STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made this 22 day of April 1999 by and among
California Precision Aluminum Casting, Inc., a California corporation
("CPAC"), the undersigned shareholders of CPAC who are identified in Schedule
4(c) hereto (the "Shareholders"), and Coastcast Corporation, a California
corporation ("Coastcast").
RECITALS:
A. CPAC manufactures and sells precision aluminum castings in accordance
with specifications furnished by its customers (the "Business") in leased
facilities located at 7320 Adams Street, Paramount, California 90723 (the
"Facilities").
B. Coastcast manufactures and sells precision investment castings in a
variety of metal alloys, including stainless steel and titanium, in
accordance with specifications furnished by its customers.
C. Coastcast desires to purchase and Shareholders are willing to sell
all of the outstanding stock of CPAC for the price and on the terms and
conditions set forth herein.
AGREEMENTS:
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, the parties hereby agree as follows:
1. PURCHASE AND SALE OF CPAC STOCK. Shareholders will sell to Coastcast
and Coastcast will purchase from Shareholders, at the closing provided for in
Paragraph 3 hereof (the "Closing"), all of the outstanding stock of CPAC (the
"Shares"), for the consideration specified in Paragraph 2 hereof allocated
among the Shareholders in the as set forth on Schedule 4(c) hereto.
2. PURCHASE PRICE OF SHARES. The total price payable to Shareholders by
Coastcast for the Shares shall be Two Hundred Fifty Thousand Dollars
($250,000.00), payable to the Shareholders in the amounts set forth opposite
their names on Schedule 4(c) hereto at the Closing by Coastcast checks to the
order of Shareholders (the "Purchase Price").
3. CLOSING. The Closing for the purchase and sale of the Shares shall
occur on April 22, 1999 at ___ p.m. (the "Closing Date") at the offices of
CPAC, unless another place, time and/or date is agreed on in writing by the
parties. At the Closing:
(a) SHAREHOLDER DELIVERIES. Shareholders will deliver to Coastcast:
(i) STOCK CERTIFICATES AND ASSIGNMENTS. The certificates
evidencing the Shares, duly endorsed or accompanied by duly executed stock
powers in proper form for transfer of the Shares to Coastcast on the stock
transfer records of CPAC, with signatures witnessed or guaranteed in a manner
satisfactory to Coastcast.
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(ii) BRING-DOWN CERTIFICATE. A certificate executed by
Shareholders representing and warranting to Coastcast that the
representations and warranties of Shareholders herein are correct as of the
Closing Date and that Shareholders have performed all obligations required to
be performed by them prior to the Closing.
(b) COASTCAST DELIVERIES. Coastcast will deliver to Shareholders:
(i) PURCHASE PRICE CHECKS. Checks for the Purchase Price
payable to Shareholders in the amounts set forth opposite their names on
Schedule 4(c) hereto.
(ii) BRING-DOWN CERTIFICATE. A certificate executed by
Coastcast representing and warranting to Shareholders that the
representations and warranties of Coastcast herein are correct as of the
Closing Date and that Coastcast has performed all obligations required to be
performed by it prior to the Closing.
4. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS. Shareholders hereby
represent and warrant to Coastcast that:
(a) ORGANIZATION AND STANDING. CPAC is a corporation which is duly
organized, validly existing, and in good standing under the laws of the state
of California, with full corporate power to own or lease its properties and
to carry on its business as it is now and has previously been conducted.
(b) AUTHORIZATION OF AGREEMENT. This Agreement constitutes the
legal, valid and binding obligation of Sellers, enforceable against Sellers in
accordance with its terms. Shareholders have the absolute and unrestricted
right, power, authority and capacity to execute, deliver and perform this
Agreement.
(c) CAPITALIZATION OF CPAC. The authorized capital stock of CPAC
consists of 100,000 shares of common stock, of which 1,000 shares are duly
and validly issued and outstanding and constitute the Shares. Shareholders are
and will be on the Closing Date the record and beneficial owners of the
Shares, free and clear of all encumbrances and restrictions. Each Shareholder
owns the number of Shares set forth opposite his or her name on Schedule 4(c)
hereto. The Shares have been duly authorized and validly issued and are fully
paid and nonassessable. There are no contracts or commitments of any kind
relating to the sale, issuance, purchase, or transfer of any stock or other
securities of CPAC, including options and warrants, other than this Agreement
and shareholder agreements between CPAC and Shareholders.
(d) FINANCIAL STATEMENTS OF CPAC. The unaudited balance sheet of
CPAC as of February 28, 1999 (the "Balance Sheet") and the related statement
of operations for the ten months ended on that date were prepared from the
books and records of CPAC, are complete and correct, and fairly present the
financial condition and the results of operations of CPAC as of that date and
for that period, all in accordance with generally accepted accounting
principles consistently applied.
(e) BOOKS AND RECORDS. The accounting books and records, minute
books, stock records books, and other records of CPAC, all of which have been
made
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available to Coastcast, are complete and correct and have been maintained in
accordance with sound business practices. The minute books include an
accurate record of all meetings, actions and proceedings of the directors and
shareholders of CPAC.
(f) TITLE TO AND ENCUMBRANCES ON ASSETS. CPAC owns all of the
assets it purports to own, including all of the assets reflected in the
Balance Sheet (other than inventory which has been sold in the ordinary course
of business since the date of the Balance Sheet), all of the assets located
at the Facilities (other than the building and improvements which are owned by
the lessor thereof), and all of the items of equipment and tooling listed in
Schedule 4(f) hereto. Except as disclosed on Schedule 4(f) hereto, all of
such assets are free and clear of liens, encumbrances and restrictions.
(g) LEASE OF FACILITIES. The only lease to which CPAC is a party is
that certain Standard Industrial Lease dated September 22, 1995 (the "Lease")
between Garfield-Pacific Development Company, as lessor ("Lessor"), and CPAC,
as lessee, covering the Facilities, a true and complete copy of which has
been delivered to Coastcast. The Lease is in full force and effect and no
default or breach thereunder has occurred and no event has occurred which, with
the passage of time or giving of notice or both, would constitute a breach or
default thereunder.
(h) ACCOUNTS RECEIVABLE. All accounts receivable reflected on the
Balance Sheet and all accounts receivable arising since the date of the
Balance Sheet and prior to the Closing Date either have been or will be
collected in full without any setoff.
(i) INVENTORY. The net realizable value of the inventory reflected
on the Balance Sheet is not less than the carrying value of such inventory on
the Balance Sheet.
(j) NO UNDISCLOSED LIABILITIES. CPAC has no liabilities or
obligations of any nature whatsoever (whether known, unknown, absolute,
accrued, contingent or otherwise) except liabilities reflected in the Balance
Sheet, accounts payable and accrued expenses arising in the ordinary course
of business since the date of the Balance Sheet, the Lease, and contracts
listed in Schedule 4(l) hereto.
(k) ABSENCE OF CERTAIN CHANGES. Since February 28, 1999, except as
otherwise disclosed in Schedule 4(k) hereto, there has not been (i) any
material adverse change in CPAC's operations, condition (financial or
otherwise), assets, liabilities (whether absolute, accrued, contingent, or
otherwise), the Business or its prospects; (ii) any damage, destruction or
loss, whether or not covered by insurance, materially and adversely affecting
the Business or any of CPAC's assets; or (iii) any other event or condition
of any character which materially and adversely affects the results of
operations, or condition (financial or otherwise) of CPAC, or any of CPAC's
assets or the Business or its prospects.
(l) CPAC CONTRACTS. Attached hereto as Schedule 4(l) is a complete
list and description of each contract to which CPAC is a party or by which
CPAC or any of its assets is bound or obligated (the "Contracts").
Shareholders have furnished to Coastcast true and complete copies of all of
the Contracts. Each of the Contracts is a valid and binding agreement of CPAC
and Shareholders do not have any knowledge that any of such Contracts is not
a valid and binding obligation of the other parties thereto (collectively,
the "Contract Parties"). CPAC has fulfilled all material obligations required
by the Contracts to have been
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performed by it prior to the date hereof and Shareholders have no reason to
believe that CPAC will not be able to fulfill, when due, all of its
obligations under the Contracts which remain to be performed after the date
hereof. There has not occurred any material default under any Contract on the
part of CPAC; Shareholders do not have any knowledge that any material
default under any Contract on the part of any of the Contract Parties has
occurred; and Shareholders do not have any knowledge that any event has
occurred which with the giving of notice or the passage of time, or both,
would constitute any material default under any of the Contracts.
Shareholders do not have actual knowledge of any fact which reasonably can be
expected in the future to cause CPAC to be in material default under any of
the Contracts.
(m) ENVIRONMENTAL LAWS. To the knowledge of the Shareholders, CPAC
has complied and is in compliance in all material respects with all
applicable environmental protection laws pertaining to any of its properties
and assets, including the Facilities, at which the Business has ever been
conducted, and the use and ownership thereof. No violation by CPAC of any
environmental protection law has ever been asserted or alleged. Shareholders
do not know of any studies, analyses, reports or test results relating to the
environmental condition of the Facilities or any other properties or assets
owned, used or occupied by CPAC.
(n) INTELLECTUAL PROPERTY RIGHTS. To the knowledge of Shareholders,
CPAC owns or has the unrestricted right to use without payment of
consideration to any third party all patents, trade secrets, copyrights, and
other proprietary or intellectual property rights required for the conduct of
its business in the manner it has previously been and currently is being
conducted. To the knowledge of Shareholders, the conduct by CPAC of its
business and the manufacture and sale by it of its products does not conflict
with, infringe on or violate any patent, trade secret, copyright or other
proprietary or intellectual property rights of any other person or entity.
(o) NO LITIGATION. There is and during the last three years there
has been no legal, administrative, arbitration or other proceeding, or any
governmental investigation pending or, to the knowledge of Shareholders,
threatened against or otherwise affecting CPAC or any of its assets, and to
the knowledge of Shareholders, there is no fact that might reasonably be
expected to form the basis for any such proceeding or investigation.
(p) TAXES. CPAC has timely filed all tax returns and reports
required to have been filed by it and has paid all taxes as due to any taxing
authority. All amounts that are required to be withheld by CPAC have been
duly collected or withheld and all such amounts that are required to be
remitted to any taxing authority have been duly remitted.
(q) CONSENTS. The sale of the Shares by Shareholders to Coastcast
pursuant to this Agreement does not require the consent or approval of any
person or entity.
(r) BANK ACCOUNTS. A correct and complete list of all bank accounts
of CPAC has been furnished to Coastcast.
(s) OTHER INFORMATION. The information provided and to be provided
by Shareholders to Coastcast pursuant to this Agreement or in any other
writing pursuant hereto does not and will not contain any untrue statement of
a material fact or omits or will omit to state a material fact required to be
stated herein or therein or necessary to make the statements and facts
contained herein or therein, in light of the circumstances in which they
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are made, not false or misleading. Copies of all documents delivered or
made available to Coastcast pursuant hereto will be complete and accurate
records of such documents.
5. REPRESENTATIONS AND WARRANTIES OF COASTCAST. Coastcast hereby
represents and warrants to Shareholders that:
(a) ORGANIZATION AND STANDING. Coastcast is duly organized,
validly existing, and in good standing under the laws of the State of
California and has all requisite corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby.
(b) AUTHORIZATION OF AGREEMENT. This Agreement constitutes the
legal, valid and binding obligation of Coastcast, enforceable against
Coastcast in accordance with its terms. Coastcast has the absolute and
unrestricted right, power, authority and capacity to execute, deliver and
perform this Agreement.
(c) OTHER INFORMATION. No representation or warranty made by
Coastcast contained in this Agreement or in any other writing furnished to
Shareholders pursuant hereto contains or will contain an untrue statement of
a material fact or omits or will omit to state a material fact required to be
stated herein or therein or necessary to make the statements and facts
contained herein or therein, in light of the circumstances in which they were
or are made, not false or misleading.
6. CERTAIN UNDERSTANDINGS AND AGREEMENTS.
(a) ACCESS. Between the date hereof and the Closing, (i) authorized
representatives of Coastcast will have reasonable access during normal
business hours to the books and records, contracts, and documents of CPAC
relating to the Business or the assets of CPAC, (ii) Shareholders will
furnish to Coastcast all information with respect to the Business or the
assets of CPAC that Coastcast may reasonably request, and (iii) Coastcast
will have the right to discuss the Business with the employees and customers
of CPAC.
(b) CONDUCT OF BUSINESS. Between the date hereof and the Closing,
(i) the Business will be conducted in accordance with prior practice and in
the ordinary course of business, (ii) CPAC will not enter into any material
agreement or transaction not in the ordinary course of business, (iii) CPAC
will not sell or transfer any portion of or interest in the Business or sell
or otherwise dispose of any of its assets other than in the ordinary course
of its business, (iv) CPAC will not encumber any of its assets, (v)
Shareholders will not sell, otherwise transfer or dispose of, or encumber in
any manner any of the Shares or any interest therein, (vi) CPAC will maintain
its assets in accordance with prior practice and in the ordinary course of
business, (vii) CPAC will maintain its tangible assets in the same condition
they are in as of the date of this Agreement, reasonable wear and tear
excepted, (viii) CPAC will not pay or declare any dividends, issue any
securities, or purchase any of its securities, or enter into any commitments
to do any of those things, (ix) CPAC will not increase the compensation of, or
pay any bonuses to, any of its employees or make any commitment to do that,
and (x) CPAC will not take any action that would cause Coastcast's purchase of
the Shares pursuant to this Agreement to be less beneficial or attractive to
Coastcast.
(c) HECTOR SERRANO'S COVENANTS NOT TO COMPETE. Subject to the
Closing having occurred, without the prior written consent of Coastcast, for
a period of five
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years following the Closing, Hector Serrano will not, directly or indirectly
(whether as an employee, owner, or consultant or through any partnership of
which he is a member, through any trust of which he is a beneficiary,
trustor, or trustee, or through any corporation or other association in which
he has any interest, legal or equitable, or in any other capacity
whatsoever), engage in any business competitive with the Business in any
County of the State of California or any other part of the United States;
provided, however, that the foregoing covenant not to compete (i) will
terminate upon the date of termination of Mr. Serrano's employment with CPAC
if he is fired by CPAC without cause, and (ii) will not preclude Mr. Serrano
from competing as an employee of another company in any part of the State of
California or any part of the country or world in the event Mr. Serrano is
fired with or without cause. The parties agree that the duration and area for
which this covenant not to compete is to be effective are reasonable. In the
event that any court determines that the time period or the area, or both of
them, are unreasonable and that such convenant is to that extent
unenforceable, the parties hereto agree that such covenant shall remain in
full force and effect for the longest time period and for the greatest are
that would not render it unenforceable.
(d) SHAREHOLDER RELEASES. Subject to the Closing having occurred,
each Shareholder hereby releases CPAC and Coastcast and each of the former
and present officers, directors, shareholders, accountants, attorneys, and
agents of CPAC or Coastcast from any and all liabilities, obligations, debts,
demands, damages, losses, actions, causes of actions, claims and expenses
whatsoever, whether matured or contingent, known or unknown, suspected or
unsuspected. Each Shareholder hereby waives the benefits of California Civil
Code Section 1542 which provides:
A general release does not extent to claims which the
creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him must
have materially affected his settlement with the debtor.
The foregoing release does not apply to the rights of Shareholders
under this Agreement or unpaid wages, healthcare benefits, and unused
vacation, if any, of Jose Geraldo as an employee of CPAC, but does apply to
unpaid compensation and benefits of Hector Serrano as an employee of CPAC.
7. CONDITIONS TO CLOSING.
(a) CONDITIONS TO OBLIGATIONS TO EACH PARTY. The obligations of
Shareholders and Coastcast to consummate the purchase and sale of the Shares
pursuant to this Agreement will be subject to the fulfillment, at or prior to
the Closing, of the following conditions: No claim, action, suit,
investigation, or other proceeding shall be pending or threatened before any
court or governmental agency which presents a substantial risk of the
restraint or prohibition of the transactions contemplated by this Agreement
or the obtaining of material damages or other relief in connection therewith.
(b) CONDITIONS TO OBLIGATIONS OF COASTCAST. The obligations of
Coastcast to consummate the purchase of the Shares pursuant to this Agreement
will be subject to the fulfillment, at or prior to the Closing, of the
following conditions: (i) The representations and warranties of Shareholders
contained in this Agreement or in any other document of Shareholders
delivered pursuant hereto shall be true and correct in all material respects
as of the Closing, and at the Closing, Shareholders shall have delivered to
Coastcast
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a certificate signed by Shareholders to such effect; (ii) all of the
obligations of Shareholders to be performed by them prior to the Closing
shall have been duly performed in all material respects; (iii) there shall not
have occurred any damage, destruction or loss of any of the assets of CPAC,
whether or not covered by insurance, which has had or may reasonably be
expected to have a material and adverse effect on the Business or any
prospects of the Business, nor shall there have occurred any other event or
condition which has had or which reasonably may be expected to have a
material and adverse effect on the operations or prospects of the Business;
(iv) Hector Serrano shall have paid in full all of his indebtedness to CPAC;
and (v) Hector Serrano shall have entered into an employment agreement with
CPAC on terms and conditions mutually agreeable to him and Coastcast.
(c) CONDITIONS TO OBLIGATIONS OF SHAREHOLDERS. The obligations of
Shareholders to consummate the sale of the Shares pursuant to this Agreement
will be subject to the fulfillment, at or prior to the Closing, of the
following conditions: (i) The representations and warranties of Coastcast
contained in this Agreement or in any document delivered pursuant to this
Agreement shall be true and correct in all material respects as of the
Closing, and at the Closing, Coastcast shall have delivered to Shareholders a
certificate signed by Coastcast to such effect; (ii) all of the obligations
of Coastcast to be performed by it prior to the Closing shall have been duly
performed in all material respects; and (iii) Hector Serrano shall have
entered into an employment agreement with CPAC on terms and conditions
mutually agreeable to him and Coastcast.
8. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement will be governed by and construed
in accordance with the laws of the State of California.
(b) ASSIGNMENT AND PARTIES IN INTEREST. This Agreement shall not be
assignable by any party without the express prior written consent of the
other parties. Subject to the foregoing, this Agreement shall inure to the
benefit of and be binding on the parties and their respective permitted
successors and assigns.
(c) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.
(d) ENTIRE AGREEMENT. This Agreement contains the entire agreement
among the parties with respect to the purchase and sale of the Shares and
shall supersede all previous oral and written and all contemporaneous oral
negotiations, commitments, and understandings.
(e) AMENDMENTS. This Agreement may be amended only by a written
instrument signed by all of the parties.
(f) ATTORNEYS FEES. In the event of litigation between or among the
parties with respect to this Agreement, the prevailing party in such
litigation will be entitled to recover reasonable attorneys fees and costs
from the losing party or parties in addition to any and all other relief to
which such prevailing party may be entitled.
(g) ARBITRATION. Any dispute relating to this Agreement shall be
resolved by arbitration conducted in Los Angeles County, California, in
accordance with the
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Commercial Arbitration Rules of the American Arbitration Association and
judgment upon any award rendered by the arbitrator may be entered in any
federal or state court having jurisdiction thereof. Section 1283.05 of the
California Code of Civil Procedure is incorporated herein by this reference.
The decision of the arbitrator shall be final and binding. The arbitrator
shall be authorized only to award actual damages and shall not have the power
or authority to award punitive or exemplary damages or other legal or
equitable relief.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year first above written.
CALIFORNIA PRECISION ALUMINUM CASTING, INC.
By: /s/ Hector Serrano
--------------------------------
COASTCAST CORPORATION /s/ Hector Serrano
-------------------------------------
Hector Serrano
By: /s/ Bryan Rolfe /s/ Elena Serrano
-------------------------------- -------------------------------------
Bryan Rolfe Elena Serrano
By: /s/ Norman Fujitaki /s/ Michael Tamez
-------------------------------- -------------------------------------
Norman Fujitaki Michael Tamez
/s/ Ricardo Arriaga /s/ Norma Tamez
- ----------------------------------- -------------------------------------
Ricardo Arriaga Norma Tamez
/s/ Alicia Arriaga /s/ Hugo Ortiz
- ----------------------------------- -------------------------------------
Alicia Arriaga Hugo Ortiz
/s/ John Le Blanc /s/ Audelia Ortiz
- ----------------------------------- -------------------------------------
John Le Blanc Audelia Ortiz
/s/ Carole Le Blanc /s/ Jose Geraldo
- ----------------------------------- -------------------------------------
Carole Le Blanc Jose Geraldo
/s/ Lance Robert Lukasik /s/ Esperanza Geraldo
- ----------------------------------- -------------------------------------
Lance Robert Lukasik Esperanza Geraldo
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