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
Date of Report (Date of earliest event reported): March 22, 1996
S.O.I. INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
1-12572 59-2158586
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(Commission File Number) (IRS Employer Identification No.)
16910 Dallas Parkway, Suite 100, Dallas, Texas 75248
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: AC 214/248-1922
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(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 22, 1996, the Registrant sold and transferred all of the issued and
outstanding capital stock of its wholly-owned subsidiary Tempo Lighting, Inc., a
Delaware corporation ("Tempo") to T.I. Technologies Corporation (the "Buyer").
The purchase price for all of the capital stock of Tempo was $453,435.79 and the
payoff in full of Tempo's bank debt with NBD Bank, N.A. which amounted to
$593,107.89. The terms of the transaction were negotiated in an arms length
transaction based upon the book value of Tempo 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 T.I. Technologies Corporation, dated as of
March 1, 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 December 31,
1995, for the six month period ended December 31, 1995 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 Tempo as if the sale had occurred on
December 31, 1995. The historical statements of operations are adjusted to give
effect to the sale of Tempo as if the sale had occurred on July 1, 1994.
The sale of 100% of the common stock of Tempo was effective on February 29,
1996 and consisted of a total purchase price of $1,046,544, however, $593,108 of
this amount was required to be used to retire the outstanding debt on Tempo's
revolving line of credit agreement to which the Company was a guarantor. The net
purchase price was therefore $453,436. The book value of Tempo at the effective
date of the sale of 100% of the common stock of Tempo was $1,442,972, which
resulted in a loss on the disposition of Tempo of $989,536.
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 Tempo 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.
F - 1
<PAGE>
S.O.I. Industries, Inc. and Subsidiaries
Condensed Pro Forma Consolidated Balance Sheet
December 31, 1995
<TABLE>
<CAPTION>
Historical Adjustments Pro Forma
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents, including
restricted cash of $500,000 .................. $ 713,397 $ (63,505)(a) $ 649,892
Accounts receivable .............................. 3,649,607 (380,602)(a) 3,269,005
Inventories ...................................... 3,061,225 (1,389,379)(a) 1,671,846
Other current assets ............................. 736,179 (47,698)(a) 688,481
------------ ------------
Total current assets ......................... 8,160,408 6,279,224
------------ ------------
Property, plant and equipment, net ..................... 2,636,235 (399,738)(a) 2,236,497
Goodwill, net .......................................... 2,022,690 2,022,690
Other .................................................. 1,732,820 (53,097)(a) 1,679,723
============ ============
$ 14,552,153 $ 12,218,134
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving lines of credit ........................ $ 4,315,788 (600,000)(a)(c)
(152,327)(d) $ 3,563,461
Trade accounts payable ........................... 3,244,229 (156,028)(a) 3,088,201
Other current liabilities ........................ 1,643,743 (72,461)(a)
(121,745)(b) 1,449,537
------------ ------------
Total current liabilities .................... 9,203,760 8,101,199
------------ ------------
Long-term debt, net of current maturities .............. 1,065,681 (62,558)(a)
(172,472)(b) 830,651
Other .................................................. 639,976 639,976
Stockholders' equity:
Common stock, par value $0.0002;
20,000,000 shares authorized,
1,712,110 shares outstanding ................. 342 342
Additional paid-in capital ....................... 6,171,375 6,171,375
Accumulated deficit .............................. (2,234,764) (996,428)(a)
(294,217)(b) (3,525,409)
Due from ESOP .................................... (294,217) 294,217 (b) 0
------------ ------------
Total stockholders' equity ................... 3,642,736 2,646,308
------------ ------------
Total liabilities and
stockholders' equity ................. $ 14,552,153 $ 12,218,134
============ ============
</TABLE>
See Notes to Pro Forma Consolidated Financial Data
F - 2
<PAGE>
S.O.I. Industries, Inc. and Subsidiaries
Condensed Pro Forma Consolidated Statements of Operations
for the six months ended December 31, 1995
<TABLE>
<CAPTION>
Historical Adjustments Pro Forma
------------ ------------- -----------
<S> <C> <C> <C>
Net sales ............................................ $ 11,208,919 $ (1,887,267)(e) $ 9,321,652
------------ ----------
Costs and expenses:
Cost of goods sold ............................. 10,077,981 (1,546,393)(e) 8,531,588
Selling expenses ............................... 961,259 (310,710)(e) 650,549
General and administrative expenses ............ 1,340,376 (231,813)(e) 1,108,563
------------ -----------
Total costs and expenses ................... 12,379,616 10,290,700
------------ -----------
Operating loss ........................ (1,170,697) (969,048)
------------ -----------
Other expense:
Loss on sales of securities .................... (148,644) (148,644)
Loss on sale of investment in Digital
Communications Technology
Corporation ................................ (594,406) (594,406)
Interest expense and other ..................... (245,726) 31,046 (e)
21,388 (f) (193,292)
------------ -----------
(988,776) (936,342)
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Loss from continuing operations before
provision for income taxes ..................... (2,159,473) (1,905,390)
Provision for income taxes ........................... -- --
------------ -----------
Loss from continuing operations ................ $ (2,159,473) $ (1,905,390)
============ ===========
Weighted average shares of common
stock outstanding .............................. 1,666,300 1,666,300
============ ===========
Loss per share from continuing operations ............ $ (1.29) $ (1.14)
============ ===========
</TABLE>
See Notes to Pro Forma Consolidated Financial Data
F - 3
<PAGE>
S.O.I. Industries, Inc. and Subsidiaries
Condensed Pro Forma Consolidated Statements of Operations
for the year ended June 30, 1995
<TABLE>
<CAPTION>
Historical Adjustments Pro Forma
----------------- ------------------ ------------------
<S> <C> <C> <C>
Net sales $ 23,279,817 $ (4,361,715) (e) $ 18,918,102
----------------- ------------------
Costs and expenses:
Cost of goods sold 21,622,368 (3,498,542) (e) 18,123,826
Selling expenses 2,333,607 (585,108) (e) 1,748,499
General and administrative expenses 3,116,964 (430,949) (e)
355,089 (g) 3,041,104
----------------- ------------------
Total costs and expenses 27,072,939 22,913,429
----------------- ------------------
Operating loss (3,793,122) (3,995,327)
----------------- ------------------
Other income (expense):
Gain on sales of securities 355,348 355,348
Gain on sale of investment in Digital
Communications Technology Corporation 228,728 228,728
Interest expense and other (925) 51,884 (e)
42,776 (f) 93,735
----------------- ------------------
583,151 677,811
----------------- ------------------
Loss from continuing operations before
provision for income taxes (3,209,971) (3,317,516)
Benefit for income taxes 562,320 (51,997) (e)
-----------------
(17,110) (h) 493,213
------------------
Loss from continuing operations $ (2,647,651) $ (2,824,303)
================= ==================
Weighted average shares of common
stock outstanding 12,541,468 12,541,468
================= ==================
Loss per share from continuing operations $ (0.21) $ (0.23)
================= ==================
</TABLE>
See Notes to Pro Forma Consolidated Financial Data
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<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 Tempo as of
December 31, 1995, as if the sale of 100% of the common stock of Tempo
had occurred on December 31, 1995. At December 31, 1995, the book
value was in excess of the selling price by $996,428, and is reflected
as a loss (increase in accumulated deficit).
(b) To record the use of $294,217 of the proceeds from the sale of 100% of
the common stock of Tempo to retire the Company's Employee Stock
Ownership Trust's ("ESOT") note payable to a bank. This loan financed
the purchase of the Company's stock by the Company's ESOT. Since the
unallocated portion of the Employee Stock Ownership Plan's ("ESOP")
shares of the Company's common stock is reflected as a receivable due
from the ESOP (as a reduction of stockholders' equity), the repayment
of the related note payable is also reflected as a contribution to the
ESOP by the Company. Therefore, the current and long-term portion of
the note payable is reduced by $294,217, and the Due from ESOP account
is reduced, with a corresponding charge to ESOP Contributions Expense
(Accumulated Deficit). (c) The sale agreement required the repayment
of all amounts outstanding under Tempo's revolving line of credit
agreement which had been guaranteed by the Company.
(d) The remaining funds after repayment of the ESOP loan, see (b), above
and after repayment of Tempo's line of credit, see (c), above, totaled
$152,327. This adjustment assumes that these funds are used to reduce
the balance due on the line of credit facility at one of the Company's
remaining subsidiaries.
(e) To eliminate the historical income and expense of Tempo for the
respective periods presented, as if the sale of 100% of the common
stock of Tempo had occurred on July 1, 1994.
(f) Assumes that interest on the retired ESOP loan and interest on the
payment on the Tempo line of credit accrues at an effective rate of 9%
and 11%, respectively.
(g) Assumes that a portion of the proceeds from the sale of Tempo's common
stock was used as a contribution to the Company's ESOP plan, thereby
repaying the ESOP debt -- see (b), above. The balance due on the ESOP
loan at July 1, 1994 was $355,089, therefore a contribution of this
amount is assumed as of July 1, 1994, and a corresponding charge to
ESOP contribution expense is reflected.
(h) The tax effect of pro forma adjustments to earnings before taxes is
based on the estimated federal and state statutory tax rates.
F - 5
<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.
By: /s/ Kevin B. Halter
Kevin B. Halter, President
Dated: April 3, 1996
3
<PAGE>
EXHIBIT INDEX
Exhibit No.
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2.1 Agreement for Purchase and Sale of Stock between S.O.I. Industries, Inc.
and T.I. Technologies Corporation, dated as of March 1, 1996.
4
<PAGE>
EXHIBIT 2.1
5
<PAGE>
AGREEMENT FOR PURCHASE AND SALE OF STOCK
This Agreement for Purchase and Sale of Stock is made this 1st day of
March, 1996, by and between TI, Inc. (the "Purchaser"), a Nevada corporation to
be formed and S.O.I. Industries, Inc., a Delaware corporation, (the "Seller").
WHEREAS, the Purchaser desires to acquire, on the terms and subject to the
conditions and in the manner reflected below, the outstanding shares of capital
stock of the Company, and
WHEREAS, the Purchaser is not prepared or willing to proceed with the
contemplated transaction without the support, agreements, and representations of
the Seller and the Company contained in this Agreement, and is proceeding in
reliance upon such support, agreements, and representations:
NOW, THEREFORE the parties to this Agreement for Purchase and Sale of Stock
do hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the terms identified below in this Article I
shall have the meanings indicated, unless a different and common meaning of the
term is clearly indicated by the context, and variants and derivatives of the
following terms shall have correlative meanings.
SECTION 1.1 AFFILIATE. "Affiliate" means with respect to a specified Person:
(a) Any Person owning, outstanding equity interests or profits
interests of any other Person;
(b) Any Person, 5% or more of whose outstanding equity interests are
owned by any other Person,
(c) Any Person owning, owned by or under common ownership with any
other Person
(d) Any officer or director of any other Person:
(e) If such other Person is an officer or director, any entity for
which such Person acts in any such capacity; and
(f) Any person related to another Person by blood or marriage.
E - 1
<PAGE>
SECTION 1.2 AGREEMENT. This Agreement for Purchase and Sale of Stock (including
all of its schedules and exhibits and all other documents specifically
referred to in this Agreement that have been or are to be delivered by a
party to this Agreement to another such party in connection with the
Transaction or this Agreement, and including all duly adopted amendments,
modifications, and supplements to or of this Agreement and such schedules,
exhibits and other documents.
SECTION 1.3 AUDITED FINANCIAL STATEMENTS. The balance sheet, income statement,
statement of stockholders' equity, and statement of cash flows of the
Company or, in each instance, equivalent statements as commonly provided to
the shareholders, as at June 30, 1995.
SECTION 1.4 AUDITORS. With respect to the Company, Coopers & Lybrand, L.L.P.,
independent certified public accountants currently being retained for the
purpose of auditing financial statements. With respect to any report
hereafter issued by Auditors, the term shall mean that firm of independent
certified public accountants of national reputation that the Entity in
question reasonably selects to serve as its auditors.
SECTION 1.5 CLOSING. The completion of the Transaction, to take place as
described in Article II.
SECTION 1.6 CLOSING DATE. The date on which the Closing actually occurs, which
shall be on or before March 12, 1996, unless otherwise agreed by the
parties, but shall not in any event be prior to satisfaction or waiver of
the conditions to Closing set forth in Article VIII hereof.
SECTION 1.7 CLOSING TIME. The time at which the Closing actually occurs. All
events that are to occur at the Closing Time shall for all purposes, be
deemed to occur simultaneously, except to the extent, if at all, that a
specific order of occurrence is otherwise described.
SECTION 1.8 CODE. The Internal Revenue Code of 1986, as amended and in effect at
the time of execution of the Agreement.
SECTION 1.9 COMPANY. Tempo Lighting, Inc., a Delaware corporation.
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<PAGE>
SECTION 1.10 COMPANY BALANCE SHEET. The most recent Balance Sheet included in
the Audited Financial Statements of the Company.
SECTION 1.11 COMPANY DISCLOSURE DOCUMENT. The document delivered by the Seller
to the Purchaser containing certain disclosures regarding the Company or
otherwise used by the Company in connection with the operation of its
business or leased or subleased by the Company.
SECTION 1.13 ENTITY. A corporation, partnership, sole proprietorship, joint
venture, or other form of organization formed for the conduct of a business
whether active or passive.
SECTION 1.14 ERISA. The Employee Retirement Income Security Act of 1934, as
amended to the date as of which any reference thereto is relevant under
this Agreement, including any substitute or replacement statute adopted in
place or in lieu therefor.
SECTION 1.16 GAAP. Generally Accepted Accounting Principles, as in effect on the
date of any statement, report, or determination that purports to be, or is
required to be, prepared or made in accordance with GAAP. All references
herein to financial statements prepared in accordance with GAAP shall mean
in accordance with GAAP consistently applied throughout the periods to
which reference is made.
SECTION 1.17 INVENTORIES. The stock of raw materials, work-in-process, and
finished goods, including but not limited to finished goods purchased for
resale, held by the Company for manufacturing, assembly, processing,
finishing, sale, or resale to others from time to time in the ordinary
course of the business of the Company in the form in which such inventories
then are held or after manufacturing, assembling, finishing, processing,
incorporating with other goods or items, refining or the like.
SECTION 1.18 IRS. The Internal Revenue Service.
SECTION 1.19 LIABILITIES. At any point in time ( the Determination Time) the
obligations of a person or Entity, whether known or unknown, contingent or
absolute, recorded on its books or not, arising or resulting in any way
from facts, events, agreements, obligations, or occurrences that existed or
transpired at a prior point in time, or resulted from the passage of time
to the Determination Time, but not including obligations accruing or
payable after the Determination Time to the extent (but only to the extent)
that such obligations (1) arise under previously existing agreements for
services, benefits or other considerations, and (2) accrue or become
payable with respect to services, benefits or other considerations received
by the person or Entity after the Determination Time.
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<PAGE>
SECTION 1.20 PAYABLES. Liabilities of a party arising from the borrowings of
money or the incurring of obligations for merchandise or goods purchased.
SECTION 1.21 PENSION PLAN. A "pension plan" or "employee pension benefit plan,"
as defined in Section 3(2) of ERISA or successor provisions to such
revision adopted by amendments to ERISA and including other provisions of
ERISA or of other law, and regulations adopted under ERISA or such other
law, modifying, amending, interpreting, or otherwise affecting the
application of such provision, either in general or as applied to the
nature or circumstances of a particular Entity that is a party to, or is
affected by or is involved in the Transaction with respect to which Entity
the use of the term in this Agreement, or in the particular location of
this Agreement, is relevant.
SECTION 1.22 PERSON. Any natural person, incorporated or unincorporated entity.
SECTION 1.23 PROPRIETARY RIGHTS. Trade secrets, copyrights, patents, trademarks,
service marks, customer lists, and all similar types of intangible property
developed, created, or owned by the Company, or used by the Company in
connection with its business, whether or not the same are entitled to legal
protection.
SECTION 1.24 PURCHASER. TI, Inc., a Nevada corporation which under the terms of
this Agreement is acquiring the shares of the Company.
SECTION 1.25 RECEIVABLES. Account Receivable, notes receivable, and other
obligations appearing as assets on the books of the Company, and
customarily reflected as assets in balance sheets of entities prepared in
accordance with GAAP, indicating, indicating moneys owed to the entity.
SECTION 1.26 SEC. The Securities and Exchange Commission.
SECTION 1.27 SECURITIES ACT. The Securities Act of 1933, as amended, to the date
as of which reference thereto is relevant under this Agreement, including
any substitute or replacement statute adopted in place or lieu thereof.
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<PAGE>
SECTION 1.28 SELLER. S.O.I. Industries, Inc., a Delaware Corporation.
SECTION 1.29 SUBSIDIARY. With respect to any Entity, another Entity of which
fifty percent (50%) or more of the effective voting power, or the effective
power to elect a majority of the board of directors or similar governing
body, or fifty percent (50%) or more of the true equity interest is owned
by such first Entity, directly or indirectly.
SECTION 1.30 SUBSIDIARIES. Each of Omni Door, Inc., and AQM Corporation
SECTION 1.31 TRANSACTION. The acquisition of shares of Common Stock of the
Company by the Purchaser from the Seller, as provided in Article II of this
Agreement.
SECTION 1.32 UNAUDITED FINANCIAL STATEMENTS. The balance sheet and income
statement, as commonly prepared, as at January 31, 1996, for the seven (7)
months then ended of the Company.
SECTION 1.33 WELFARE PLAN. A "welfare plan" or an "employee welfare benefit
plan" as defined in Section 3(1) of ERISA or successor provisions to such
provision adopted by amendments to ERISA and including other provisions of
ERISA or of other law, and regulations adopted under ERISA or such other
law, modifying, amending, interpreting, or otherwise affecting the
application of such provision, either in general or as applied to the
nature or circumstances of a particular Entity that is a party to, or is
affected by or is involved in the Transaction and with respect to which
Entity the use of the term in this Agreement, o in particular location in
this Agreement, is relevant.
ARTICLE II
THE TRANSACTION
SECTION 2.1 THE TRANSACTION. On the Closing Date, and at the Closing Time,
subject in all instances to each of the terms, conditions, provisions, and
limitations contained in this Agreement, the Seller shall sell, transfer,
convey, and assign to the Purchaser, free and clear of any and all liens
and charges, and the Purchaser shall acquire from the Seller, its shares of
Common Stock, $.0001 par value, of the Company, comprising the entire
ownership of equity securities of the Company, in exchange for the
Consideration, as described herein.
SECTION 2.2 CONSIDERATION. Pursuant to the Transaction, the Seller shall be
entitled to receive on and subject to each of the terms, conditions, and
provisions of this Agreement $500,000.00 and assumption of or payoff in
full, the Company's current bank debt, in the amount of no more than
$600,000.00 as of Closing Date pursuant to the Amended Restated Credit
Agreement (the "Credit Agreement") between NBD Bank, N.A., and the Company
and the related Replacement Revolving Business Credit Note (the "Note"),
and causing NBD Bank, N.A. to release the Seller and all of its Affiliates
from any liability under said Credit Agreement, Note and related documents
with the bank, provided that audited financial statements of the Company
for the period ending February 29, 1996 show a tangible net worth for the
Company of a minimum of $1.4 Million ("Minimum Net Worth"). For each $1.00
of deficiency in Minimum Net Worth, the cash consideration paid to Seller
shall likewise be reduced $1.00.
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<PAGE>
SECTION 2.3 CLOSING. The Closing hereunder shall take place at the offices of
the Purchaser, at 4801 South University Drive, Suite 1C, Davie, Florida
33328, or at such other place as the Purchaser and the Company may agree
upon, on the Closing Date.
SECTION 2.4 CLOSING TIME. the Closing Time for the Transaction shall be 10:00
a.m., Eastern Daylight Savings Time.
ARTICLE III
REPRESENTATIONS & WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Seller:
SECTION 3.1 ORGANIZATION AND QUALIFICATION. The Purchaser is a Corporation duly
organized, validly existing, and in good standing under the laws of its
respective jurisdiction of incorporation, and has the requisite corporate
power and authority to carry on its business as it is now being conducted.
The Purchaser is duly qualified as a foreign corporation to do business,
and is in good standing, in each jurisdiction where the character of the
properties owned or leased by it, or the nature of its activities, is such
that qualifications as a foreign corporation in that jurisdiction is
required by law.
SECTION 3.2 AUTHORITY RELATIVE TO THIS AGREEMENT. The Purchaser has the
requisite corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized and approved by the governing body of Purchaser and no
other corporate proceedings on the part of the Purchaser are necessary to
approve and adopt this Agreement or to approve the consummation of the
transactions contemplated hereby have been duly authorized and approved by
the governing body of Purchaser and no other corporate proceedings on the
part of the Purchaser are necessary to approve and adopt this Agreement or
to approve the consummation of the Transactions contemplated hereby,
including delivery of the Consideration. This Agreement has been duly and
validly executed and delivered by the Purchaser, and constitutes a valid
and binding Agreement of the Purchaser, enforceable in accordance with its
terms.
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<PAGE>
SECTION 3.3 LEGEND
The Purchaser understands that the Stock will not have been registered
pursuant to the Securities Act or any applicable state securities
laws, that the Stock will be characterized as "restricted securities"
under federal securities laws, and that under such laws and applicable
regulations the Stock cannot be sold or otherwise disposed of without
registration under the Securities Act or an exemption therefrom. In
this connection, the Purchaser represents that it is familiar with
Rule 144 promulgated under the Securities act, as currently in effect,
and understands the resale limitations imposed thereby and by the
Securities Act. Stop transfer instructions may be issued to the
transfer agent for securities of the Company (or a notation may be
made in the appropriate records of the Company) in connection with the
Stock.
ARTICLE IV
REPRESENTATION & WARRANTIES OF THE SELLER
FOR ITSELF AND/OR ON BEHALF OF THE COMPANY
The Seller, on behalf of itself and the Company, represents and warrants to the
Purchaser as follows:
SECTION 4.1 ORGANIZATION AND QUALIFICATION. Each of the Seller ad the Company
are corporations duly organized, validly existing, and in good standing
under the laws of its respective jurisdiction of incorporation and each has
the requisite corporate power and authority to carry on its business as it
is now being conducted. Each of the Seller and the Company is duly
qualified as a foreign corporation to do business, and is in good standing,
in each jurisdiction where the character of the properties owned or leased
by either of them or the nature of its activities, is such that
qualification as a foreign corporation in that jurisdiction is required by
law.
SECTION 4.2 CAPITALIZATION. The authorized capital stock of the Company consists
of 5,000,000 shares of Common Stock, $.0001 par value. there is no other
capital stock authorized for the issuance.. As of the date of the Company
Balance Sheet, 10,000 shares of Common Stock were validly issued and
outstanding, fully paid, and nonassessable. No shares of Common Stock were
held in the Company treasury, and no shares were reserved for issuance, nor
were there outstanding any options, warrants, convertible instruments, or
other rights, agreements, or commitments to acquire Common Stock of the
Company. Since the date of the Company Balance Sheet, no shares of the
Company's capital stock, or options, warrants, or other rights, agreements,
or commitments (contingent or otherwise) obligating the Company to issue
shares of capital stock have been executed or issued.
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<PAGE>
SECTION 4.3 AUTHORITY RELATIVE TO THE AGREEMENT. This Agreement has been duly
and validly executed and delivered by the board of directors of the Seller,
constitutes a valid and binding Agreement of the Seller and is enforceable
in accordance with its terms. The Seller has all requisite corporate power
and authority to enter into this Agreement and to carry out the Transaction
contemplated hereby, and its doing so has been duly and sufficiently
authorized, subject only to governmental regulatory approvals as and to the
extent specifically set forth elsewhere in this Agreement.
SECTION 4.4 ABSENCE OF BREACH; NO CONSENTS. The execution, delivery and
performance of this Agreement, and the performance by the Seller of its
obligations hereunder, do not, (1) conflict with or result in a breach of
any of the provisions of the Articles of Incorporation or Bylaws of the
Seller or the Company or any of its Subsidiaries; (2) contravene any law,
ordinance, rule, or regulation of any State or Commonwealth or political
subdivision of either or of the United States, or contravene any order,
writ, judgment, injunction, decree, determination, or award of any court or
other authority having jurisdiction, or cause the suspension or revocation
of any authorization, consent, approval, or license, presently in effect,
which affects or binds, the Company or the Seller or any of its
Subsidiaries, or on the validity of the consummation the Transaction; (3)
conflict with or result in a material breach of or default under any
material indenture or loan or credit agreement or any other material
agreement or instrument to which the Company, Seller or any of its
Subsidiaries is a party or by which it or they or any of its or their
material properties may be affected or bound; (4) other than consents
disclosed on the Company Disclosure Document, require the authorization,
consent, approval, or license of any third party; or (5) constitute grounds
for the loss or suspension of an permits, licenses, or other authorizations
used in the business of the Company.
SECTION 4.5 BROKERS. No broker, finder, or investment banker is entitled to ant
brokerage, finder's, or other fee or commission in connection with this
Agreement or the Transaction or any related transaction based upon any
agreements, written or oral, made by or on behalf of the Company or Seller.
Neither Company nor the Seller has any obligation to pay finder's or
broker's fees or commissions in connection with the exercise of options to
renew or extend real estate leases to which the Company is a party.
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SECTION 4.6 FINANCIAL STATEMENTS. The Seller has heretofore delivered to the
Purchaser, the following:
(1) The Audited Financial Statements of the Company;
(2) The Unaudited Financial Statements of the Company; and
(3) All documents of the Seller relating to the Company filed with
the SEC within the two (2) years preceding the date of execution
of this Agreement.
All of the historical financial statements contained in such documents were
prepared from the books and records with GAAP, and fairly and accurately reflect
the financial positions and condition of the Company as at the dates and for the
periods indicated. Without limiting the foregoing, at the date of the Company
Balance Sheet, the Company owned each of the assets included in preparation of
the Company Balance Sheet, and the valuation of such assets in the Company
Balance Sheet is not more than their fair salable value (on any item by basis)
at that date; and the Company had no Liabilities in amounts in excess of the
amounts included for them in the Company Balance Sheet. The Unaudited Financial
Statements included in the documents described above in this Section were
prepared in a manner consistent with the basis of presentation used in the
Audited Financial Statements, and fairly present the financial position and
condition of the Company as at and for the periods indicated, subject to normal
year-end adjustments, none of which will be material.
SECTION 4.7 ABSENCE OF MATERIAL DIFFERENCES FROM DISCLOSURE DOCUMENT. Except as
specifically disclosed in the Company Disclosure Document:
(1) No Undisclosed Liabilities. The Company has no Liabilities which
are not adequately reflected or reserved against on the face of
the Company Balance Sheet and (a) there are no unpaid leasehold
improvements at any of the Company's facilities or locations for
which the Company is or will be responsible, and (b) there are no
deferred rents due to lessors at or with respect to any such
facilities or locations, and (c) the Company Disclosure Document
sets forth, as part thereof, each Liability of the Company in and
amount in excess of Five Thousand Dollars ($5,000.00) and the
aggregate amount of Liabilities to each person to whom such
aggregate exceeds One Thousand Dollars ($1,000.00).
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(2) No Material Adverse Change, Et Cetera. Since the date of the
Company Balance Sheet, other than as contemplated or caused by
this Agreement, there has not been (a) any material adverse
change in the business, condition (financial or otherwise),
operations, or prospects of the Company;(b) any damage,
destruction, or loss, whether covered by insurance or not, having
a material adverse effect on the business, condition (financial
or otherwise), operations, or prospects of the Company; (c) any
entry into or termination of any material commitment, contract,
agreement, or transaction (including, without limitation, any
material borrowing or capital expenditure or sale or other
disposition of ant material asset or assets) by the Company,
other than this Agreement and agreements executed in the ordinary
course of business; (d) any redemption, repurchase, or other
acquisition for value of its capital stock or any issuance of
capital stock of the Company of securities convertible into or
rights to acquire any such capital stock or any dividend or
distribution declared, set aside or paid on capital stock of the
Company;(3) any transfer by the Company of, or right granted by
the Company under any material lease, license, agreement, patent,
trademark, trade name, or copyright; (e) any sale or other
disposition of any asset of the Company, or any mortgage, pledge,
or imposition of any lien or other incumbrance on any asset of
the Company, or any agreement relating to any of the foregoing;
or (g) any default or breach by the Company or any Subsidiary of
the Company in any material respect under any contract, license,
or permit. Since the date of the Company Balance Sheet, no
changes have been made in (a) executive compensation levels; (b)
the manner in which other employees of the Company are
compensated; (c) supplemental benefits provided in any such
executives or other employees; (d) management fees to the Seller
or any Affiliate; (e) inter-company accounts; or (f) inventory
levels in relation to sales levels, except, in the ordinary
course of business and, in any event, without material adverse
effect on the business, condition (financial or otherwise),
operations, or prospects of the Company.
(3) Taxes. The Company has properly filed or caused to be filed all
federal, state, local, and foreign income and other tax returns,
reports, and declarations that are required by applicable law to
be filed by it and have paid, or made full and adequate provision
for the payment of, all federal, state, local, and foreign income
and other taxes properly due for the periods covered by such
returns, reports and declarations, except such taxes, if any, as
are adequately reserved against on the Company Balance Sheet.
(4) Litigation. (a) No material investigation or review by any
governmental entity with respect to the Seller or the Company is
pending or, to the best of the knowledge of Seller or the
Company, threatened (other than inspections and reviews
customarily made of businesses such as that of the Company), nor
has any governmental entity indicated to the Seller or the
Company and intention to conduct the same; and (b) there is no
action, suit, or proceeding pending or, threatened against or
affecting Seller or the Company at law or in equity, or before
any federal, state or municipal, or other governmental
department, commission, board, bureau, agency, or
instrumentality. The Company Disclosure Document includes a brief
description of each litigation matter included therein, except
claims for amounts of less than $1,000.
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(5) Employees, Et Cetera. There are, except as disclosed on the
Company Disclosure Document, no collective bargaining, bonus,
profit sharing, compensation, or other plans, agreements, trusts,
funds, or arrangements maintained by the Seller or the Company
for the benefit of the directors, officers, or employees of the
Company, and there are no employment, consulting, severance, or
indemnification arrangements, agreements or understandings
between the Seller or the Company, on the one hand, and any
current or former directors, officers or other employees (or
Affiliates thereof) of the Seller or the Company. The Company
Disclosure Document identifies each person or entity whose income
from the Company in the fiscal year begun immediately thereafter
is at a rate exceeding, $25,000 per annum, and describes any
contractual arrangement for the employment or compensation of
each such person or entity. The Company is not, and following the
Closing will not be, bound by any express or implied contract or
agreement to employ, directly or as a consultant or otherwise, an
person for or entity any specific period of time or until any
specific age except as specified in agreements in writing
identified in the Company Disclosure Document or executed
pursuant to the provisions hereof, if any.
(6) Compliance With Laws. The Company is in substantial compliance
with all, and has received no notice of any violation of any,
laws or regulations applicable to its operations, including,
without limitation, the use of premises occupied by it, or with
respect to which compliance is a condition of engaging in any
aspect of the business of the Company, and it has all permits,
licenses, zoning rights, and other governmental authorizations
necessary to conduct its business as presently conducted.
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(7) Ownership of Assets. The Company has, except as disclosed in the
Company Disclosure Document, good, marketable, and insurable
title, or valid, effective and continuing leasehold rights in the
case of leased property, to all real property (as to which, in
the case of owned property, such title is fee simple) and all
personal property owned or leased by it I the conduct of its
business in such a manners to create the appearance or reasonable
expectation that the same is owned or leased by it, free and
clear of all liens, claims, encumbrances, and charges, except
liens for taxes not yet due and minor imperfections of title and
encumbrances, if any, which, singly and in the aggregate, are not
substantial in amount and do not materially detract from the
value of the property subject thereto or materially impair the
use thereof. Neither the Seller nor the Company know of any
potential action by any party, governmental or other, and no
proceedings with respect thereto have been instituted of which
the Seller or the company has notice, that would materially
affect the Company's ability to use and to utilize each of such
assets in its business. Neither the Seller nor the Company has
receives notices from any mortgagee regarding any properties
leased by the Company. The Company Disclosure Document contains a
detailed listing of all assets that consist of (a) accounts
receivable as provided in clause (11) below; (b) miscellaneous
current assets in excess of One Thousand Dollars ($1,000.00); (c)
prepaid expenses in excess of One Thousand Dollars (41,000.00);
(d) real property; and (e) gross aggregate additions for each of
the past two (2) years by location of (I) buildings and
improvements, (ii) furniture and fixtures, (iii) leasehold
improvements, or (iv) automobiles and trucks.
(8) Proprietary Rights. The company possesses full ownership of, or
adequate and enforceable long-term licenses or other rights to
use (without payment), all Proprietary Rights owned by or
registered in the name of the Company or used in the business of
the Company; neither the Seller nor the Company has received any
notice of conflict which asserts the rights of others with
respect thereto; and each of the Seller and the Company has in
all material respects performed all of the obligations required
to be performed by it, and is not in default in any material
respect, under any agreement relating to any Proprietary Right.
(9) Subsidiaries, Et Cetera. The Company has no subsidiaries, and the
Company is not a partner of or joint venturer with any person or
Entity.
(10) Employee Welfare Benefit Plans. Except for the Employee's Stock
Option of S.O.I. Industries, Inc, ("ESOP") the Company does not
maintain or contribute to any Pension Plan or any Welfare Plan,
nor is the Company presently, nor has it been within the last two
(2) years, a participating employer in any Multiemployer Plan.
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The Company is current under its financial obligations under the
ESOP and the Seller and its Subsidiaries shall issue to the employees
of the Company such notices, shares of ESOP stock or other matters as
is necessary to comply with ERISA upon consummation of this Agreement
and termination of the Company's employees' participation in the ESOP.
(11) FACILITIES. The Company Facilities are (as to physical plant and
structure) structurally sound and none of the Company Facilities, nor
any of the vehicles or other equipment used by the Company in
connection with is business, has any material defects and all of them
are in all material respects in as good operating condition and repair
as they were on January 25, 1994, and are adequate for the uses to
which they are being put: none of such Company Facilities, vehicles,
or other equipment is in need of maintenance or repairs except for
ordinary, routine maintenance and repairs which are not material in
nature or cost. The Company is not in breach, violation, or default of
any lease with respect to or as a result of which the other party
(whether lessor, lessee, sublessor or sublessee) thereto has the right
to terminate the same, and the Company has not received notice of any
claim or assertion that it is or may be in any such breach, violation,
or default.
(12) ACCOUNTS RECEIVABLE. All accounts receivable of the Company, represent
transactions in the ordinary course of business, and are current and
collectible net of any reserves shown on such Balance Sheet (which
reserves are calculated consistent with past practice). The Company
Disclosure Document specifically identifies (a) the aging of
Receivables: and (b) each Receivable in excess of One Thousand Dollars
($1,000.00).
(13) INVENTORIES. The same percentage of all Inventories of the Company,
are of a quality and quantity usable and salable in the ordinary
course of business as were on January 25, 1994, except for obsolete
items and items of below standard quality, all of which, in the
aggregate, are immaterial in amount. Items included in such
Inventories are carried on the books of the Company, and are valued on
the Company Balance Sheet, at the lower of cost or market and, in any
event, at not greater than their net realizable value, on an
item-by-item basis, after appropriate deduction for costs of
completion, marketing costs, transportation expense, and allocation of
overhead.
(14) CONTRACTS. Except as identified in the Company Disclosure Document,
the Company has no contracts, agreements, or understandings, whether
express or implied, written or verbal. The Company Disclosure Document
contains a description of all leases of properties by the Company,
including all amendments, supplements, extensions, and modifications
thereof, identifying, inter alia, the date each such document was
executed and its effective period. The Company is not a party to any
executory contract to sell or transfer any part of any leasehold or
real property interest of the Company. True and accurate copies of all
leases, and of all amendments, supplements, extensions, and
modifications thereof, have heretofore been delivered to the Purchaser
by the Seller.
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(15) ACCOUNTS PAYABLE. The accounts payable reflected on the Company
Balance Sheet do, and those reflected in the most recent balance sheet
included in the Unaudited Financial Statements do, and those reflected
on the books of the Company at the time of the Closing will, reflect
all amounts owed by the Company in respect of trade accounts due and
other Payables, and the actual Liability of the Company in respect of
such obligations was not, and will not be, on any of such dates, in
excess of the amounts so reflected on the balance sheets or the books
of the Company, as the case may be.
(16) LABOR MATTERS. Except as set forth in the Company Disclosure Document,
there are no activities or controversies, including, without
limitation, any labor organizing activities, election petitions or
proceedings, unfair labor practice complaints, labor strikes,
disputes, slowdowns, or work stoppages, pending or, to the best of the
knowledge of the Company, threatened, between the Company and any of
its employees.
(17) INSURANCE. The Company has insurance policies in full force and effect
which provide for coverages which are usual and customary in the
business of the Company as to amount and scope, and are adequate to
protect the Company against any reasonably foreseeable risk of loss,
including business interruption. The Company Disclosure Document
identifies each of the Company's insurance policies, indicating the
carrier, amount of coverage, annual premium, risks covered, placing
broker or agent, and other relevant information as to each. The
Company has not, within the past two (2) years, received any notice of
cancellation of any insurance agreement.
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(18) TITLE TO AND UTILIZATION OF REAL PROPERTIES. Except as disclosed in
the Company Disclosure Document, the Company owns fee, simple, insured
title to all real properly identified herein or in any document
referred to herein as owned by the Company, and has the unbridled
right to use the same, and is not aware of any claim, notice, or
threat to the effect that its right to own and use such property is
subject in any way to any challenge, claim, assertion of rights,
proceedings toward condemnation, or confiscation, in whole or in part,
or is otherwise subject to challenge. Each parcel of real property
owned or leased by the Company is free of any and all hazardous
wastes, toxic substances, or other types of contamination or matters
of environmental concern, and the Company is not subject to any
Liability resulting from or related to any such wastes, substances,
contaminants, or matters of environmental concern in connection with
any such property. The Company has, in conjunction with acquiring
property, (a) caused an audit and examination to be made as to the
existence of any hazardous wastes, toxic substances, or other types of
contamination or matters of environmental concern affect each such
property, which examination indicated that such property was free of
any such wastes, substances, contaminants, or other matters of
environmental concern, and the Company has delivered a copy of the
report of such audit and examination to the Purchaser: and (b)
obtained an appropriate policy of title insurance insuring the
interest of the Company in such property, which insurance policy was
not subject to any exceptions not reasonably acceptable in the
ordinary course of business, and a copy of which has been delivered to
the Purchaser.
SECTION 4.8 FULL DISCLOSURE. The documents, certificates, and other writings
furnished or to be furnished by or on behalf of the Company to the
Purchaser by the Seller or the Company pursuant to the provisions of this
Agreement, taken together in the aggregate, do not and will not contain any
untrue statement of a material fact, or omit to state any material fact, or
omit to state any material fact necessary to make the statements made, in
the light of the circumstances under which they are made, not misleading.
SECTION 4.9 ACTIONS SINCE BALANCE SHEET DATE. Except as set forth on the Company
Disclosure Document, since the date of the Company Balance Sheet, the
Company has taken no actions that would be prohibited under the provisions
of this Agreement (without the prior consent of the Purchaser) after the
date of this Agreement.
ARTICLE V
COVENANTS OF PURCHASER
SECTION 5.1 AFFIRMATIVE COVENANTS. From the date hereof through the Closing
Date, the Purchaser will take every action reasonably required of it in
order to satisfy the conditions to closing set forth in this Agreement and
otherwise to ensure the prompt and expedient consummation of the
Transaction, and will exert all reasonable efforts to cause the Transaction
promptly to be consummated, provided in all instances that the
representations and warranties of the Company and the Seller in this
Agreement are and remain true and accurate and that the covenants and
agreements of the Company and the Seller in this Agreement are honored and
that the conditions to the obligations o the Purchaser set forth in this
Agreement are satisfied or appear capable of being satisfied.
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SECTION 5.2 ACCESS TO INFORMATION. The Purchaser shall afford to the Seller and
to Seller's accountants, access to its financial statements for the period
commencing on the Closing Date and ending on June 30, 1996 for the purpose
of Seller preparing its audited financial statements for the same period
and to conduct its post-closing audit.
SECTION 5.3 EXPENSES. Whether or not the Transaction is consummated, all costs
and expenses incurred by the Purchaser in connection with this Agreement
and the transactions contemplated hereby shall be paid by the Purchaser
except as otherwise provided (directly or indirectly) herein.
ARTICLE VI
COVENANTS OF THE SELLER, THE COMPANY,
THE SUBSIDIARIES, AND CONTROLLING PERSON
SECTION 6.1 AFFIRMATIVE COVENANTS. From the date hereof through the Closing
Date, the Seller and the Company will take every action reasonably required
of each of it to satisfy the conditions to closing set forth in this
Agreement and otherwise to ensure the prompt and expedient consummation of
the Transaction contemplated by this Agreement, and will exert all
reasonable efforts to cause the Transaction to be consummated, provided in
all instances that the representations and warranties of the Purchaser in
this Agreement are and remain true and accurate, that the covenants and
agreements of the Purchaser in this Agreement are honored, and that the
conditions to the obligations of the Seller and the Company set forth in
this Agreement are satisfied or appear capable of being satisfied.
Neither the Seller nor its Subsidiaries will engage in a business
competitive with that of the Company, directly or indirectly, alone or in
collaboration with others, except as a shareholder of less than one percent
(1%) of the common stock of a publicly held company engaged in one or more
of such businesses for a period of two (2) years after the date of this
Agreement and agree to injunctive and other equitable relief in the event
this covenant is breach.
SECTION 6.2. ACCESS AND INFORMATION. The Seller and the Company shall afford to
the Purchaer and to the Purchaser's accountants, counsel, and other
representatives, reasonable access during normal business hours throughout
the period prior to the Closing, to each of its properties, books,
contract, commitments, records (including, but not limited to tax returns),
and personnel and, during such period, the Seller and the Company shall
promptly furnish to the Purchaser (1) all written communications to its
directors or to its shareholders generally, (2) internal monthly financial
statements when and as available, and (3) all other information concerning
its or any of its business, properties, and personnel as the Purchaser may
request, but no investigation pursuant to this Section 6.2 shall affect any
representations or warranties of the Seller or the Company, or the
conditions to the obligations of the Purchaser to consummate the
Transaction contained in this Agreement. Purchaser and its representatives
shall assert their rights hereunder in such manner as to minimize
interference with the business of the Company.
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SECTION 6.3 CONDUCT OF BUSINESS PENDING THE TRANSACTION. the Seller and the
Company covenant and agree with the Purchaser that, prior to the
consummation of the Transaction or the termination of this Agreement
pursuant to its terms, unless the Purchaser shall otherwise consent in
writing, which consent shall not be unreasonably withheld or delayed, and
except as otherwise contemplated by this Agreement or disclosed in the
Company Disclosure Document, the each of the Seller and the Company will
comply with each of the following in regard to the Company:
(1) The Company, its business shall be conducted only in the ordinary and
usual course, and will keep available the services of its officers and
employees and maintain good relationships with suppliers, lenders,
creditors, distributors, employees, customers, and others having
business or financial relationships with them, and it shall
immediately notify the Purchaser of any event or occurrence or
emergency material to;
(2) It shall not (a) amend its Article of Incorporation or Bylaws or (b)
split, combine, or reclassify any of its outstanding securities, or
declare, set aside, or pay any dividend or other distribution on, or
make or agree or commit to make any exchange for or redemption of any
such securities payable in cash, stock or property;
(3) It shall not (a) issue or agree to issue any additional shares of, or
rights of any kind to acquire any shares of, its capital stock of any
class, or (b) enter into any contract, agreement, commitment, or
arrangement with respect to any of the foregoing;
(4) It shall not create, incur, or assume any long-term or short-term
indebtedness for money borrowed or make any capital expenditures or
commitment for capital expenditures;
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(5) It shall not (a) adopt, enter into, or amend any bonus, profit
sharing, compensation, stock option, warrant, pension, retirement,
deferred compensation, employment severance, termination or other
employee benefit plan, agreement, trust fund, or arrangement for the
benefit or welfare of any officer, director, or employee; or (b) agree
to any material (in relation to historical compensation) increase in
the compensation payable or to become payable to, or any increase in
the contractual term of employment of, any officer, director or
employee;
(6) It shall not sell, lease, mortgage, encumber, or otherwise dispose of
or grant any interest in any of its assets or properties except for
liens for taxes not yet due or liens or encumbrances that are not
material in amount or effect and do not impair the use of the
property, or as specifically provided for or permitted in this
Agreement;
(7) It shall not enter into, or terminate, any material contract,
agreement, commitment, or understanding;
(8) It shall not enter into any agreement, commitment, or understanding,
whether in writing or otherwise, with respect to any of the foregoing;
(9) Will not hold any meetings of its board of directors, or any committee
thereof, or of its shareholders, without inviting a representative
selected by the Purchaser to attend the same;
(10) It will continue properly and promptly to file when due all federal,
state, local, foreign, and other tax returns, reports, and
declarations required to be filed by it, and will pay, or make full
and adequate provision for the payment of, all taxes and governmental
charges due from or payable by it;
(11) It will comply with all laws and regulations applicable to it and its
operations; and
(12) It will maintain in full force and effect insurance coverage of a type
and amount customary in its business, but not less than that presently
in effect.
SECTION 6.4 COOPERATION. The Seller and the Company will cooperate with the
Purchaser and its counsel, accountants, and agents in every way in carrying
out the transactions contemplated by this Agreement, and in delivering all
documents and instruments deemed reasonably necessary or useful by the
Purchaser.
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SECTION 6.5 EXPENSES. Whether or not the Transaction is consummated, all costs
and expenses incurred by the Seller or the Company in connection with this
Agreement and the Transactions, shall be paid by the Seller or the Company
except as otherwise provided (directly or indirectly) herein.
SECTION 6.6 PUBLICITY. Prior to the Closing, any written news releases by the
Seller or the Company pertaining to this Agreement or the Transaction shall
be submitted to the Purchaser for review and approval prior to release by
the Seller, and shall be released only in a form approved by the Purchaser,
provided, however, that (1) such approval shall not be unreasonably
withheld, and (2) such review and approval shall not be required of
releases by the Company if prior review and approval would prevent the
timely and accurate dissemination of such press release as required to
comply, in the judgment of counsel, with any applicable law, rule, or
policy.
SECTION 6.7 UPDATING OF EXHIBITS AND DISCLOSURE DOCUMENTS. The Seller and the
Company shall notify the Purchaser of any changes, additions, or events
which may cause any change in or addition to the Company Disclosure
Document or any Schedules or Exhibits delivered by it under this Agreement
promptly after the occurrence of the same and again at the Closing by
delivery of appropriate updates to the Company Disclosure Document and to
all Schedules and Exhibits. No such notification made pursuant to this
Section shall be deemed to cure any breach of any representation or
warranty make in this Agreement unless the Purchaser specifically agrees
thereto in writing, nor shall any such notification by considered to
constitute or give rise to a waiver by the Purchaser of any condition set
forth in this Agreement.
SECTION 6.8 PAYMENT OF UNASSUMED LIABILITIES. The Seller agrees promptly to pay
or otherwise to discharge, without cost or expense to the Purchaser, each
and every Liability of the Company that is not specifically assumed or
disclosed in the Company Disclosure Document by the Purchaser pursuant to
this Agreement.
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ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.1 CONDITIONS TO OBLIGATION OF PURCHASER. The obligation of the
Purchaser to effect the Transaction shall be subject to the fulfillment at
or prior to the Closing of the following conditions to the Purchaser's
discretion, unless Purchaser shall waive such fulfillment:
(1) This Agreement and the transactions contemplated hereby shall have
received all approvals, consents, authorizations and waivers from
governmental and other regulatory agencies and other third parties
(including lenders, holders of debt securities and lessors) required
to consummate the Transaction;
(2) There shall not be in effect a preliminary or permanent injunction or
other order by any federal or state court which prohibits the
consummation of the Transaction;
(3) The Company and the Seller shall have performed in all material
respects each of their agreements and obligations contained in this
Agreement and required to be performed on or prior to the Closing and
shall have complied with all material requirements, rules, and
regulations of all regulatory authorities having jurisdiction relating
to the Transaction;
(4) No material adverse change shall, in the reasonable judgment of the
Purchaser, have taken place in the business, condition (financial or
otherwise), operations, or prospects of the Company since the date of
the Company Balance Sheet;
(5) The representations and warranties of the Seller and the Company set
forth in this Agreement shall be true in all material respects as of
the date of this Agreement and, do not materially and adversely affect
the business, condition (financial or otherwise), operations, or
prospects of the Company, as of the Closing Time as if made as of such
time;
(6) The Purchaser shall have received from the Company an officer's
certificate, executed by the Chief Executive Officer and the Chief
Financial Officer of the Company (in their capacities as such) dated
the Closing Date, as to the satisfaction of the conditions of
paragraphs (3), (4) and (5) above;
(7) The Purchaser shall have received, on and as of the Closing Date, an
opinion of Counsel to the Company, substantially as to the matters set
forth in Sections 4.1, 4.2, 4.3, 4.4 (to the best of the knowledge of
such counsel as to parts (2), (3), (4), and (5)), (to the best of the
knowledge of such counsel) of this Agreement, all subject to customary
limitations reasonably acceptable to Counsel to the Purchaser, a
customary comfort letter from the Company's Auditors; and such other
closing documents and instruments as Purchaser shall reasonably
request, in each case reasonably satisfactory in form and substance to
Purchaser and its counsel;
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(8) Purchaser shall have received a valuation of the Company to determine
its fair market value as of December 31, 1995 prepared by the
independent firm of Hill Valuation Group, LLC;
(9) Purchaser shall have received from each lessor or lessee other than
Donald E. Courtney and his Affiliates with whom the Company has a
material (as reasonably determined by the Purchaser) lease of real
property, certificates satisfactory in form and substance to the
Purchaser and its counsel as to the continuing validity of such
leases, and the absence of any basis for the termination thereof; and
SECTION 7.2 CONDITIONS TO OBLIGATION OF THE SELLER. The obligation of the Seller
to effect the Transaction shall be subject to the fulfillment at or prior
to the Closing of the following conditions to the Seller's discretion.
(1) The Purchaser shall have performed in all material respects its
agreements and obligations contained in this Agreement required to be
performed on or prior to the Closing; and
(2) The representations and warranties of the Purchaser set forth in this
Agreement shall be true in all material respects as of the date of
this Agreement and, except in such respects as do not materially and
adversely affect the business of the Purchaser, taken as a whole, as
of the Closing Date as if made as of such time.
ARTICLE VIII
TERMINATION, AMENDMENT, WAIVER
SECTION 8.1 TERMINATION. This Agreement and the Transaction may be terminated at
any time prior to the Closing, by mutual consent of the Purchaser and
Seller prior to the Closing;
SECTION 8.2 AMENDMENT. This Agreement may be amended in a mutual writing by the
Seller and the Purchaser by action taken at any time.
SECTION 8.3 WAIVER. At any time prior to the Closing Date, the Purchaser and
Seller, may (1) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (2) waive any
inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto, (2) waive any inaccuracies in the
representations and warranties contained herein or in any document
delivered pursuant hereto or (3) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of any
party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party.
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ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 ARBITRATION. In the event that there shall be a dispute arising out
of or relating to this Agreement, the Transaction, any document referred to
herein or centrally related to the subject matter hereof, or the subject
matter of any of the same, the parties agree that such dispute shall be
submitted to binding arbitration in Miami, Florida, under the auspices of,
and pursuant to the rules of, the American Arbitration Association as then
in effect, or such other procedures as the parties may agree to at the
time, before a tribunal of three arbitrators, one of which shall be
selected by each of the parties to the dispute and the third of which shall
be selected by the two arbitrators so selected. Any award issued as a
result of such arbitration shall be final and binding between the parties,
and shall be enforceable by any court having jurisdiction over the party
against whom enforcement is sought.
SECTION 9.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) to the parties at
the following addresses (or at such other address for a party as shall be
specified by the notice given at least five (5) days prior to thereto):
If to the Purchaser:
Kelley, Black, Black, Beasley & Byrne
169 East Flager Street, Suite 1400
Miami, Florida 33131
Attention: Hugo Black, Jr.
and
Chesteen & Associates, P.C.
1432 East Northern Avenue
Phoenix, Arizona 85020
Attention: George V. Chesteen
If to the Company, the Seller, any of them, or any Affiliate of any of
them:
Morgan Johnston
16910 Dallas Parkway, Suite 100
Dallas, Texas 75248
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SECTION 9.2 INTERPRETATION. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.3 SURVIVAL OF REPRESENTATIONS, WARRANTIES, ET CETERA. The
representations, warranties, covenants, and agreements of the parties
contained herein shall survive the Closing and any investigation of the
other party made prior thereto. Representations and warranties shall so
survive for a period of three (3) years from the Closing.
SECTION 9.4 MISCELLANEOUS. This Agreement (1) constitutes the entire agreement
and supersedes all other prior agreements and understandings, both written
and oral, between the parties, with respect to the subject matter hereof,
except as specifically provided otherwise or referred to herein, so that no
such external or separate agreements relating to the subject matter of this
Agreement shall have any effect or be binding, unless the same is referred
to specifically in this Agreement or is executed by the parties after the
date hereof; (2) is not intended to confer upon any other person any rights
or remedies hereunder; (3) shall not be assigned by operation of law or
otherwise except for assignment of all or any part of the rights of the
Purchaser hereunder, which may be freely assigned by the Purchaser so long
as the obligations of the Purchaser under this Agreement remain obligations
of, or their performance is guaranteed by, the Purchaser; and (4) shall be
governed in all respects, including validity, interpretation, and effect,
by the internal laws of the State of Florida for contracts entered into and
wholly performed in such state without regard to the principals of conflict
of law thereof. This Agreement may be executed in two or more counterparts
which together shall constitute a single Agreement.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed on
the date first written above by their above by their respective officers
thereunto duly authorized.
THE PURCHASER:
T.I. Technologies Corporation
By: /s/ Don Courtney
Don Courtney
President
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THE SELLER:
S.O.I. Industries, Inc.
By: /s/ Kevin B. Halter
Kevin B.Halter
President
SUBSIDIARIES:
OMNI DOOR, INC.
By: /s/ Kevin B. Halter
Kevin B. Halter
Chairman
AQM CORPORATION:
By: /s/ Kevin B. Halter
Kevin B. Halter
Chairman
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