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): July 30, 1998
BENTLEY INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
MISSOURI 0-19503 43-1325291
(State or other jurisdiction (Commission File No.) (IRS Employer ID No.)
of organization)
9719 Conway Road 63124
St. Louis, Missouri (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (314) 569-1659
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ITEM 2. DISPOSITION OF ASSETS
On July 30, 1998, pursuant to a Stock Purchase Agreement executed on
July 7, 1998, Interiors, Inc. ("Interiors") acquired all of the outstanding
shares of stock of Windsor Art, Inc. ("Windsor"), a wholly-owned subsidiary of
Bentley International, Inc. ("Bentley"). The purchase price was paid as follows:
(i) $1,700,000 in cash, (ii) a $2,000,000, secured, subordinated, long-term
promissory note providing for interest at the rate of 8% per annum and a
discount of $500,000 if paid by September 30, 1998 (the "Long Term Note"), and
(iii) a $3,300,000, secured, subordinated, short-term, promissory note,
providing for interest at the rate of 8% per annum, due September 30, 1998 (the
"Short Term Note"). The Long Term Note and the Short Term Note are collectively
referred to as the "Notes". All of the outstanding stock of Windsor was pledged
to secure repayment of the Notes. The other terms of the Long Term Note provide
that one twelfth of the outstanding principal amount and accrued interest is due
and payable quarterly commencing July 1, 1999. A payment of $300,000 was
required on the Short Term Note on July 30, 1998, reducing the principal amount
due on that note to $3,000,000. The maturity date of the Short Term Note may be
extended to October 30, 1998, if, on or before September 30, 1998, Interiors
pays Bentley (i) all interest accrued on the Short Term Note through September
30, 1998, plus (ii) $500,000 to reduce the principal amount of the Short Term
Note, plus (iii) an extension fee of $100,000, which fee will not reduce the
principal amount of the Short Term Note. If the Short Term Note is paid by
September 30, 1998, Interiors may obtain $1,000,000 in "mezzanine financing"
over and above any asset based loan secured with Windsor's assets. If, however,
the "mezzanine financing" is not paid off by December 31, 1998, Interiors is
required within ten business days to make an additional payment of $250,000 to
Bentley. Every six months thereafter, if the "mezzanine financing" remains
outstanding, Interiors within ten business days is required to pay an additional
$100,000 to Bentley. Such payments are required in accordance with the terms of
the Stock Purchase Agreement. Failure to make such payments is considered a
default under the Long Term Note but the payments do not reduce any amount due
under the Long Term Note. The Notes are also secured by a pledge of Bentley
securities described below, which securities were purchased by Interiors
pursuant to a Securities Purchase And Registration Rights Agreement dated July
30, 1998. In addition, upon payment of the "mezzanine financing" Interiors must
use its best efforts to effect a security interest in Windsor's assets
subordinate to any asset based loan to further secure the Long Term Note.
The Stock Purchase Agreement provides that so long as the
Notes to Bentley are outstanding and the Consulting Agreement (described below)
not satisfied in full, Windsor's board of directors shall consist of two
members, one appointed by Interiors and one appointed by Bentley.
In addition, on July 30, 1998, pursuant to the Securities Purchase And
Registration Rights Agreement, Interiors acquired the following equity interests
in Bentley for the consideration recited: (i) 150,000 shares of common stock of
Bentley for 750,000 shares of Class A Common Stock of Interiors ("Interiors
Stock") and (ii) a warrant to purchase an additional 300,000 shares of common
stock of Bentley for $10 per share for 750,000 shares of Interiors Stock. The
warrant will expire at the earlier of 10 years after July 30, 1998, or sixty
days after the last reported sale price per share of common stock of Bentley, as
reported on the OTC Bulletin Board or any stock exchange upon which the common
stock is subsequently listed, exceeds $15 per share. In the event that, on or
prior to December 31, 1998, (i) the Long Term Note has been repaid in full, (ii)
the "mezzanine financing", if any, has been repaid in full and (iii) a
Consulting Agreement (described below) between the former Chief Executive
Officer of Windsor, Windsor and Interiors has been bought out pursuant to the
terms thereof, Interiors has the option, but not the obligation, to purchase the
Interiors Stock owned by Bentley for $1,625,000 by December 31, 1998. In
addition, if prior to December 31, 1998, Interiors consummates an underwritten
public offering of Interiors Stock pursuant to a registration statement declared
effective under the Securities Act of 1933, as amended, in which the aggregate
gross proceeds (before underwriting fees, commissions and discounts) are at
least $15,000,000, then Interiors has the obligation, and not the option, to
repurchase the Interiors Stock for $1,625,000. The stock of Bentley and the
warrant to purchase additional stock of Bentley acquired by Interiors were
pledged to secure repayment of the Notes.
The Windsor stock is subject to a voting trust (the "Windsor Voting
Trust"). The Windsor Voting Trust has two trustees. Bentley designated one of
the trustees and Interiors designated the other. The Windsor Voting Trust
terminates upon the earlier to occur of the following: (i) the execution of an
instrument by the voting trustees, Bentley and Interiors terminating the Windsor
Voting Trust; (ii) at such time as the Notes have been paid
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in full and all obligations under the Consulting Agreement have either been paid
in full or satisfied; or (iii) at such time as Bentley acquires the Voting Trust
Certificate pursuant to the pledge made to secure repayment of the Notes, which
certificate was issued pursuant to the terms of the Windsor Voting Trust. Upon
the occurrence of either of the first two events, all of the stock of Windsor
will be delivered to Interiors. Upon the occurrence of the last event all of the
stock of Windsor will be delivered to Bentley.
The stock of Bentley and the warrant to purchase additional stock of
Bentley purchased by Interiors are also subject to a separate voting trust (the
"Bentley Voting Trust"). The Bentley Voting Trust has one trustee designated by
Bentley. At such time as the stock of Bentley and the warrant are no longer
pledged to secure payment of the Notes, Interiors has the right, subject to
applicable federal and state securities laws, to sell the stock in the Bentley
Voting Trust at any time to one or more non-affiliates so long as any such sale
does not result in the buyer owning more than 2.5% of the outstanding voting
stock of Bentley. The Bentley Voting Trust will terminate with respect to the
stock of Bentley so sold. In addition, the Bentley Voting Trust may be
terminated by agreement of the trustee, Interiors and Bentley at any time.
The Interiors stock acquired by Bentley is subject to an escrow
agreement (the "Escrow Agreement") and a voting trust (the "Interiors Voting
Trust"). U.S. Bank Trust, a national association, acts as the escrow agent under
the Escrow Agreement. Interiors has the right to designate the sole trustee of
the Interiors Voting Trust. If Interiors suffers any damage as a result of i)
any inaccuracy in or breach of any representation, warranty, covenant or
agreement made by Bentley in the Stock Purchase Agreement or in any writing
delivered pursuant to the Stock Purchase Agreement, (ii) the failure of Bentley
to perform or observe fully any covenant, agreement or provision to be performed
or observed by Bentley pursuant to the Stock Purchase Agreement; or (iii) any
action arising out of or resulting from the conduct by Windsor of its business
or operations, or Windsor's occupancy or use of its properties or assets, on or
prior to the July 30, 1998, the escrow agent is directed to release to Interiors
stock of Interiors held by the escrow agent having a then fair market value, as
defined in the Escrow Agreement, equal to the damages suffered. The Escrow
Agreement terminates on the later of (i) July 30, 1999, and (ii) the date on
which the last pending claim for damages is resolved and paid or not paid. Upon
termination of the Escrow Agreement, all stock of Interiors held by the escrow
agent will be delivered to Bentley, subject to the terms of the Interiors Voting
Trust. The Interiors Voting Trust terminates when all the parties thereto,
Bentley, Interiors and the voting trustee, agree. The Interiors Voting Trust
also terminates with respect to any stock of Interiors which Bentley sells, in
accordance with all federal and state securities laws, to a non-affiliate.
Bentley has covenanted not to sell, for ten consecutive weeks after receipt of
the Interiors stock, more than ten percent (10%) per week of the aggregate
number of shares of Interiors stock which Bentley receives.
In determining the amount of consideration received for all of the
shares of stock of Windsor, the Board of Directors considered the following
principles: multiple of last three years' earnings; multiple of book value; and,
multiple of sales. In determining appropriate multiples for each of the
aforementioned ratios certain conditions affecting the business of Windsor were
taken into consideration. Among the factors considered were the substantial
capital investment required (i) to replace Windsor's computer system and (ii) to
move Windsor's manufacturing facility as a result of the anticipated expiration
of the facility's current lease, along with Windsor's dependency on a few
key employees and suppliers. The Board also considered the prospects of
increasing Windsor's sales and potential profits in the face of strong
competition.
In connection with the sale of all the shares of Windsor, Windsor and
Interiors entered into a four year Consulting Agreement (the "Consulting
Agreement") with the former Chief Executive Officer of Windsor, Mr. Lloyd Abrams
(the "Consultant"). Mr. Abrams is the Chief Executive Officer and President of
Bentley. The Consulting Agreement provides for annual payments of $200,000 to
the Consultant for three years. In the fourth year of the Consulting Agreement,
the consulting fees will be reduced to $50,000. For all four years the
Consulting Agreement provides for additional benefits and expense reimbursements
for the Consultant, including the following: family health insurance; a St.
Louis auto expense allowance of $150 per month; a California auto expense
allowance of $450 per month plus reimbursement of certain expenses associated
with such auto; a California condominium allowance of $2,000 per month;
reimbursement of St. Louis office expenses not to exceed $2,400 per year; and
reimbursement of travel expenses in behalf of any business for Windsor,
Interiors and any of Interiors' subsidiaries to be paid by Windsor. Interiors
guaranteed the Consulting Agreement and also granted the Windsor CEO warrants
for 50,000 shares of Interiors stock and the right to grant warrants for another
40,000 shares of Interiors stock to designated employees of
Windsor.
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Exhibits
Exhibit No. Description
10.1 Stock Purchase Agreement between Bentley International, Inc.
and Interiors, Inc. dated July 7, 1998, without the
following annexes dated July 30, 1998:
Annex A-1-- $2,000,000 Promissory Note
Annex A-2-- $3,300,000 Promissory Note
Annex B-- Escrow Agreement
Annex C-- Certificate from Shareholder
Annex D-- Certificate from CEO of Company
Annex E-- Certificate from Secretary of Company
Annex F-- Non-Competition Agreement with Lloyd R. Abrams
Annex G-- Certificate from Secretary of Buyer
Annex H-- Certificate from CEO of Buyer
Annex I-- Consulting Agreement
Annex J-- Pledge Agreement
Annex K-- Continuing Guaranty
Annex L-- Securities Purchase Agreement
Annex M-- Subordination Language
Annex N-- Windsor Voting Trust Agreement
Annex O-- Bentley Voting Trust Agreement
Annex P-- Interiors Voting Trust Agreement
10.2 Securities Purchase and Registration Rights Agreement between
Bentley International, Inc. and Interiors, Inc. dated July 30,
1998
4.1 Warrant to Purchase 300,000 shares of Common Stock of
Bentley International, Inc., $0.18 par value, issued to
Interiors, Inc., dated July 30, 1998
3.1 Amendment to the Articles of Incorporation of Bentley
International, Inc., dated July 2, 1998
99 Press Releases of the Registrant dated:
August 3, 1998
July 9, 1998
July 2, 1998
June 3, 1998
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Note: This Form 8-K contains certain forward looking statements of the type
described in the "Safe Harbor" provisions of the Private Securities
Litigation Reform Act of 1995. The results of management's plans are
beyond the ability of the Company to control. Economic conditions,
product and service demand, competitive pricing and other factors could
cause materially different results from those planned by management.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Form 8-K to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated: July 30, 1998
BENTLEY INTERNATIONAL, INC.
By: /s/ Lloyd R. Abrams
Lloyd R. Abrams, President and
Chief Executive Officer
Exhibit 10.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered
into as of July 7, 1998 by and between Interiors, Inc., a Delaware corporation
("Buyer"), and Bentley International, Inc., a Missouri corporation (the
"Shareholder"), the owner of all of the issued and outstanding shares (the
"Shares") of common stock, par value $1.00 per share ("Common Stock"), of
Windsor Art, Inc., a Missouri corporation (the "Company").
R E C I T A L S
A. The Shareholder owns all of the Shares.
B. The Shareholder desires to sell to Buyer, and Buyer desires
to purchase from the Shareholder, the Shares in accordance with the terms of
this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties herein contained, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Unless the context otherwise requires, the terms defined in
this Article I shall have the meanings herein specified for all purposes of this
Agreement, applicable to both the singular and plural forms of any of the terms
herein defined. All accounting terms used in this Agreement shall, except as
otherwise provided for herein, be construed in accordance with GAAP.
"Action" shall mean any actual or threatened claim, action,
suit, arbitration, hearing, inquiry, proceeding, complaint, charge or
investigation by or before any Governmental Entity or arbitrator and any appeal
from any of the foregoing.
"Affiliate" shall mean any Person which directly or indirectly
controls, is controlled by, or is under common control with, the indicated
Person.
"Agreement" shall have the meaning assigned to such term in
the introductory paragraph of this Agreement.
"Balance Sheet" and "Balance Sheet Date" shall have the
respective meanings assigned to such terms in Section 3.04(a).
"Business Day" shall mean any day excluding Saturday, Sunday
or any day which shall be a day on which banking institutions are authorized by
federal law to close.
"Buyer" shall have the meaning assigned to such term in the
introductory paragraph of this Agreement.
"Buyer Common Stock" shall mean the Class A Common Stock, par
value $.001 per share, of Buyer.
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"Closing" and "Closing Date" shall have the respective
meanings assigned to such terms in Section 2.04.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Common Stock" shall have the meaning assigned to such term in
the introductory paragraph of this Agreement.
"Company" shall have the meaning assigned to such term in the
introductory paragraph of this Agreement.
"Credit Facility" shall have the meaning assigned to such term
in Section 3.02.
"Damages" shall mean any and all losses, liabilities,
obligations, costs, expenses, damages or judgments of any kind or nature
whatsoever (including without limitation reasonable attorneys', accountants' and
experts' fees, disbursements of counsel, and other costs and expenses incurred
pursuing indemnification claims under Article X hereof).
"Earnest Deposit" shall have the meaning assigned to such term
in Section 2.02.
"Environmental Laws" shall mean all Legal Requirements
pertaining to the protection of the environment, the treatment, emission and
discharge of gaseous, particulate and effluent pollutants and the use, handling,
storage, treatment, removal, transport, transloading, cleanup, decontamination,
discharge and disposal of Hazardous Material.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"Escrow Account" shall have the meaning set forth in the
Escrow Agreement.
"Escrow Agent" shall mean U.S. Bank Trust, a national
association, or such other party designated by Buyer and Shareholder.
"Escrow Agreement" shall have the meaning assigned to such
term in Section 2.03.
"Escrow Shares" shall have the meaning assigned to such term
in Section 2.03.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Financial Statements" shall have the meaning assigned to such
term in Section 3.04(a).
"First Promissory Note" shall have the meaning assigned to
such term in Section 2.02.
"GAAP" means United States generally accepted accounting
principles, consistently applied.
"Governmental Entity" shall mean any local, state, federal or
foreign (i) court, (ii) government or (iii) governmental department, commission,
instrumentality, board, agency or authority, including the IRS and other taxing
authorities.
"Hazardous Material" shall mean any flammable, ignitable,
corrosive, reactive, radioactive or explosive substance or material, hazardous
waste, toxic substance or related material and any other substance or material
defined or designated as a hazardous or toxic substance, material or waste by
any Environmental Law currently in effect or as amended or promulgated in the
future.
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"Indebtedness" shall mean, when used with reference to any
Person, without duplication, (i) any liability of such Person created or assumed
by such Person, or any Subsidiary thereof, (A) for borrowed money, (B) evidenced
by a bond, note, debenture or similar instrument (including a purchase money
obligation, deed of trust or mortgage) given in connection with the acquisition
of, or exchange for, any property or assets (other than inventory or similar
property acquired and consumed in the Ordinary Course), including securities and
other Indebtedness, (C) in respect of letters of credit issued for such Person's
account and "swaps" of interest and currency exchange rates (and other interest
and currency exchange rate hedging agreements) to which such Person is a party
or (D) for the payment of money as lessee under leases that should be, in
accordance with GAAP, recorded as capital leases for financial reporting
purposes; (ii) any liability of others described in the preceding clause
guaranteed as to payment of principal or interest by such Person or in effect
guaranteed by such Person through an agreement, contingent or otherwise, to
purchase, repurchase or pay the related Indebtedness or to acquire the security
therefor; (iii) all liabilities or obligations secured by a Lien upon property
owned by such Person and upon which liabilities or obligations such Person
customarily pays interest or principal, whether or not such Person has not
assumed or become liable for the payment of such liabilities or obligations; and
(iv) any amendment, renewal, extension, revision or refunding of any such
liability or obligation; provided, however, that Indebtedness shall not include
any liability for compensation of such Person's employees or for the purchase of
inventory or similar property acquired and consumed in the Ordinary Course.
"IRS" shall mean the United States Internal Revenue Service.
"Knowledge" shall mean, with respect to the Shareholder, the
knowledge of Lloyd R. Abrams, Ramakant Agarwal and Pauline M. Raschella, each of
whom is an officer of the Company and the latter two of whom are responsible for
the day-to-day operations of the Company.
"Leases" shall have the meaning assigned to such term in
Section 3.02.
"Leased Real Property" shall mean all real property,
including Structures, leased by the Company.
"Legal Requirement" shall mean any statute, law, ordinance,
rule, regulation, permit, order, writ, judgment, injunction, decree or award
issued, enacted or promulgated by any Governmental Entity or any arbitrator.
"Lien" shall mean all liens (including judgment and mechanics'
liens, regardless of whether liquidated), mortgages, assessments, security
interests, easements, claims, pledges, trusts (constructive or other), deeds of
trust, options or other charges, encumbrances or restrictions, other than any
lien created pursuant to this Agreement, including without limitation, the
Escrow Agreement and the Stock Purchase Agreement and any other lien created by
the Credit Facility.
"Material Adverse Effect" shall mean a material adverse effect
on the business, financial condition, properties, profitability, prospects or
operations of the Company.
"Options" shall mean all outstanding options, warrants and
other rights to acquire Common Stock.
"Ordinary Course" shall mean, when used with reference to the
Company or Buyer or an Affiliate of Buyer, the ordinary course of their
respective businesses consistent with past practices, including with respect to
the Company without limitation the payment of monthly dividends to Shareholder
to defray the expenses of Shareholder, including without limitation the salary
of Shareholder's President.
"Permits" shall have the meaning assigned to such term in
Section 3.16 hereof.
"Permitted Liens" shall mean (a) Liens for ad valorem real or
personal property taxes or assessments not at the time due and (b) Liens in
respect of pledges or deposits under workers' compensation laws
<PAGE>
or similar legislation, carriers', warehousemen's, mechanics', laborers' and
materialmen's and similar liens, if the obligations secured by such Liens are
not then delinquent.
"Person" shall mean all natural persons, corporations,
business trusts, associations, companies, partnerships, limited liability
companies, joint ventures, Governmental Entities and any other entities.
"Policies" shall have the meaning assigned to such term in
Section 3.09(b).
"Promissory Notes" shall have the meaning assigned to such
term in Section 2.02.
"Proprietary Information" shall have the meaning assigned to
such term in Section 3.08(b).
"Registered Rights" shall have the meaning assigned to such
term in Section 3.08(a).
"Second Promissory Note" shall have the meaning assigned to
such term in Section 2.02.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Securities Purchase Agreement" shall have the meaning
assigned to such term in Section 6.02.
"Shareholder" shall have the meaning assigned to such term in
the introductory paragraph of this Agreement.
"Shares" shall have the meaning assigned to such term in the
introductory paragraph of this Agreement.
"Stock Plans" shall mean all stock option plans and other
stock or equity-related plans of the Company.
"Structure" shall mean any facility, building, plant, factory,
office, warehouse structure or other improvement owned or leased by the Company.
"Subsidiary" of a Person shall mean any corporation,
partnership, association or other business entity at least 50% of the
outstanding voting power of which is at the time owned or controlled directly or
indirectly by such Person or by one or more of such subsidiary entities, or
both.
"Tax" shall mean any federal, state, local or foreign income,
gross receipts, license, payroll, unemployment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including, without
limitation, taxes under Code Section 59A), customs duties, capital stock,
franchise, profits, withholding, social security (or similar), employment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated tax or other
tax, assessment or charge of any kind whatsoever, including, without limitation,
any interest, fine penalty or addition thereto, whether disputed or not.
"Tax Return" shall mean any return, declaration, report, claim
for refund or information, or statement relating to Taxes, and any exhibit,
schedule, attachment or amendment thereto.
ARTICLE II
PURCHASE AND SALE OF THE SHARES
SECTION 2.01 Purchase and Sale of the Shares. Subject to the
terms and conditions set forth herein, the Shareholder agrees to sell and
deliver the Shares to Buyer, and Buyer agrees to purchase and accept the Shares
from the Shareholder, free and clear of all Liens, for the purchase price
described in Section 2.02 hereof.
<PAGE>
SECTION 2.02 Purchase Price. The aggregate purchase price for
the Shares shall be an amount equal to (i) One Million Seven Hundred Thousand
Dollars ($1,700,000.00) in cash (the "Closing Payment"), (ii) an eight percent
(8%) secured, subordinated promissory note of Buyer substantially in the form
attached as Annex A-1 hereto in the aggregate principal amount of Two Million
Dollars ($2,000,000.00) (the "First Promissory Note") and (iii) an eight percent
(8%) secured, subordinated promissory note of Buyer substantially in the form
attached as Annex A-2 hereto in the aggregate principal amount of Three Million
Three Hundred Thousand Dollars ($3,300,000.00) (the "Second Promissory Note")
(the First Promissory Note and the Second Promissory Note being hereinafter
referred to as the "Promissory Notes"). Each of Buyer and Shareholder
acknowledge that, on the date hereof, Buyer has paid to Shareholder the sum of
Two Hundred Fifty Thousand Dollars ($250,000.00) (the "Earnest Deposit") via
wire transfer of immediately available funds as a partial payment of the Closing
Amount.
SECTION 2.03 Escrow. On the Closing Date, Buyer, Shareholder
and Escrow Agent shall execute, in triplicate counterparts, each of which shall
be deemed an original, an Escrow Agreement substantially in the form of Annex B
attached hereto (the "Escrow Agreement") in order to provide Buyer with security
for indemnifiable claims hereunder. Within ten (10) Business Days after the
Closing Date, Buyer shall deliver to the Escrow Agent 1,500,000 shares of Buyer
Common Stock which are to be issued to Shareholder on the Closing Date pursuant
to the terms of the Securities Purchase Agreement (the "Escrow Shares"). Upon
termination of the Escrow Agreement, Buyer and Shareholder agree that any shares
of Buyer Common Stock to be received by Shareholder shall be placed in a voting
trust which shall be governed by the Interiors, Inc. Voting Trust Agreement No.
1 attached hereto as Annex P.
SECTION 2.04 Closing. Unless this Agreement shall have been
terminated pursuant to Section 9.01 hereof, the closing of the purchase and sale
of the Shares (the "Closing") shall take place at the offices of Paul, Hastings,
Janofsky & Walker LLP, Twenty-Third Floor, 555 South Flower Street, Los Angeles,
California 90071, at 10:00 A.M. local time on or prior to August 3, 1998, as
promptly as practicable upon satisfaction of the conditions appearing in Article
VI and Article VII hereof or at such other place as Buyer and Shareholder may
mutually establish (such time and date being referred to herein as the "Closing
Date").
SECTION 2.05 Actions at the Closing. At the Closing:
(a) The Shareholder shall deliver or cause to be
delivered to:
(i) The Voting Trustees of the Windsor Art, Inc.
Voting Trust Agreement No.1 (the "Windsor Voting Trust") attached hereto
as Annex N a certificate or certificates representing the Shares registered
in the name of the Voting Trustees; and
(ii) Buyer and Escrow Agent all of the
documents, certificates and instruments required to be delivered to Buyer and
Escrow Agent pursuant to Article VI hereof.
(b) Buyer shall deliver or caused to be delivered to:
(i) Shareholder cash in an amount equal to the
Closing Payment less the Earnest Deposit plus interest on the difference at the
rate of 8% per annum from July 7, 1998 by wire transfer of immediately
available funds to an account designated by the Shareholder in writing no later
than three (3) Business Days prior to the Closing;
(ii) Shareholder the Promissory Notes;
(iii) Riezman & Blitz, P.C. of St. Louis County,
Missouri, the certificate or certificates representing the Shares in
accordance with the Pledge Agreement attached hereto as Annex J; along with
executed copies of the stock power attached to the Windsor Voting Trust as
Exhibit B and the Voting Trust Certificate attached to the Windsor Voting Trust
as Exhibit A; and
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(iv) Shareholder and Escrow Agent all of the
documents, certificates and instruments required to be delivered to the
Shareholder and Escrow Agent pursuant to Article VI hereof.
(c) Shareholder, Buyer and the Escrow Agent shall
execute and deliver to one another the Escrow Agreement in three original
counterparts.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
REGARDING THE COMPANY
The Shareholder represents and warrants to the best of
Shareholder's knowledge and belief to, and covenants and agrees with, Buyer
(other than with respect to Sections 3.01, 3.02 and 3.03, which representations
and warranties are not qualified to the best of Shareholder's knowledge and
belief) that:
SECTION 3.01 Organization and Good Standing.
(a) The Company has been duly organized and is existing as a
corporation in good standing under the laws of the State of Missouri with
full power and authority (corporate and other) to own and lease its properties
and to conduct its business as currently conducted. The Company has been duly
qualified as a foreign corporation for the transaction of business and is in
good standing under the laws of California, Georgia, North Carolina and Texas.
(b) The Company has no Subsidiaries nor owns or controls, or has any other
equity investment or other interest in, directly or indirectly, any corporation,
joint venture, partnership, association or other Person.
SECTION 3.02 No Conflicts. Subject to compliance with the
applicable requirements of the Securities Act and any applicable state laws,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will not (a) conflict with or result in a
breach or violation of any term or provision of, or constitute a default under
(with or without notice or passage of time, or both), or otherwise give any
Person a basis for accelerated or increased rights or termination or
nonperformance under, any indenture, mortgage, deed of trust, loan or credit
agreement, lease, license or other agreement or instrument to which the Company
is a party or by which the Company is bound or affected or to which any of the
property or assets of the Company is bound or affected (except for that certain
credit facility between the Company and Norwest Business Credit, Inc. (the
"Credit Facility"), and except for the Company's manufacturing facility and
showroom leases in California, Georgia, North Carolina and Texas (the
"Leases")), (b) result in the violation of the provisions of the Articles of
Incorporation or Bylaws of the Company or any Legal Requirement applicable to or
binding upon it, or (c) result in the creation or imposition of any Lien upon
any property or asset of the Company (other than any Lien created as a result of
the transactions contemplated hereby). The Credit Facility and the Leases may
require the consent of one or more parties thereto to one or more of the
transactions contemplated hereby.
SECTION 3.03 Capitalization. The authorized capital stock of
the Company consists solely of 30,000 shares of Common Stock, of which 100
shares are, and on the Closing Date will be, issued and outstanding. The
Shareholder is the only holder of shares of Common Stock. All of the issued and
outstanding shares of Common Stock are duly authorized, validly issued, fully
paid, nonassessable and free of all preemptive rights. There are no existing
Options of any character relating to shares of Common Stock, there are no
outstanding securities or other instruments convertible into or exchangeable for
shares of Common Stock and no commitments to issue such securities or
instruments, and no Person has any right of first refusal, preemptive right,
subscription right or similar right with respect to any shares of Common Stock.
The offer, issuance and sale of the Shares were (i) exempt from the registration
and prospectus delivery requirements of the Securities Act, (ii) registered or
qualified (or exempt from registration or qualification)under the registration
or qualification requirements of all applicable state securities laws and (iii)
accomplished in conformity with all other Legal Requirements.
<PAGE>
SECTION 3.04 Financial Statements.
(a) Schedule 3.04(a) contains true and complete copies of (i) the audited
balance sheet of the Company at December 31, 1997 and the related audited
statements of income, shareholders' equity and cash flows for the year then
ended, together with the opinion thereon of Rubin, Brown, Gornstein & Co.
LLP, the Company's independent accountants, and (ii) no later than June 28,
1998, Shareholder will provide Buyer with the unaudited balance sheet of
the Company (the "Balance Sheet") dated May 31, 1998 (the "Balance Sheet
Date"), and the related unaudited statements of income, shareholders' equity
and cash flows for the five-month period ended on the Balance Sheet Date
(such audited and unaudited financial statements are collectively referred to
as the "Financial Statements").
(b) The Financial Statements present fairly the financial condition
of the Company as of the dates indicated therein and the results of
operations and changes in financial position of the Company for the periods
specified therein, have been prepared in conformity with GAAP during the
periods covered thereby and prior periods (except that the Balance Sheet and
the related unaudited statements of income, shareholders' equity and cash
flows for the five-month period ended on the Balance Sheet Date do not
contain footnotes and are subject to year end adjustments which would not,
either individually or in the aggregate, be material), have been derived
from the accounting records of the Company and represent only actual, bona
fide transactions.
SECTION 3.05 Title to Property; Encumbrances.
(a) The Company does not own any real property (other than leasehold
interests with respect to the Leases) or any Structures.
(b) The Company has, and immediately prior to the Closing will have,
good, valid and marketable title to all personal property reflected on the
Balance Sheet as owned by the Company, subject to changes in the Ordinary
Course, and all personal property acquired by the Company since the Balance
Sheet Date, subject to changes in the Ordinary Course, in each case free
and clear of all Liens except Permitted Liens; provided, however, that the
Company may transfer ownership of any life insurance policy it owns on the
life of Lloyd R. Abrams to Shareholder, with or without consideration therefor.
(c) The Leases are the only real property leases or personal property
leases to which the Company is a party. All the Leases are valid, subsisting in
full force and effect in accordance with their respective terms, and there is
not, under any Lease any existing default or event of default (or event that,
with notice or passage of time, or both, would constitute a default,or would
constitute a basis of force majeure or other claim of excusable delay or
nonperformance) by the Company thereunder or any other party thereto.For
purposes of this Agreement, a "lease" shall include a sublease.
(d) All equipment owned by the Company and all equipment held by the
Company pursuant to personal property leases, if any, is, in the
aggregate and considered as a whole, in good operating condition and repair,
subject only to ordinary wear and tear, has been operated, serviced and
maintained properly and is suitable and appropriate for the use thereof made
and proposed to be made by the Company in its business and operations.
SECTION 3.06 Inventory and Accounts Receivable.
(a) All inventory set forth or reflected in the Balance Sheet, or acquired
by the Company since the Balance Sheet Date, consists of a quality and
quantity usable and saleable by the Company in the Ordinary Course. The value
at which inventories are carried on the Balance Sheet reflects the normal
inventory valuation policy of the Company, on a basis consistent with that
used in the preparation of the audited balance sheet of Company at December 31,
1997, of stating inventory at its lower of cost or market value.
(b) All accounts receivable of the Company reflected in the Balance Sheet
and all accounts receivable of the Company that have arisen since the Balance
Sheet Date (except such accounts receivable as have been collected since
such dates and except to the extent of the allowance for doubtful accounts
reflected on
<PAGE>
the Balance Sheet) are valid and enforceable claims against the account debtor,
and the goods and services sold and delivered that gave rise to such accounts
were sold and delivered in conformity with all applicable express and implied
warranties, purchase orders, agreements and specifications. Such accounts
receivable of the Company are subject to no valid defense, offset or
counterclaim and are fully collectible in the Ordinary Course, except to the
extent of the allowance for doubtful accounts reflected on the Balance Sheet.
SECTION 3.07 Compliance with Law. Except where it has not had
a Material Adverse Effect, the Company (i) has not violated, has not conducted
its business or operations in violation of, and has not used or occupied its
properties or assets in violation of, any Legal Requirement, (ii) has not been
alleged to be in violation of any Legal Requirement, and (iii) has not received
any notice of any alleged violation of, nor any citation for noncompliance with,
any Legal Requirement.
SECTION 3.08 Trademarks, Patents, Etc.
(a) The Company has the right to use the name "Windsor" in connection with
the sale of pre-framed art and mirrors in the contiguous United States of
America and owns the toll free number 888-612- 7792. No other patent,
trademark, service mark, tradename, or copyright or license with respect
to any of the foregoing (collectively herein, "Registered Rights"), is necessary
to permit the Company's business as now conducted or as heretofore conducted.
(b) The Company has the unrestricted right to use every trade secret,
know-how, process, discovery, development, design, technique, customer and
supplier list, promotional idea, marketing and purchasing strategy, computer
program (including source code), technical data, invention, process,
confidential data and other information (collectively herein, "Proprietary
Information"),if any, required for or incident to the design, development,
manufacture, operation, sale and use of all products and services sold or
rendered or proposed to be sold or rendered by the Company, free and clear of
any right, equity or claim of others and without infringing upon or otherwise
acting adversely to the right or claimed right of any third party under or
with respect to any of the Proprietary Information. The Company has taken
reasonable security measures to protect the secrecy, confidentiality and value
of all Proprietary Information.
(c) The Company has not sold, transferred, assigned, licensed, restricted,
encumbered or subjected to any Lien, the name "Windsor" or any Proprietary
Information or any interest therein except in connection with the Credit
Facility and (ii) the Company is not obligated or under any liability whatever
to make any payments by way of royalties, fees or otherwise to any owner or
licensor of, or other claimant to, Registered Rights or Proprietary Information.
(d) There are no claims or demands of any Person pertaining to, or any
Actions that are pending or threatened, which challenge the rights of the
Company in respect of any Registered Rights or any Proprietary Information.
SECTION 3.09 Banking and Insurance.
(a) The names and locations of all financial institutions at which the
Company maintains a checking account, deposit account, securities account,
safety deposit box or other deposit or safekeeping arrangement, the numbers or
other identification of all such accounts and arrangements and the names of all
persons authorized to draw against any funds therein will be made available to
Buyer pursuant to Section 8.04 hereof.
(b) All insurance policies and bonds and self insurance arrangements
currently in force that cover or purport to cover risks or losses to, or
associated with, the Company's business, operations, premises, properties,
assets, employees, agents and directors will be made available to Buyer pursuant
to Section 8.04 hereof (the "Policies"). No facts or circumstances exist that
would cause the Company to be unable to renew its existing insurance coverage as
and when the same shall expire upon terms at least as favorable as those
currently in effect, other than possible increases in premiums that do not
result from any act or omission of the Company or the Shareholder.
<PAGE>
SECTION 3.10 Indebtedness.
(a) The Company has no liability or obligation for Indebtedness other than
pursuant to the Credit Facility and the Leases. No event has occurred and no
condition has become known to the Shareholder (other than the transactions
contemplated hereby) that constitutes or, with notice or passage of time, or
both, would constitute a default or basis of force majeure or other claim of
accelerated or increased rights, termination, excusable delay or nonperformance
by the Company or any other Person under the Credit Facility or the Leases that
would entitle any Person to require the Company to pay any portion of the
principal amount of such Indebtedness prior to the scheduled maturity thereof.
All documents associated with the Credit Facility and the Leases will be made
available to Buyer pursuant to Section 8.04 hereof.
(b) All agreements or instruments pursuant to which any of the Company's
directors, employees or the Shareholder have guaranteed any Indebtedness of the
Company (the "Guaranties") will be made available to Buyer pursuant to Section
8.04 hereof.
SECTION 3.11 Judgments; Litigation.
(a) There is no (i) outstanding judgment, order, decree, award, stipulation,
injunction of any Governmental Entity or arbitrator against or affecting the
Company or its properties, assets or business or (ii) Action pending against or
affecting the Company or its properties, assets or business, other than routine
Actions in the Ordinary Course which, individually and in the aggregate, will
not have a Material Adverse Effect. All such pending Actions shall be disclosed
to Buyer in writing prior to the Closing Date.
(b) There is no (i) outstanding judgment, order, decree, award, stipulation,
injunction of any Governmental Entity or arbitrator against or affecting any
officer, director or employee of the Company relating to the Company or its
business, (ii) Action threatened against the Company or its properties, assets
or business, (iii) Action pending or threatened against the Company's officers,
directors or employees relating to the Company or its business or (iv) basis for
the institution of any Action against the Company or any of its officers,
directors, employees, properties or assets which, if decided adversely, would
have a Material Adverse Effect.
SECTION 3.12 Income and Other Taxes.
(a) All Tax Returns required to be filed through and including the date
hereof in connection with the operations of the Company are true, complete and
correct in all material respects and have been properly and timely filed. The
Company has not requested any extension of time within which to file any Tax
Return, which Tax Return has not since been filed. True, correct and complete
copies of each Tax Return of the Company with respect to the past three taxable
years, and of all reports of, and communications from, any Governmental Entities
relating to such period will be made available to Buyer pursuant to Section 8.04
hereof. The Company has disclosed on its Federal income Tax Returns all
positions taken therein that could give rise to a substantial understatement
of income Taxes for federal income tax purposes within the meaning of Code
Section 6662.
(b) All Taxes required to be paid or withheld and deposited through and
including the date hereof in connection with the operations of the Company have
been duly and timely paid or deposited by the Company. The Company has properly
withheld or collected all amounts required by law for income Taxes and
employment Taxes relating to its employees, creditors, independent contractors
and other third parties, and for Taxes on sales, and has properly and timely
remitted such withheld or collected amounts to the appropriate Governmental
Entity. The Company has no liabilities for any Taxes for any taxable period
ending prior to or coincident with the Closing Date other than those which have
been recorded on the books and records of the Company.
(c) The Company has made adequate provision on its books of
account for all Taxes with respect to its business, properties and operations
through the Balance Sheet Date, and the accruals for Taxes in the Balance Sheet
are adequate to cover all liabilities for Taxes of the Company for all periods
ending on or before the Closing Date.
<PAGE>
(d) The Company has not heretofore (i) had a tax deficiency proposed, asserted
or assessed against it, (ii) executed any waiver of any statute of limitations
on the assessment or collection of any Taxes, or (iii) been delinquent in the
payment of any Taxes.
(e) No Tax Return of the Company has been audited or the subject of other Action
by any Governmental Entity since January 1, 1994 and, to the knowledge of the
Shareholder, prior to January 1, 1994. The Company has not received any notice
from any Governmental Entity of any pending examination or any proposed
deficiency, addition, assessment, demand for payment or adjustment relating to
or affecting the Company or its assets or properties and the Shareholders have
no reason to believe that any Governmental Entity may assess (or threaten to
assess) any Taxes for any periods ending on or prior to the Closing Date.
(f) The Company (i) has not filed any consent or agreement pursuant to Code
Section 341(f), and no such consent or agreement will be filed at any time on or
before the Closing Date; (ii) has not made any payments, is not obligated to
make any payments and is not a party to any agreement that under certain
circumstances could obligate the Company to make any payments that will not be
deductible under Code Section 280G; (iii) is not a United States real property
holding corporation within the meaning of Code Section 897(c)(2); (iv) is not a
party to a tax allocation or sharing agreement; (v) has never been (or does not
have any liability for unpaid Taxes because it was) a member of an affiliated
group within the meaning of Code Section 1504(a); (vi) has never applied for a
tax ruling from a Governmental Entity; and (vii) has never filed or been the
subject of an election under Code Section 338(g) or Code Section 338(h)(10) or
caused or been the subject of a deemed election under Code Section 338(e).
(g) The Company has no unused net operating loss, net capital loss, unused
investment or other credit, unused foreign tax or excess charitable
contribution. No representation or warranty is made that such items are
available for use by Buyer or its Affiliates.
SECTION 3.13 Corporate Records.
The copies or originals of the Articles of Incorporation, Bylaws, minute books
and stock records of the Company will be made available to Buyer pursuant to
Section 8.04 hereof.
SECTION 3.14 Employee Benefit Matters.
Copies of all pension, retirement, profit-sharing, employee stock ownership
plan, deferred compensation, stock bonus or other similar plan; medical, vision,
dental or other health plan; life insurance plan; vacation, severance, golden
parachute or other similar plan or arrangement; stock option, stock appreciation
or other similar plan or arrangement; and any other employee benefit plan,
including, without limitation, any "employee benefit plan" as defined in Section
3(3) of ERISA, which, in any case, relates to the Company will be made available
to Buyer pursuant to Section 8.04 hereof.
SECTION 3.15 No Undisclosed Liabilities
Except (i) to the extent set forth or provided for in the Financial Statements
or the notes thereto, (ii) for obligations created pursuant to the Leases or
(ii) for non-material current liabilities incurred since the Balance Sheet Date
in the Ordinary Course, as of the date hereof the Company has no material
liabilities, whether accrued, absolute, contingent or otherwise, whether due or
to become due and whether the amounts thereof are readily ascertainable or not,
or any unrealized or anticipated losses from any commitments of a contractual
nature, including Taxes with respect to or based upon the transactions or events
occurring at or prior to the Closing.
SECTION 3.16 Permits, Licenses, Etc.
The Company possesses, and is operating in material compliance with, all
franchises, licenses, permits, certificates, authorizations, rights and other
approvals of Governmental Entities necessary to (i) occupy, maintain, operate
and use the Leased Real Property as it is currently used and proposed to be used
(including, if applicable, with respect to storm water runoff and treatment of
any of the Leased Real Property as a hazardous waste facility), (ii) conduct its
business as currently conducted, and (iii) maintain and operate its employee
benefit plans (the "Permits"). Each Permit has been lawfully and validly issued,
and no proceeding is pending or threatened looking toward the revocation,
suspension or limitation of any Permit. The consummation of the transactions
contemplated hereby will not result in the revocation, suspension or limitation
of any Permit and no Permit will require the consent of its issuing authority as
a result of the
<PAGE>
consummation of the transactions contemplated hereby. All Permits will be made
available to Buyer pursuant to Section 8.04 hereof.
SECTION 3.17 Regulatory Filings.
The Company has made all required registrations and filings with and submissions
to all applicable Governmental Entities relating to the operations of the
Company as currently conducted and as proposed to be conducted, including,
without limitation, all such applicable Governmental Entities having
jurisdiction over any matters pertaining to conservation or protection of the
environment, and the treatment, discharge, use, handling, storage or production,
or disposal of Hazardous Materials. All such registrations, filings and
submissions were in compliance with all Legal Requirements (including all
Environmental Laws) and other requirements when filed, no material deficiencies
have been asserted by any such applicable Governmental Entities with respect to
such registrations, filings or submissions and no facts or circumstances exist
which would indicate that a material deficiency may be asserted by any such
authority with respect to any such registration, filing or submission.
SECTION 3.18 Consents.
All consents, authorizations and approvals of any Person that are necessary in
connection with the operations and business of the Company as currently
conducted, or for which the failure to obtain the same might have, individually
or in the aggregate, a Material Adverse Effect, have been lawfully and validly
obtained by the Company or will be obtained by the Company prior to the Closing
Date.
SECTION 3.19 Material Contracts; No Defaults.
(a) All outstanding sales orders and sales contracts of the Company have been
entered into in the Ordinary Course and will be made available to Buyer pursuant
to Section 8.04 hereof. Other than as disclosed on the Financial Statements or
as reflected in the books and records of the Company, the Company has not
received any advance, progress payment or deposit in respect of any sales order
or sales contract. The Company has no sales order or sales contract that will
result, upon completion of the performance thereof, in gross margins materially
lower than those normally experienced by the Company for services or products
covered by such sales order or sales contract.
(b) All outstanding purchase orders and purchase commitments of the Company will
be made available to Buyer pursuant to Section 8.04 hereof. All outstanding
purchase orders and purchase commitments of the Company have been incurred in
the Ordinary Course, and no purchase order or purchase commitment of the Company
is in excess of the normal, ordinary and usual requirements of the business of
the Company.
(c) All sales agency, sales representative and similar contracts or agreements
of the Company and a description of the territory or market and the expiration
or renewal date of each such contract or agreement will be made available to
Buyer pursuant to Section 8.04 hereof.
(d) There are no noncompetition agreements or covenants under which the Company
or the Shareholder or any of the Company's officers, directors or key employees
is obligated. The Company is not restricted by any agreement from carrying on
its business anywhere in the world, and no officer, director or key employee is
a party to or otherwise bound or affected by any agreement, covenant or other
arrangement or understanding that would restrict or impair his ability to
perform diligently his other duties to the Company. There are no noncompetition
agreements or covenants in favor of the Company except those created in
connection with the Agreement.
(e) All written contracts, agreements, understandings, arrangements and
commitments of the Company with any officer, director, consultant, employee or
Affiliate of the Company or with any associate, Affiliate or employee of any
Affiliate of the Company will be made available to Buyer pursuant to Section
8.04 hereof. There are no oral contracts, agreements, understandings,
arrangements and commitments of the Company with any officer, director,
consultant, employee or Affiliate of the Company or with any associate,
Affiliate or employee of any Affiliate of the Company. There are no oral
contracts, agreements, understandings or commitments with
<PAGE>
any third party by which the Company's properties, rights or assets are bound,
other than the Company's agreement to pay a $20,000 bonus to the President of
the Company.
(f) All other material contracts, agreements, understandings, arrangements and
commitments, written or oral, of the Company by which it or its properties,
rights or assets are bound that are not otherwise disclosed in this Agreement or
the Schedules hereto will be made available to Buyer pursuant to Section 8.04
hereof. For the purposes of this subsection (f), "material" means any contract,
agreement, understanding, arrangement or commitment that (i) involves
performance by any party more than ninety (90) days from the date hereof, (ii)
involves payments or receipts by the Company in excess of $15,000 or (iii)
involves capital expenditures in excess of $15,000. Prior to the Closing Date,
Buyer will be provided with a schedule of all such material agreements,
contracts, understandings, arrangements and commitments, written or oral, which
involve payments or receipts by the Company in excess of $25,000 other than
sales orders, purchase orders and catalog supply orders.
(g) No event or condition has occurred or is alleged to have occurred that
constitutes or, with notice or the passage of time, or both, would constitute a
default or a basis of force majeure or other claim of excusable delay,
termination, nonperformance or accelerated or increased rights by the Company or
any other Person under any written or oral contract, agreement, arrangement,
commitment or other understanding; and no Person with whom the Company has such
a contract, agreement, arrangement, commitment or other understanding is in
default thereunder or has failed to perform fully thereunder by reason of force
majeure or other claim of excusable delay, termination or nonperformance
thereunder, the delay, termination or nonperformance of which, or a default
under which, has had or may have a Material Adverse Effect.
SECTION 3.20 Absence of Certain Changes.
Since the Balance Sheet Date, the Company has not: (i) incurred any debts,
obligations or liabilities (absolute, accrued, contingent or otherwise), other
than current liabilities incurred in the Ordinary Course which, individually or
in the aggregate, are not material; (ii) subjected to or permitted a Lien (other
than a Permitted Lien) upon or otherwise encumbered any of its assets, tangible
or intangible; (iii) sold, transferred, licensed or leased any of its material
assets or properties except in the Ordinary Course; (iv) discharged or satisfied
any Lien other than a Lien securing, or paid any obligation or liability other
than, current liabilities shown on the Balance Sheet and current liabilities
incurred since the Balance Sheet Date, in each case in the Ordinary Course; (v)
canceled or compromised any debt owed to or by or claim of or against it, or
waived or released any right of material value other than in the Ordinary
Course; (vi) suffered any physical damage, destruction or loss (whether or not
covered by insurance) causing a Material Adverse Effect; (vii) entered into any
material transaction or otherwise committed or obligated itself to any capital
expenditure other than in the Ordinary Course (except with respect to the
acquisition of new computer software and hardware); (viii) made or suffered any
change in, or condition affecting, its condition (financial or otherwise),
properties, profitability, prospects or operations other than changes, events or
conditions in the Ordinary Course, none of which (individually or in the
aggregate) has had or may have a Material Adverse Effect; (ix) made any change
in the accounting principles, methods, records or practices followed by it or
depreciation or amortization policies or rates theretofore adopted; (x) other
than in the Ordinary Course, made or suffered any amendment or termination of
any material contract, agreement, lease or license to which it is a party; (xi)
paid, or made any accrual or arrangement for payment of, any severance or
termination pay to, or entered into any employment or loan or loan guarantee
agreement with, any current or former officer, director or employee or
consultant; (xii) paid, or made any accrual or arrangement for payment of, any
increase in compensation, bonuses or special compensation of any kind to any
employee other than the Company's agreement to pay a $20,000 bonus to the
President of the Company or in the Ordinary Course, or paid, or made any accrual
or arrangement for payment of, any increase in compensation, bonuses or special
compensation of any kind to any officer or director of the Company or any
consultant to the Company, other than the agreement to pay said $20,000 bonus to
the President of the Company; (xiii) made or agreed to make any charitable
contributions or incurred any nonbusiness expenses; (xiv) changed or suffered
change in any Plan or labor agreement affecting any employee of the Company
otherwise than to conform to Legal Requirements; or (xv) entered into any
material agreement or otherwise obligated itself to do any of the foregoing
other than in the Ordinary Course (provided, however, that, prior to the Closing
Date, Buyer will be provided with a schedule of all such material agreements,
contracts, understandings, arrangements and commitments, written or oral, which
involve payments or receipts by the Company in excess of $25,000 other than
sales orders, purchase orders and catalog supply orders).
<PAGE>
SECTION 3.21 Employees and Labor Matters.
(a) All contracts, agreements, plans, arrangements, commitments and
understandings (formal and informal, including the Company's employee manual, if
any) pertaining to terms of employment, compensation, bonuses, profit sharing,
stock purchases, stock repurchases, stock options, commissions, incentives,
loans or loan guarantees, severance pay or benefits, use of the Company's
property and related matters of the Company with any current or former officer,
director, employee or consultant will be made available to Buyer pursuant to
Section 8.04 hereof.
(b) Copies of all labor, collective bargaining, union and similar agreements
under or by which the Company is obligated will be made available to Buyer
pursuant to Section 8.04 hereof.
(c) Except for the employment and labor agreements which will be made available
to Buyer pursuant to Section 8.04 hereof, neither Buyer nor the Company will
have any responsibility for continuing any person in the employ (or retaining
any person as a consultant) of the Company from and after the Closing or have
any liability for any severance payments to or similar arrangements with any
such Person who shall cease to be an employee of the Company at or prior to the
Closing. Other than pursuant to any agreement which will be made available to
Buyer pursuant to Section 8.04 hereof, there is no agreement, arrangement,
commitment or understanding between the Company and any of its employees which
could prohibit the Company from modifying the work schedule of its employees.
(d) There is not occurring or threatened, any strike,slow down, picket, work
stoppage or other concerted action by any union or other group of employees or
other persons against the Company or its premises or products. Except for
activities by the unions that are parties to any of the agreements which will be
made available to Buyer pursuant to Section 8.04 hereof, no union or other labor
organization has attempted to organize any of the employees of the Company.
(e) The Company has complied with all Legal Requirements relating to
employment and labor, except where the failure to so comply would not have a
Material Adverse Effect, and no facts or circumstances exist that could provide
a reasonable basis for a claim of wrongful termination by any current or former
employee of the Company against the Company.
SECTION 3.22 Affiliations.
No Shareholder, officer, director or key employee of the Company or any
associate or Affiliate of the Company or any of such Persons has, directly or
indirectly, (i) an interest in any Person that (A) furnishes or sells, or
proposes to furnish or sell, services or products that are furnished or sold by
the Company or (B) purchases from or sells or furnishes to, or proposes to
purchase from or sell or furnish to, the Company any goods or services or (ii) a
beneficial interest in any contract or agreement to which the Company is a party
or by which the Company or any of the assets of the Company are bound or
affected, except as recited in the Consulting Agreement referred to in Section
6.02(d).
SECTION 3.23 Principal Customers and Suppliers.
(a) The name and address of each customer that purchased in excess of 5% of the
Company's sales of goods or services during the twelve months ended on the
Balance Sheet Date will be made available to Buyer pursuant to Section 8.04
hereof, and since that date no such customer has terminated its relationship
with or adversely curtailed its purchases from the Company or indicated (for any
reason) its intention so to terminate its relationship or curtail its purchases.
(b) Each supplier from whom the Company purchased in excess of 5% of the
Company's purchases of goods or services during the twelve months ended on the
Balance Sheet Date will be made available to Buyer pursuant to Section 8.04
hereof, and since that date no such supplier has terminated its relationship
with or adversely curtailed its accommodations, sales or services to the Company
or indicated (for any reason) its intention to terminate such relationship or
curtail its accommodations, sales or services.
<PAGE>
SECTION 3.24 Warranty Liability.
All written warranties granted or made with respect to services rendered or
products sold by the Company, and the Company's aggregate expense related to
such warranties for each of the last three years will be made available to Buyer
pursuant to Section 8.04 hereof.
SECTION 3.25 Hazardous Materials.
(a) Except for Hazardous Material used in the Ordinary Course, no Hazardous
Material (i) has been released, placed, stored, generated, used, manufactured,
treated, deposited, spilled, discharged, released or disposed of on or under any
real property currently or previously owned or leased by the Company or is
presently located on or under any Leased Real Property (or any property
adjoining any Leased Real Property), (ii) is presently maintained, used,
generated, or permitted to remain in place by the Company in violation of any
Environmental Law, (iii) is required by any Environmental Law to be eliminated,
removed, treated or mitigated by the Company, given the nature of its present
condition, location, nature, material or maintenance, or (iv) is of a type,
location, material, nature or condition which requires special notification to
third parties by the Company under Environmental Law or common law.
(b) No notice, citation, summons or order has been received by the Company or
any Shareholder, no notice has been given by the Company and no complaint has
been filed, no penalty has been assessed and no investigation or review is
pending or, to the Shareholder's knowledge, threatened by any Governmental
Entity, with respect to (i) any alleged violation by the Company of any
Environmental Law or (ii) any alleged failure by the Company to have any
environmental permit, certificate, license, approval, registration or
authorization required in connection with its business or properties, or (iii)
any use, possession, generation, treatment, storage, recycling, transportation,
release or disposal by or on behalf of the Company of any Hazardous Material.
(c) The Company has not received any request for information, notice of claim,
demand or notification that it is or that indicates that it may be a
"potentially responsible party" with respect to any investigation or remediation
of any threatened or actual release of any Hazardous Material. All Material
Safety Data Sheets applicable to the Company's operations at the Leased Real
Property will be made available to Buyer pursuant to Section 8.04 hereof.
(d) No above-ground or underground storage tanks, whether or not in use, are or
have ever been located at any property currently owned or leased by the Company,
except in the Ordinary Course. Information relating to all such storage tanks
will be made available to Buyer pursuant to Section 8.04 hereof, and prior to
the Closing Date Buyer will be provided with a schedule of all such storage
tanks with a capacity in excess of fifty-five (55) gallons.
(e) No notice has been received by the Company with respect to the listing or
proposed listing of any property currently or previously owned, operated or
leased by the Company on the National Priorities List promulgated pursuant to
CERCLA, CERCLIS or any similar state list of sites requiring investigation or
cleanup.
(f) There have been no environmental inspections, investigations, studies,
tests, reviews or other analyses conducted in relation to any Leased Real
Property except those that indicated no violation of any Legal Requirement, or
if a violation was indicated, such violation has been remedied.
(g) The Company has not released, transported, or arranged for the
transportation of any Hazardous Material from any property currently or
previously owned, operated or leased by the Company except in the Ordinary
Course with licensed and qualified carriers.
SECTION 3.26 Brokers' Fees.
No broker, finder or similar agent has been employed by or on behalf of the
Company or the Shareholder in connection with this Agreement or the transactions
contemplated hereby, and neither the Company nor the Shareholder has entered
into any agreement or understanding of any kind with any person or entity for
the payment of any brokerage commission, finder's fee or any similar
compensation in connection with this Agreement or the transactions contemplated
hereby.
<PAGE>
SECTION 3.27 Disclosure.
No representation or warranty of the Shareholder in this Agreement and no
information contained in any Schedule or other writing delivered by the
Shareholder pursuant to this Agreement or at the Closing contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact required to make the statements herein or therein not misleading.
There is no fact that the Shareholder has not disclosed to Buyer in writing that
has had or, insofar as the Shareholder can now foresee, may have a Material
Adverse Effect on the ability of the Shareholder to perform fully this
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
REGARDING BUYER
Buyer represents and warrants to the best of Buyer's knowledge and belief to,
and covenants and agrees with, Shareholder (other than with respect to Sections
4.01, 4.02, 4,03 and 4.04, which representations and warranties are not
qualified to the best of Buyer's knowledge and belief) that:
SECTION 4.01 Organization, Power and Authority of Buyer. Buyer
has been duly organized and is existing as a corporation in good standing under
the laws of the State of Delaware with full power and authority (corporate and
other) to own and lease its properties and to conduct its business as currently
conducted.
SECTION 4.02 Authorization. Buyer has the corporate power and
authority to execute and deliver this Agreement, to consummate the transactions
contemplated hereby and to perform its obligations under this Agreement. The
execution and delivery by Buyer of this Agreement, and the consummation by Buyer
of the transactions contemplated hereby, have been duly authorized by all
necessary corporate action by Buyer. This Agreement, upon its execution and
delivery by Buyer (assuming the due authorization, execution and delivery hereof
by the other parties hereto), will constitute the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency and similar laws relating to creditors' rights generally and by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
SECTION 4.03. No Conflict or Violation. Subject to compliance
with the applicable requirements of the Securities Act and any applicable state
securities laws, the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not (a) conflict
with or result in a breach or violation of any term or provision of, or
constitute a default under (with or without notice or passage of time, or both),
or otherwise give any Person a basis for accelerated or increased rights or
termination or nonperformance under, any indenture, mortgage, deed of trust,
loan or credit agreement, lease, license or other agreement or instrument to
which Buyer is a party or by which Buyer is bound or affected or to which any of
the property or assets of Buyer is bound or affected, (b) result in the
violation of the provisions of the Certificate of Incorporation or Bylaws of
Buyer or any Legal Requirement applicable to or binding upon it, (c) result in
the creation or imposition of any Lien upon any property or asset of Buyer or
(d) otherwise adversely affect the contractual or other legal rights or
privileges of Buyer. Schedule 4.03 sets forth a list of all agreements to which
Buyer is a party requiring the consent of any party thereto to any of the
transactions contemplated hereby.
SECTION 4.04 Capitalization. The authorized capital stock of
Buyer consists of (i) 60,000,000 shares of Buyer Common Stock, of which
16,624,684 were issued and outstanding on June 1, 1998,(ii) 2,500,000 shares of
Class B Common Stock, par value $.001 per share, of which 2,374,750 were issued
and outstanding on June 1, 1998 and (iii) 5,300,000 shares of preferred stock,
par value $.01 per share, of which 666,638 were issued and outstanding on June
1, 1998. All of the issued and outstanding shares of capital stock of Buyer are
duly authorized, validly issued, fully paid, nonassessable and free of all
preemptive rights. All of the Shares of Buyer Common Stock to be issued pursuant
to this Agreement, when issued in accordance with this Agreement, will be duly
authorized, validly issued, fully paid, nonassessable and free of all preemptive
rights.
SECTION 4.05 Consents and Approvals. No consent, approval,
authorization, license, permit or other action by, or filing with, any
governmental or regulatory authority is required in connection with the
<PAGE>
execution and delivery of this Agreement by Buyer or the consummation by Buyer
of the transactions contemplated hereby, except for such consents, approvals,
authorizations, licenses, permits, actions or filings as will have been
obtained, taken or filed at or prior to the Closing.
SECTION 4.06 Reports and Financial Statements. Buyer will
deliver to Shareholder prior to June 28, 1998 accurate copies, as amended or
supplemented, of its (i) Quarterly Report on Form 10-Q for the fiscal quarters
ended September 30,1997, December 31, 1997, and March 31, 1998 (ii) Annual
Report on Form 10-K for the fiscal year ended June 30, 1997, each as filed with
the Securities and Exchange Commission (the "SEC"), and (iii) all other reports
filed by the Buyer under Section 13 of the Exchange Act with the SEC since March
31, 1998 (such reports are collectively referred to herein as the "Buyer
Reports"). The Buyer Reports include all of the documents required to be filed
by the Buyer under the Exchange Act with the SEC since June 30, 1997. As of
their respective dates, the Buyer Reports did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited financial
statements and unaudited interim financial statements of the Buyer included in
the Buyer Reports (i) comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, (ii) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby (except as may be
indicated therein or in the notes thereto, and in the case of quarterly
financial statements, as permitted by Form 10-Q under the Exchange Act), (iii)
fairly present the consolidated financial condition, results of operations and
cash flows of the Buyer as of the respective dates thereof and for the periods
referred to therein, and (iv) are consistent with the books and records of the
Buyer.
SECTION 4.07 Brokers' Fees. Except for a fee which may be
payable to Henry Goldman by Buyer, no broker, finder or similar agent has been
employed by or on behalf of Buyer in connection with this Agreement or the
transactions contemplated hereby, and Buyer has not entered into any agreement
or understanding of any kind with any person or entity for the payment of any
brokerage commission, finder's fee or any similar compensation in connection
with this Agreement or the transactions contemplated hereby.
SECTION 4.08 Disclosure. No representation or warranty of the
Buyer in this Agreement and no information contained in any other writing
delivered by Buyer to the Company or the Shareholder pursuant to this Agreement
or at the Closing contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact required to make the
statements herein or therein not misleading. To the knowledge of Buyer, there is
no fact that the Buyer has not disclosed to the Company or the Shareholder in
writing that has had or, insofar as the Buyer can now foresee, may have a
Material Adverse Effect on the ability of Buyer to fully perform this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
REGARDING THE SHAREHOLDER
Shareholder hereby represents and warrants to, and covenants and agrees with,
Buyer that:
SECTION 5.01 Ownership of Shares. The Shareholder owns of
record and beneficially the Shares, and has, and immediately prior to the
Closing the Shareholder will have, good and marketable title to the Shares free
and clear of all Liens, other than the agreements and commitments contained
herein or contemplated hereby.
SECTION 5.02 Delivery of Good Title. All consents, approvals,
authorizations and orders necessary for the sale and delivery of the Shares to
be sold by the Shareholder hereunder have been obtained, and the Shareholder
has, and immediately prior to the Closing the Shareholder will have, full right,
power, authority and capacity to sell, assign, transfer and deliver the Shares
pursuant to this Agreement, subject to obtaining the requisite approval of the
shareholders of Shareholder necessary pursuant to Missouri law to convey
substantially all of the assets of Shareholder. Upon delivery of the Shares and
payment of the consideration therefor pursuant to
<PAGE>
this Agreement, valid and marketable title to the Shares, free and clear of all
Liens (other than any Lien created by Buyer) will pass to Buyer.
SECTION 5.03 Authorization. The Shareholder has the corporate
power and authority to execute and deliver this Agreement, to consummate the
transactions contemplated hereby and to perform its obligations under this
Agreement, subject to the approval of the shareholders of Shareholder as recited
above. The execution and delivery by the Shareholder of this Agreement, and the
consummation by the Shareholder of the transactions contemplated hereby, have
been duly authorized by all necessary corporate action by the Shareholder other
than the approval of the shareholders of Shareholder as recited above. Subject
to the approval of the shareholders of Shareholder as recited above, this
Agreement, upon its execution and delivery by the Shareholder (assuming the due
authorization, execution and delivery hereof by Buyer), will constitute the
legal, valid and binding obligation of the Shareholder, enforceable against the
Shareholder in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency and similar laws relating to
creditors' rights generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
SECTION 5.04 No Conflict or Violation. Subject to compliance
with the applicable requirements of the Securities Act and any applicable state
securities laws, the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not (a) conflict
with or result in a breach or violation of any term or provision of, or
constitute a default under (with or without notice or passage of time, or both),
or otherwise give any Person a basis for accelerated or increased rights or
termination or nonperformance under, any indenture, mortgage, deed of trust,
loan or credit agreement, lease, license or other agreement or instrument to
which the Shareholder is a party, other than the Credit Facility or the Leases,
or by which the Shareholder is bound or affected or to which any of the property
or assets of the Shareholder is bound or affected, other than the Credit
Facility or the Leases, (b) result in the violation of the provisions of the
Articles of Incorporation or Bylaws of the Shareholder or any Legal Requirement
applicable to or binding upon it, (c) result in the creation or imposition of
any Lien upon any property or asset of the Shareholder, other than pursuant to
the terms of this Agreement, or (d) otherwise adversely affect the contractual
or other legal rights or privileges of the Shareholder. The Credit Facility and
Leases identified above may require the consent of one or more parties thereto
to one or more of the transactions contemplated hereby.
SECTION 5.05 Restrictions on Transfer of Buyer Common Stock Under Securities
Laws.
(a) The Shareholder understands and agrees that the shares of Buyer Common Stock
it will acquire under the Securities Purchase Agreement have not been registered
under the Securities Act and that, accordingly, such shares will not be fully
transferable except as permitted under various exemptions contained in the
Securities Act or upon satisfaction of the registration and prospectus delivery
requirements of the Securities Act. The Shareholder acknowledges that it must
bear the economic risk of its investment in such shares of Buyer Common Stock
for an indefinite period of time since such shares have not been registered
under the Securities Act and therefore cannot be sold unless they are
subsequently registered or an exemption from registration is available.
(b) The Shareholder hereby represents and warrants that it is acquiring the
shares of Buyer Common Stock under the Securities Purchase Agreement for
investment purposes only, for its own account, and not as nominee or agent for
any other Person, and not with the view to, or for resale in connection with,
any distribution thereof within the meaning of the Securities Act.
(c) The Shareholder hereby agrees with Buyer as follows:
(i) The certificates evidencing the shares of Buyer Common Stock it will acquire
under the Securities Purchase Agreement, and each instrument or certificate
issued in transfer thereof, will bear substantially the following legends:
"The securities evidenced by this certificate have not been registered under the
Securities Act of 1933 and have been taken for investment purposes only and not
with a view to the distribution thereof, and such securities may not be sold or
transferred unless
<PAGE>
there is an effective registration statement under such Act covering such
securities or the issuer corporation receives an opinion of counsel (which may
be counsel for the issuer corporation) stating that such sale or transfer is
exempt from the registration and prospectus delivery requirements of such Act."
"The securities evidenced by this certificate are subject to, and transferable
only in accordance with, the provisions of a Stock Purchase Agreement between
Bentley International, Inc. and Interiors, Inc. (the "Company"). A copy of this
agreement is on file in the office of the Secretary of the Company."
(ii) The certificates representing such shares of Buyer Common Stock, and each
instrument or certificate issued in transfer thereof, will also bear any legend
required under any applicable state securities law.
(iii) Absent an effective registration statement under the Securities Act,
covering the disposition of the shares of Buyer Common Stock which the
Shareholder acquires under the Securities Purchase Agreement, the Shareholder
will not sell, transfer, assign, pledge, hypothecate or otherwise dispose of any
or all of such shares of Buyer Common Stock without first providing Buyer with
an opinion of counsel (which may be counsel for Buyer) to the effect that such
sale, transfer, assignment, pledge, hypothecation or other disposition will be
exempt from the registration and the prospectus delivery requirements of the
Securities Act and the registration or qualification requirements of any
applicable state securities laws.
(iv) The Shareholder consents to Buyer's making a notation on its records or
giving instructions to any transfer agent of the Buyer Common Stock in order to
implement the restrictions on transfer set forth in this subsection (c).
SECTION 5.06 Registration Rights. Commencing on the Closing
Date, if and whenever Buyer shall prepare a registration statement under the
Securities Act on Form S-3 covering shares of Buyer Common Stock, Buyer agrees
to give promptly written notice to the Shareholder that such registration is to
be effected. Buyer agrees to include in such registration statement such shares
of Buyer Common Stock owned by the Shareholder for which Buyer has received a
written request to register such shares by the Shareholder within thirty (30)
days after the receipt of written notice from Buyer.
ARTICLE VI
CONDITIONS TO THE CONSUMMATION OF THE AGREEMENT
SECTION 6.01 Conditions to Obligations of Buyer.
Notwithstanding any other provision of this Agreement, the obligations of Buyer
to consummate the Agreement and the other transactions contemplated hereby shall
be subject to the satisfaction, at or prior to the Closing Date, of the
following conditions:
(a) The representations and warranties of the Shareholder in this Agreement
shall be true and correct in all material respects on and as of the Closing Date
with the same effect as if made on the Closing Date and each of the Company and
Shareholder shall have complied with all covenants and agreements and satisfied
all conditions on the Company's or its part, as applicable, to be performed or
satisfied on or prior to the Closing Date.
(b) Buyer shall have received from Shareholder a certificate dated the Closing
Date in substantially the form attached as Annex C hereto.
(c) Buyer shall have received a certificate from the Chief Executive Officer of
the Company in substantially the form attached as Annex D hereto.
<PAGE>
(d) Buyer shall have received a certificate of the Secretary or Assistant
Secretary of the Company dated the Closing Date in substantially the form
attached as Annex E hereto.
(e) Lloyd R. Abrams shall have entered into a Non-Competition Agreement with
Buyer substantially in the form attached as Annex F hereto.
(f) Buyer, the Escrow Agent and the Shareholder shall have entered into the
Escrow Agreement.
(g) All authorizations, consents, waivers and approvals by or from third parties
required for the consummation of the transactions contemplated hereby shall have
been obtained and the Liens on the assets and properties of the Company listed
on Schedule 6.01(g) will be released or terminated upon Closing.
(h) All corporate and other proceedings and actions taken in connection with the
transactions contemplated hereby and all certificates, opinions, agreements,
instruments, releases and documents referenced herein or incident to the
transactions contemplated hereby shall be in form and substance reasonably
satisfactory to Buyer and its counsel.
(i) The shareholders of the Shareholder shall have approved the adoption of the
Agreement and any other matters required to be approved by them under applicable
Legal Requirements.
SECTION 6.02 Conditions to Obligations of the Shareholder.
Notwithstanding any other provision of this Agreement, the obligations of the
Shareholder to consummate the Agreement and the other transactions contemplated
hereby shall be subject to the satisfaction, at or prior to the Closing Date, of
the following conditions:
(a) The representations and warranties of Buyer in this Agreement shall be true
and correct in all material respects on and as of the Closing Date with the same
effect as if made on the Closing Date, and Buyer shall have complied with all
covenants and agreements and satisfied all conditions on its part to be
performed or satisfied on or prior to the Closing Date.
(b) The Shareholder shall have received a certificate from the Secretary of
Buyer dated the Closing Date in substantially the form attached as Annex G
hereto.
(c) The Shareholder shall have received a certificate from the President of
Buyer in substantially the form attached as Annex H hereto.
(d) Lloyd R. Abrams shall have entered into a Consulting Agreement with Company,
the terms of which shall have been guaranteed by Buyer, substantially in the
form attached as Annex I hereto.
(e) Buyer shall have entered into a Pledge Agreement with the Shareholder
substantially in the form attached as Annex J hereto.
(f) Max and Laurie Munn shall have entered into a Continuing Guaranty in favor
of Shareholder substantially in the form attached as Annex K hereto.
(g) All corporate and other proceedings and actions taken in connection with the
transactions contemplated hereby and all certificates, opinions, agreements,
instruments, releases and documents referenced herein or incident to the
transactions contemplated hereby shall be in form and substance reasonably
satisfactory to the Shareholder and its counsel.
(h) Buyer and the Shareholder shall have entered into a Securities Purchase
Agreement substantially in the form attached as Annex L hereto (the "Securities
Purchase Agreement"), and Buyer
<PAGE>
simultaneously with the Closing hereunder shall have paid to Shareholder the
consideration recited in Securities Purchase Agreement.
(i) All guarantees of Shareholder relating to obligations of the Company (other
than the Credit Facility) shall have been canceled and Shareholder shall have
been released of any other obligations whatsoever with respect to the Leases and
any other Indebtedness, obligation or liability of Company (other than the
Credit Facility).
(j) Buyer and Shareholder shall have executed the Windsor Voting Trust Agreement
and the Bentley Voting Trust Agreement (the latter substantially in the form
attached hereto as Annex O) and all other documents required by the terms of
such agreements.
ARTICLE VII
CONDUCT OF BUSINESS PENDING CLOSING
During the period commencing on the date hereof and continuing
through the Closing Date, the Shareholder covenants and agrees (except as
expressly contemplated by this Agreement or to the extent that Buyer shall
otherwise expressly consent in writing) that:
SECTION 7.01 Qualification. The Shareholder shall cause the
Company to maintain all qualifications to transact business and remain in good
standing in the foreign jurisdictions set forth in Section 3.01(a).
SECTION 7.02 Ordinary Course. The Shareholder shall cause the
Company to conduct its business in, and only in, the Ordinary Course and
preserve intact its current business organizations, keep available the services
of its current officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with it to the end that
its goodwill and going business value shall be unimpaired at the Closing Date;
provided, however, that the foregoing shall in no event prohibit the Company
from continuing its program to upgrade and replace its computer hardware and
software. The Shareholder shall cause the Company to maintain its properties and
assets in good condition and repair.
SECTION 7.03 Organic Changes. The Shareholder shall not permit
the Company to (a) amend its Articles of Incorporation or Bylaws (or equivalent
documents), (b) acquire by merging or consolidating with, or agreeing to merge
or consolidate with, or purchase substantially all of the stock or assets of, or
otherwise acquire any business or any corporation, partnership, association or
other business organization or division thereof, (c) enter into any partnership
or joint venture, (d) declare, set aside, make or pay any dividend or other
distribution in respect of its capital stock, other than in the Ordinary Course
(provided that any dividends paid by the Company to the Shareholder shall not
exceed $15,000.00 per month), or purchase or redeem, directly or indirectly, any
shares of its capital stock, (e) issue or sell or agree to issue or sell any
shares of its capital stock of any class or any options, warrants, conversion or
other rights to purchase any such shares or any securities convertible into or
exchangeable for such shares, or (f) liquidate or dissolve or obligate itself to
do so.
SECTION 7.04 Indebtedness. The Shareholder shall not permit
the Company to incur any Indebtedness, sell any debt securities or lend money to
or guarantee the Indebtedness of any Person except in the Ordinary Course. The
Shareholder shall not permit the Company to restructure or refinance its
existing Indebtedness.
SECTION 7.05 Accounting. The Shareholder shall not permit the
Company to make any change in the accounting principles, methods, records or
practices followed by it or depreciation or amortization policies or rates
theretofore adopted by it. The Shareholder shall cause the Company to maintain
its books, records and accounts in accordance with GAAP.
<PAGE>
SECTION 7.06 Compliance with Legal Requirements. The
Shareholder shall cause the Company to comply promptly with all requirements
that applicable law may impose upon it and its operations and with respect to
the transactions contemplated by this Agreement, and cooperate promptly with,
and furnish information to, Buyer in connection with any such requirements
imposed upon Company, or upon any of its Affiliates, in connection therewith or
herewith.
SECTION 7.07 Disposition of Assets. The Shareholder shall not
permit the Company to sell, transfer, license, lease or otherwise dispose of, or
suffer or cause the encumbrance by any Lien not disclosed herein to Buyer upon
any of, its material properties or assets, tangible or intangible, or any
interest therein.
SECTION 7.08 Compensation. The Shareholder shall not permit
the Company to (a) adopt or amend in any material respect any collective
bargaining, bonus, profit-sharing, compensation, stock option, pension,
retirement, deferred compensation, employment or other plan, agreement, trust,
fund or arrangement for the benefit of employees (whether or not legally
binding) other than to comply with any Legal Requirement or (b) pay, or make any
accrual or arrangement for payment of, any increase in compensation, bonuses or
special compensation of any kind, or any severance or termination pay to, or
enter into any employment or loan or loan guarantee agreement with, any current
or former officer, director, employee or consultant of the Company, other than
the $20,000 bonus heretofore accrued for the President of the Company.
SECTION 7.09 Modification or Breach of Agreements; New
Agreements. The Shareholder shall not permit the Company to terminate or modify,
or commit or cause or suffer to be committed any act (other than an act required
by the terms of this Agreement) that will result in breach or violation of any
term of, or (with or without notice or passage of time, or both) constitute a
default under or otherwise give any person a basis for nonperformance under, any
indenture, mortgage, deed of trust, loan or credit agreement, lease, license or
other agreement, instrument, arrangement or understanding, written or oral,
disclosed in this Agreement or the Schedules hereto. The Shareholder will not
permit the Company to become a party to any contract or commitment other than in
the Ordinary Course. Subject to any requirement within this Agreement, the
Shareholder will cause the Company to meet all of its contractual obligations in
accordance with their respective terms.
SECTION 7.10 Capital Expenditures. Except for capital
expenditures or commitments with regard to the upgrade of the Company's computer
system (the cost of which upgrade will not exceed $25,000 in the aggregate) and
for capital expenditures or commitments necessary to maintain its properties and
assets in good condition and repair (the amount of which for repairs only shall
not exceed $20,000 in the aggregate), the Shareholder shall not permit the
Company to purchase or enter into any contract to purchase any capital assets.
SECTION 7.11 Maintain Insurance. The Shareholder shall cause
the Company to maintain its Policies in full force and effect and shall not do,
permit or willingly allow to be done any act by which any of the Policies may be
suspended, impaired or canceled; provided, however, that the Company may replace
any existing one of its Policies with another that provides equivalent or
enhanced coverage at any time.
SECTION 7.12 Discharge. The Shareholder shall not permit the
Company to cancel, compromise, release or discharge any claim of the Company
upon or against any person or waive any right of the Company of material value,
and not discharge any Lien (other than Permitted Liens) upon any asset of the
Company or compromise any debt or other obligation of the Company to any person
other than Liens, debts or obligations with respect to current liabilities of
the Company.
SECTION 7.13 Actions. The Shareholder shall not permit the
Company to institute, settle or agree to settle any Action before any
Governmental Entity.
SECTION 7.14 Permits. The Shareholder shall cause the Company
to maintain in full force and effect, and comply with, all Permits.
SECTION 7.15 Tax Assessments and Audits. The Shareholder shall
cause the Company to furnish promptly to Buyer a copy of all notices of proposed
assessment or similar notices or reports that are received from any taxing
authority and which relate to the Company's operations for periods ending on or
prior to
<PAGE>
the Closing Date. The Shareholder shall cause the Company to promptly inform
Buyer, and permit the participation in and control by Buyer, of any
investigation, audit or other proceeding by a Governmental Entity in connection
with any Taxes, assessment, governmental charge or duty and shall not consent to
any settlement or final determination in any proceeding without the prior
written consent of Buyer.
ARTICLE VIII
ADDITIONAL COVENANTS
SECTION 8.01 Covenants of the Shareholder. During the period
commencing on the date hereof and continuing through the Closing Date, the
Shareholder agrees to:
(a) comply promptly with all requirements that applicable Legal Requirements may
impose upon it with respect to the transactions contemplated by this Agreement,
and shall cooperate promptly with, and furnish information to, Buyer in
connection with any such requirements imposed upon Buyer or upon any of its
affiliates in connection therewith or herewith;
(b) use its reasonable commercial efforts to obtain (and to cooperate with Buyer
in obtaining) any consent, authorization or approval of, or exemption by, any
Person required to be obtained or made by the Company or the Shareholder, as
applicable, in connection with the transactions contemplated by this Agreement;
(c) use its reasonable commercial efforts to bring about the satisfaction of the
conditions precedent to Closing set forth in Section 6.01 of this Agreement;
(d) promptly advise Buyer orally and, within three (3) Business Days thereafter,
in writing of any change in the Company's business or condition that has had or
may have a Material Adverse Effect; and
(e) deliver to Buyer prior to the Closing a written statement disclosing any
untrue statement in this Agreement or any Schedule hereto (or supplement
thereto) or document furnished pursuant hereto, or any omission to state any
material fact required to make the statements herein or therein contained
complete and not misleading, promptly upon the discovery of such untrue
statement or omission, accompanied by a written supplement to any Schedule to
this Agreement that may be affected thereby; provided, however, that the
disclosure of such untrue statement or omission shall not prevent Buyer from
terminating this Agreement pursuant to Section 9.01(c) hereof at any time at or
prior to the Closing in respect of any original untrue or misleading statement.
SECTION 8.02 Covenants of Buyer. During the period commencing
on the date hereof and continuing through the Closing Date, Buyer agrees to:
(a) comply promptly with all requirements that applicable Legal Requirements may
impose upon it with respect to the transactions contemplated by this Agreement,
and shall cooperate promptly with, and furnish information to, the Company and
the Shareholder in connection with any such requirements imposed upon the
Shareholder or the Company or upon any of the Affiliates of the Company in
connection therewith or herewith;
(b) use its reasonable commercial efforts to obtain (and to cooperate with
Shareholder and Company in obtaining) any consent, authorization or approval of,
or exemption by, any Person required to be obtained or made by Buyer in
connection with the transactions contemplated by this Agreement;
(c) use its reasonable commercial efforts to preserve intact its business
organization, employees and other business relationships, to operate its
business in the Ordinary Course and to maintain its books, records and accounts
in accordance with GAAP; and
<PAGE>
(d) use its reasonable commercial efforts to bring about the satisfaction of the
conditions precedent to Closing set forth in Section 6.02 of this Agreement.
SECTION 8.03 Confidentiality. Each of the parties hereto
acknowledges that all information, documents, customer lists, patents,
trademarks, copyrights, materials, specifications, business strategies,
information or any other ideas which directly relate to the business of the
other party (collectively, "Confidential Information") shall be the exclusive,
confidential property of such other party, except to the extent expressly
authorized in writing for dissemination. From the date of this Agreement through
and including the twenty-fourth (24th) month following the Closing Date, each
party shall not disclose any of such Confidential Information of the other party
to any third party without the prior written consent of the other party and
shall take all reasonable steps and actions necessary to maintain the
confidentiality of such Confidential Information. The foregoing restrictions
shall not apply to any information which (i) becomes generally available to the
public other than as a result of disclosures by the non-disclosing party, (ii)
was available to the non-disclosing party on a non-confidential basis prior to
disclosure to it by the other party, (iii) becomes available to the
non-disclosing party on a non-confidential basis from any source other than the
disclosing party, provided such source is not bound by a confidentiality
agreement with one of the parties hereto, or (iv) is required to be disclosed by
any Governmental Entity. In addition, the obligations set forth in this Section
8.03 shall not apply to Buyer with respect to Confidential Information which is
acquired by Buyer as a result of the consummation of the transactions
contemplated herein.
SECTION 8.04 Access and Information. Between the date hereof
and the Closing Date, (i) the Shareholder will cause the Company's officers,
directors, key employees and advisors to permit, Buyer and its representatives
and agents reasonable access to the Company's books and records, facilities, key
personnel, customers, suppliers, independent accountants and attorneys, as
requested by Buyer and (ii) Buyer will permit the Shareholder and its
representatives and agents access to Buyer's books and records, facilities, key
personnel, customers, suppliers, independent accountants and attorneys, as
requested by the Shareholder.
SECTION 8.05 Expenses. Except as otherwise specifically
provided herein, each party to this Agreement shall bear its own direct and
indirect expenses incurred in connection with the negotiation and preparation of
this Agreement and the consummation and performance of the transactions
contemplated hereby, including, without limitation, all legal fees and fees of
any brokers, finders or similar agents. The fees and expenses of the Escrow
Agent under the Escrow Agreement will be shared one-half by Buyer and one-half
by the Shareholder.
SECTION 8.06 Certain Notifications. At all times from the date
hereof to the Closing Date, each party shall promptly notify the others in
writing of the occurrence of any event that will or may (i) render any
statement, representation or warranty of such party in this Agreement (including
the Schedules hereto) inaccurate or incomplete in any material respect or (ii)
constitute or result in the breach by such party of, or a failure to comply
with, any agreement or covenant in this Agreement applicable to such party or
(iii) result in the failure by such party to satisfy any of the conditions
specified in Article VI hereof.
SECTION 8.07 Publicity; Employee Communications. At all times
prior to the Closing Date, each party shall obtain the consent of all other
parties hereto, which shall not be unreasonably withheld, prior to issuing, or
permitting any of its directors, officers, employees or agents to issue, any
press release or other information to the press, employees of the Company or any
third party with respect to this Agreement or the transactions contemplated
hereby; provided, however, that no party shall be prohibited from supplying any
information to any of is representatives, agents, attorneys, advisors, financing
sources and others to the extent necessary to complete the transactions
contemplated hereby so long as such representatives, agents, attorneys,
advisors, financing sources and others are made aware of and agree to be bound
by the terms of this Section 8.07. Nothing contained in this Agreement shall
prevent any party to this Agreement at any time from furnishing any required
information to any Governmental Entity or authority pursuant to a Legal
Requirement or from complying with its legal or contractual obligations.
SECTION 8.08 Further Assurances.
<PAGE>
(a) Subject to the terms and conditions of this Agreement, each of the parties
hereto agrees to use all reasonable efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable Legal Requirements, to consummate and make effective
the transactions contemplated by this Agreement.
(b) If at any time after the Closing any further action is necessary or
desirable to carry out the purposes of this Agreement, the Shareholder or the
proper officers or directors of the Company or Buyer, as the case may be, shall
take or cause to be taken all such necessary or convenient action and execute,
and deliver and file, or cause to be executed, delivered and filed, all
necessary or convenient documentation.
SECTION 8.09 Inconsistent Action. Buyer and Shareholder shall
not take or suffer to be taken, and Shareholder shall not permit the Company to
take or cause or suffer to be taken, any action that would cause any of the
representations or warranties of the Buyer or Shareholder, respectively, in this
Agreement to be untrue, incorrect, incomplete or misleading.
SECTION 8.10 Post-Termination Employment. The Shareholder
acknowledges and agrees that, subject to any written contracts of employment, if
any, after the Closing (a) Buyer shall not be required to employ or retain any
employee of the Company or any other Person, and (b) Buyer, in its sole and
absolute discretion, may cause the Company to retain all, some, or none of such
employees.
SECTION 8.11 Competing Offers; Merger or Liquidation. The
Shareholder agrees that it will not, and the Shareholder will cause the Company
not to, directly or indirectly, through any officer, director, agent or
otherwise, solicit, initiate or encourage discussions with, or the submissions
of bids, offers or proposals by, any Person with respect to an acquisition of
the Shares, and the Shareholder will not, and the Shareholder will not permit
the Company to, engage any broker, financial adviser or consultant with an
incentive to initiate or encourage proposals or offers from other parties.
Furthermore, the Shareholder shall not, and the Shareholder shall not permit the
Company to, directly or indirectly, through any officer, director, agent or
otherwise, engage in negotiations concerning any such transaction with, or
provide information to, any Person other than Buyer and its representatives,
with a view to engaging, or preparing to engage, that Person with respect to any
matters referenced in this Section. The Shareholder shall ensure that the
Company shall not commence any proceeding to merge, consolidate or liquidate or
dissolve or obligate itself to do so.
SECTION 8.12 Limitation on Indebtedness.
(a) Buyer covenants and agrees with the Shareholder that, from and after the
Closing Date and so long as either of the Promissory Notes is outstanding,
without the written consent of the Shareholder, which Shareholder may withhold
in Shareholder's absolute discretion, Buyer shall not permit the Company to
incur Indebtedness from any senior, secured lender in an amount which exceeds,
in the aggregate, (i) 85% of the Company's eligible receivables (as such term is
customarily defined by such senior, secured lender), plus (ii) 50% of the
Company's eligible inventory (as such term is customarily defined by such
senior, secured lender), plus (iii) the ordinary advance rate (as set by such
senior, secured lender) for the Company's machinery and equipment.
(b) Notwithstanding the limitations set forth in Section 8.12(a), the
Shareholder hereby consents to the Company's incurrence of Indebtedness in
excess of such limitations, up to a maximum of One Million Dollars
($1,000,000.00) (the "Mezzanine Financing"), if the Second Promissory Note has
been paid in full on or prior to September 30, 1998.
(c) In the event that the First Promissory Note remains outstanding and the
Mezzanine Financing, if any, has not been repaid by December 31, 1998 (the
"Agreed Repayment Date"), Buyer shall pay to the Shareholder the sum of $250,000
no later than ten (10) Business Days after the Agreed Repayment Date. If the
Mezzanine Financing remains outstanding on the six-month anniversary of the
Agreed Repayment Date or on any subsequent six-month anniversary date on which
the First Promissory Note is outstanding (i.e., June 30 and December 31 of each
year), then Buyer shall pay to the Shareholder the sum of $100,000 no later than
ten (10) Business Days after each such anniversary date on which the Mezzanine
Financing remains outstanding.
<PAGE>
If there exists a reasonable likelihood that the Mezzanine Financing, if any,
will not be repaid prior to the Agreed Repayment Date, Buyer will notify
Shareholder of such likelihood no later than three (3) Business Days prior to
the Agreed Repayment Date. Failure to make the payments recited above in this
subsection 8.12(c) in a timely fashion shall be considered a Default under the
First Promissory Note.
(d) Upon the repayment of the Mezzanine Financing, if any, and provided that at
such time the First Promissory Note remains outstanding, Buyer agrees to use its
best efforts to obtain the approval of the Company's senior, secured lender to
cause the Company to enter into a guaranty of the First Promissory Note and to
grant in favor of the Shareholder a subordinate lien on the assets of the
Company as security for the Company's obligations under such guaranty.
SECTION 8.12 Subordination. The Shareholder agrees that the
Promissory Notes shall be subordinated in right of payment to payment of Buyer's
Indebtedness to any senior, secured lender. The Shareholder further agrees that,
at the request of Buyer, it shall execute a Subordination Agreement containing
terms similar to those set forth in Annex M hereto in favor of any such senior,
secured lender.
SECTION 8.13 Right to Repurchase Buyer Common Stock. In the
event that, on or prior to December 31, 1998, (i) the First Promissory Note has
been repaid in full, (ii) the Mezzanine Financing, if any, has been repaid in
full and (iii) the Consulting Agreement has been repurchased pursuant to the
terms thereof, then Buyer shall have the option, but not the obligation, to
repurchase the shares of Buyer Common Stock which have been issued to the
Shareholder pursuant to the Securities Purchase Agreement (the "Buyer Shares")
on or prior to December 31, 1998 for a purchase price equal to One Million Six
Hundred Twenty-Five Thousand Dollars ($1,625,000.00) (the "Repayment Price");
provided, however, that if prior to December 31, 1998 Buyer consummates an
underwritten public offering of Buyer Common Stock pursuant to a registration
statement declared effective under the Securities Act in which the aggregate
gross proceeds (before underwriting fees, commissions and discounts) are at
least Fifteen Million Dollars ($15,000,000.00), then Buyer shall have the
obligation, and not the option, to repurchase the Buyer Shares for the Repayment
Price.
SECTION 8.14 Obligation to Repay Credit Facility. Buyer
covenants to use its best efforts to (i) cause the Company to pay all
outstanding amounts with respect to the Credit Facility and (ii) obtain an
unconditional release of all obligations of Shareholder with respect thereto on
or before September 30, 1998. Buyer acknowledges that Buyer has been informed
that prior to the Closing the agreement with respect to the Credit Facility will
be amended to permit the sale of the Shares to Buyer and to make payments of all
outstanding amounts with respect to the Credit Facility due on September 30,
1998. Buyer hereby consents to such amendments.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by mutual consent of all of the parties hereto;
(b) by the Shareholder, on the one hand, or by Buyer, on the other hand, by
written notice to the other party or parties hereto if the Closing shall not
have taken place on or before August 15, 1998 (or such later date as Buyer and
the Shareholder may agree), provided that in the case of a termination under
this clause (b), the party or parties terminating this Agreement shall not then
be in material breach of any of its or their obligations under this Agreement;
(c) by Buyer if (i) there has been a material misrepresentation, breach of
warranty or breach of covenant by the Shareholder under this Agreement or (ii)
any of the conditions precedent to Closing set
<PAGE>
forth in Section 6.01 have not been met on the Closing Date, and, in each case,
Buyer is not then in material default of its obligations hereunder; or
(d) by the Shareholder if (i) there has been a material misrepresentation,
breach of warranty or breach of covenant by Buyer under this Agreement or (ii)
any of the conditions precedent to Closing set forth in Section 6.02 have not
been met on the Closing Date, and, in each case, the Shareholder is not then in
material default of its obligations hereunder.
SECTION 9.02 Effect of Termination.
(a) In the case of any termination of this Agreement, the provisions of Sections
8.03 and 8.05 shall remain in full force and effect.
(b) Upon termination of this Agreement as provided in Section 9.01(a), this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of any party hereto or their respective directors,
officers, employees, agents or other representatives.
(c) In the event of termination of this Agreement as provided in Section 9.1(b),
(c) or (d) hereof, such termination shall be without prejudice to any rights
that the terminating party or parties may have against the breaching party or
parties or any other Person under the terms of this Agreement or otherwise.
SECTION 9.03 Amendment. This Agreement may be amended only by
a written instrument executed by each of the parties hereto. Any amendment
effected pursuant to this Section 9.03 shall be binding upon all parties hereto.
SECTION 9.04 Waiver. Any term or provision of this Agreement
may be waived in writing at any time by the party or parties entitled to the
benefits thereof. Any waiver effected pursuant to this Section 9.04 shall be
binding upon all parties hereto. No failure to exercise and no delay in
exercising any right, power or privilege shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege preclude
the exercise of any other right, power or privilege. No waiver of any breach of
any covenant or agreement hereunder shall be deemed a waiver of any preceding or
subsequent breach of the same or any other covenant or agreement. The rights and
remedies of each party under this Agreement are in addition to all other rights
and remedies, at law or in equity, that such party may have against the other
parties.
ARTICLE X
INDEMNIFICATION
SECTION 10.01 Survival of Representations and Warranties and
Covenants.
(a) The representations and warranties of the parties hereto contained in this
Agreement or in any writing delivered pursuant hereto or at the Closing shall
survive the execution and delivery of this Agreement and the Closing and the
consummation of the transactions contemplated hereby (and any examination or
investigation by or on behalf of any party hereto) until the first anniversary
of the Closing Date (except for claims in respect thereof pending at such time,
which shall survive until finally resolved or settled); provided, however, that
the representations and warranties contained in Article V and in Sections 3.01,
3.02, 3.03, 3.12 and 3.25 shall survive until the expiration of the applicable
statute of limitations.
(b) No Action may be commenced with respect to any representation, warranty,
covenant or agreement in this Agreement, or in any writing delivered pursuant
hereto, unless written notice, setting forth in reasonable detail the claimed
breach thereof, shall be delivered pursuant to Section 11.01 to the party or
parties against whom liability for the claimed breach is charged on or before
the termination of the survival period specified in Section 10.01(a) for such
representation, warranty, covenant or agreement.
SECTION 10.02 Indemnification.
<PAGE>
(a) Subject to the limitations set forth in this Article X, the Shareholder
covenants and agrees to defend, indemnify and hold harmless Buyer and each
Person who controls Buyer within the meaning of the Securities Act from and
against any Damages arising out of or resulting from: (i) any inaccuracy in or
breach of any representation, warranty, covenant or agreement made by the
Shareholder in this Agreement or in any writing delivered pursuant to this
Agreement or at the Closing, (ii) the failure of the Shareholder to perform or
observe fully any covenant, agreement or provision to be performed or observed
by the Shareholder pursuant to this Agreement; or (iii) any Action arising out
of or resulting from the conduct by the Company of its business or operations,
or the Company's occupancy or use of its properties or assets, on or prior to
the Closing Date.
(b) Subject to the limitations set forth in this Article X, Buyer covenants and
agrees to defend, indemnify and hold harmless the Shareholder from and against
any Damages arising out of or resulting from: (i) any inaccuracy in or breach of
any representation, warranty, covenant or agreement made by Buyer in this
Agreement or in any writing delivered pursuant to this Agreement or at the
Closing; or (ii) the failure by Buyer to perform or observe any covenant,
agreement or condition to be performed or observed by it pursuant to this
Agreement.
(c) The rights to indemnification set forth in this Section 10.02 shall be the
sole and exclusive remedies of the parties with respect to the breach of this
Agreement, including without limitation the breach of any representation,
warranty, covenant or agreement contained in this Agreement. Each party hereto
shall retain all rights and remedies to which it may be entitled under
applicable law for matters other than the breach of this Agreement (including,
without limitation, conduct constituting fraud by any party hereto in connection
with the transactions contemplated hereby).
SECTION 10.03 Third Party Claims.
(a) If any party entitled to be indemnified pursuant to Section 10.02 (an
"Indemnified Party") receives notice of the assertion by any third party of any
claim or of the commencement by any such third person of any Action (any such
claim or Action being referred to herein as an "Indemnifiable Claim") with
respect to which another party hereto (an "Indemnifying Party") is or may be
obligated to provide indemnification, the Indemnified Party shall promptly
notify the Indemnifying Party in writing (the "Claim Notice") of the
Indemnifiable Claim; provided, however, that the failure to provide such notice
shall not relieve or otherwise affect the obligation of the Indemnifying Party
to provide indemnification hereunder, except to the extent that any Damages
directly resulted or were caused by such failure.
(b) The Indemnifying Party shall have thirty (30) days after receipt of the
Claim Notice to undertake, conduct and control, through counsel of its own
choosing, and at its expense, the settlement or defense thereof, and the
Indemnified Party shall cooperate with the Indemnifying Party in connection
therewith; provided, however, that (i) the Indemnifying Party shall permit the
Indemnified Party to participate in such settlement or defense through counsel
chosen by the Indemnified Party (subject to the consent of the Indemnifying
Party, which consent shall not be unreasonably withheld), provided that the fees
and expenses of such counsel shall not be borne by the Indemnifying Party, and
(ii) the Indemnifying Party shall not settle any Indemnifiable Claim without the
Indemnified Party's consent, which shall not be unreasonably withheld. So long
as the Indemnifying Party is vigorously contesting any such Indemnifiable Claim
in good faith, the Indemnified Party shall not pay or settle such claim without
the Indemnifying Party's consent, which consent shall not be unreasonably
withheld.
(c) If the Indemnifying Party does not notify the Indemnified Party within
thirty (30) days after receipt of the Claim Notice that it elects to undertake
the defense of the Indemnifiable Claim described therein, the Indemnified Party
shall have the right to contest, settle or compromise the Indemnifiable Claim in
the exercise of its reasonable discretion; provided, however, that the
Indemnified Party shall notify the Indemnifying Party of any compromise or
settlement of any such Indemnifiable Claim.
(d) Anything contained in this Section 10.03 to the contrary notwithstanding,
the Shareholder shall not be entitled to assume the defense for any
Indemnifiable Claim (and shall be liable for the reasonable fees and expenses
incurred by the Indemnified Party in defending such claim) if the Indemnifiable
Claim seeks an order, injunction or other equitable relief or relief for other
than money damages against Buyer or
<PAGE>
the Company which Buyer determines, after conferring with its counsel, cannot be
separated from any related claim for money damages and which, if successful,
would adversely affect the business, properties or prospects of Buyer or the
Company; provided, however, if such equitable relief portion of the
Indemnifiable Claim can be so separated from that for money damages, the
Shareholders shall be entitled to assume the defense of the portion relating to
money damages.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01 Notices. All notices and other communications
under or in connection with this Agreement shall be in writing and shall be
deemed given (a) if delivered personally, upon delivery, (b) if delivered by
registered or certified mail (return receipt requested), upon the earlier of
actual delivery or three days after being mailed, or (c) if given by facsimile,
upon confirmation of transmission by facsimile, in each case to the parties at
the following addresses:
(a) If to Buyer addressed to:
Interiors, Inc.
320 Washington Street
Mt. Vernon, New York 10553-1017
Facsimile: (914) 665-5469
Attention: Mr. Max Munn
With copies to:
Paul, Hastings, Janofsky & Walker LLP
Twenty-Third Floor
555 South Flower Street
Los Angeles, California 90071
Facsimile: (213) 627-0705
Attention: DeAnne H. Ozaki, Esq.
and
Mr. Dennis D'Amore
1755 Glendale Boulevard
Los Angeles, California 90026
Facsimile: (213) 664-5679
and
Irvin Rothfarb, Esq.
15 West 53rd Street
New York, New York 10019
Facsimile: (212) 262-6228
(b) If to the Shareholder, addressed to:
Mr. Lloyd R. Abrams, Pres.
Bentley International, Inc.
9719 Conway Road
St. Louis, MO 63124
Facsimile: 314-569-1512
<PAGE>
With a copy to:
Mr. Richard B. Rothman
Riezman & Blitz, P.C.
7700 Bonhomme Ave. 7th Floor
St. Louis, MO 63105
Facsimile: 314-727-6458
SECTION 11.02 Severability. If any term or provision of this
Agreement or the application thereof to any circumstance shall, in any
jurisdiction and to any extent, be invalid or unenforceable, such term or
provision shall be ineffective as to such jurisdiction to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
such term or provision in any other jurisdiction, the remaining terms and
provisions of this Agreement or the application of such terms and provisions to
circumstances other than those as to which it is held invalid or enforceable.
SECTION 11.03 Entire Agreement. Except as specifically set
forth herein, this Agreement, including the annexes and schedules attached
hereto and other documents referred to herein, contain the entire understanding
of the parties hereto in respect of their subject matter and supersede all prior
and contemporaneous agreements and understandings, oral and written, among the
parties with respect to such subject matter.
SECTION 11.04 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of each of the parties hereto and their
respective successors, heirs and assigns; provided, however, that no party may
assign either this Agreement or any of its rights, interests or obligations
hereunder in whole or in part without the prior written consent of the other
parties hereto, and any such transfer or assignment without said consent shall
be void, ab initio. Subject to the immediately preceding sentence, this
Agreement is not intended to benefit, and shall not run to the benefit of or be
enforceable by, any other person or entity other than the parties hereto and
their permitted successors and assigns.
SECTION 11.05 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all
such counterparts together shall constitute but one and the same Agreement.
SECTION 11.06 Schedules and Annexes. The schedules and annexes
to this Agreement are incorporated herein and, by this reference, made a part
hereof as if fully set forth at length herein.
SECTION 11.07 Construction.
(a) The article, section and subsection headings used herein are inserted for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
(b) As used in this Agreement, the masculine, feminine or neuter gender, and the
singular or plural, shall be deemed to include the others whenever and wherever
the context so requires.
(c) For the purposes of this Agreement, unless the context clearly requires,
"or" is not exclusive.
SECTION 11.08 Consent to Jurisdiction. Each party hereto
irrevocably submits to the jurisdiction of the courts of the State of Missouri
and the United States District Court for the Eastern District of Missouri for
the purpose of any suit, action, proceeding or judgment relating to or arising
out of this Agreement and the transactions contemplated hereby and to the laying
of venue in any such court. Each party hereto irrevocably waives any claim that
any such suit, action or proceeding brought in any such court has been brought
in an inconvenient forum.
SECTION 11.09 Governing Law. This Agreement shall be governed
by and construed in accordance with the internal laws (and not the law of
conflicts) of the State of Delaware.
<PAGE>
ARTICLE XII
TAX MATTERS
SECTION 12.01 Liability for Taxes.
(a) Taxable Periods Ending On or Before the Closing Date. The Shareholder shall
be liable for, and shall indemnify and hold Buyer and the Company harmless
against, all Taxes (other than Taxes which result from actions precipitated by
Buyer) for any taxable year or taxable period ending on or before the Closing
Date due or payable by the Company (including any liability that arises because
the Company ceases on the Closing Date to be a member of a group filing
consolidated, combined or unitary Tax Returns) or with respect to the income of
any member of the Shareholder's consolidated group (other than the Company) for
any year in which the Company was a member of such group.
(b) Taxable Periods Commencing On or After the Closing Date. Buyer shall be
liable for, and shall hold, indemnify and hold the Shareholder harmless against
(i) all Taxes for any taxable year or taxable period commencing on or after the
Closing Date, due or payable by the Buyer or the Company, and (ii) any and all
Taxes resulting from any election made by the Buyer or the Company imposed on
the Buyer or the Company by the Internal Revenue Service (the "IRS") under
Section 338 the Code.
SECTION 12.02 Administrative Matters.
(a) The Shareholder shall prepare and file or cause to be prepared and filed all
federal income Tax Returns and consolidated or combined state income Tax
Returns, if any, which are required to be filed with respect to the Company for
taxable periods ending on or prior to the Closing Date and shall timely pay or
cause to be paid in full all Taxes on such Tax Returns shown to be due with
respect to such periods, subject to Section 12.01. In preparing the Tax Returns
described in the previous sentence, the operations of the Company through the
day prior to the Closing Date shall be included in such consolidated federal
income Tax Return and in such consolidated or combined state Tax Returns, if
any. In order to facilitate such filings, Buyer shall cause the Company to
prepare (in accordance with tax accounting methods, elections, and positions
utilized in prior years) and transmit to the Shareholder no later than September
15, 1998 pro-forma returns for the Company and for such taxable periods.
(b) On the day prior to the Closing, the Shareholder shall cause any and all tax
sharing arrangements between itself and the Company to be terminated and of no
further force and effect.
SECTION 12.03 Refunds or Credits.
(a) Except as otherwise set forth in this Agreement, any refunds or credits of
Taxes, to the extent that such refunds or credits are attributable to taxable
periods ending on or before the Closing Date, shall be for the account of the
Shareholder, and, to the extent that such refunds or credits are attributable to
taxable periods beginning after the Closing Date (including a Section 338
return), such refunds or credits shall be for the account of Buyer. Buyer shall
cause the Company promptly to forward to the Shareholder or to reimburse the
Shareholder for any such refunds or credits due the Shareholder after receipt
thereof by any of Buyer or the Company and the Shareholder shall promptly
forward to Buyer or reimburse Buyer for any refunds or credits due Buyer after
receipt thereof by the Shareholder.
(b) If an audit examination of any federal income tax return of the Shareholder,
or the Company for taxable periods ending on or before the Closing Date by the
IRS shall result (by settlement or otherwise) in any adjustment the effect of
which is to increase deductions, losses or tax credits or decrease income, gains
or recapture of tax credits (the "Changes") reflected on Buyer's consolidated
federal income tax return for any taxable periods commencing after the Closing
Date, the Shareholder will notify Buyer (Buyer and the Shareholder, for the
purposes of this subsection 12.03(b), shall be deemed to include, where
appropriate, the
<PAGE>
consolidated group for federal income tax purposes of which such party is a
member) and provide it with all necessary information so that it can reflect on
the Tax Returns of Buyer or the Company any appropriate Changes. If as a result
of such Changes, Buyer enjoys a net federal income tax benefit (the federal
income tax for purposes of this Agreement, shall include the alternative minimum
tax) from an increase in deductions, losses or tax credits and/or a decrease in
the income, gains or recapture of tax credits (after taking into account the
deferral of, or decrease in, deductions, losses or tax credits, or acceleration
of, or increase in, income, gain or recapture of tax credits suffered by Buyer
as a result in such Changes) ("Buyer Benefits") for all taxable periods
commencing after the Closing Date, Buyer shall promptly make payments to the
Shareholder as and when Buyer realizes such Buyer Benefits. For purposes of this
subsection 12.03(b), if a net operating loss of Buyer is increased as a result
of the use of Buyer Benefits, Buyer shall be deemed to have realized Buyer
Benefits in an amount equal to forty one percent (41%) of such increase. Such
Buyer Benefits will be claimed (in a manner to be determined by Buyer in Buyer's
reasonable judgment) on the appropriate federal income tax returns commencing
with its next federal income tax return after it has received all necessary
information from the Shareholder, or in amended returns or claims for refund
filed within a reasonable period of time after Buyer receives all necessary
information. In addition, if Buyer unreasonably fails to claim such Buyer
Benefits as described in this paragraph, Buyer shall be liable to the
Shareholder for the amount it would have been required to pay to the Shareholder
under this subsection 12.03(b) if such Buyer Benefits had been claimed by Buyer.
(c) If an audit examination of any federal income tax return of Buyer, or the
Company for taxable periods commencing after the Closing Date by the IRS shall
result (by settlement or otherwise) in any Change reflected on Shareholder's
consolidated federal income tax return for any taxable periods ending on or
before the Closing Date, Buyer will notify the Shareholder and provide it with
all necessary information so that it can reflect on the Tax Returns of the
Shareholder or the Company any appropriate Changes. If as a result of such
Changes, the Shareholder enjoys a net federal income tax benefit from an
increase in deductions, losses or tax credits and/or a decrease in the income,
gains or recapture of tax credits (after taking into account the deferral of, or
decrease in deductions, losses or tax credits, or acceleration of, or increase
in, income, gain or recapture of tax credits suffered by the Shareholder as a
result of such Changes) ("Shareholder Benefits") for all taxable periods ending
on or before the Closing Date, the Shareholder shall promptly make payments to
Buyer as and when the Shareholder realizes such Shareholder Benefits. For
purposes of this subsection 12.03(c), if a net operating loss of Shareholder is
increased as a result of the use of Shareholder Benefits, Shareholder shall be
deemed to have realized Shareholder Benefits in an amount equal to forty one
percent (41%) of such increase. Such Shareholder Benefits will be claimed (in a
manner to be determined by the Shareholder in the Shareholder's reasonable
judgment) on the appropriate federal income tax returns commencing with its next
federal income tax return, after it has received all necessary information from
Buyer, or in amended returns or claims for refund filed within a reasonable
period of time after the Shareholder receives all necessary information. In
addition, if the Shareholder unreasonably fails to claim such Shareholder
Benefits as described in this paragraph, the Shareholder shall be liable to
Buyer for the amount it would have been required to pay to Buyer under this
subsection 12.03(c) if such Shareholder Benefits had been claimed by the
Shareholder.
SECTION 12.04 Cooperation With Respect to Tax Matters.
Shareholder and Buyer recognize that Company has joined with certain
subsidiaries of Shareholder in filing unitary, consolidated or combined Tax
Returns. Accordingly, after the Closing, Shareholder and Buyer (i) shall
provide, or shall cause to be provided, to and by each other and each other's
respective subsidiaries, officers, employees and representatives such assistance
as may reasonably be requested by any of them in connection with the preparation
of any Tax Return, any audit or other examination by any taxing authority or any
judicial or administrative proceeding (collectively, an "Audit") relating to the
income, gains, losses, deductions, credits or other items of the Company and
(ii) shall retain, or shall cause to be retained, for as long as any taxable
year through and including the taxable year that includes the Closing Date shall
remain open for adjustments, any records or information which may be relevant to
any such Tax Return or Audit. The assistance provided for in this Section 12.04
shall include, without limitation, (i) making their employees and the employees
of their respective subsidiaries available on a mutually convenient basis to
provide such assistance as might reasonably be expected to be of use in
connection with any such Tax Return or Audit and (ii) providing or, causing to
be provided, such information as might reasonably be expected to be of use in
connection with any such Tax Return or Audit, including, without limitation,
records, returns, schedules, documents, work papers, opinions, letters or
memoranda, or other relevant materials relating thereto. The party
<PAGE>
requesting the assistance provided for in this Section 12.04 shall reimburse the
party whose assistance is requested for reasonable costs incurred by it in
providing such assistance.
SECTION 12.05 Contests. Whenever any taxing authority asserts
a claim, makes an assessment, or otherwise disputes the amount of Taxes for
which Shareholder is or may be liable under this Agreement, Buyer shall promptly
inform Shareholder, and Shareholder shall have the right to control any
resulting proceedings and to determine whether and when to settle any such
claim, assessment or dispute to the extent such proceedings or determination
affect the amount of Taxes for which Shareholder is liable under this Agreement.
Whenever any taxing authority asserts a claim, makes an assessment or otherwise
disputes the amount of Taxes for which Buyer is liable under this Agreement,
Shareholder shall promptly inform Buyer, and Buyer shall have the right to
control any resulting proceedings and to determine whether and when to settle
any such claim, assessment or dispute to the extent such proceedings or
determination affect the amount of Taxes for which Buyer is liable under this
Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
BENTLEY INTERNATIONAL, INC.
By: /s/ Lloyd R. Abrams, President
An Authorized Officer
INTERIORS, INC.
By:/s/ Max Munn, President
An Authorized Officer
<PAGE>
Annex A-1-- $2,000,000 Promissory Note
Annex A-2-- $3,300,000 Promissory Note
Annex B-- Escrow Agreement
Annex C-- Certificate from Shareholder
Annex D-- Certificate from CEO of Company
Annex E-- Certificate from Secretary of Company
Annex F-- Non-Competition Agreement with Lloyd R. Abrams
Annex G-- Certificate from Secretary of Buyer
Annex H-- Certificate from CEO of Buyer
Annex I-- Consulting Agreement
Annex J-- Pledge Agreement
Annex K-- Continuing Guaranty
Annex L-- Securities Purchase Agreement
Annex M-- Subordination Language
Annex N-- Windsor Voting Trust Agreement
Annex O-- Bentley Voting Trust Agreement
Annex P-- Interiors Voting Trust Agreement
Exhibit 10.2
SECURITIES PURCHASE AND REGISTRATION RIGHTS AGREEMENT
THIS SECURITIES PURCHASE AND REGISTRATION RIGHTS AGREEMENT (this
"Agreement") is entered into as of July 30, 1998, by and between Bentley
International, Inc., a Missouri corporation (the "Company"), and Interiors,
Inc., a Delaware corporation ("Investor").
RECITALS
A. WHEREAS, the Company and Investor have entered into that certain
Stock Purchase Agreement dated as of July 7, 1998 (the "Stock Purchase
Agreement").
B. WHEREAS, in connection with the transactions contemplated by the
Stock Purchase Agreement, Investor desires to purchase, and the Company desires
to sell, the securities described herein on the terms and conditions described
herein.
NOW, THEREFORE, the parties hereto hereby agree as follows:
Definitions. Unless the context otherwise requires, the terms
defined in this Section 1 shall have the meanings herein specified for
all purposes of this Agreement, applicable to both the singular and
plural forms of any of the terms herein defined.
"Agreement" means this Securities Purchase and Registration
Rights Agreement.
"Common Stock" means the common stock, $.18 par value, of the Company.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Investor" has the meaning assigned to it in the
introductory paragraph of this Agreement.
"Investor Common Stock" means the Class A Common Stock, par value $.001
per share, of Investor.
"Lien" means any mortgage, pledge, security interest, encumbrance,
community property interest, trust, option, lien or charge of any
kind, including, without limitation, any conditional sale or other
title retention agreement, any lease in the nature thereof and the
filing of or agreement to give any financing statement under the
Uniform Commercial Code of any jurisdiction and including any lien or
charge arising by statute or other law.
"Person" includes any natural person, corporation, trust, association,
company, partnership, limited liability company, joint venture and
other entity and any government, governmental agency, instrumentality
or political subdivision.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement
in compliance with the Securities Act, and the declaration or ordering
of the effectiveness of such registration statement.
"Registrable Securities" means (1) the Shares, (2) the Warrant Shares,
and (3) any securities issued or issuable with respect to the Common
Stock referred to in clauses (1) or (2) above by way of a stock
dividend or stock split or in connection with a combination of shares,
reclassification, recapitalization, merger or consolidation or
reorganization.
<PAGE>
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means the shares of Common Stock which have been issued to
Investor by the Company pursuant to this Agreement.
"Warrant" means the warrant to purchase Common Stock which has been
issued to Investor by the Company pursuant to this Agreement, and any
warrant issued upon transfer or substitution thereof.
"Warrant Certificate" means the certificate dated of even date
herewith, held by Investor and evidencing the right to purchase up to
300,000 shares of Common Stock.
"Warrant Shares" means the Common Stock issued or issuable upon
exercise of the Warrant.
Purchase and Sale of Shares.
(a) Authorization of Shares. The Company has authorized the issuance and sale of
ONE HUNDRED FIFTY THOUSAND (150,000) shares of Common Stock of the Company.
(b) Sale and Purchase of Shares. Concurrently herewith, the Company hereby sells
to Investor and Investor hereby purchases from the Company ONE HUNDRED FIFTY
THOUSAND (150,000) shares of Common Stock of the Company for an aggregate
purchase price of SEVEN HUNDRED FIFTY THOUSAND (750,000) shares of Investor
Common Stock. Investor hereby acknowledges receipt of the Shares, and the
Company hereby acknowledges receipt of the purchase price therefor.
Purchase and Sale of Warrant.
(a) Authorization of Warrant. The Company has authorized the issuance and sale
of the Warrant to purchase THREE HUNDRED THOUSAND (300,000) shares of Common
Stock of the Company, having the terms set forth herein and in the Warrant
attached hereto as Exhibit A.
(b) Sale and Purchase of Warrant. Concurrently herewith, the Company hereby
sells to Investor and Investor hereby purchases from the Company the Warrant for
a purchase price of SEVEN HUNDRED FIFTY THOUSAND (750,000) shares of Investor
Common Stock. Investor hereby acknowledges receipt of the Warrant, and the
Company hereby acknowledges receipt of the purchase price therefor.
Company Representations and Warranties.
In connection with the purchase of the Shares and the Warrant hereunder, the
Company represents and warrants to Investor the following:
(a) Organization, Power and Authority of the Company. The
Company has been duly organized and is existing as a corporation in good
standing under the laws of the State of Missouri with full power and authority
(corporate and other) to own and lease its properties and to conduct its
business as currently conducted.
(b) Authorization. The Company has the corporate power and
authority to execute and deliver this Agreement, to consummate the transactions
contemplated hereby and to perform its obligations under this Agreement. The
execution and delivery by the Company of this Agreement, and the consummation by
the Company of the transactions contemplated hereby, have been duly authorized
by all necessary corporate action by the Company. This Agreement, upon its
execution and delivery by the Company (assuming the due authorization, execution
and delivery hereof by the other parties hereto), will constitute the legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency and similar laws relating to creditors' rights
generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
<PAGE>
(c) No Conflict or Violation. Subject to compliance with the
applicable requirements of the Securities Act and any applicable state
securities laws, the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not (a) conflict
with or result in a breach or violation of any term or provision of, or
constitute a default under (with or without notice or passage of time, or both),
or otherwise give any Person a basis for accelerated or increased rights or
termination or nonperformance under, any indenture, mortgage, deed of trust,
loan or credit agreement, lease, license or other agreement or instrument to
which the Company is a party or by which the Company is bound or affected or to
which any of the property or assets of the Company is bound or affected, (b)
result in the violation of the provisions of the Articles of Incorporation or
Bylaws of the Company or any legal requirement applicable to or binding upon the
Company, (c) result in the creation or imposition of any Lien upon any property
or asset of the Company or (d) otherwise adversely affect the contractual or
other legal rights or privileges of the Company.
(d) Capitalization. The authorized capital stock of the
Company consists of 10,000,000 shares of the Company's Common Stock, of which
2,813,285 were issued and outstanding on June 1, 1998. All of the issued and
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid, nonassessable and free of all preemptive rights. The Shares,
the Warrant and the Warrant Shares to be issued pursuant to this Agreement, when
issued in accordance with this Agreement and the Warrant, will be duly
authorized, validly issued, fully paid, nonassessable and free of all Liens
(other than those created by Investor in connection with the Stock Purchase
Agreement and the other agreements referred to therein) and preemptive rights.
(e) Consents and Approvals. No consent, approval,
authorization, license, permit or other action by, or filing with, any
governmental or regulatory authority is required in connection with the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated hereby, except for such consents,
approvals, authorizations, licenses, permits, actions or filings as have been
obtained, taken or filed at or prior to the date hereof.
(f) Reports and Financial Statements. The Company has
previously furnished to Investor complete and accurate copies, as amended or
supplemented, of its (i) Quarterly Report on Form 10-QSB for the fiscal quarter
ended March 31, 1998, (ii) Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1997, each as filed with the Commission, and (iii) all other
reports filed by the Company under Section 13 of the Exchange Act with the
Commission since March 31, 1998 (such reports are collectively referred to
herein as the "Company Reports"). The Company Reports include all of the
documents required to be filed by the Company under the Exchange Act with the
Commission since December 31, 1997. As of their respective dates, the Company
Reports did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The audited financial statements and unaudited interim financial
statements of the Company included in the Company Reports (i) comply as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission with respect thereto, (ii)
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods covered thereby (except as
may be indicated therein or in the notes thereto, and in the case of quarterly
financial statements, as permitted by Form 10-QSB under the Exchange Act), (iii)
fairly present the consolidated financial condition, results of operations and
cash flows of the Company as of the respective dates thereof and for the periods
referred to therein, and (iv) are consistent with the books and records of the
Company.
(g) Brokers' Fees. No broker, finder or similar agent has been
employed by or on behalf of the Company in connection with this Agreement or the
transactions contemplated hereby, and the Company has not entered into any
agreement or understanding of any kind with any person or entity for the payment
of any brokerage commission, finder's fee or any similar compensation in
connection with this Agreement or the transactions contemplated hereby.
(h) Disclosure. To the knowledge of the Company, no
representation or warranty of the Company in this Agreement and no information
contained in any other writing delivered by the Company to Investor pursuant to
this Agreement contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact required to make the statements
herein or therein not misleading. To the
<PAGE>
knowledge of the Company, there is no fact that the Company has not disclosed to
Investor in writing that has had or, insofar as the Company can now foresee, may
have a material adverse effect on the ability of the Company to fully perform
this Agreement.
(i) Securities Laws. The offer, issue and sale of the Shares,
the Warrant and the Warrant Shares are and will be exempt from the registration
and prospectus delivery requirements of the Securities Act, and have been
registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state securities laws.
Restrictions on Transfer of Shares Under Securities Laws.
(a) The Investor understands and agrees that the Shares, the
Warrant and the Warrant Shares have not been registered under the Securities Act
and that, accordingly, they will not be fully transferable except as permitted
under various exemptions contained in the Securities Act or upon satisfaction of
the registration and prospectus delivery requirements of the Securities Act. The
Investor acknowledges that it must bear the economic risk of its investment in
such securities for an indefinite period of time since they have not been
registered under the Securities Act and therefore cannot be sold unless they are
subsequently registered or an exemption from registration is available.
(b) The Investor hereby represents and warrants that it is
acquiring the Shares, the Warrant and the Warrant Shares for investment purposes
only, for its own account, and not as nominee or agent for any other Person, and
not with the view to, or for resale in connection with, any distribution thereof
within the meaning of the Securities Act.
(c) The Investor hereby agrees with the Company as follows:
(i) The certificates evidencing the Shares, the Warrant and the Warrant Shares,
and each instrument or certificate issued in transfer thereof, will bear
substantially the following legends:
"The securities evidenced by this certificate have not been
registered under the Securities Act of 1933 and have been
taken for investment purposes only and not with a view to
the distribution thereof, and such securities may not be
sold or transferred unless there is an effective
registration statement under such Act covering such
securities or the issuer corporation receives an opinion of
counsel (which may be counsel for the issuer corporation)
stating that such sale or transfer is exempt from the
registration and prospectus delivery requirements of such
Act."
"The securities evidenced by this certificate are subject
to, and transferable only in accordance with, the provisions
of a Securities Purchase and Registration Rights Agreement
between Bentley International, Inc. (the "Company") and
Interiors, Inc. ("Interiors"). A copy of this agreement is
on file in the office of the Secretary of the Company."
"The securities evidenced by this certificate are subject to
the provisions of a Pledge Agreement between the Company and
Interiors. A copy of this agreement is on file in the office
of the Secretary of the Company."
"The securities evidenced by this certificate are subject to
the terms of the Bentley International, Inc. Voting Trust
Agreement No. 1. A copy of this agreement is on file in the
office of the Secretary of the Company."
(ii) The certificates representing the Shares, the Warrant and the Warrant
Shares and each instrument or certificate issued in transfer thereof, will also
bear any legend required under any applicable state securities law.
<PAGE>
(iii) Absent an effective registration statement under the Securities Act,
covering the disposition of the Shares, the Warrant and the Warrant Shares, the
Investor will not sell, transfer, assign, pledge, hypothecate or otherwise
dispose of any or all of the Shares, the Warrant and the Warrant Shares without
first providing the Company with an opinion of counsel (which may be counsel for
the Company) to the effect that such sale, transfer, assignment, pledge,
hypothecation or other disposition will be exempt from the registration and the
prospectus delivery requirements of the Securities Act and the registration or
qualification requirements of any applicable state securities laws.
(iv) The Investor consents to the Company's making a notation on its records or
giving instructions to any transfer agent of the Shares, the Warrant and the
Warrant Shares in order to implement the restrictions on transfer set forth in
this subsection (c).
(d) The Investor hereby agrees with the Company that, without
the prior written consent of the Company, it will not sell or transfer any of
the Shares or the Warrant Shares to any Person who, immediately after such sale
or transfer, will own more than 4.9% of the issued and outstanding Common Stock.
Required Registration.
Commencing on the date hereof, if and whenever the Company shall prepare a
registration statement under the Securities Act on Form S-3 covering shares of
Common Stock, the Company agrees to give promptly written notice to Investor
that such registration is to be effected. The Company agrees to include in such
registration statement such shares of Registrable Securities for which it has
received a written request to register such shares by Investor within thirty
(30) days after the receipt of written notice from the Company.
Reporting Requirements Under the Exchange Act.
The Company shall timely file such information, documents and reports as the
Commission may require or prescribe under Section 13 of the Exchange Act. The
Company acknowledges and agrees that the purposes of the requirements contained
in this Section 7 are (a) to enable the Investor to comply with the current
public information requirement contained in paragraph (c) of Rule 144 should
Investor ever wish to dispose of any of the Shares or the Warrant Shares without
registration under the Securities Act in reliance upon Rule 144 (or any other
similar exemptive provision) and (b) to qualify the Company for the use of
registration statements on Form S-3.
Forms.
All references in this Agreement to particular forms of registration statements
are intended to include, and shall be deemed to include, references to all
successor forms which are intended to replace, or to apply to similar
transactions as, the forms herein referenced.
General Provisions.
Notices. All notices and other communications which are required or permitted to
be given pursuant to the terms of this Agreement must be delivered in accordance
with the provisions of Section 11.01 of the Stock Purchase Agreement.
Choice of Law. This Agreement shall be governed by and construed in accordance
with the internal laws (and not the law of conflicts of law) of the State of
Missouri.
Severability. The parties hereto agree that the terms and provisions in this
Agreement are reasonable and shall be
<PAGE>
binding and enforceable in accordance with the terms hereof and, in any event,
that the terms and provisions of this Agreement shall be enforced to the fullest
extent permissible under law. In the event that any term or provision of this
Agreement shall for any reason by adjudged to be unenforceable or invalid, then
such unenforceable or invalid term or provision shall not affect the
enforceability or validity of the remaining terms and provisions of this
Agreement, and the parties hereto hereby agree to replace such unenforceable or
invalid term or provision with an enforceable and valid arrangement which, in
its economic effect, shall be as close as possible to the unenforceable or
invalid term or provision.
Parties in Interest. All the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
permitted successors and assigns of the parties hereto, whether so expressed or
not.
Counterparts. This Agreement may be executed in any number of counterparts and
by different parties in separate counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
Modification, Amendment and Waiver. This Agreement may be amended only in
writing with the written consent of Investor and the Company. Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally or by course of dealing, but only by a statement in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought, except to the extent provided in this Section 9.
Specifically, but without limiting the generality of the foregoing, the failure
of Investor at any time or times to require performance of any provision hereof
by the Company shall in no manner affect its right at a later time to enforce
the same. No waiver by any party of the breach of any term or provision
contained in this Agreement, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such breach, or a
waiver of the breach of any other term or covenant contained in this Agreement.
Further Assurances. The parties agree to execute such further instruments and to
take such further action as may reasonably be necessary to carry out the intent
of this Agreement, and the Company specifically agrees to cooperate
affirmatively with Investor, if any, to the extent reasonably requested by
Investor, to enforce the rights of Investor and its assignees hereunder.
Headings. The headings of the Sections and paragraphs of this Agreement have
been inserted for convenience of reference only and do not constitute a part of
this Agreement.
<PAGE>
Gender and Number. As used in this Agreement, the masculine, feminine or neuter
gender, and the singular or plural, shall be deemed to include the others
whenever and wherever the context so requires. Additionally, unless the context
requires otherwise, "or" is not exclusive.
Jurisdiction and Venue. Each party hereto irrevocably submits to the
jurisdiction of the courts of the State of Missouri and the United States
District Court for the Eastern District of Missouri for the purpose of any suit,
action, proceeding or judgment relating to or arising out of this Agreement and
the transactions contemplated hereby and to the laying of venue in any such
court. Each party hereto irrevocably waives any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum.
<PAGE>
[SIGNATURE PAGE OF SECURITIES PURCHASE
AND REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, or caused this Agreement to be duly executed on their behalf, as of
the day and year first above written.
COMPANY:
BENTLEY INTERNATIONAL, INC.,
a Missouri corporation
By:/s/ Lloyd R. Abrams
Name: Lloyd R. Abrams
Title: President
Address: Bentley International, Inc.
9719 Conway Road
St. Louis, Missouri 63124
INVESTOR:
INTERIORS, INC.,
a Delaware corporation
By:/s/ Max Munn
Name: Max Munn
Title: President
Address: Interiors, Inc.
320 Washington Street
Mt. Vernon, New York 10553-1017
<PAGE>
Exhibit A
WARRANT
TO PURCHASE SHARES OF COMMON STOCK
OF
BENTLEY INTERNATIONAL, INC.
THE WARRANT REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND NEITHER THIS WARRANT NOR ANY INTEREST THEREIN MAY BE
TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF WITHOUT REGISTRATION UNDER
THAT ACT OR AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED. THE WARRANT EVIDENCED BY THIS CERTIFICATE AND ANY
SHARES OF COMMON STOCK ISSUED UPON EXERCISE HEREOF ARE SUBJECT TO, AND
TRANSFERABLE ONLY IN ACCORDANCE WITH, THE PROVISIONS OF A SECURITIES PURCHASE
AGREEMENT BETWEEN THE COMPANY AND INVESTOR, ARE SUBJECT TO THE PROVISIONS OF A
PLEDGE AGREEMENT BETWEEN THE COMPANY AND INVESTOR, AND ARE SUBJECT TO THE TERMS
OF THE BENTLEY INTERNATIONAL, INC. VOTING TRUST AGREEMENT NO. 1, ALL DATED AS OF
THE SAME DATE AS THIS WARRANT. COPIES OF THE AFOREMENTIONED AGREEMENTS ARE ON
FILE IN THE OFFICE OF THE SECRETARY OF THE COMPANY.
No. W -- 1 Warrant to Purchase Three Hundred Thousand (300,000)
________ ___, 1998 Shares of Common Stock, $.18 Par Value
WARRANT TO PURCHASE COMMON STOCK
of
BENTLEY INTERNATIONAL, INC.,
a Missouri corporation
This certifies that, for value received, Interiors, Inc., a Delaware corporation
("Investor"), or registered assigns (Investor or any such assign being referred
to herein as "Holder") is entitled, subject to the terms set forth below, to
purchase from Bentley International, Inc., a Missouri corporation (the
"Company"), three hundred thousand (300,000) shares of Common Stock, $.18 par
value, of the Company (such class of stock being referred to herein as "Common
Stock"), as constituted on the date hereof (the "Issue Date"), upon surrender of
this Warrant, at the principal office of the Company referred to below, with the
subscription form attached hereto duly executed, and simultaneous payment
therefor in the consideration specified in Section 1 hereof, at the price of
$10.00 per share (the "Purchase Price"). The shares of Common Stock issued or
issuable upon exercise of this Warrant are sometimes referred to as the "Warrant
Shares." The term "Warrant" as used herein shall include this Warrant and any
warrants delivered in substitution or exchange therefor as provided herein. This
Warrant is issued pursuant to the terms of, and is the Warrant referenced in,
that certain Securities Purchase Agreement dated of even date herewith by and
between the Company and Investor.
Exercise and Payment of Purchase Price. This Warrant may be exercised at any
time or from time to time, on any business day, on or after the date hereof
through the earlier to occur of (i) ten (10) years from the date hereof or (ii)
sixty (60) days after the last reported sale price per share of Common Stock, as
reported on the OTC Bulletin Board or any stock exchange upon which the Common
Stock is subsequently listed, exceeds $15.00 per share (as such target price may
be adjusted for the effect of any stock split, stock dividend, recapitalization
or similar event effected by the Company after the date hereof), for all or part
of the full number of shares of Common Stock during the period of time called
for hereby, by surrendering it at the principal office of the Company, 9719
Conway Road,
<PAGE>
St. Louis, Missouri 63124, with the subscription form duly executed, together
with payment for the Warrant Shares payable in cash or cash equivalents. No
other form of consideration shall be acceptable for the exercise of this
Warrant. This Warrant shall be deemed to have been exercised immediately prior
to the close of business on the date of its surrender for exercise as provided
above, and the person entitled to receive the shares of Common Stock issuable
upon such exercise shall be treated for all purposes as the holder of such
shares of record as of the close of business on such date. As soon as
practicable on or after such date, and in any event within 10 days thereof, the
Company shall issue and deliver to the person or persons entitled to receive the
same a certificate or certificates for the number of shares of Common Stock
issuable upon such exercise. Upon any partial exercise, the Company will issue
and deliver to Holder a new Warrant or Warrants with respect to the shares of
Common Stock not purchased as a result of the partial exercise. No fractional
shares of Common Stock shall be issued upon exercise of this Warrant. In lieu of
any fractional share to which Holder would be entitled upon exercise, the
Company shall pay cash equal to the product of such fraction multiplied by the
Purchase Price.
Payment of Taxes. All shares of Common Stock issued upon the exercise of this
Warrant shall be duly authorized, validly issued and outstanding, fully paid and
non-assessable. Holder shall pay all taxes and other governmental charges that
may be imposed in respect of the issue or delivery thereof and any tax or other
charge imposed in connection with any transfer involved in the issue of any
certificate for shares of Common Stock in any name other than that of the
registered Holder of this Warrant surrendered in connection with the purchase of
such shares, and in such case the Company shall not be required to issue or
deliver any stock certificate until such tax or other charge has been paid or it
has been established to the Company's satisfaction that no tax or other charge
is due.
Transfer and Exchange. This Warrant and all rights hereunder are transferable,
in whole or in part in accordance with the terms hereof. If a transfer is
effected, this Warrant is transferable on the books of the Company maintained
for such purpose at its principal office referred to above by Holder in person
or by duly authorized attorney, upon surrender of this Warrant properly endorsed
and upon payment of any necessary transfer tax or other governmental charge
imposed upon such transfer. Each taker and holder of this Warrant, by taking or
holding the same, consents and agrees that this Warrant, when endorsed in blank,
shall be deemed negotiable and that when this Warrant shall have been so
endorsed, the Holder hereof may be treated by the Company and all other persons
dealing with this Warrant as the absolute owner hereof for any purpose and as
the person entitled to exercise the rights represented hereby or to the transfer
hereof on the books of the Company, any notice to the contrary notwithstanding;
but until such transfer on such books, the Company may treat the registered
Holder hereof as the owner for all purposes.
Certain Adjustments. Adjustment for Reorganization, Consolidation, Merger. In
case of any reorganization of the Company (or any other corporation, the stock
or other securities of which are at the time receivable on the exercise of this
Warrant) after the Issue Date, or in case, after such date, the Company (or any
such other corporation) shall consolidate with or merge into another corporation
(other than the merger of a wholly owned subsidiary into the Company), then and
in each such case Holder, upon the exercise hereof as provided in Section 1 at
any time after the consummation of such reorganization, consolidation, or
merger, shall be entitled to receive, in lieu of the stock receivable upon the
exercise of this Warrant prior to such consummation, the stock or other
securities or property to which such Holder would have been entitled upon such
consummation if such Holder had exercised this Warrant immediately prior
thereto.
Adjustments for Dividends in Common Stock. If the Company at any time or from
time to time after the Issue Date makes, or fixes a record date for the
determination of holders of Common Stock entitled to receive, a dividend payable
in additional shares of Common Stock, then and in each such event the Purchase
Price then in effect shall be decreased as of the time of such issuance or, in
the event such record date is fixed, as of the close of business on such record
date, by multiplying the Purchase Price then in effect by a fraction (1) the
numerator of which is the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of
business on such record date, and (2) the denominator of which shall be the
total number of shares of Common Stock issued and outstanding immediately
<PAGE>
prior to the time of such issuance or the close of business on such record date
plus the number of shares of Common Stock issuable in payment of such dividend;
provided, however, that if such record date is fixed and such dividend is not
fully paid on the date fixed therefor, the Purchase Price shall be recomputed
accordingly as of the close of business on such record date and thereafter the
Purchase Price shall be adjusted pursuant to this Section 4.2 as of the time of
actual payment of such dividends.
Stock Split and Reverse Stock Split. If the Company at any time or from time to
time after the Issue Date effects a subdivision of the outstanding Common Stock,
the Purchase Price then in effect immediately before that subdivision shall be
proportionately decreased and the number of shares of Common Stock theretofore
receivable upon the exercise of this Warrant shall be proportionately increased.
If the Company at any time or from time to time after the Issue Date combines
the outstanding shares of Common Stock into a smaller number of shares, the
Purchase Price then in effect immediately before that combination shall be
proportionately increased and the number of shares of Common Stock theretofore
receivable upon the exercise of this Warrant shall be proportionately decreased.
Each adjustment under this Section 4.3 shall become effective at the close of
business on the date the subdivision or combination becomes effective.
Accountants' Certificate as to Adjustment. In each case of an adjustment in the
shares of Common Stock receivable on the exercise of the Warrants, the Company
at its expense shall cause independent public accountants of recognized standing
selected by the Company (who may be the independent public accountants then
auditing the books of the Company) to compute such adjustment in accordance with
the terms of the Warrants and prepare a certificate setting forth such
adjustment and showing the facts upon which such adjustment is based. The
Company will forthwith mail a copy of each such certificate to each holder of a
Warrant at the time outstanding.
Loss or Mutilation. Upon receipt by the Company of evidence satisfactory to it
(in the exercise of reasonable discretion) of the ownership of and the loss,
theft, destruction or mutilation of any Warrant and (in the case of loss, theft
or destruction) of indemnity satisfactory to it (in the exercise of reasonable
discretion), and (in the case of mutilation) upon surrender and cancellation
thereof, the Company will execute and deliver in lieu thereof a new Warrant of
like tenor.
Reservation of Common Stock. The Company shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the exercise of this Warrant, such number of its shares
of Common Stock as shall from time to time be sufficient to effect exercise of
this Warrant; and if at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect such exercise, the Company will
take such corporate action as may, in the opinion of its counsel, be necessary
to increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
Notices of Record Date. In the event of (i) any taking by the Company of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
distribution, or (ii) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company, any
merger or consolidation of the Company with or into any other corporation (other
than a merger of a wholly owned subsidiary into the Company), or any transfer of
all or substantially all of the assets of the Company to any other person or any
voluntary or involuntary dissolution, liquidation or winding up of the Company,
the Company shall mail to the Holder at least twenty (20) days prior to the
record date specified therein, a notice specifying (1) the date on which any
such record is to be taken for the purpose of such dividend or distribution and
a description of such dividend or distribution, (2) the date on which any such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding up is expected to become effective, and (3) the date, if
any, that is to be fixed, as to when the holders of record of Common Stock (or
other securities) shall be entitled to exchange their shares of Common Stock (or
other securities) for securities or other property deliverable upon such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding up.
Investment Representation and Restriction on Transfer.
<PAGE>
Securities Law Requirements.
By its acceptance of this Warrant, Holder hereby represents and warrants to
the Company that this Warrant and the Warrant Shares will be acquired for
investment for its own account, not as a nominee or agent, and not with a view
to the sale or distribution of any part thereof, and that it has no present
intention of selling, granting participations in or otherwise distributing the
same. By acceptance of this Warrant, Holder further represents and warrants that
it does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to any person, with respect to
this Warrant or the Warrant Shares.
By its acceptance of this Warrant, Holder understands that this Warrant is
not, and the Warrant Shares will not be, registered under the Securities Act of
1933, as amended (the "Act"), on the basis that the issuance of this Warrant and
the Warrant Shares are exempt from registration under the Act pursuant to
Section 4(2) thereof, and that the Company's reliance on such exemption is
predicated on Holder's representations and warranties set forth herein.
By its acceptance of this Warrant, Holder understands that this Warrant and
the Warrant Shares may not be sold, transferred, or otherwise disposed of
without registration under the Act, or an exemption therefrom, and that in the
absence of an effective registration statement covering this Warrant and the
Warrant Shares or an available exemption from registration under the Act, this
Warrant and the Warrant Shares must be held indefinitely. In particular, Holder
is aware that this Warrant and the Warrant Shares may not be sold pursuant to
Rule 144 promulgated under the Act unless all of the conditions of Rule 144 are
satisfied. Among the conditions for use of Rule 144 are the availability of
current information about the Company to the public, prescribed holding periods
which will commence only upon Holder's payment for the securities being sold,
manner of sale restrictions, volume limitations and certain other restrictions.
By its acceptance of this Warrant, Holder represents and warrants that, in the
absence of an effective registration statement covering this Warrant or the
Warrant Shares, it will sell, transfer or otherwise dispose of this Warrant and
the Warrant Shares only in a manner consistent with its representations and
warranties set forth herein and then only in accordance with the provisions of
Section 8.1(d).
By its acceptance of this Warrant, Holder agrees that in no event will it
transfer or dispose of the Warrant or the Warrant Shares other than pursuant to
an effective registration statement under the Act, unless and until (i) Holder
shall have notified the Company of the proposed disposition and shall have
furnished the Company with a statement of the circumstances surrounding the
disposition, and (ii) if requested by the Company, at the expense of the Holder
or transferee, it shall have furnished to the Company an opinion of counsel,
reasonably satisfactory to the Company, to the effect that (A) such transfer may
be made without registration under the Act and (B) such transfer or disposition
will not cause the termination or the non-applicability of any exemption to the
registration and prospectus delivery requirements of the Act or to the
qualification or registration requirements of the securities laws of any other
jurisdiction on which the Company relied in issuing this Warrant or the Warrant
Shares.
Legends; Stop Transfer. All certificates evidencing the Warrant Shares shall
bear legends in substantially the following forms:
"The securities represented by this certificate have not been registered under
the Securities Act of 1933. These securities have been acquired for investment
and not with a view to distribution and may not be offered for sale, sold,
pledged or otherwise transferred in the absence of an effective registration
statement for such securities under the Securities Act of 1933 or an opinion of
counsel reasonably satisfactory in form and content to the issuer that such
registration is not required under such Act."
"The securities represented by this certificate are subject to, and transferable
only in accordance with, the provisions of a Securities Purchase Agreement
between issuer and Interiors, Inc."
"The securities represented by this certificate are also subject to the
provisions of a Pledge Agreement between issuer and Interiors, Inc."
<PAGE>
"The securities represented by this certificate are subject to the terms of The
Bentley International, Inc. Voting Trust Agreement No. 1."
"Copies of the aforementioned agreements are on file in the Office of the
Secretary of the issuer."
The certificates evidencing the Warrant Shares shall also bear any legend
required by any applicable state securities law.
In addition, the Company shall make, or cause its transfer agent to make, a
notation regarding the transfer restrictions of this Warrant and the Warrant
Shares in its stock books, and this Warrant and the Warrant Shares shall be
transferred on the books of the Company only if transferred or sold pursuant to
an effective registration statement under the Act covering the same or pursuant
to and in compliance with the provisions of Section 8.1(d).
Notices. All notices and other communications from the Company to the Holder of
this Warrant shall be mailed by first-class registered or certified mail,
postage prepaid, to the address furnished to the Company by Holder.
Change; Waiver. Neither this Warrant nor any term hereof may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought.
Headings. The headings in this Warrant are for purposes of convenience in
reference only, and shall not be deemed to constitute a part hereof.
Governing Law. This Warrant shall be construed and enforced in accordance with
and governed by the internal laws, and not the law of conflicts, of the State of
Missouri.
Jurisdiction and Venue. Each party hereto irrevocably submits to the
jurisdiction of the courts of the State of Missouri and the United States
District Court for the Eastern District of Missouri for the purpose of any suit,
action, proceeding or judgment relating to or arising out of this Warrant and
the transactions contemplated hereby and to the laying of venue in any such
court. Each party hereto irrevocably waives any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum.
<PAGE>
[SIGNATURE PAGE TO WARRANT]
BENTLEY INTERNATIONAL, INC.,
a Missouri corporation
By:______________________________________
Lloyd R. Abrams, President
<PAGE>
SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
The undersigned, registered owner of this Warrant, irrevocably exercises this
Warrant and purchases ____________ of the number of shares of Common Stock, $.18
par value, of BENTLEY INTERNATIONAL, INC., a Missouri corporation, purchasable
with this Warrant, and herewith makes payment therefor, all at the price and on
the terms and conditions specified in this Warrant.
DATED:______________
(Signature of Registered Owner)
(Street Address)
(City) (State) (Zip)
Exhibit 4.1
WARRANT
TO PURCHASE SHARES OF COMMON STOCK
OF
BENTLEY INTERNATIONAL, INC.
THE WARRANT REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND NEITHER THIS WARRANT NOR ANY INTEREST THEREIN MAY BE
TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF WITHOUT REGISTRATION UNDER
THAT ACT OR AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED. THE WARRANT EVIDENCED BY THIS CERTIFICATE AND ANY
SHARES OF COMMON STOCK ISSUED UPON EXERCISE HEREOF ARE SUBJECT TO, AND
TRANSFERABLE ONLY IN ACCORDANCE WITH, THE PROVISIONS OF A SECURITIES PURCHASE
AGREEMENT BETWEEN THE COMPANY AND INVESTOR, ARE SUBJECT TO THE PROVISIONS OF A
PLEDGE AGREEMENT BETWEEN THE COMPANY AND INVESTOR, AND ARE SUBJECT TO THE TERMS
OF THE BENTLEY INTERNATIONAL, INC. VOTING TRUST AGREEMENT NO. 1, ALL DATED AS OF
THE SAME DATE AS THIS WARRANT. COPIES OF THE AFOREMENTIONED AGREEMENTS ARE ON
FILE IN THE OFFICE OF THE SECRETARY OF THE COMPANY.
No. W -- 1 Warrant to Purchase Three Hundred Thousand (300,000)
July 30, 1998 Shares of Common Stock, $.18 Par Value
WARRANT TO PURCHASE COMMON STOCK
of
BENTLEY INTERNATIONAL, INC.,
a Missouri corporation
This certifies that, for value received, Interiors, Inc., a Delaware corporation
("Investor"), or registered assigns (Investor or any such assign being referred
to herein as "Holder") is entitled, subject to the terms set forth below, to
purchase from Bentley International, Inc., a Missouri corporation (the
"Company"), three hundred thousand (300,000) shares of Common Stock, $.18 par
value, of the Company (such class of stock being referred to herein as "Common
Stock"), as constituted on the date hereof (the "Issue Date"), upon surrender of
this Warrant, at the principal office of the Company referred to below, with the
subscription form attached hereto duly executed, and simultaneous payment
therefor in the consideration specified in Section 1 hereof, at the price of
$10.00 per share (the "Purchase Price"). The shares of Common Stock issued or
issuable upon exercise of this Warrant are sometimes referred to as the "Warrant
Shares." The term "Warrant" as used herein shall include this Warrant and any
warrants delivered in substitution or exchange therefor as provided herein. This
Warrant is issued pursuant to the terms of, and is the Warrant referenced in,
that certain Securities Purchase Agreement dated of even date herewith by and
between the Company and Investor.
Exercise and Payment of Purchase Price. This Warrant may be exercised at any
time or from time to time, on any business day, on or after the date hereof
through the earlier to occur of (i) ten (10) years from the date hereof or (ii)
sixty (60) days after the last reported sale price per share of Common Stock, as
reported on the OTC Bulletin Board or any stock exchange upon which the Common
Stock is subsequently listed, exceeds $15.00 per share (as such target price may
be adjusted for the effect of any stock split, stock dividend, recapitalization
or similar event effected by the Company after the date hereof), for all or part
of the full number of shares of Common Stock during the period of time called
for hereby, by surrendering it at the principal office of the Company, 9719
Conway Road,
<PAGE>
St. Louis, Missouri 63124, with the subscription form duly executed, together
with payment for the Warrant Shares payable in cash or cash equivalents. No
other form of consideration shall be acceptable for the exercise of this
Warrant. This Warrant shall be deemed to have been exercised immediately prior
to the close of business on the date of its surrender for exercise as provided
above, and the person entitled to receive the shares of Common Stock issuable
upon such exercise shall be treated for all purposes as the holder of such
shares of record as of the close of business on such date. As soon as
practicable on or after such date, and in any event within 10 days thereof, the
Company shall issue and deliver to the person or persons entitled to receive the
same a certificate or certificates for the number of shares of Common Stock
issuable upon such exercise. Upon any partial exercise, the Company will issue
and deliver to Holder a new Warrant or Warrants with respect to the shares of
Common Stock not purchased as a result of the partial exercise. No fractional
shares of Common Stock shall be issued upon exercise of this Warrant. In lieu of
any fractional share to which Holder would be entitled upon exercise, the
Company shall pay cash equal to the product of such fraction multiplied by the
Purchase Price.
Payment of Taxes. All shares of Common Stock issued upon the exercise of this
Warrant shall be duly authorized, validly issued and outstanding, fully paid and
non-assessable. Holder shall pay all taxes and other governmental charges that
may be imposed in respect of the issue or delivery thereof and any tax or other
charge imposed in connection with any transfer involved in the issue of any
certificate for shares of Common Stock in any name other than that of the
registered Holder of this Warrant surrendered in connection with the purchase of
such shares, and in such case the Company shall not be required to issue or
deliver any stock certificate until such tax or other charge has been paid or it
has been established to the Company's satisfaction that no tax or other charge
is due.
Transfer and Exchange. This Warrant and all rights hereunder are transferable,
in whole or in part in accordance with the terms hereof. If a transfer is
effected, this Warrant is transferable on the books of the Company maintained
for such purpose at its principal office referred to above by Holder in person
or by duly authorized attorney, upon surrender of this Warrant properly endorsed
and upon payment of any necessary transfer tax or other governmental charge
imposed upon such transfer. Each taker and holder of this Warrant, by taking or
holding the same, consents and agrees that this Warrant, when endorsed in blank,
shall be deemed negotiable and that when this Warrant shall have been so
endorsed, the Holder hereof may be treated by the Company and all other persons
dealing with this Warrant as the absolute owner hereof for any purpose and as
the person entitled to exercise the rights represented hereby or to the transfer
hereof on the books of the Company, any notice to the contrary notwithstanding;
but until such transfer on such books, the Company may treat the registered
Holder hereof as the owner for all purposes.
Certain Adjustments.
Adjustment for Reorganization, Consolidation, Merger. In case of any
reorganization of the Company (or any other corporation, the stock or other
securities of which are at the time receivable on the exercise of this Warrant)
after the Issue Date, or in case, after such date, the Company (or any such
other corporation) shall consolidate with or merge into another corporation
(other than the merger of a wholly owned subsidiary into the Company), then and
in each such case Holder, upon the exercise hereof as provided in Section 1 at
any time after the consummation of such reorganization, consolidation, or
merger, shall be entitled to receive, in lieu of the stock receivable upon the
exercise of this Warrant prior to such consummation, the stock or other
securities or property to which such Holder would have been entitled upon such
consummation if such Holder had exercised this Warrant immediately prior
thereto.
Adjustments for Dividends in Common Stock. If the Company at any time or from
time to time after the Issue Date makes, or fixes a record date for the
determination of holders of Common Stock entitled to receive, a dividend payable
in additional shares of Common Stock, then and in each such event the Purchase
Price then in effect shall be decreased as of the time of such issuance or, in
the event such record date is fixed, as of the close of business on such record
date, by multiplying the Purchase Price then in effect by a fraction (1) the
numerator of which is the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of
business on such record date, and (2) the denominator of which shall be the
total number of shares of Common Stock issued and outstanding immediately
<PAGE>
prior to the time of such issuance or the close of business on such record date
plus the number of shares of Common Stock issuable in payment of such dividend;
provided, however, that if such record date is fixed and such dividend is not
fully paid on the date fixed therefor, the Purchase Price shall be recomputed
accordingly as of the close of business on such record date and thereafter the
Purchase Price shall be adjusted pursuant to this Section 4.2 as of the time of
actual payment of such dividends.
Stock Split and Reverse Stock Split. If the Company at any time or from time to
time after the Issue Date effects a subdivision of the outstanding Common Stock,
the Purchase Price then in effect immediately before that subdivision shall be
proportionately decreased and the number of shares of Common Stock theretofore
receivable upon the exercise of this Warrant shall be proportionately increased.
If the Company at any time or from time to time after the Issue Date combines
the outstanding shares of Common Stock into a smaller number of shares, the
Purchase Price then in effect immediately before that combination shall be
proportionately increased and the number of shares of Common Stock theretofore
receivable upon the exercise of this Warrant shall be proportionately decreased.
Each adjustment under this Section 4.3 shall become effective at the close of
business on the date the subdivision or combination becomes effective.
Accountants' Certificate as to Adjustment. In each case of an adjustment in the
shares of Common Stock receivable on the exercise of the Warrants, the Company
at its expense shall cause independent public accountants of recognized standing
selected by the Company (who may be the independent public accountants then
auditing the books of the Company) to compute such adjustment in accordance with
the terms of the Warrants and prepare a certificate setting forth such
adjustment and showing the facts upon which such adjustment is based. The
Company will forthwith mail a copy of each such certificate to each holder of a
Warrant at the time outstanding.
Loss or Mutilation. Upon receipt by the Company of evidence satisfactory to it
(in the exercise of reasonable discretion) of the ownership of and the loss,
theft, destruction or mutilation of any Warrant and (in the case of loss, theft
or destruction) of indemnity satisfactory to it (in the exercise of reasonable
discretion), and (in the case of mutilation) upon surrender and cancellation
thereof, the Company will execute and deliver in lieu thereof a new Warrant of
like tenor.
Reservation of Common Stock. The Company shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the exercise of this Warrant, such number of its shares
of Common Stock as shall from time to time be sufficient to effect exercise of
this Warrant; and if at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect such exercise, the Company will
take such corporate action as may, in the opinion of its counsel, be necessary
to increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
Notices of Record Date. In the event of (i) any taking by the Company of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
distribution, or (ii) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company, any
merger or consolidation of the Company with or into any other corporation (other
than a merger of a wholly owned subsidiary into the Company), or any transfer of
all or substantially all of the assets of the Company to any other person or any
voluntary or involuntary dissolution, liquidation or winding up of the Company,
the Company shall mail to the Holder at least twenty (20) days prior to the
record date specified therein, a notice specifying (1) the date on which any
such record is to be taken for the purpose of such dividend or distribution and
a description of such dividend or distribution, (2) the date on which any such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding up is expected to become effective, and (3) the date, if
any, that is to be fixed, as to when the holders of record of Common Stock (or
other securities) shall be entitled to exchange their shares of Common Stock (or
other securities) for securities or other property deliverable upon such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding up.
Investment Representation and Restriction on Transfer.
<PAGE>
Securities Law Requirements.
By its acceptance of this Warrant, Holder hereby represents and warrants to the
Company that this Warrant and the Warrant Shares will be acquired for investment
for its own account, not as a nominee or agent, and not with a view to the sale
or distribution of any part thereof, and that it has no present intention of
selling, granting participations in or otherwise distributing the same. By
acceptance of this Warrant, Holder further represents and warrants that it does
not have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to any person, with respect to this
Warrant or the Warrant Shares.
By its acceptance of this Warrant, Holder understands that this Warrant is not,
and the Warrant Shares will not be, registered under the Securities Act of 1933,
as amended (the "Act"), on the basis that the issuance of this Warrant and the
Warrant Shares are exempt from registration under the Act pursuant to Section
4(2) thereof, and that the Company's reliance on such exemption is predicated on
Holder's representations and warranties set forth herein.
By its acceptance of this Warrant, Holder understands that this Warrant and the
Warrant Shares may not be sold, transferred, or otherwise disposed of without
registration under the Act, or an exemption therefrom, and that in the absence
of an effective registration statement covering this Warrant and the Warrant
Shares or an available exemption from registration under the Act, this Warrant
and the Warrant Shares must be held indefinitely. In particular, Holder is aware
that this Warrant and the Warrant Shares may not be sold pursuant to Rule 144
promulgated under the Act unless all of the conditions of Rule 144 are
satisfied. Among the conditions for use of Rule 144 are the availability of
current information about the Company to the public, prescribed holding periods
which will commence only upon Holder's payment for the securities being sold,
manner of sale restrictions, volume limitations and certain other restrictions.
By its acceptance of this Warrant, Holder represents and warrants that, in the
absence of an effective registration statement covering this Warrant or the
Warrant Shares, it will sell, transfer or otherwise dispose of this Warrant and
the Warrant Shares only in a manner consistent with its representations and
warranties set forth herein and then only in accordance with the provisions of
Section 8.1(d).
By its acceptance of this Warrant, Holder agrees that in no event will it
transfer or dispose of the Warrant or the Warrant Shares other than pursuant to
an effective registration statement under the Act, unless and until (i) Holder
shall have notified the Company of the proposed disposition and shall have
furnished the Company with a statement of the circumstances surrounding the
disposition, and (ii) if requested by the Company, at the expense of the Holder
or transferee, it shall have furnished to the Company an opinion of counsel,
reasonably satisfactory to the Company, to the effect that (A) such transfer may
be made without registration under the Act and (B) such transfer or disposition
will not cause the termination or the non-applicability of any exemption to the
registration and prospectus delivery requirements of the Act or to the
qualification or registration requirements of the securities laws of any other
jurisdiction on which the Company relied in issuing this Warrant or the Warrant
Shares.
Legends; Stop Transfer.
All certificates evidencing the Warrant Shares shall bear legends in
substantially the following forms:
"The securities represented by this certificate have not been registered under
the Securities Act of 1933. These securities have been acquired for investment
and not with a view to distribution and may not be offered for sale, sold,
pledged or otherwise transferred in the absence of an effective registration
statement for such securities under the Securities Act of 1933 or an opinion of
counsel reasonably satisfactory in form and content to the issuer that such
registration is not required under such Act."
"The securities represented by this certificate are subject to, and transferable
only in accordance with, the provisions of a Securities Purchase Agreement
between issuer and Interiors, Inc."
"The securities represented by this certificate are also subject to the
provisions of a Pledge Agreement between issuer and Interiors, Inc."
<PAGE>
"The securities represented by this certificate are subject to the terms of The
Bentley International, Inc. Voting Trust Agreement No. 1."
"Copies of the aforementioned agreements are on file in the Office of the
Secretary of the issuer."
The certificates evidencing the Warrant Shares shall also bear any legend
required by any applicable state securities law.
In addition, the Company shall make, or cause its transfer agent to make, a
notation regarding the transfer restrictions of this Warrant and the Warrant
Shares in its stock books, and this Warrant and the Warrant Shares shall be
transferred on the books of the Company only if transferred or sold pursuant to
an effective registration statement under the Act covering the same or pursuant
to and in compliance with the provisions of Section 8.1(d).
Notices. All notices and other communications from the Company to the Holder of
this Warrant shall be mailed by first-class registered or certified mail,
postage prepaid, to the address furnished to the Company by Holder.
Change; Waiver. Neither this Warrant nor any term hereof may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought.
Headings. The headings in this Warrant are for purposes of convenience in
reference only, and shall not be deemed to constitute a part hereof.
Governing Law. This Warrant shall be construed and enforced in accordance with
and governed by the internal laws, and not the law of conflicts, of the State of
Missouri.
Jurisdiction and Venue. Each party hereto irrevocably submits to the
jurisdiction of the courts of the State of Missouri and the United States
District Court for the Eastern District of Missouri for the purpose of any suit,
action, proceeding or judgment relating to or arising out of this Warrant and
the transactions contemplated hereby and to the laying of venue in any such
court. Each party hereto irrevocably waives any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum.
<PAGE>
[SIGNATURE PAGE TO WARRANT]
BENTLEY INTERNATIONAL, INC.,
a Missouri corporation
By: /s/ Lloyd R. Abrams, President
<PAGE>
SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
The undersigned, registered owner of this Warrant, irrevocably exercises this
Warrant and purchases ____________ of the number of shares of Common Stock, $.18
par value, of BENTLEY INTERNATIONAL, INC., a Missouri corporation, purchasable
with this Warrant, and herewith makes payment therefor, all at the price and on
the terms and conditions specified in this Warrant.
DATED:______________
(Signature of Registered Owner)
(Street Address)
(City) (State) (Zip)
Exhibit 3.1
AMENDMENT OF ARTICLES OF INCORPORATION
OF BENTLEY INTERNATIONAL, INC.
(To be submitted in duplicate)
Pursuant to the provisions of The General and Business Corporation Law of
Missouri, the undersigned Corporation certifies the following:
1. The present name of the Corporation is Bentley International, Inc.
2. The name under which it was originally organized was Megacards, Inc.
3. The following amendment to Bentley International, Inc.'s Articles of
Incorporation was adopted by the shareholders of Bentley International, Inc. on
July 2, 1998.
ARTICLE THREE shall be amended by adding the following Section 3.3:
"3.3 The Corporation shall have authority to issue warrants for authorized,
unissued shares of Common Stock and Preferred Stock of the Corporation on such
terms as the Board of Directors shall determine."
4. Of the 2,813,285 shares outstanding, 2,813,285 of such shares were entitled
to vote on such amendment.
5. The number of outstanding shares of any class entitled to vote thereon as a
class were as follows:
Class Number of Outstanding Shares
Common 2,813,285
6. The number of shares voted for and against the amendment were as follows:
Class No. Voted For No. Voted Against
Common 2,117,500 20,000
IN WITNESS WHEREOF, the undersigned, Lloyd R. Abrams, President and Chief
Executive Officer of Bentley International, Inc., has executed this instrument
and its Secretary, Ramakant Agarwal, has affixed its corporate seal hereto and
attested said seal on the 2nd day of July, 1998.
BENTLEY INTERNATIONAL, INC.
ATTEST:
/s/ Ramakant Agarwal By: /s/ Lloyd R. Abrams
Ramakant Agarwal, Secretary Lloyd R. Abrams, President and Chief
Executive Officer
STATE OF MISSOURI )
) SS:
<PAGE>
COUNTY OF ST. LOUIS )
I, Richard B. Rothman, a Notary Public, do hereby certify that this 2nd day of
July, 1998, personally appeared before me Lloyd R. Abrams, who, being by me
first duly sworn, declared that he is President and Chief Executive Officer of
Bentley International, Inc. and that he signed the foregoing documents as
President and Chief Executive Officer of said entity, and that the statements
therein contained are true.
/s/ Richard B. Rothman
-----------------------------------
Notary Public
My Commission Expires: 11/3/2000
Exhibit 99
Bentley International, Inc.
Sale of Windsor Art, Inc.
August 3, 1998 Press Release
On Thursday, July 30, 1998, Bentley International, Inc. consummated the sale of
its subsidiary, Windsor Art, Inc. to Interiors, Inc. on substantially the terms
described in the company's press release of July 9, 1998.
For more information, please call Lloyd R. Abrams at 314-569-1659.
<PAGE>
Bentley International, Inc.
Sale of Windsor Art, Inc.
July 9, 1998 Press Release
On July 7, 1998, Bentley International, Inc. entered into a contract with
Interiors, Inc. for the sale of Bentley's Windsor Art, Inc. subsidiary, 150,000
shares of Bentley common stock and a warrant for the purchase of an additional
300,000 shares at $10 per share. The transaction was authorized by Bentley's
shareholders at their annual meeting on July 2, 1998. Closing of the transaction
is scheduled for August 3, 1998. Management plans to develop information
services and specialty marketing businesses using the proceeds of the sale to
finance the expansion of the new businesses.
The initial offer by Interiors was made public on June 1, 1998, when Bentley
filed an Information Statement pursuant to Section 14(c) of the Securities
Exchange Act disclosing an offer by Interiors to purchase the common stock of
Windsor and make an equity investment in Bentley. Originally, Interiors had
offered $2,000,000 in cash, a $2,000,000 four year note and 1,500,000 shares of
Interiors Class A common stock for Windsor and $3,000,000 in cash for the
Bentley common stock and the warrant. Subsequently, Interiors modified its offer
to afford Interiors additional time to obtain financing.
Interiors requested and Bentley agreed to reduce the cash component of the
transaction from $5,000,000 to $1,700,000. For the stock of Windsor Bentley has
agreed to accept $1,700,000 in cash and two secured, subordinated promissory
notes in the aggregate amount of $5,300,000. The first note in the amount of
$2,000,000 is payable over four years. The second note in the amount of
$3,300,000 is due on September 30, 1998. In addition, if Interiors prepays the
entire balance of the $2,000,000 note on or before September 30, 1998, Interiors
will receive a $500,000 discount on the principal amount of that note. For the
150,000 shares of Bentley common stock and the warrant to purchase an additional
300,000 shares for $10 per share, Bentley has agreed to accept 1,500,000 shares
of Interiors Class A common stock. On July 7, 1998, Interiors stock traded for
approximately $2.00 per share. If the sale is consummated, Bentley has agreed to
allocate approximately $1,000,000 of the sale proceeds in the form of cash,
stock and stock options to current officers and employees of Windsor.
In connection with the transaction Interiors has also agreed to enter into a
consulting agreement with the current CEO of Windsor, Lloyd R. Abrams, who will
resign when the sale closes, providing for aggregate consulting fees over the
four year term of the agreement in the amount of $650,000 plus additional
expense allowances. Interiors will also have the option by December 31, 1998, to
buy back all of the Interiors common stock issued to Bentley in connection with
the transaction for $1,625,000, if Interiors has repaid the $3,300,000 note,
buys out the consulting agreement for $525,000 and pays off $1,000,000 in
mezzanine financing which Interiors may obtain with respect to Windsor's assets
if the second note is paid off by September 30, 1998.
Prior to the Annual Meeting of Shareholders on July 2, 1998, two shareholders
delivered notices to Bentley objecting to the sale of Windsor. Windsor
represents substantially all of Bentley's assets. In the notices the objecting
Shareholders state that they own approximately 117,000 shares of Bentley. Such
notices are required under Missouri law to preserve the right of the objecting
shareholders to surrender their shares to Bentley and demand that Bentley pay
the objecting shareholders the fair value of their shares as of the day prior to
the Annual Meeting. The objecting shareholders may choose not to exercise their
rights and their rights will lapse in any event if the sale of Windsor is
abandoned. One of the objecting shareholders also has an indirect beneficial
interest in approximately 423,000 shares of Bentley which are owned by a voting
trust. Such shares were voted in favor of authorizing the sale of Windsor.
Bentley believes such shares are not subject to the rights described above.
Bentley's stock on July 1, 1998, traded for approximately $1.56 per share on the
OTC Bulletin Board under the symbol, "BNTL." Bentley currently has approximately
2,813,285 shares outstanding. For more information, please call Lloyd R. Abrams
at 314-569-1659.
<PAGE>
This release contains certain forward looking statements of the type described
in the "Safe Harbor" provisions of the Private Securities Litigation Reform Act
of 1995, including without limitation, those with regard to the likelihood of
the proposed transaction being effected as presented, and plans to move into the
specialty marketing and information services businesses. The closing of the sale
of Windsor Art, Inc., the results of the plans to invest in new businesses and
the ability of Interiors to obtain financing are all out of Bentley's control
and the value of the proceeds of the sale are subject to the incentive discounts
on repayment of the notes, the possible discounted repurchase of the Interiors
stock and fluctuations in the value of the non-cash consideration. Economic
conditions, product and service demand, competitive pricing, timely completion
of acquisitions on acceptable terms and other factors could also cause
materially different results from those planned by management.
<PAGE>
Bentley International, Inc.
Renegotiation of Subsidiary Sale
July 2, 1998 Press Release
Bentley International, Inc. is in the process of renegotiating the sale of its
Windsor Art, Inc. subsidiary. The possible sale was made public on June 1, 1998,
when Bentley filed an Information Statement pursuant to Section 14(c) of the
Securities Exchange Act disclosing an offer by Interiors, Inc. to purchase the
common stock of Bentley's subsidiary, Windsor Art, Inc. and make an equity
investment in Bentley. The transaction requires shareholder approval, which will
be sought at Bentley International, Inc.'s annual meeting today. Management
plans to develop information services and specialty marketing businesses using
the proceeds of the sale to finance the expansion of the new businesses. To
afford Interiors, Inc. additional time to obtain financing to effect the
purchase, Interiors has reduced the cash component of its offer from $5,000,000
to $1,700,000, and asked Bentley to accept notes in the aggregate amount of
$5,300,000 compared to $2,000,000. Interiors has further proposed to make a
$3,300,000 principal payment with respect to the notes by September 30, 1998,
and, if the entire loan balance is repaid by September 30, 1998, that Interiors
receive a $500,000 discount on the principal amount of the notes and have the
option to repurchase by December 31, 1998, the 1,500,000 shares of Class A
common stock of Interiors, which Bentley will acquire in connection with the
transaction, for $1,625,000, approximately $1.08 per share. On June 29, 1998,
Interiors stock traded for approximately $2.00 per share. The combined
consideration for all of the stock of Windsor, 150,000 shares of Bentley common
stock, and warrants to purchase an additional 300,000 shares of Bentley common
stock at $10.00 per share remains approximately $10,000,000, subject to the
incentive discounts on repayment of the notes, the possible discounted
repurchase of the Interiors stock and fluctuations in the value of the non-cash
consideration. In addition, certain key employees of Windsor may receive
compensation packages in connection with the sale of the subsidiary. Bentley
trades for approximately $1.63 per share on the OTC Bulletin Board under the
symbol, "BNTL." Bentley currently has approximately 2,813,285 shares
outstanding. For more information, please call me at 314-569-1659.
<PAGE>
This press release contains certain forward looking statements of the type
described in the "Safe Harbor" provisions of the Private Securities Litigation
Reform Act of 1995, including without limitation, those with regard to the
likelihood of the proposed transaction being effected as presented, and plans to
move into the specialty marketing and information services businesses. The
closing of the sale of Windsor Art, Inc. and the results of the plans to invest
in new business are beyond the ability of the company to control. Economic
conditions, product and service demand, competitive pricing, timely completion
of acquisitions on acceptable terms and other factors could cause materially
different results from those planned by management.
<PAGE>
Bentley International, Inc.
Sale of Windsor Art, Inc., Subsidiary
June 3, 1998 Press Release
On June 1, 1998, Bentley International, Inc. filed an Information Statement
Pursuant to Section 14(c) of the Securities Exchange Act disclosing an offer by
Interiors, Inc. to purchase the common stock of Bentley International, Inc.'s
subsidiary, Windsor Art, Inc. and make an equity investment in Bentley. The
combined consideration for all of the stock of Windsor, 150,000 shares of
Bentley International, Inc. common stock, and warrants to purchase an additional
300,000 shares of Bentley International, Inc. at $10.00 per share is
approximately $10,000,000.00. The consideration consists of $5,000,000.00 in
cash, a $2,000,000.00 subordinated, secured note, and 1,500,000 shares of stock
in Interiors, Inc. The transaction requires shareholder approval, which will be
sought at Bentley International, Inc.'s annual meeting scheduled for July 2,
1998.
Interiors, Inc., through wholly owned subsidiaries, is engaged in the
manufacture and distribution of decorative accessories and home furnishings.
Interiors currently sells decorative accessories through its Artisan House,
Vanguard Studios, Inc. and Artmaster Studios, Inc. subsidiaries. Gross Revenues
of Interiors should exceed $30,000,000.00 in 1998, before the purchase of
Windsor Art, Inc. Windsor manufactures and distributes framed art and mirrors.
Bentley International, Inc. will use the proceeds from the sale to invest in
speciality marketing and information services businesses. Bentley International,
Inc, through its newly formed subsidiary, Bentley Information Services, Inc.
purchased the assets of Best Credit Bureau, Inc. in Miami, Florida on May 27,
1998. Best Credit Bureau, Inc. is in the business of providing consumer credit
reports to mortgage companies and consumers in the Miami area.
<PAGE>
Bentley International, Inc. trades for approximately $2.00 per share on the OTC
Bulletin Board under the symbol "BNTL." Bentley currently has approximately
2,813,285 shares outstanding. For more information, please refer to the
company's 14(c) filing or contact Lloyd Abrams at (314) 569-1659.
This press release contains certain forward looking statements of the type
described in the "Safe Harbor" provisions of the Private Securities Litigation
Reform Act of 1995, including, without limitation, those with regard to the
likelihood of the proposed transaction being effected as presented, and plans to
move into the information services business. The closing of the sale of Windsor
Art, Inc. and the results of the plans to invest in new business are beyond the
ability of the company to control. Economic conditions, product and service
demand, competitive pricing, timely completion of acquisitions on acceptable
terms and other factors could cause materially different results from those
planned by management.
