STOCK PURCHASE AGREEMENT I
AXIS/BATES
THIS STOCK PURCHASE AGREEMENT ('Agreement') is entered into effective the date set forth on the signature page below, by and between:
Albert V. Axis ('Seller'); and
Leon A. Bates ('Buyer').
Recitals
A. Bates Insurance, Inc. (the 'Company') is in the process of amending its Articles of Incorporation to increase the number of its authorized shares from 100,000 to 200,000 and also to change its name to 'Axis-Bates, Inc.'.
B. As a result of the merger of their respective agency corporations concurrently herewith, Seller shall own approximately 150,528 shares of the increased common stock of the Company, constituting 69.3% of its outstanding stock; Buyer shall own 30,000 shares, constituting 13.8% of its outstanding stock.
C. The exact number of their relative share holdings shall be adjusted by Dan Strong, C.P.A, several months following execution hereof; however, the parties wish to close a final and binding sale of stock between them now, subject to that later adjustment.
D. Seller desires to sell and transfer to Buyer, and Buyer desire to purchase from Seller upon the terms and conditions hereinafter provided, a
sufficient number of shares of Seller's stock in the Company in order to
equalize the shares held by each of them and another shareholder, Benjamin
W. Charles ('Charles').Agreement
THEREFORE, in consideration of the provisions set forth below, the parties agree as follows:1. Sale and Purchase of Stock
1.1 Subject to the terms and conditions of this Agreement, Buyer hereby agrees to purchase from Seller, and Seller agrees to sell and transfer to Buyer, all of Seller's rights, title and interest in and to a sufficient number of shares of the common stock of the Company in order to equalize their respective share holdings. Such shares sold by Seller to Buyer shall hereinafter be referred to as the 'Stock'.
1.2 The sale and transfer of the Stock shall be deemed effective as of the date of this Agreement; and
1.3 Following filing of the Articles of Amendment and the resultant increase in the total authorized shares, the Company's total outstanding shares as a result of this sale and a concurrent sale by Seller to Benjamin W. Charles, shall be held approximately as follows:
Shares % of Total
Thomas Smith 6,735 3.1%
Benjamin Charles 70,176 32.3%
Bates 70,176 32.3%
Albert Axis 70,176 32.3%
________ _______
Total: 217,263 100%
1.4 The exact number of shares held by each stockholder shall be determined by Dan Strong, C.P.A. ('Strong') as he determines and adjusts the relative book values of the two agency corporations merged concurrently herewith, and this Agreement shall be automatically amended in order to reflect the precise numbers arrived at by Mr. Strong.
1.4.1 In making the determinations of relative book value, and from that the final relative share holdings of the parties, Strong shall:
(a) Make deductions therefrom equivalent to 100% of the write-offs for uncollectable accounts receivable at each agency on business written prior to March 1, 20__; and
(b) Make allowances for any shareholder loans outstanding within either agency corporation.
1.4.2 There shall be no fractional shares; whole shares shall be issued in the Company's new name following filing of the Articles of Amendment, with cash payments made to any parties as necessary following closing, in order to conform the per-share values.
1.4.3 Strong's determinations shall be final and binding on the parties hereto in all respects.
2. Purchase Price
2.1 Total. Buyer's purchase price for the Stock would be approximately three hundred twelve thousand eight hundred twenty-one dollars ($312,821) based on the figures presently available, hereinafter referred to as the 'Purchase Price'.
2.1.1 That Purchase Price shall be adjusted by Strong as he ascertains the relative book values of the merged agencies in the manner set forth above.
2.1.2 Although both the Purchase Price and the Note (defined below) for the balance shall be automatically adjusted in that manner, the down payment shall remain fixed.
2.2 Down Payment. Concurrent with the execution of this Agreement, Buyer has delivered to Seller a down payment in the amount of ninety- three thousand eight hundred eighty-four dollars ($93,884) applicable to that Purchase Price; and
2.3 Note. The balance of the Purchase Price shall be paid in accordance with a non-negotiable promissory note delivered to Seller herewith in the form attached hereto as Exhibit 'A' (the 'Note'); the principal amount thereof shall be subsequently adjusted in accordance with Strong's computations set forth above, and a substitute Note exchanged with Seller showing a revised balance due on the Purchase Price.
3. Security
As security for payment of the Note, Buyer shall grant to Seller a security interest in all Stock purchased from Seller hereunder, by delivery to Seller at closing a Stock Pledge Agreement in the form attached hereto as Exhibit 'B', with the certificates themselves to be held by the Pledge Holder described therein.
4. Representations and Warranties by Seller
Seller represents and warrants to Buyer that:
4.1 Seller is the sole record and beneficial owner of the Stock, and holds the Stock free and clear of all claims, liens, charges, security interests and encumbrances other than as set forth in a SHAREHOLDERS AGREEMENT entered into by the parties concurrently herewith;
4.2 Seller has the full legal right, power and authority to enter into and to perform this Agreement; and
4.3 This Agreement constitutes Seller's valid and binding obligation, enforceable against him in accordance with its terms.
5. Representations and Warranties by Buyers
Buyer represent and warrants to Seller that Buyer:
5.1 Is purchasing the Stock for his own personal account, for investment and not with a view to the sale or distribution of all or any part of the Stock. No one other than Buyer shall have any beneficial interest in the Stock;
5.2 Has had full opportunity to ask questions and receive answers concerning the Stock and the financial condition of the Company;
5.3 Has the full legal right, power and authority to enter into and to perform this Agreement; and
5.4 This Agreement constitutes his valid and binding obligation, enforceable against Buyer in accordance with its terms.
6. Dividends
Provided neither he nor the Company are in material default on their respective obligations to Seller, Buyer shall be entitled to receive any dividends in cash, stock or otherwise that may accrue to the Stock on or after the effective date hereof and Seller shall vote to cause the Company to pay all dividends in cash, stock or otherwise to Buyer.
7. Voting Rights
Seller hereby agrees that any voting rights that may accrue to the Stock on or after the effective date hereof are hereby granted to Buyer as long as neither Buyer nor the Company becomes in material default on their respective obligations to Seller.
8. Dispute Resolution
All disputes with respect to this Agreement or involving the parties hereto, including without limitation anything concerning the offer or sale of securities under either state or federal law, shall be resolved in accordance with Section 14 (entitled 'Dispute Resolution') of the SHAREHOLDERS AGREEMENT entered into between the parties concurrently herewith, which Section is hereby incorporated by reference in its entirety.
9. General Provisions
9.1 Notices. All notices, requests, demands, and other communications which are required or may be given under this Agreement shall be in writing and shall be sent to all parties by certified mail, return receipt requested, postage prepaid, to the respective addresses set forth on the signature page below; or to such other address as any party shall have specified by notice in writing to the other parties in that same manner. Such notices shall be deemed effective three (3) days after mailing in the prescribed manner.
9.2 Assignment. This Agreement may not be assigned by any party in whole or in part.
9.3 Modification & Waiver. This Agreement may not be changed, supplemented, or terminated orally. No waiver of any provision of this Agreement shall be deemed, nor shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver.
9.4 Severability. In case any provision of this Agreement shall be held to be invalid, illegal, or unenforceable, in whole or in part, then neither the validity of the remaining part of such provision nor the validity of any other provision of this Agreement shall in any way be affected thereby.
9.5 Attorney fees and costs. See Section 8 above.
9.6 Benefit. All rights and obligations of the parties hereunder shall be binding upon themselves, their heirs, legal representatives, successors and permitted assigns.
9.7 Merger. All understandings and agreements heretofore between the parties relating to the subject matter hereof are merged in this Agreement, which alone fully and completely expresses their agreement thereon; and the same is entered into after full investigation, no party relying upon any statement or representation made by the other and not embodied in this Agreement .
9.8 Construction. The captions and titles are for convenience and reference only, and they shall not define, limit, or construe the contents of any provision. Except where the context indicates otherwise, words in the singular number shall include the plural, and words in the masculine gender shall include the feminine, and vice versa.
9.9 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.
9.10 Community Property Interest. The spouses of Seller and Buyer join in the execution and delivery of this Agreement for the express purpose of binding their community property interest, if any, in the Stock. The spouses' addresses for purposes hereof shall be deemed to be the same as those for the parties as set forth below, unless all parties are notified to the contrary in the manner prescribed above.
10. Separate Counsel
The parties acknowledge that only seller and his spouse have been represented by Vander Wel & Jacobson with respect to this entire merger transaction, including without limitation this agreement and all exhibits Hereto, and that there is no conflict of interest in doing so despite the Fact that Gary E. Jacobson has heretofore separately represented buyer and/or his corporations on various occasions. All other parties have been advised to seek separate legal counsel, and have either done so to their satisfaction, or by signing below confirm that they have intentionally waived their opportunity to do so.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective the 1st day of March, 20__.
Seller: Spouses:
________________________ _________________________
Albert V. Axis Alexis M. Axis
Address:
182 NE 222nd
Portland, OR 88020
Buyer:
________________________ _________________________
A. Bates Emily G. Bates
Address:
5111 Tops Dr NE
Vancouver, WA 98222
Exhibit 'A' to Charles Stock Purchase Agreement
Non-Negotiable Promissory Note
U.S. $218,937.00 March 1, 20__
1. Payment Obligation
1.1 For value received, BENJAMIN W. CHARLES and SUSAN M. CHARLES (collectively, 'Maker') promise to pay to ALBERT V. AXIS ('Holder') the sum of Two Hundred Eighteen Thousand Nine Hundred Thirty-Seven Dollars ($218,937.00).
1.2 This Note and the parties hereto are subject in all respects to the provisions of the STOCK PURCHASE AGREEMENT (the 'Purchase Agreement') covering shares of Bates Insurance, Inc. (the 'Corporation') and the executed originals of all Exhibits thereto, between Maker and Holder executed concurrently herewith; in the event of conflict with the provisions of this Note, the Purchase Agreement shall control. Capitalized terms used herein shall have the same meanings as set forth in the Purchase Agreement.
2. Terms and Conditions
2.1 Payments:
2.1.1 Interest Rate. Maker shall pay to Holder interest on the declining principal balance of this Note over the ten (10)-year term hereof, calculated at the rate of twelve percent (12%) per annum simple (or, in the event that this rate is in excess of the then-maximum rate allowed by law, then at the highest rate then allowable by law);
2.1.2 Five years interest-only. Interest-only payments shall be made annually over the entire ten (10)-year term hereof, commencing March 1, 20__ and subsequently on the first day of March of each year thereafter; and
2.1.3 Principal. In addition, principal shall be fully-amortized and paid in five (5) equal annual payments along with the annual interest payments over the final five (5) years of that 10-year term, with the first payment thereof beginning March 1, 2000.
2.2 Prepaid Interest Adjustment. Maker may at it's option prepay the principal amount outstanding in whole or in part at any time; however, in consideration of the future interest income thereby forgone by Holder, any such prepayment shall be subject to a 'Prepaid Interest Adjustment' computed in accordance with Exhibit 'A' attached hereto, a sample calculation of which is attached as Exhibit 'B'.
2.2.1 Adjustment. The total prepayment amount at any time shall be computed by subtracting from any excess prepaid principal an amount computed in accordance with the last line of that Exhibit 'A'. If the principal amount of this Note is modified by Dan Strong, C.P.A. in the process of adjusting book value and other factors associated with the concurrent insurance agency merger, the Prepaid Interest Adjustment percentages set forth on Exhibit 'A' shall still apply to the new principal amount.
2.2.2 Partial Prepayment. Any partial prepayment of principal shall require a Prepaid Interest Adjustment computed in that same percentages to the amount of principal being prepaid. Any partial prepayments shall be applied against the principal amount then outstanding, so as to reduce the amount of each subsequent annual principal payment, but shall not postpone any subsequent payments nor shorten the remaining payment schedule required hereunder.
3. General Provisions
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