 9, 1996.
Schedule (m). A complete listing of the Company's aged Trade Accounts
Payable as of September 9, 1996.
Schedule (n). Resignation Letters from any officer, director or employee of
Seller who serves in any capacity, as an officer or employee of Company,
including a letter to each and every financial institution in which the company
has an account, either depository or lending, stating that they are hereby no
longer authorized to transfer funds, in any form whatsoever, from any of the
Company's accounts.
Schedule (o) A copy of any and all lawsuits, EEOC and worker's compensation
claims or other legal proceedings or legal claims, including any environmental
claim or dispute to which the Company is a party, either as a defendant or
plaintiff, and all general counsel opinions pertaining to those lawsuits and
proceedings.
Schedule (p.) A letter from Seller to Purchaser and the Company stating
that there is no liability of the Company to any present or former directors or
officers of Company or Seller.
<PAGE>
Schedule (q). A copy of any and all Purchase Money Liens or security
interests granted by the Company and a copy of any and all reclamation notices
received by the Company.
Schedule (r.) A complete list of equipment, plant and property leasehold
improvements including the cost and depreciation schedules thereto, not included
in Schedule (a).
Schedule (s.) The only press release that will be issued by the parties to
this Agreement concerning this transaction shall be the one shown on Schedule
(s).
Seller knows of nothing at this time which would result in any material adverse
change in the schedules listed above.
4.10. TITLE TO PROPERTIES. The Company has good and marketable title to or
a valid and binding lease of the real and personal property or interests therein
described in the leases and inventory reports as delivered to Purchaser as of
this date and all other material assets used in the ordinary course of its
business (including patents, copyrights, trade names, trademarks, service marks
and other names and marks used in connection with the Company's operations and
whether or not reflected in the Latest Balance Sheet), free and clear of any
liens, claims, charges, options or other encumbrances. Except as previously
disclosed to Purchaser, there are no financing or construction statements filed
or signed which list the Company as debtor and no agreements exist authorizing
or permitting any person to sign or file any such statements. All machinery,
electronic equipment and other equipment in regular use included in such
personal property have been well maintained and are in good and serviceable
condition in all material respects, reasonable wear and tear excepted. The real
property as described in the leases hereinabove described constitutes all of the
interests in real property reflected in the Latest Balance Sheet, and except as
indicated, no real property or agreements to acquire real property have been
entered into by the Company, or by Seller for the benefit of the Company, since
the date of the Latest Balance Sheet. The buildings occupied by, and the
operations of the Company, conform in all material respects with all applicable
ordinances, regulations and zoning laws and all applicable requirements of
federal, state or local regulatory authorities, including any environmental,
OSHA or EPA or State requirements to the extent that any failure to comply
therewith would or may have a material effect on the business or properties of
the Company, and such buildings are in a reasonable state of repair and have
been well maintained. All leases of real or personal property are valid and in
full force and effect, and the Company has not breached any provision of, or
defaulted in any respect under the terms of, any such lease, and there has not
been any event that with notice or lapse of time or both would constitute a
breach or default under any such lease.
4.11 POSSESSION AND CONTROL. At closing, Seller shall allow Purchaser full
possession and control of the business affairs of the Company and provide access
to all locations of the Company's business including but not limited to all
books, records, accounts and assets described in the Schedules referred to above
and shall cooperate with Purchase executing and delivering such documents and
take such action as may be reasonably necessary to accommodate such possession,
control and access.
4.12 REMEDIES. Purchaser and Company are beneficiaries of the warranties,
representations,
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covenants and agreements of Seller as set forth in Article IV and accompanying
schedules. In the event of a breach of any such warranty, representation,
covenant or agreement, Seller shall be liable to Purchaser and Company in an
amount equal to all non-disclosed liabilities and obligations of the Company,
the value of scheduled assets which are not owned by the Company, and/or any
other loss, cost or expense suffered either by Purchaser or the Company to cure
any breach of such warranties, representations, covenants and agreements of
Article IV.
V.
NEGATIVE COVENANTS AND ADDITIONAL PROVISIONS
5.1 NON-COMPETE. Seller agrees as an inducement for Purchaser to enter into
this Agreement that it will not, directly or indirectly, own, operate, Consult,
control or enter into a contract for the manufacture of or distribution of
kitchen and/or bathroom cabinets, and lumber or building materials either
unfinished or finished, (including, but not limited to, a stock ownership
position of more than 10%, a partnership or any position whatsoever that would
give them the opportunity to direct or influence the business) for a period of
three (3) years from the date of Closing.
5.2 MISCELLANEOUS. This Agreement (together with the Exhibits, Schedules,
Financial Statements, and other documents referred to herein) constitutes the
entire contract and understanding between the parties hereto and supersedes all
prior agreements, arrangements and understandings relating to the subject matter
hereof. The terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective heirs, legal representatives, successors and
assigns of the parties hereto. This Agreement and the rights and obligations
hereunder shall not be assignable by Seller. Nothing in this Agreement, express
or implied, is intended to confer upon any person, other than the parties hereto
and their respective heirs, legal representatives, successors and assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement; there are no third party beneficiaries of this Agreement.
5.3 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without regard to the principles
of conflicts of law of such state.
5.4 SEVERABILITY. Should any phrase, clause, sentence or section of this
Agreement be judicially declared to be invalid, unenforceable or void, such
decision will not have the effect of invalidating or voiding the remainder of
this Agreement, and such part of this Agreement will be deemed to have been
stricken here from and the remainder will have the same force and effect as if
such part or parts had never been included herein.
5.5 MUTUAL COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
5.6 ASSIGNMENT OF CERTAIN RIGHTS. Effective as of the Closing, the Seller
hereby assigns to the Company all of its respective right, title and interest in
and to any patents, trademarks, service marks, trade names, assumed names,
copyrights and similar rights, name or marks, goodwill and customer
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lists connected with or used in the business of the Company in which they may
have any interest. Seller agrees to execute and deliver such other instruments
of transfer and to take such other action as Purchaser may reasonably request to
effectuate this Assignment.
5.7 FURTHER ASSURANCES. Each of the parties shall execute such documents
and perform such further acts (including without limitation, obtaining any
consents, exemptions, authorizations, or other actions by, or giving any notices
to, or making any filings with, any governmental authority or any other Person)
as may be reasonably required or desirable to carry out or to perform the
provisions of this Agreement and effectively transfer to and vest in Purchaser
the full and complete ownership of the Shares as contemplated herein.
5.8 SELLER'S ACCESS TO COMPANY RECORDS. Seller shall be provided access to
the Company's books and records, as necessary to enable Seller to complete its
current audit, during normal business hours.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and ratified as of the date first above written.
Olympus Sales Co. S.O.I. Industries, Inc.
By: /s/ Timothy A. Heider By: /s/ Kevin B. Halter
---------------------- ---------------------
Its President Its President
American Quality Manufacturing
Corporation d/b/a American Cabinet,
Inc.
By: /s/ Clifford E. Patton
------------------------
Its President
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