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Title: |
Stock Purchase Agreement |
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Date: |
2001 |
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Preview shows 16KB of 139KB total |
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$57 |
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#375293 |
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STOCK PURCHASE AGREEMENT
AMONG
QUALITY PRODUCTS, INC.,
COLUMBUS JACK CORPORATION,
AND
DENNIS B. MELLMAN
April 26, 2001
{PAGE}
TABLE OF CONTENTS
Page
----
BACKGROUND INFORMATION.......................................................1
STATEMENT OF AGREEMENT.......................................................1
ARTICLE I STOCK PURCHASE AND SALE..........................................1
ss.1.1. Stock Purchase and Sale............................................1
ss.1.2. Closing............................................................3
ss.1.3. Transfer Documents.................................................3
ss.1.4. CJC Packaging Division.............................................3
ss.1.5. Purchase of Packard Shares.........................................4
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE PARTIES....................4
ss.2.1. Representations and Warranties of Buyer............................4
ss.2.2. Representations and Warranties of Mr. D. Mellman...................4
ARTICLE III COVENANTS OF THE PARTIES........................................4
ss.3.1 Mutual Covenants...................................................4
(a) General..............................................................4
(b) Governmental Matters.................................................4
(c) CJC Packaging Division...............................................4
(c) Hockey and Football Tickets..........................................5
(d) Expense Reimbursement................................................5
ss.3.2. Covenants of Mr. D. Mellman........................................5
(a) Consulting Agreement.................................................5
(b) Opinion of Counsel...................................................5
(c) Director Resignations................................................5
(d) Authority............................................................5
(e) Financial Statements.................................................6
(f) Employee Plans and Benefit Arrangements..............................6
(g) Books and Records....................................................6
(h) Disclosures..........................................................6
(i) Noncompetition.......................................................6
(j) Injunctive Relief....................................................7
(k) Assignment...........................................................7
(m) Myer Mellman Consulting and Non-Competition Agreement................7
ss.3.3. Covenants of Buyer.................................................7
(a) Consulting Agreement.................................................7
(b) Opinion of Counsel...................................................8
(c) Firstar Guaranty.....................................................8
(d) Authority............................................................8
(e) [Intentionally Omitted]..............................................8
(f) Board of Directors...................................................8
(g) [Intentionally Omitted]..............................................8
(h) Stock Pledge; Additional Security....................................8
ARTICLE IV INDEMNIFICATION..................................................9
ss.4.1. Survival of Representations, Warranties and Agreements.............9
ss.4.2. Indemnification....................................................9
ss.4.3. Limitations on Indemnification....................................10
ss.4.4. Procedure for Indemnification with Respect to Third Party Claims..11
ss.4.5. Procedure For Indemnification with Respect to Non-Third Party
Claims ...........................................................12
ss.4.6. [Intentionally Omitted]...........................................12
i
{PAGE}
ss.4.7. Indemnification of the Shareholders...............................12
ARTICLE V MISCELLANEOUS...................................................12
ss.5.1. Notices...........................................................12
ss.5.2. Non-Waiver........................................................13
ss.5.3. Genders and Numbers...............................................13
ss.5.4. Headings..........................................................13
ss.5.5. Counterparts......................................................13
ss.5.6. Entire Agreement..................................................13
ss.5.7. No Third Party Beneficiaries......................................14
ss.5.8. Governing Law.....................................................14
ss.5.9. Successors; Assignment............................................14
ss.5.10. Remedies........................................................14
ss.5.11. Expenses........................................................14
ss.5.12. Announcements...................................................15
ss.5.13. Severability....................................................15
ii
{PAGE}
DEFINED TERMS LOCATOR LIST
Term Section
---- -------
2000 Financial Statements Exhibit B,ss.B.7(a)
Additional Documents 4.1(a)
Affiliate Exhibit B,ss.B.19(a) (forss.B.19 only);
ss.B.21 for rest of Agreement)
Affiliated Company 3.2(i)
Agreement Introduction
Buyer Introduction
Applicable Laws Exhibit B,ss.B.11
Benefit Arrangements Exhibit B,ss.B.19(e)
Buyer Stock Exhibit A,ss.A.2(a)
CJC Introduction
CJC Schedules 2.2
CJC Shares Background Information
CJF Background Information
CJF Shares Background Information
Closing 1.2
Closing Date 1.2
Code Exhibit B,ss.B.19(a)
Contract 9311 Exhibit B,ss.B.18
Current CJC Customers Exhibit B,ss.B.20
Damages 4.2(a)
D. Mellman Consulting Agreement 3.2(a)
D. Mellman Shares Background Information
Emess Exhibit B,ss.B.20
i
{PAGE}
Employee Plans Exhibit B,ss.B.19(a)
entity Exhibit B,ss.B.3
Environmental Laws Exhibit B,ss.B.11
ERISA Exhibit B,ss.B.19(a)
Exhibit A 2.1
Exhibit B 2.2
Financial Statements Exhibit B,ss.B.7(a)
Firstar 3.3(c)
Firstar Loan Agreement 3.3(c)
Firstar Loan Guaranty 3.3(c)
Granville Solvents Excluded Liabilities 4.2(b)(ii)
Incorporated Documents 5.6
Indemnifiable Claims 4.2(b)(i)
Indemnifying Party 4.4(a)
Liens 3.3(h)(ii)
Material Adverse Effect Exhibit B,ss.B.9(a)
Mr. D. Mellman Introduction
Mr. Packard 1.5
Myer Mellman Consulting Agreement 3.2(l)
Neal Machine Exhibit B,ss.B.6
Neal Machine Assets Exhibit B,ss.B.6
Notes 3.3(c)
Packard Deferred Payments 1.5
Packard Purchase Agreement 1.5
Packard Shares Background Information
Parties Background Information
ii
{PAGE}
Pension Plans Exhibit B,ss.B.19(a)
Permits Exhibit B,ss.B.11
Proprietary Rights Exhibit B,ss.B.12
Purchase Price 1.1
Related Party Payables Exhibit B,ss.B.21
Related Party Receivables Exhibit B,ss.B.21
Response Period 4.4(a)
Restricted Customer 3.2(i)
Restricted Goods and Services 3.2(i)
Restricted Period 3.2(i)
RHE Columbus Limited Exhibit B,ss.B.20
Securities Act Exhibit B,ss.B.28
Settlement Agreement Exhibit B,ss.B.18
Software Exhibit B,ss.B.12
Stock Pledge Agreement 3.3(h)
Stock Power 1.3
Stock Purchase Background Information
Third-Party Claim 4.4(a)
To the best of Mr. D.
Mellman's knowledge 2.2
iii
{PAGE}
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made effective April
26, 2001, among Quality Products, Inc., a Delaware corporation ("Buyer"),
Columbus Jack Corporation, an Ohio corporation ("CJC"), and Dennis B. Mellman
("Mr. D. Mellman").
BACKGROUND INFORMATION
A. There are 500 shares of issued and outstanding capital stock of CJC
(the "CJC Shares"), of which Mr. D. Mellman owns 455 common shares, without par
value (the "D. Mellman Shares"), and the Columbus Jewish Foundation ("CJF") owns
45 common shares, without par value (the "CJF Shares").
B. Mr. D. Mellman desires to sell, and Buyer desires to purchase (the
"Stock Purchase"), all of the D. Mellman Shares for the consideration described
inss.1.1, below. Concurrently with the execution of this Agreement, Buyer is
entering into separate agreements for the purchase of the Packard Shares and the
CJF Shares. Buyer, CJC, and Mr. D. Mellman (the "Parties") also desire to
consummate the other transactions contemplated by this Agreement.
STATEMENT OF AGREEMENT
The Parties acknowledge the foregoing Background Information and hereby
agree as follows:
ARTICLE I
STOCK PURCHASE AND SALE
ss.1.1. Stock Purchase and Sale. On the terms and subject to the
conditions described in this Agreement, Mr. D. Mellman shall sell, assign,
transfer, and deliver to Buyer, and Buyer shall purchase from Mr. D. Mellman,
all of the D. Mellman Shares, for a total purchase price (collectively, the
"Purchase Price") payable as follows:
(a) At the Closing, Buyer shall pay $440,000 to Mr. D. Mellman;
(b) Not later than December 31, 2001, Buyer shall cause CJC, as its
wholly-owned subsidiary, to pay to Mr. D. Mellman cash in an amount equal
to 25% of the amount (if any) by which the net income of CJC for the
fiscal year ended September 30, 2001 exceeds $150,000;
(c) Not later than December 31, 2002, Buyer shall cause CJC, as its
wholly-owned subsidiary, to pay to Mr. D. Mellman cash in an amount equal
to the sum of $162,000 (subject to offset pursuant to ss.1.5, below) and
25% of the amount (if any) by which the net income of CJC for the fiscal
year ended September 30, 2002 exceeds $150,000;
(d) Not later than December 31, 2003, Buyer shall cause CJC, as its
wholly-owned subsidiary, to pay to Mr. D. Mellman cash in an amount equal
to the sum of $162,000 (subject to offset pursuant to ss.1.5, below) and
25% of the amount (if any) by which the net income of CJC for the fiscal
year ended September 30, 2003 exceeds $150,000, provided that if the total
payment actually made to Mr. D. Mellman under this ss.1(d) is less than
$175,000, then, concurrently with such payment, Buyer shall issue to Mr.
D. Mellman that number of shares of common stock of Buyer (determined as
described below) having an aggregate fair market value as of the end of
such fiscal year equal to the amount by which $175,000 exceeds the cash
payment made to Mr. D. Mellman under this ss.1(d);
{PAGE}
(e) Not later than December 31, 2004, Buyer shall cause CJC, as its
wholly-owned subsidiary, to pay to Mr. D. Mellman cash in an amount equal
to the sum of $162,000 (subject to offset pursuant to ss.1.5, below) and
25% of the amount (if any) by which the net income of CJC for the fiscal
year ended September 30, 2004 exceeds $150,000, provided that if the total
payment actually made to Mr. D. Mellman under this ss.1(e) is less than
$200,000, then, concurrently with such payment, Buyer shall issue to Mr.
D. Mellman that number of shares of common stock of Buyer (determined as
described below) having an aggregate fair market value as of the end of
such fiscal year equal to the amount by which $200,000 exceeds the cash
payment made to Mr. D. Mellman under this ss.1(e);
(f) Not later than December 31, 2005, Buyer shall cause CJC, as its
wholly-owned subsidiary, to pay to Mr. D. Mellman cash in an amount equal
to the sum of $162,000 (subject to offset pursuant to ss.1.5, below) and
25% of the amount (if any) by which the net income of CJC for the fiscal
year ended September 30, 2005 exceeds $150,000, provided that if the total
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