<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: May 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to ___________________
Commission file number: 0-19450
OAKHURST COMPANY, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 25-1655321
--------------------------- -----------------------
(State of Incorporation) (I.R.S. Employer
Identification No.)
1001 SANTERRE DRIVE, GRAND PRAIRIE, TEXAS
75050
-----------------------------------------
(Address of principal executive offices)
(Zip Code)
(214) 660-4499
----------------------------------------------------
(Registrant's telephone number, including area code)
-----------------------------------------------------
(Former name, former address, and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
------ ------
As of July 1, 1997, 3,207,053 shares of the Registrant's Common Stock,
$0.01 par value per share, were issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
OAKHURST COMPANY, INC. AND SUBSIDIARIES
<TABLE>
<S> <C>
Consolidated Balance Sheets at May 31, 1997 (unaudited)
and February 28, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations for the three month periods ended
May 31, 1997 and May 31, 1996 (unaudited) . . . . . . . . . . . . . . . . . . 4
Consolidated Statement of Stockholders' Equity for the three months
ended May 31, 1997 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows for the three month periods ended
May 31, 1997 and May 31, 1996 (unaudited) . . . . . . . . . . . . . . . . . . 6
Notes to consolidated financial statements (unaudited) . . . . . . . . . . . . 7
</TABLE>
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<PAGE> 3
OAKHURST COMPANY, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
ASSETS MAY 31, FEBRUARY 28,
1997 1997
-------- --------
(Unaudited)
<S> <C> <C>
Current assets:
Cash ..................................................................... $ 50 $ 39
Trade accounts receivable, less allowance of $438 and $555,respectively .. 4,505 3,882
Other receivables ........................................................ 630 483
Inventories .............................................................. 5,574 5,687
Net assets held for sale (Note 2) ........................................ -- --
Other .................................................................... 288 370
-------- --------
Total current assets ................................... 11,047 10,461
-------- --------
Property and equipment, at cost ............................................... 2,831 2,839
Less accumulated depreciation ............................................ (1,379) (1,311)
-------- --------
1,452 1,528
-------- --------
Deferred tax asset, less valuation allowance of $51,300 ....................... 1,000 1,000
Excess of cost over net assets acquired, net .................................. 2,420 2,468
Other assets .................................................................. 435 450
-------- --------
3,855 3,918
-------- --------
$ 16,354 $ 15,907
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ......................................................... $ 6,539 $ 6,106
Accrued compensation ..................................................... 346 394
Current maturities of long-term obligations .............................. 1,783 953
Current maturities of long-term obligations, related parties ............. 88 88
Accrued interest ......................................................... 97 88
Other accrued expenses ................................................... 268 417
-------- --------
Total current liabilities .............................. 9,121 8,046
-------- --------
Long-term obligations:
Long-term debt ........................................................... 5,054 5,344
Long-term debt, related parties .......................................... 264 286
Other long-term obligations .............................................. 79 86
-------- --------
5,397 5,716
-------- --------
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $0 01; authorized 1,000,000 shares, none issued -- --
Common stock, par value $0 01 per share; authorized 14,000,000
shares; issued 3,207,053 and 3,201,144 shares, respectively ........... 32 32
Additional paid-in capital ............................................... 46,535 46,529
Deficit (Reorganized on August 26, 1989) ................................. (44,730) (44,415)
Treasury stock, at cost, 207 common shares ............................... (1) (1)
-------- --------
Total stockholders' equity ............................. 1,836 2,145
-------- --------
$ 16,354 $ 15,907
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
-3-
<PAGE> 4
OAKHURST COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MAY 31, MAY 31,
1997 1996
----------- -----------
<S> <C> <C>
Sales ........................................................... $ 8,291 $ 10,892
Other income .................................................... 19 45
----------- -----------
8,310 10,937
----------- -----------
Cost of goods sold, including occupancy and
buying expenses .............................................. 6,799 8,480
Operating, selling and administrative expenses .................. 1,567 2,574
Provision for doubtful accounts ................................. 19 30
Amortization of excess of cost over net assets acquired ......... 49 112
Interest expense ................................................ 178 204
Loss on assets held for sale - H&H and Puma (see Note 2) ........ 12 --
----------- -----------
8,624 11,400
----------- -----------
Net loss before income taxes .................................... (314) (463)
Income tax expense .............................................. (1) (8)
----------- -----------
Net loss ........................................................ $ (315) $ (471)
=========== ===========
Net loss per share .............................................. $(0.10) $ (0.15)
=========== ===========
Weighted average number of shares outstanding
used in computing per share amount ........................... 3,203,611 3,197,183
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE> 5
OAKHURST COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MAY 31, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED TREASURY STOCK
-------------------------- PAID-IN EARNINGS ---------------------
SHARES PAR VALUE CAPITAL (DEFICIT) SHARES COST
-------------- ---------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balances, February 28, 1997 ............. 3,201,144 $ 32 $ 46,529 $ (44,415) 207 $ (1)
Net loss for the period ................. (315)
Stock award ............................. 5,909 * 6
-------------- ---------- ----------- ----------- ----------- ---------
Balances, May 31, 1997 .................. 3,207,053 $ 32 $ 46,535 $ (44,730) 207 $ (1)
============== ========== =========== =========== =========== =========
</TABLE>
*Rounds to less than one thousand
The accompanying notes are an integral part of these
consolidated financial statements.
- 5 -
<PAGE> 6
OAKHURST COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MAY 31, MAY 31,
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss ............................................... $ (315) $ (471)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation and amortization ...................... 172 281
Loss on retirement of assets ....................... 3 5
Stock awards ....................................... 6 7
Other changes in operating assets and liabilities:
Accounts receivable ................................ (623) (947)
Inventories ........................................ 113 512
Accounts payable ................................... 433 583
Other .............................................. (302) (232)
----------- -----------
Net cash (used in) provided by operating activities of:
Continuing operations .................................. (513) (262)
Discontinued retail operations ......................... 10 17
----------- -----------
Net cash used in operating activities ..................... (503) (245)
----------- -----------
Cash flows from investing activities:
Additions to property and equipment .................... -- (70)
Acquisition of a subsidiary, net of cash acquired ...... -- (79)
----------- -----------
Net cash used in investing activities ..................... -- (149)
----------- -----------
Cash flows from financing activities:
Net borrowings under revolving credit agreement ........ 735 1,154
Proceeds from issuance of long-term debt ............... -- 1,500
Repayment of note payable .............................. (105) --
Principal payments on long-term obligations ............ (116) (1,878)
Deferred loan costs .................................... -- (197)
----------- -----------
Net cash provided by financing activities ................. 514 579
----------- -----------
Net increase in cash ...................................... 11 185
Cash at beginning of period ............................... 39 318
----------- -----------
Cash at end of period ..................................... $ 50 $ 503
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE> 7
OAKHURST COMPANY, INC. AND SUBSIDIARIES
THREE MONTHS ENDED MAY 31, 1997
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL STATEMENTS
Oakhurst Company, Inc. ("Oakhurst" or the "Company") was formed as a
result of a merger transaction (the "merger") in fiscal 1992 between Steel City
Products, Inc. ("SCPI") and an Oakhurst subsidiary. The merger resulted in a
restructuring of SCPI such that it became a majority-owned subsidiary of
Oakhurst. In accordance with the merger, Oakhurst owns 10% of the outstanding
common stock of SCPI and all of SCPI's Series A Preferred Stock. The merger
was structured such that the aggregate fair market value of SCPI's common stock
and Series A Preferred Stock owned by Oakhurst would be approximately 90% of
the aggregate fair market value of SCPI. Accordingly, Oakhurst controls
approximately 90% of the voting power of SCPI. The accompanying financial
statements reflect this control and include the accounts of SCPI.
Oakhurst owns all of the outstanding capital stock of Dowling's Fleet
Service Co., Inc. ("Dowling's"), and of Oakhurst Management Corporation
("OMC"). The accompanying consolidated financial statements include the
accounts of these subsidiaries, and all significant intercompany accounts and
transactions have been eliminated in consolidation (see Note 2).
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments necessary to present fairly the
financial position, results of operations and cash flows for the interim
periods presented. All adjustments made are of a normal, recurring nature.
While the Company believes that the disclosures presented herein are
adequate to make the information not misleading, it is suggested that these
unaudited consolidated financial statements be read in conjunction with the
audited consolidated financial statements for the fiscal year ended February
28, 1997 ("fiscal 1997") as filed in the Company's Annual Report on Form 10-K.
2. NET ASSETS HELD FOR SALE
In June 1997, Oakhurst entered into an agreement to sell the capital
stock of Puma Products, Inc., and in July 1997, Oakhurst entered into an
agreement to sell the capital stock of H&H Distributors, Inc., d/b/a Harry
Survis Auto Centers ("H&H"). Accordingly, the results for the fourth quarter
of fiscal 1997 included a charge related to the disposal of such subsidiaries
representing the write-off of the net assets of the subsidiaries and of the
related excess of costs over net assets acquired.
Effective as of May 31, 1997, the former owner of Puma, a director of
Oakhurst, acquired the capital stock of Puma in exchange for his repayment of
the revolving debt attributable to Puma of approximately $400,000, the
cancellation of a note payable and an earn-out to him aggregating $1.2 million,
the forgiveness of Oakhurst's intercompany debts to Puma, and the payment by
Oakhurst of $50,000. The agreement contains mutual releases and provides for a
payment to Oakhurst in the event of a re-sale of Puma's stock within one year,
equal to 12.5% of the excess of any such sales price (including debt assumed by
an acquirer) over $1 million. The buyer of Puma also acquired all of the
assets relating to SCPI's Wing-Tech division for the net book value at May 31,
1997 of approximately $170,000. As a result of the sale of Puma, Oakhurst was
relieved of contingent liabilities in respect of Puma's lease and employment
agreement obligations aggregating approximately $500,000.
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<PAGE> 8
Effective as of July 14, 1997, a Vice-President of H&H acquired the
capital stock of H&H in exchange for H&H's forgiveness of Oakhurst's
intercompany debt to H&H and the retention by Oakhurst of certain insurance
claims related to H&H. As a result of the sale of H&H, Oakhurst was relieved
of contingent liabilities in respect of H&H's lease and employment obligations
aggregating approximately $900,000.
During the period ended May 31, 1997, there was an additional charge
of $12,000 to Oakhurst's results of operations related to the net funding of
the operations of these two subsidiaries prior to their disposal.
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<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Oakhurst Company, Inc. ("Oakhurst" or "the Company"), a holding
company, was formed as part of a merger transaction in July 1991, in which
Steel City Products, Inc. ("SCPI") became a special, limited purpose,
majority-owned subsidiary of Oakhurst. Management believes that the corporate
structure resulting from the merger transaction will facilitate capital
formation by Oakhurst while permitting Oakhurst and its subsidiaries to file
consolidated tax returns so that both may utilize the tax benefits (including
approximately $150 million of net operating loss carryforwards and $4 million
of capital losses) attributable primarily to SCPI. Through Oakhurst's
ownership of SCPI, primarily in the form of preferred stock, Oakhurst retains
the value of SCPI, and receives substantially all of the benefit of SCPI's
operations through dividends on such preferred stock. Oakhurst's ownership of
SCPI facilitates the preservation and utilization of SCPI's net operating loss
carryforwards.
Oakhurst, through its subsidiaries, is primarily a distributor of
products to the automotive after-market. Its largest business, which is
conducted by SCPI under the trade name "Steel City Products", is the
distribution of automotive parts and accessories to independent retailers from
a facility in Pittsburgh, Pennsylvania. Dowling's Fleet Service Co., Inc.
("Dowling's") is a New York-headquartered distributor of automotive radiators
and related products.
In the current year first quarter, Oakhurst also owned H&H
Distributors, Inc., d/b/a Harry Survis Auto Centers ("H&H"), a Pittsburgh-based
company that distributes and installs automotive accessories, including
stereos, alarms and cellular phones; and Puma Products, Inc. ("Puma"), a Texas
based distributor of after-market products to the light truck and van
conversion industry. In fiscal 1997, H&H and Puma incurred aggregate operating
losses of approximately $500,000, and as a result, in June 1997, Oakhurst sold
Puma to its former owner, and effective July 14, 1997, Oakhurst sold H&H to a
Vice-President of H&H. Results of operations for the first quarter of fiscal
1998 reflect only the net funding of these two subsidiaries through disposal.
In addition to cash derived from the operations of its subsidiaries,
Oakhurst's liquidity and financing requirements are determined principally by
the working capital needed to support each subsidiary's level of business,
together with the need for capital expenditures and the cash required to repay
debt. Each subsidiary's working capital needs vary primarily with the amount
of inventory carried, which can change seasonally, the size and timeliness of
payment of receivables from customers, especially at the SCPI subsidiary which
from time to time grants extended payment terms for seasonal inventory
build-ups, and the amount of credit extended by suppliers.
At May 31, 1997, Oakhurst's debt primarily consisted of (i) a credit
facility with an institutional lender (the "Credit Facility"), which included a
SCPI term loan with a balance of approximately $1.2 million, and borrowings of
approximately $4.6 million under a revolving credit facility (the "Revolver"),
(ii) debt in connection with Oakhurst's acquisition of Dowling's and Dowling's
acquisition of G&O Sales Company ("G&O"), and (iii) notes payable with
outstanding principal balances aggregating approximately $806,000 that were
issued in connection with the settlement of certain contingent liabilities
related to SCPI's former retail division.
Oakhurst and its subsidiaries have available financing under the
Revolver up to a maximum of $7 million, subject to defined levels of the
subsidiaries' accounts receivable and inventories. Management believes that
the Revolver will provide adequate funding for the Company's foreseeable
working capital requirements, including seasonal fluctuations.
- 9 -
<PAGE> 10
From time to time the information provided by the Company or
statements made by its employees may contain so-called "forward looking"
information that involves risks and uncertainties. In particular, statements
contained in this Item 2 - "Management's Discussion and Analysis of Financial
Condition and Results of Operations," which are not historical facts
(including, but not limited to statements concerning anticipated sales, profit
levels, customers and cash flows) are forward looking statements. The
Company's actual future results may differ significantly from those stated in
any forward looking statements. Factors that may cause such differences
include, but are not limited to the factors discussed above as well as the
accuracy of the Company's internal estimates of revenue and operating expense
levels. Each of these factors and others are discussed from time to time in
the Company's Securities and Exchange Commission filings.
MATERIAL CHANGES IN FINANCIAL CONDITION
At May 31, 1997, there had been no material changes in the Company's
financial condition from February 28, 1997, as discussed in Item 7 of the
Company's Annual Report on Form 10-K for fiscal 1997.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
As previously discussed, Puma was sold effective May 31, 1997, and H&H
was sold effective July 14, 1997. Accordingly, the net funding of the
operations of these two subsidiaries in the current year first quarter
($12,000) has been reflected as a loss on assets held for sale. In the prior
year first quarter, these two subsidiaries incurred aggregate operating losses
of approximately $40,000.
THREE MONTHS ENDED MAY 31, 1997 COMPARED WITH THREE MONTHS ENDED MAY 31, 1996
Consolidated sales for the current year first quarter decreased by
approximately $2.6 million, or by 23.9% when compared with the prior year.
The decrease was caused by the disposals of Puma and H&H, which together had
sales of $2.6 million in the prior year first quarter. Sales for the remaining
subsidiaries were at essentially the same levels as in the prior year.
Although sales are expected to decrease for the remainder of fiscal
1998 when compared with the prior year because of the subsidiary disposals, net
operating results are expected to reflect a comparative improvement since Puma
and H&H incurred aggregate operating losses of approximately $500,000 in the
prior year.
Gross profits were $1.5 million, or 18% of sales, in the current year
first quarter compared with $2.4 million, or 22.1% of sales, in the prior year
period, with the decrease in profits again resulting from disposals of Puma and
H&H. Gross profits attributable to Puma and H&H were approximately $930,000 in
the prior year.
Operating, selling and administrative expenses decreased by $1 million
when compared to the prior year. The disposals of Puma and H&H resulted in
lower expenses of approximately $950,000. The remaining reductions are
attributable to savings in corporate overhead expenses.
The amortization of the excess of cost over net assets acquired
decreased by $63,000 in the current year first quarter, due to the disposals of
Puma and H&H.
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<PAGE> 11
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material legal proceedings pending against the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
quarter for which this report is filed.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10. Stock Purchase and Sale Agreement between James Stein,
H&H Distributors, Inc. and Oakhurst Company, Inc.,
dated as of July 14, 1997
27. Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter for which
this report is filed.
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<PAGE> 12
SIGNATURES
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.
OAKHURST COMPANY, INC.
Date: July 14, 1997 By: /s/ Robert M. Davies
---------------------------------
Mr. Robert M. Davies
Chief Executive Officer
Date: July 14, 1997 By: /s/ Mark Auerbach
---------------------------------
Mr. Mark Auerbach
Chief Financial Officer
- 12 -
<PAGE> 13
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
10 Stock Purchase and Sale Agreement between James Stein,
H&H Distributors, Inc. and Oakhurst Company, Inc.,
dated as of July 14, 1997.
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10
STOCK PURCHASE AND SALE AGREEMENT BETWEEN JAMES STEIN, H&H
DISTRIBUTORS, INC. AND OAKHURST COMPANY, INC.
<PAGE> 2
EXHIBIT 10
STOCK PURCHASE AND SALE AGREEMENT
JAMES STEIN, H&H DISTRIBUTORS, INC. & OAKHURST COMPANY, INC.
THIS STOCK PURCHASE AND SALE AGREEMENT (this "Agreement") is entered into as of
this 14th day of July 1997, by and among James Stein an individual, ("Mr.
Stein"), H&H Distributors, Inc., a Pennsylvania corporation ("H&H"), and
Oakhurst Company Inc., a Delaware corporation, (formerly known as Oakhurst
Capital, Inc.) ("Oakhurst"), which owns all of the outstanding capital stock of
H&H. Mr. Stein, H&H and Oakhurst are each referred to in this Agreement as a
"Party" and collectively as the "Parties."
1 BACKGROUND. This Agreement contemplates transactions, among
others, in which Oakhurst will sell to Mr. Stein, and Mr. Stein
will purchase from Oakhurst all of the outstanding capital stock of
H&H (the "H&H Shares"), and the Parties will resolve all
outstanding debts, and obligations between and among them.
2 THE CONSIDERATION. The consideration to be paid for the H&H Shares
shall consist of the liabilities to be assumed; the mutual exchange
of promises and releases; the documents to be executed and
delivered by Mr. Stein, H&H and/or Oakhurst; and the
representations, warranties and covenants herein, contained.
3 THE CLOSING. The consummation of the transactions contemplated by
this Agreement (the "Closing") shall take place on or about the
date hereof. The Parties may by agreement select such other date
for the Closing as they deem suitable. The date on which the
Closing occurs is hereinafter referred to as the "Closing Date."
4 DELIVERIES AT THE CLOSING. At the Closing the following will take
place:
4.1 The H&H Shares. Oakhurst will deliver to Mr.
Stein one or more stock certificates representing
the H&H Shares endorsed in blank or accompanied
by an assignment document executed in blank.
4.2 Finova Debt. Oakhurst shall pay any balance of
the debt of H&H owing to Finova Capital
Corporation ("Finova") at the Closing under that
certain Loan and Security Agreement dated March
28, 1996 among Oakhurst, H&H and others, and
Oakhurst shall retain any H&H bank balances
existing on the day prior to the Closing Date.
H&H shall retain any deposits made on the Closing
Date.
4.3 UCC Release Forms. Oakhurst will deliver to Mr.
Stein UCC-3 forms executed by Finova relating to
all liens imposed by Finova on the assets of H&H.
4.4 Assignment of Claims and Proceeds Agreement. H&H
will execute the form of Assignment of Claims and
Proceeds Agreement relating to certain claims and
the proceeds thereof arising from thefts of H&H
assets in substantially the form set forth in
Exhibit A.
4.5 Assignment of Certain Intellectual Property
Rights and Transfer of Stock. H&H will execute
and deliver and Oakhurst will cause Oakhurst
Holdings, Inc., a wholly-owned subsidiary of
Oakhurst ("OHI") to execute and deliver that
certain Assignment of Intellectual Property
Rights and Transfer of Stock substantially in the
form of Exhibit
Page 1 of 14
<PAGE> 3
Stock Purchase and Sale Agreement dated July 14, 1997 - continued
B pursuant to which OHI sells, assigns and
transfers to H&H all of OHI's right, title and
interest in and to the trade names "Harry Survis"
and "Harry Survis Auto Center" and in payment
therefor, H&H will deliver to OHI that certain
stock certificate representing one hundred
seventy (170) shares of OHI capital stock
endorsed in blank or accompanied by an assignment
document executed in blank.
4.6 Termination of Corporate Services Agreement. H&H
will execute and deliver, and Oakhurst will cause
Oakhurst Management Corporation, a wholly-owned
subsidiary of Oakhurst, to execute and deliver
that certain Corporate Services Termination
Agreement in substantially the form of Exhibit C.
4.7 Extension of Options. Oakhurst shall provide to
Mr. Stein a true and complete copy of an action
by the Stock Plans Committee of Oakhurst
providing that the options to purchase Oakhurst
common stock held by him will continue in full
force and effect for a period of four (4) years
after the Closing Date notwithstanding the fact
that after the Closing, he will not be an
employee of a subsidiary of Oakhurst.
4.8 Upon Closing, Oakhurst will release to Marmion
Advertising the check held in the amount of
$7,946.00 and will fund payment of such check.
5 CERTAIN SOFTWARE & EQUIPMENT. As soon as practicable after the
Closing Date, but in any event no later than October 31, 1997, H&H
shall sell, assign and transfer to Oakhurst or its designee for one
dollar ($1.00) those certain software packages and the associated
equipment on which such software runs, all as set forth in Exhibit
D.
6 CERTAIN RELEASES.
6.1 Inter-Company Debt. By the execution hereof, H&H
Oakhurst, OHI and Oakhurst Management Corporation
("OMC") hereby each releases the other from and
against any and all amounts owing from one to the
other immediately prior to the Closing Date. On
the date hereof, it is estimated that for book
purposes, Oakhurst is indebted to H&H in the
range of $400,000 to $450,000.
6.2 Employment Agreement. Each of Mr. Stein and H&H
on the one hand and Oakhurst and its subsidiaries
on the other hand hereby releases, remises,
acquits and forever discharges the other and each
of the other's heirs, administrators, personal
representatives, successors and assigns, of and
from any and all claims, demands, losses,
damages, actions or causes of action, known or
unknown, now existing or hereafter existing,
relating to, or arising out of that certain
Employment Agreement between H&H and Mr. Stein
dated as of November 1, 1993.
6.3 The Operations of H&H. By the execution hereof
each of Mr. Stein and H&H on the one hand, and
Oakhurst and its subsidiaries on the other hand
hereby releases, remises, acquits and forever
discharges the other and each of the other's
consultants, officers, and directors acting in
any capacity for Oakhurst, for its subsidiaries
and for H&H or for any one of them and the
other's subsidiaries, heirs, administrators,
personal representatives, successors and assigns,
of and from any
Page 2 of 14
<PAGE> 4
Stock Purchase and Sale Agreement dated July 14, 1997 - continued
and all claims, demands, losses, damages, actions
or causes of action, known or unknown, now
existing or hereafter existing, relating to, or
arising out of the business and operations of H&H
on and prior to the Closing Date.
6.4 Each Party represents and warrants to each other
Party that such Party has not assigned and will
not assign any claim released herein.
6.5 Nothing in this Section 6 shall be construed as
an admission of any kind or nature for any
purpose by any Party to this Agreement or shall
be construed as a waiver by any Party of any
right of such Party arising under this Agreement.
7 COVENANTS. The Parties agree as follows with respect to the period
following the Closing.
7.1 General. In case at any time after the Closing
any further action is necessary or desirable to
carry out the purposes of this Agreement, each of
the Parties will take such further action
(including the execution and delivery of such
further instruments and documents) as any other
Party may reasonably request, all at the sole
cost and expense of the requesting Party.
7.2 Litigation Support. In the event and for so long
as any Party actively is contesting or defending
against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or
demand of a person or entity that is not a Party
hereto in connection with (a) any transaction
contemplated under this Agreement, or (b) any
fact, situation, circumstance, status, or
condition existing on or prior to the Closing
Date involving H&H, each of the other Parties
will cooperate with him or it and his or its
counsel in such contest or defense, make
available personnel, and provide such testimony
and access to books and records as shall be
reasonably necessary in connection with such
contest or defense. The contesting or defending
Party shall reimburse to the other Party or
Parties the out-of-pocket expenses (but not the
overhead type expenses) incurred in rendering
such cooperation unless the contesting or
defending Party is entitled to indemnification
therefor hereunder.
7.3 Confidentiality. Each Party will treat and hold
in confidence the confidential information of the
other Party, except such information as becomes
generally available to the public without a
breach of this Section 7.3 by such Party or as is
received from a person or entity who is not a
party to this Agreement without a restriction as
to its disclosure.
7.4 Finova Debt. Oakhurst shall not incur any
indebtedness for or on behalf of H&H from and
after the Closing Date.
7.5 Business Continuation. It is understood that Mr.
Stein plans to close the automotive accessories
part of the H&H business and to close some of
H&H's facilities. Mr. Stein agrees that he will
not pay himself a salary from the H&H business of
more than $1,500 per week until such time as all
creditors relating to the portion of the business
that is closed down have been paid in full, and
until a business plan has
Page 3 of 14
<PAGE> 5
Stock Purchase and Sale Agreement dated July 14, 1997 - continued
been formulated that provides for the payment of
the on-going expenses of the portion of the H&H
business that is not closed.
8 REPRESENTATIONS AND WARRANTIES OF OAKHURST. Oakhurst represents
and warrants to Mr. Stein that the statements contained in this
Section 8 are correct and complete as of the date hereof (except as
otherwise noted) and will be correct and complete at the Closing
Date.
8.1 Organization of Oakhurst. Oakhurst is a
corporation duly organized, validly existing, and
in good standing under the laws of the State of
Delaware.
8.2 Authorization of Transaction. Oakhurst has full
power and authority to execute and deliver this
Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid
and legally binding obligation of Oakhurst,
enforceable in accordance with its terms and
conditions. Oakhurst need not give any notice
to, make any filing with, or obtain any
authorization, consent, or approval of any
government or governmental agency in order to
consummate the transactions contemplated by this
Agreement other than those already given, made or
obtained as of the date hereof.
8.3 H&H Shares. At the Closing Date, Oakhurst will
hold of record and own beneficially all of the
H&H Shares free and clear of any restrictions on
transfer (other than any restrictions under the
Securities Act of 1933 and state securities
laws), taxes, security interests, options,
warrants, purchase rights, contracts,
commitments, equities, claims, and demands. The
entire authorized capital stock of H&H consists
of five hundred (500) shares, $100 par value per
share, of which three hundred (300) shares are
issued and outstanding. No shares are held in
treasury. All of the issued and outstanding
shares of H&H have been duly authorized, are
validly issued, fully paid, and non-assessable.
Except as provided for in this Agreement, since
the acquisition by Oakhurst of the H&H Shares in
January 1994, (i) no options, warrants, purchase
rights, subscription rights, conversion rights,
exchange rights, or other contracts or
commitments that could require H&H to issue,
sell, or otherwise cause to become outstanding
any of its capital stock have been created, and
(ii) no voting trusts, proxies, or other
agreements or understandings with respect to the
voting of the capital stock of H&H have been
entered into.
8.4 Non-contravention. Neither the execution and the
delivery of this Agreement, nor the consummation
of the transactions contemplated hereby, will
violate any statute, regulation, rule,
injunction, judgment, order, decree, ruling,
charge, or other restriction of any government,
governmental agency, or court to which Oakhurst
is subject or any provision of its charter or
bylaws.
8.5 Brokers' Fees. Oakhurst has no liability or
obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the
transactions contemplated by this Agreement for
which Mr. Stein or H&H could become liable or
obligated.
Page 4 of 14
<PAGE> 6
Stock Purchase and Sale Agreement dated July 14, 1997 - continued
8.6 Taxes. Oakhurst has paid all taxes that were due
on or before the Closing Date and that are
payable with respect to H&H.
8.7 Operation of the Business of H&H. The Parties
note that Mr. Stein has been a senior executive
of H&H since its acquisition by Oakhurst in 1994.
Other than those matters that either Mr. Stein or
Harold Garfinkel, the President of H&H, (a) is
aware of, (b) carried out, or (c) caused to be
carried out, and other than this Agreement, to
the actual knowledge of the directors of
Oakhurst, since February 28, 1997, the date of
the most recent consolidated financial statements
of Oakhurst and its subsidiaries, (i) no material
transaction has been entered into by H&H, or has
occurred with respect to H&H that is not in the
ordinary course of H&H's business and consistent
with its past practice; and (ii) there has been
no occurrence, not in the ordinary course of
business, which is expected to give rise to a
claim against H&H.
9 REPRESENTATIONS AND WARRANTIES OF MR. STEIN. Mr. Stein represents
and warrants to Oakhurst that the statements contained in this
Section 9 are correct and complete as of the date hereof (except as
otherwise noted) and will be correct and complete at the Closing
Date.
9.1 Authorization and Financial Expertise. Mr. Stein
has full power and authority to execute and
deliver this Agreement and to perform his
obligations hereunder, and has the financial
expertise necessary to carry on the business of
H&H after the Closing. This Agreement
constitutes his valid and legally binding
obligation, enforceable in accordance with its
terms and conditions. Mr. Stein need not give
any notice to, make any filing with, or obtain
any authorization, consent, or approval of any
Person, government or governmental agency in
order to consummate the transactions contemplated
by this Agreement.
9.2 Non-contravention. Neither the execution and the
delivery of this Agreement, nor the consummation
of the transactions contemplated hereby, will
violate any statute, regulation, rule,
injunction, judgment, order, decree, ruling,
charge, or other restriction of any government,
governmental agency, or court to which Mr. Stein
is subject.
9.3 Brokers' Fees. Mr. Stein has no liability or
obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the
transactions contemplated by this Agreement for
which Oakhurst could become liable or obligated.
10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Representations and
warranties of Mr. Stein and Oakhurst shall survive the Closing
hereunder (even if the other Party knew or had reason to know of
any misrepresentation or breach of warranty at the time of Closing)
and shall continue in full force and effect for a period of two (2)
years after the Closing Date
11 INDEMNIFICATION PROVISIONS.
Page 5 of 14
<PAGE> 7
Stock Purchase and Sale Agreement dated July 14, 1997 - continued
11.1 Each Party. Each Party hereby agrees to
indemnify the other Party from and against any
claim released in this Agreement by such Party as
well as from any right or demand that may now or
hereafter be asserted by such Party or by any
person or entity claiming through such Party in
connection with any claim released by such Party.
11.2 Indemnification For the Benefit of Oakhurst. In
the event that Mr. Stein breaches this Agreement
or any of his representations, warranties or
covenants contained herein, and provided that
Oakhurst makes a written claim for
indemnification against Mr. Stein within the
survival period set forth in Section 10, above,
then Mr. Stein agrees to indemnify Oakhurst from
and against the entirety of any Adverse
Consequences that Oakhurst may suffer through and
after the date of the claim for indemnification
(including any Adverse Consequences Oakhurst may
suffer after the end of any applicable survival
period) resulting from, arising out of, relating
to, in the nature of, or caused by such breach.
Mr. Stein also agrees to indemnify Oakhurst from
and against the entirety of any Adverse
Consequences Oakhurst may suffer resulting from,
arising out of, relating to, in the nature of, or
caused by the conduct by Mr. Stein of the
business of H&H after the Closing Date.
11.3 Indemnification For the Benefit of Mr. Stein. In
the event that Oakhurst breaches this Agreement
or any of its representations, warranties and
covenants contained herein, and provided that Mr.
Stein makes a written claim for indemnification
against Oakhurst, then Oakhurst agrees to
indemnify Mr. Stein from and against the entirety
of any Adverse Consequences Mr. Stein may suffer
through and after the date of the claim for
indemnification resulting from, arising out of,
relating to, in the nature of, or caused by the
breach.
11.4 Other Indemnification Provisions. The foregoing
indemnification provisions are in addition to,
and not in derogation of, any statutory,
equitable, or common law remedy any Party may
have for breach of this Agreement or of any
representation, warranty, or covenant contained
herein. Mr. Stein hereby agrees that he will not
make any claim for indemnification against
Oakhurst by reason of the fact that he has been
and may continue to be a director, officer, and
employee of H&H or any subsidiary thereof.
11.5 The term "Adverse Consequences" means all
actions, suits, proceedings, hearings,
investigations, charges, complaints, claims,
demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, liabilities,
obligations, taxes, liens, losses, expenses, and
fees, including court costs and reasonable
attorneys' fees and expenses.
12 MISCELLANEOUS.
12.1 Press Releases and Public Announcements. No
Party shall issue any press release or make any
public announcement relating to the subject
matter of this Agreement
Page 6 of 14
<PAGE> 8
Stock Purchase and Sale Agreement dated July 14, 1997 - continued
prior to the Closing without the prior written
approval of Oakhurst and Mr. Stein; provided,
however, that Oakhurst may make any public
disclosure that it believes in good faith is
required by applicable law or by any listing or
trading agreement concerning its publicly-traded
securities (in which case Oakhurst will advise
Mr. Stein thereof prior to making the
disclosure).
12.2 No Third-Party Beneficiaries. This Agreement
shall not confer any rights or remedies upon any
Person other than the Parties and their
respective successors and permitted assigns.
12.3 Entire Agreement. This Agreement (including the
Exhibits referred to herein) constitutes the
entire agreement among the Parties and supersedes
any prior understandings, agreements, or
representations by or among the Parties, written
or oral, to the extent they related in any way to
the subject matter hereof.
12.4 Succession and Assignment. This Agreement shall
be binding upon and inure to the benefit of the
Parties named herein and their respective
successors and permitted assigns. No Party may
assign either this Agreement or any of his or its
rights, interests, or obligations hereunder
without the prior written approval of Oakhurst
and Mr. Stein.
12.5 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be
deemed an original but all of which together will
constitute one and the same instrument.
12.6 Headings. The section headings contained in this
Agreement are inserted for convenience only and
shall not affect in any way the meaning or
interpretation of this Agreement.
12.7 Notices. All notices, requests, demands, claims,
and other communications hereunder will be in
writing and will be deemed given to a Party
either (i) when hand delivered to such Party or
(ii) when deposited with a courier service with
instructions to provide next- business-day
delivery and proof of delivery to such Party, if
to Mr. Stein at his residence address on the
books of H&H; if to Oakhurst at its headquarters
address attention of the President; and if to
H&H, at its headquarters address, attention of
the President. Any Party may change his or its
own address to which notices, requests, demands,
claims, and other communications hereunder are to
be delivered by giving the other Parties notice
in the manner herein set forth.
12.8 The words "herein," "hereof," "hereunder,"
"hereby," "herewith" and words of similar import
when used in this Agreement shall be construed to
refer to this Agreement as a whole. The word
"including" shall mean including, but not limited
to any enumerated items.
12.9 Governing Law. This Agreement shall be governed
by and construed in accordance with the domestic
laws of the Commonwealth of Pennsylvania without
giving effect
Page 7 of 14
<PAGE> 9
Stock Purchase and Sale Agreement dated July 14, 1997 - continued
to any choice of law or conflict of law provision
or rule (whether of the Commonwealth of
Pennsylvania or any other jurisdiction) that
would cause the application of the laws of any
jurisdiction other than the Commonwealth of
Pennsylvania.
12.10 Amendments and Waivers. No amendment of any
provision of this Agreement shall be valid unless
the same shall be in writing and signed by
Oakhurst, H&H and Mr. Stein. No waiver by any
Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to
any prior or subsequent default,
misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any
rights arising by virtue of any prior or
subsequent such occurrence.
12.11 Severability. Any term or provision of this
Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect
the validity or enforceability of the remaining
terms and provisions hereof or the validity or
enforceability of the offending term or provision
in any other situation or in any other
jurisdiction. Notwithstanding the foregoing,
however, no provision shall be severed if it is
clearly apparent under the circumstances that the
Parties would not have entered into this
Agreement without such provision.
12.12 Expenses. Each of Oakhurst and Mr. Stein will
bear its or his own costs and expenses (including
legal and accounting fees and expenses) incurred
in connection with this Agreement and the
transactions contemplated hereby.
12.13 Incorporation of Exhibits. The Exhibits
identified in this Agreement are incorporated
herein by reference and made a part hereof.
13 ARBITRATION. Except as otherwise provided below, this Agreement
and any controversy, claim or dispute between the Parties directly
or indirectly concerning this Agreement or the breach hereof or the
subject matter hereof, including questions concerning the scope and
applicability of this Section 13 shall be finally settled by
arbitration held in Pittsburgh, Pennsylvania in accordance with the
provisions of this Section 13 and the rules of commercial
arbitration then followed by the American Arbitration Association
or any successor to the functions thereof.
13.1 The Party shall choose the arbitrators in
accordance with the rules of commercial
arbitration then followed by the American
Arbitration Association or any successor to the
functions thereof.
13.2 A majority of the arbitrators shall have the
right and authority to determine how their
decision or determination as to each issue or
matter in dispute may be implemented or enforced.
Notwithstanding anything herein to the contrary,
no arbitrator in any such proceeding shall have
authority or power to (a) modify or alter any
express condition or provision hereof by an award
or otherwise; (b) award punitive or exemplary
damages for or against any Party to any such
proceeding; or (c) award any damages expressly
excluded under this Agreement. Any decision or
award of
Page 8 of 14
<PAGE> 10
Stock Purchase and Sale Agreement dated July 14, 1997 - continued
a majority of the arbitrators shall be final and
conclusive on the Parties to this Agreement, and
there shall be no appeal therefrom other than for
fraud or willful misconduct.
13.3 The Parties hereto agree that an action to compel
arbitration pursuant to this Agreement may be
brought in the appropriate court of the
Commonwealth of Pennsylvania. Application may
also be made to such court for confirmation of
any decision or award of a majority of the
arbitrators, for an order of enforcement and for
any other remedies which may be necessary to
effectuate such decision or award. The Parties
hereto hereby consent to the jurisdiction of the
arbitrators and of such court and waive any
objection to the jurisdiction of such arbitrators
and court.
13.4 Notwithstanding anything contained herein to the
contrary, the Parties hereby agree that this
Section 13 shall not apply to any action brought
by a Party in connection with a claim for
injunction or other equitable relief.
13.5 Each of the Parties to any controversy, claim or
dispute subject to arbitration under the terms of
this Section 13 shall pay fees and expenses in
accordance with any decision or award of a
majority of the arbitrators thereunder.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.
OAKHURST COMPANY, INC. H&H DISTRIBUTORS, INC.
By: /s/ Mark Auerbach By: /s/ Harold Garfinkel
----------------------------- --------------------------------
Mark Auerbach Harold Garfinkel
Chief Financial Officer President
/s/ James Stein
-------------------------------------
JAMES STEIN
(an Individual)
Page 9 of 14
<PAGE> 11
EXHIBIT A
ASSIGNMENT OF CLAIMS AND PROCEEDS AGREEMENT
THIS ASSIGNMENT OF CLAIMS AND PROCEEDS AGREEMENT (this "Agreement") is entered
into as of this 14th day of July 1997, by and among James Stein an individual,
("Mr. Stein"), H&H Distributors, Inc., a Pennsylvania corporation ("H&H"), and
Oakhurst Company Inc., a Delaware corporation, (formerly known as Oakhurst
Capital, Inc.) ("Oakhurst").
1 CONSIDERATION. The parties are entering into this Agreement for and in
consideration of the mutual covenants contained herein, the execution,
delivery and performance of that certain Stock Purchase and Sale
Agreement between the parties hereto providing for the sale of the
capital stock of H&H by Oakhurst to Mr. Stein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged
2 BACKGROUND. Certain persons are suspected of having stolen goods of H&H
(the "Thefts") and in connection therewith, H&H has sought to recover
proceeds of insurance covering the Thefts and/or to recover the cost of
the goods stolen directly from those suspected of making the Thefts.
3 ASSIGNMENT. H&H hereby sells, assigns and transfers to Oakhurst the
following: (i) any and all claims, demands and causes of action against
the persons believed to have perpetrated the Thefts and against all
insurance carriers that have provided insurance to H&H covering the
Thefts (collectively the "Claims"); and (ii) any and all of the proceeds
of the Claims (collectively the "Proceeds"), it being the intent of the
parties that Oakhurst shall have the right to prosecute the Claims and
to collect the Proceeds as if the Thefts had been perpetrated against
Oakhurst and as if Oakhurst were the insured under any such insurance
policies.
4 FURTHER ASSURANCES. In case at any time after the execution hereof by
the parties any further action is necessary or desirable to carry out
the purposes of this Agreement, each of the parties will take such
further action (including the execution and delivery of such further
instruments and documents) as any other party may reasonably request.
5 COOPERATION. H&H will cooperate with Oakhurst and its counsel and
assist them in prosecuting the Claims and collecting the Proceeds (i) by
making available H&H personnel to testify in civil or criminal
proceedings relating to the Thefts; (ii) by providing access to such H&H
books and records as shall be reasonably necessary in connection the
prosecution of the Claims and collection of the Proceeds; and (iii) by
doing all such other things as Oakhurst shall reasonably request in
connection with the Claims and the Proceeds.
Page 10 of 14
<PAGE> 12
6 EXPENSES. From and after the date hereof, Oakhurst shall bear its own
expenses of prosecuting the Claims and collecting the Proceeds,
including paying outstanding invoices to Aderson, Frank & Steiner, and
shall reimburse to H&H its out-of-pocket expenses (but not its overhead
type expenses) incurred in rendering cooperation and otherwise assisting
Oakhurst in implementing this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.
OAKHURST COMPANY, INC. H&H DISTRIBUTORS, INC.
By: /s/ Mark Auerbach By: /s/ Harold Garfinkel
---------------------------- ----------------------------
Mark Auerbach Harold Garfinkel
Chief Financial Officer President
/s/ James Stein
-----------------------------------
JAMES STEIN
(an Individual)
Page 11 of 14
<PAGE> 13
EXHIBIT B
ASSIGNMENT OF INTELLECTUAL PROPERTY RIGHTS AND TRANSFER OF STOCK
THIS ASSIGNMENT OF INTELLECTUAL PROPERTY AND TRANSFER OF STOCK is made as of
the 14th day of July 1997 by and among Oakhurst Holdings, Inc., a Delaware
corporation ("OHI") and H&H Distributors, Inc., a Pennsylvania corporation,
("H&H") in connection with that certain Stock Purchase and Sale Agreement
between OHI's parent, Oakhurst Company, Inc., H&H and James Stein dated as of
July 14, 1997.
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby
acknowledged:
1 OHI hereby sells, assigns and transfers to H&H all of OHI's right, title
and interest in and to the trade names "Harry Survis" and "Harry Survis
Auto Center" (the "Trade Names.")
2 H&H hereby sells, assigns and transfers to OHI that certain stock
certificate representing one hundred seventy (170) shares of OHI capital
stock.
3 The parties hereby cancel that certain license agreement between them
relating to the Trade Names dated August 16, 1995.
OAKHURST HOLDINGS, INC. H&H DISTRIBUTORS, INC.
By: /s/ Maarten D. Hemsley By: /s/ Harold Garfinkel
--------------------------------- --------------------------
Maarten D. Hemsley Harold Garfinkel
President President
Page 12 of 14
<PAGE> 14
EXHIBIT C
CORPORATE SERVICES TERMINATION AGREEMENT
H & H DISTRIBUTORS, INC. & OAKHURST MANAGEMENT CORPORATION
THIS CORPORATE SERVICES TERMINATION AGREEMENT (this "Agreement") is made
effective as of the 14th day of July 1997, by and between H & H DISTRIBUTORS,
INC. ("H&H") and OAKHURST MANAGEMENT CORPORATION (the "Company").
In consideration of the covenants of the parties hereto and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1 Effective on the date hereof, the parties hereby agree to the
termination of the Corporate Services Agreement dated as of March 27,
1995 between them (the "Services Agreement.")
2 The Company acknowledges receipt in full of all amounts owing to it
under the Services Agreement through the date hereof.
3 By the execution hereof, each party hereby releases, remises, acquits
and forever discharges the other party and the other party's officers,
directors, shareholders, heirs, administrators, personal
representatives, successors and assigns, of and from any and all
claims, demands, losses, damages, actions or causes of action, known or
unknown, now existing or hereafter existing, relating to, or arising
out of the Services Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives as of the date and year first above
written.
OAKHURST MANAGEMENT CORPORATION H&H DISTRIBUTORS, INC.
By: /s/ Maarten D. Hemsley By: /s/ Harold Garfinkel
------------------------------ ------------------------------------
Maarten D. Hemsley Harold Garfinkel
President President
Page 13 of 14
<PAGE> 15
EXHIBIT D
SOFTWARE AND ASSOCIATED EQUIPMENT
1 Two (2) file servers, including monitor, keyboard and mouse.
2 One (1) Application server, including monitor, keyboard and
mouse.
3 Two (2) copies of Mas90 software, plus diskettes and manuals.
4 Two (2) copies of Novell network software, plus diskettes and
manuals.
Page 14 of 14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-START> MAR-01-1997
<PERIOD-END> MAY-31-1997
<CASH> 50
<SECURITIES> 0
<RECEIVABLES> 4,943
<ALLOWANCES> 438
<INVENTORY> 5,574
<CURRENT-ASSETS> 11,047
<PP&E> 2,831
<DEPRECIATION> 1,379
<TOTAL-ASSETS> 16,354
<CURRENT-LIABILITIES> 9,121
<BONDS> 5,397
0
0
<COMMON> 32
<OTHER-SE> 1,804
<TOTAL-LIABILITY-AND-EQUITY> 16,354
<SALES> 8,291
<TOTAL-REVENUES> 8,310
<CGS> 6,799
<TOTAL-COSTS> 6,799
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 19
<INTEREST-EXPENSE> 178
<INCOME-PRETAX> (314)
<INCOME-TAX> 1
<INCOME-CONTINUING> (315)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (315)
<EPS-PRIMARY> (0.10)
<EPS-DILUTED> 0
</TABLE>
