Exhibit 2.16
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made and entered into
this 17th day of December, 1997, by and among VINCI, INC., a Nevada
corporation ("Seller"), XXXXXX X. XXXXX (the "Shareholder") and SAHARA
IMPORTS, INC., a Nevada corporation ("Buyer").
RECITALS
A. Seller is the owner and operator of a Honda motor vehicle sales
and service dealership (the "Dealership") located at 0000 X. Xxxxxx, Xxx
Xxxxx, Xxxxxx and operates the Dealership under the name "Las Vegas Honda"
in accordance with a dealer sales and service agreement with American Honda
Motor Co., Inc. ("Honda").
B. Shareholder owns the premises (the "Premises") on which the
Dealership is located. Seller leases the Premises from Shareholder. Seller
and Shareholder have agreed to terminate their lease at Closing (hereinafter
defined). Shareholder has agreed to lease the Premises to Buyer under a lease
in substantially the form of Exhibit "A" (the "Lease").
C. Subject to the terms and conditions set forth in this Agreement,
Buyer desires to purchase and receive from Seller, and Seller desires to sell
to Buyer, the right to operate the Dealership and certain assets used in,
arising from or related to the operation of the Dealership.
AGREEMENT
In consideration of the mutual promises contained herein and other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties agree as follows:
1. ASSETS PURCHASED. Subject to and upon the terms and conditions
hereof, Seller agrees to sell, transfer, convey, assign and deliver to Buyer,
and Buyer agrees to purchase and acquire from Seller, the following described
assets (the "Assets") at Closing:
(a) FIXED ASSETS. All tangible personal property of Seller used in
the operation of the Dealership (the "Fixed Assets"), including
(without limitation) signage, machinery, tools and equipment,
furniture, computers, office equipment, telephone systems, parts
books, equipment records, and leasehold improvements. The Fixed
Assets will be set forth on Schedule 1(a) and shall be adjusted
to include those items acquired by Seller and to exclude those
items disposed of by Seller, in the ordinary course of business
subsequent to the date of the Schedule. Buyer shall purchase
the Fixed Assets in their
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current condition and repair; provided, however, if any of the
Fixed Assets are not owned free and clear of all liens and
other encumbrances, physically present at the Dealership, and
in good working order as of the Closing Date, Buyer will not
be obligated to purchased such Fixed Assets.
(b) PARTS AND ACCESSORIES. All new, unused and undamaged Honda parts
and accessories which are (i) listed for sale in the Honda dealer
parts and accessories price schedules that are in effect for the
Dealership on the Closing Date (hereinafter defined), (ii) in the
original, resalable merchandising packaging, (iii) in unbroken
lots, and (iv) in the Seller's inventory on the Closing Date (the
"Parts").
(c) NEW VEHICLES. All new unregistered 1997 and 1998 Honda vehicles
(the "New Vehicles"), including demonstrators having no more than
2,000 miles on their odometer, which are owned and in the
possession of Seller or owned by Seller and in transit on the
Closing Date.
(d) USED VEHICLES. All used vehicles (the "Used Vehicles"),
including demonstrators have 2000 miles or more on their
odometer, which are owned and in the possession of Seller on the
Closing Date.
(e) GOODWILL. The expectation of continued public patronage of
Seller's former business, including the right of Buyer to
represent itself as carrying on the Dealership in succession to
the Seller ("Goodwill").
(f) RECORDS. All books, records, and other information arising from
or related to the operation of the Dealership (the "Records"),
including (without limitation) all information contained in or
derived from disks, tapes, manuals, source codes, charts and
other data sources.
(g) INTELLECTUAL PROPERTY. All business names, trade names, logos,
trademarks, service marks, copyrighted materials, trade secrets,
patents, patent applications and other proprietary rights,
including (without limitation) those items which will be
identified in Schedule 1(g), that are used in operating the
Dealership (the "Intellectual Property"). Schedule 1(g) shall
also set forth (i) those items of Intellectual Property that are
not owned by the Seller, and (ii) any royalties or fees that are
payable to another party by reason of Seller's use of any item of
Intellectual Property.
(h) CONTRACTS. Within ten (10) days after the date of this
Agreement, Seller shall deliver to Buyer a list of all contracts,
leases and agreements affecting or relating to the Dealership,
together with copies thereof. Within fifteen (15) days after
receipt of all of the copies, Buyer shall give Seller written
notice as to which of the contracts, leases and agreements it
will assume as of the
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Closing Date, provided that Buyer shall not assume any
liabilities, obligations or expenses under any assumed
contracts, leases or agreements that accrued prior to Closing.
All contracts, leases and agreements to be assumed by Buyer in
accordance with this Agreement will be referred to as the
"Contracts" and will be set forth on Schedule 1(h). Schedule
1(h) will also set forth the amount of any deposits or
prepayments, if any, held on behalf of Seller with respect to
the Contracts.
(i) LICENSES. All dealer franchise agreements, licenses, permits,
authorizations, and consents (except those which by law or by
their terms are not transferable) necessary to carry on the
operation of the Dealership ("Licenses").
(j) TIRES, GAS AND OIL INVENTORIES, GENERAL SUPPLIES AND
MISCELLANEOUS ASSETS. All tires, gas and oil inventories, grease
inventory, license plate frames and inserts, office supplies,
letterhead, postage, purchase order forms, parts invoices, repair
order forms, counter tickets, file jackets, and other items of
inventory, that are owned by Seller on the Closing Date
("Miscellaneous Assets"). Any vehicle sales of Seller not booked
as of the Closing Date shall be processed to completion or
cancellation by Buyer and Seller shall have no right to any
payment therefor.
(k) SUBLET REPAIRS. All sublet repairs owned by the Seller on the
Closing Date (the "Sublet Repairs"). Seller shall furnish to
Buyer at Closing a complete and accurate list of all Sublet
Repairs.
(l) WORK IN PROCESS. All work in process owned by the Seller on the
Closing Date (the "Work in Process"). Seller shall furnish to
Buyer at Closing a complete and accurate list of the Work in
Process.
(m) FINANCE RESERVES. All finance reserves owned by the Seller on
the Closing Date (the "Finance Reserves"). Seller shall furnish
to Buyer at Closing a complete and accurate list of the Finance
Reserves.
2. EXCLUDED ASSETS. Seller and Buyer mutually acknowledge and agree that
the following assets shall be excluded from the Assets to be sold, transferred,
conveyed, assigned and delivered to Buyer under the terms of this Agreement:
(a) Seller's cause of action in SIERRA AUTO CARS, INC., ETAL V.
AMERICAN HONDA MOTOR CO., INC., ETAL, Case No. SA CV 96-179 AHS
(EEx), In the United States District Court, District of Maryland.
(b) Any other assets that are not specifically described in paragraph
1 hereof.
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3. ASSUMED LIABILITIES. Except as set forth in subparagraphs 3 (a), 3
(b), and 3 (c) (the "Assumed Liabilities"), Buyer is not assuming or
undertaking to assume any liabilities, obligations or expenses of the Seller,
whether arising out of the conduct or operation of the Dealership or otherwise,
including (without limitation) any liability arising from a warranty or
incentive audit, any liability related to vehicle titles, any environmental
liability, any accounts payable, any obligations under any retirement, profit
sharing or defined benefit plan, any taxes, any contractual claims or
obligations, or any payroll obligations (including accrued vacation or sick
leave), whether disclosed, unknown, contingent or fixed. All liabilities other
than the Assumed Liabilities shall be and remain the obligations of the Seller.
(a) FLOOR PLAN. Buyer shall either pay in full or, with the consent
of the floor plan lender and the full, complete and final release by
the floor plan lender of Seller therefrom, assume Seller's floor plan
liability for the purchase price of the New Vehicles. Buyer also
agrees to accept delivery of all new vehicles, on order at Closing, in
accordance with prior practices, and either pay or floor plan the
same. If Buyer pays the floor plan liability for the purchase price
of the New Vehicles, Seller's floor plan lender shall release all
security interests that secure the floor plan liability.
(b) LICENSES. Buyer agrees to assume all liabilities relating to the
Licenses assigned by Seller, except such liabilities that accrued
prior to the Closing; and
(c) CONTRACTS. Buyer agrees to assume all obligations and
liabilities of Seller relating to the Contracts, except such
obligations and liabilities that accrued prior to the Closing.
Verified deposits and prepayments with respect to any Contracts shall
be paid by Buyer to Seller in cash on the Closing Date.
(d) FINANCE CHARGEBACKS. Buyer agrees to assume all finance
chargebacks on retail installment contracts and leases sold by Seller
to lenders prior to the Closing Date.
4. PURCHASE PRICE. Subject to the terms and conditions of this
Agreement, in reliance on the representations, warranties and agreements of
Seller and Shareholder contained herein, and in consideration of the sale,
transfer, conveyance, assignment and delivery of the Assets, Buyer shall, in
addition to the assumption of the Assumed Liabilities as provided in paragraph 3
hereof, pay or deliver to Seller at Closing the following (hereinafter
collectively referred to as the "Purchase Price"):
(a) CASH. Buyer shall pay $8,000,000, plus or minus the amount of
any increase or reduction in the Purchase Price in accordance with
paragraph 6 hereof, by cashiers check or other immediately available
funds ("Cash");
(b) PROMISSORY NOTE. Buyer shall execute and deliver a promissory
note (the "Note") to Seller in the original principal amount of
$3,194,000, bearing interest
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at eight percent (8%) per annum, payable in (i) twelve (12) monthly
installments of interest only, commencing thirty (30) days after the
Closing Date, and (ii) twenty-four (24) equal monthly installments
of principal and interest commencing thirteen (13) months after the
Closing Date. The Note shall be in the form of Exhibit "B" hereto.
(c) ISSUANCE OF RESTRICTED STOCK. Cross-Continent Auto Retailers,
Inc. ("C-CAR") shall issue to Seller the number of shares of
restricted common stock of C-CAR (the "Restricted Stock") that, when
multiplied by the average closing price of C-CAR's common stock as
quoted in THE WALL STREET JOURNAL for the last five (5) trading days
immediately preceding the date the transactions contemplated by this
Agreement are announced to the public by Buyer (the "Pricing Date"),
will equal $290,000. C-CAR shall not issue any fractional shares and
Buyer shall pay Seller cash in lieu of any fractional shares based on
the average closing price of C-CAR's common stock as quoted in THE
WALL STREET JOURNAL for the last five (5) trading days immediately
preceding the Pricing Date. The Restricted Stock will be subject to
Rule 144 promulgated under the Securities Act of 1933. The
certificates representing any Restricted Shares that are issued to
Seller shall bear a restrictive legend that the stock has not been
registered under applicable federal and state securities laws. It is
understood and agreed that C-CAR has not agreed to register any
Restricted Shares that are to be issued or have been issued to the
Seller.
5. ALLOCATION OF PURCHASE PRICE. Buyer and Seller agree that the
Purchase Price shall be allocated among the Assets in the manner which will be
set forth in Schedule 5. All federal, state, and local tax returns filed after
the Closing by either Buyer or Seller, including (without limitation) IRS Form
8594, will contain valuations which are consistent with the valuations set forth
in Schedule 5.
6. ADJUSTMENT TO THE PURCHASE PRICE. The Purchase Price shall be (a)
increased by (i) the value of the Fixed Assets, Parts, New Vehicles, and Used
Vehicles, as determined in accordance with subparagraph 17(c), and (ii) any
refundable deposits or prepayments on Contracts assumed by Buyer in accordance
with subparagraph 1(h), and (b) shall be reduced by the amount of any Assumed
Liabilities.
7. CLOSING. Subject to the terms and conditions set forth in this
Agreement, the closing ("Closing") of the purchase and sale of the Assets shall
take place at the offices of Seller, 0000 X. Xxxxxx, Xxx Xxxxx, Xxxxxx 00000, or
at such other place as may be mutually agreed upon by Buyer and Seller, as soon
as practicable following the date on which all conditions to the obligations of
the parties hereunder (other than those requiring the taking of action at the
Closing) have been satisfied or waived, but no later than June 1, 1998 (the
"Closing Date"), unless extended by the mutual agreement of the Buyer and
Seller.
8. TRANSACTIONS AT CLOSING. The following transactions shall take place
at Closing:
(a) DELIVERIES BY SELLER AND SHAREHOLDER. The Seller and the
Shareholder shall
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deliver the following to the Buyer:
(i) A Warranty Xxxx of Sale or Warranty Bills of Sale executed
by Seller, in the form of Exhibit "C" hereto, to convey to
Buyer the Fixed Assets, the Parts, the New Vehicles
(including demonstrators treated as New Vehicles), the Used
Vehicles (including demonstrators treated as Used Vehicles),
and the tangible Miscellaneous Assets;
(ii) An Assignment or Assignments executed by Seller, in the form
of Exhibit "D" hereto, to convey to Buyer the Goodwill, the
Intellectual Property, the Contracts, the Licenses, and the
intangible Miscellaneous Assets;
(iii) The Lease executed by the Shareholder;
(iv) An agreement terminating the lease between Seller and
Shareholder;
(v) a Phase I Environmental Site Audit on the Premises, paid for
by the Seller, in form and substance satisfactory to Buyer;
(vi) Copies of resolutions of the Board of Directors of the
Seller, duly certified by its Secretary, in form reasonably
satisfactory to Buyer's counsel, authorizing the execution,
delivery and performance of this Agreement and all other
documents to which Seller is a party as contemplated hereby,
and all action to be taken by Seller hereunder;
(vii) A Seller's Certificate, in the form of Exhibit "E"
hereto, duly executed by Seller and Shareholder;
(viii) The Records;
(ix) An opinion of counsel to the Seller, in the form of Exhibit
"F" hereto;
(x) The Investment Letter (hereinafter defined) and the
Registration Rights Agreement (hereinafter defined);
(xi) a list of the Sublet Repairs;
(xii) a list of the Work in Process;
(xiii) Any instruments and other documents specifically
required by this Agreement that are not otherwise set forth
in this subparagraph 8(a); and
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(xiv) Any other instruments or documents deemed reasonably
necessary by the Buyer in order to consummate the
transactions contemplated hereby.
(b) DELIVERIES BY BUYER. The Buyer shall deliver the following to
the Seller:
(i) The Cash portion of the Purchase Price, the Note and the
Restricted Stock;
(ii) A guaranty of the Note, in the form of Exhibit "G" hereto;
(iii) The Lease executed by the Buyer;
(iv) A guaranty of the Lease, in the form of Exhibit "H" hereto:
(v) Copies of resolutions of the Board of Directors of the
Buyer, duly certified by its Secretary, in form reasonably
satisfactory to Seller's counsel, authorizing the execution,
delivery and performance of this Agreement and all other
documents to which Buyer is a party as contemplated hereby,
and all action to be taken by Buyer hereunder;
(vi) The Registration Rights Agreement;
(vii) A Certificate of Good Standing issued by the Secretary
of State of the State of Nevada;
(viii) An opinion of counsel to the Buyer, in the form of
Exhibit "I" hereto; and
(ix) Any instruments and other documents specifically required by
this Agreement that are not otherwise set forth in this
subparagraph 8(b).
9. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND SHAREHOLDER. In
order to induce the Buyer to enter into this Agreement:
(a) REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
represents, warrants and covenants to the Buyer, effective as of
the date of this Agreement and again at Closing, each of the
following:
(i) ORGANIZATION AND STANDING. Seller is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Nevada and is duly qualified to do
business as a foreign corporation and is in good standing in
the states of the United States and foreign jurisdictions
where its ownership or leasing of property or the conduct of
its business requires it to be so qualified.
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(ii) POWER AND AUTHORITY. Seller has all requisite right, power
and authority to own, lease and operate its properties and
Assets and to operate the Dealership as it is now being
operated. The execution and delivery of this Agreement and
the performance of all of Seller's obligations under this
Agreement have been duly and validly authorized by all
necessary action on the part of the Seller. This Agreement
constitutes the valid and binding obligation of Seller,
enforceable against it in accordance with its terms, except
as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to the enforcement of creditors' rights generally
and by general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity
or at law).
(iii) NO CONFLICTS. Other than with respect to compliance
with the Xxxx-Xxxxx-Xxxxxx Anti-Trust Improvement Act of
1976 (the "Act") and the rights of Honda under its dealer
sales and service agreement, neither the execution and
delivery of this Agreement by the Seller, nor the
consummation by the Seller of the transactions contemplated
hereby, will (i) violate, conflict with, or result in a
breach of any provisions of, or constitute a default or an
event which, with notice or lapse of time or both, would
constitute a default under, or result in the termination of,
or accelerate the performance required by, any of the terms,
conditions, or provisions of the Seller's Articles of
Incorporation, Bylaws, or any contract, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument
or obligation to which the Seller is a party or by which it
may be bound, or to which any of the Seller's properties or
Assets may be subject, or result in the creation of any
material lien, security interest, charge or encumbrance upon
any of the properties or Assets of the Seller, or (ii)
violate any judgment, ruling, order, writ, injunction,
decree, constitution, statute, rule or regulation applicable
to the Seller or any of its properties or Assets, which in
the case of either subparagraph (i) or (ii) above would have
a materially adverse effect on the operation of the
Dealership by the Seller.
(iv) FINANCIAL STATEMENTS. The Seller has delivered to the Buyer
copies of the following financial statements (collectively
referred to herein as the "Financial Statements") of the
Seller:
(A) Balance Sheet, as of August 31, 1997;
(B) Income Statement, as of August 31, 1997; and
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(C) Balance Sheets and Income Statements for the fiscal
years ended December 31, 1995 and December 31,
1996.
To the best of Seller's knowledge, the Financial Statements
(including the notes thereto) are true and correct in all
respects and have been compiled in accordance with standard
dealer financial statement practices applied on a consistent
basis throughout the periods indicated. Without limitation
of the foregoing, the Balance Sheet described in
subparagraph 9(a)(iv)(A) above presents fairly the financial
position of the Seller as of the date indicated thereon, and
the Income Statement described in subparagraph 9(a)(iv)(B)
above presents fairly the results of operations of the
Seller for the period indicated thereon.
Seller has also delivered to the Buyer copies of Seller's
tax returns for 1994, 1995, and 1996.
(v) TITLE AND RELATED MATTERS. The Seller is the lawful owner
of and has good and marketable title to the Assets; except
for the items of Intellectual Property that are shown on
Schedule 1(g) to be owned by another party, which Seller
has the right to use. The right to operate the Dealership
under Seller's dealer sales and service agreement with Honda
and the Assets will, at the Closing, be free and clear of
all liens and encumbrances, except for:
(A) the Assumed Liabilities;
(B) liens for current taxes not yet due and payable or for
taxes the validity of which is being contested in
good faith by appropriate proceedings with
adequate reserves; and
(C) the rights of Honda under its dealer sales and service
agreement with the Seller.
All Parts which Buyer is obligated to purchase in accordance
herewith are in undamaged, returnable condition that:
(A) are still in the original, resalable merchandising
package and in unbroken lots;
(B) at Closing will be listed for sale in the then current
dealer parts and accessories price schedules for
Honda, and will not be listed as "discontinued" or
"replaced" parts and accessories;
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and
(C) were purchased directly from Honda.
(vi) LICENSES. The Seller has made copies available to Buyer of,
and will list on Schedule 9(a)(vi), all Licenses relating to
the Dealership. To the best of Seller's knowledge, all of
the Licenses are adequate for the operation of the
Dealership and are valid and in full force and effect. All
of the Licenses will be transferred to the Buyer at the
Closing, unless such transfer is prohibited by law or by the
terms of the item to be transferred.
(vii) INTELLECTUAL PROPERTY. The Seller owns all of the
Intellectual Property presently in use by the Dealership;
except for the items of Intellectual Property that are shown
on Schedule 1(g) to be owned by another party, which Seller
has the right to use. Other than with respect to the
royalties and fees listed in Schedule 1(g), no royalties or
fees are payable by the Seller to any third party by reason
of the use of any of the Intellectual Property to which
Buyer shall acquire hereunder. To the best of Seller's
knowledge, no additional intellectual property is needed to
permit the Seller to operate the Dealership as now operated.
(viii) CONTRACTS AND AGREEMENTS. The Seller will deliver to
Buyer copies of all Contracts listed in Schedule 1(h) to
which the Seller is a party or by which it or any of the
Assets is bound. To the best of Seller's knowledge, all
Contracts included in Schedule 1(h) are in full force and
effect and binding upon the parties thereto, and none of the
parties thereto is in breach of any of the provisions
thereof.
(ix) LITIGATION AND OTHER PROCEEDINGS. Except as set forth in
Schedule 9(a)(ix), the Seller is not a party to any pending
or, to the best of Seller's knowledge, threatened claim,
action, suit, investigation or proceeding, nor is it subject
to any order, judgment or decree.
(x) EMPLOYMENT CONTRACTS AND EMPLOYEE BENEFIT PLANS. Schedule
9(a)(x) will contain (i) a complete and correct list of all
pension, bonus, profit sharing, retirement, stock option,
medical expense, dental expense, hospitalization, life
insurance or other death benefit, severance, and other
benefit plans, agreements, arrangements or programs
providing benefits for Seller's employees, whether or not
funded and whether or not reflected in any plan documents,
including available vacation of Seller's employees, (ii) a
list all of the current employees of the Seller and the
independent contractors regularly performing services on
behalf of the Seller, and (iii) a list of the
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compensation paid to the current employees of the Seller
and the independent contractors regularly performing
services on behalf of the Seller, including any salary,
bonus or other payment arrangement made with any of them.
The Seller is not a party to or bound by any collective
bargaining agreement, nor has the Seller experienced any
strikes, grievances, claims of unfair labor practices, or
other collective bargaining disputes. The Seller has not,
to Seller's knowledge, committed any unfair labor
practice. The Seller has no knowledge of any
organizational effort presently being made or threatened
by or on behalf of any labor union with respect to
employees of the Seller. To the best of Seller's
knowledge, there have been no material defaults,
breaches, omissions or other failings by the Seller or
any fiduciary under any of these contracts or programs.
Except as set forth in Schedule 9(a)(x), the Seller does
not sponsor any employee benefit plan defined in Section
3(3) of the Employee Retirement Income Security Act of
1974, as amended (29 U.S.C. Section 1002(3)).
(xi) BROKERS AND FINDERS. Other than Elysium Enterprises,
Inc. (the "Broker"), no broker or finder has any potential
claim against Seller for a commission or fee arising out of
the transactions contemplated herein.
(xii) CONSENTS TO CONSUMMATION. Except as will be disclosed
in Schedule 9(a)(xii), no consent, approval or other action
of any third party is required to be obtained by the Seller
in connection with the transactions contemplated by this
Agreement.
(xiii) EQUIPMENT. The Fixed Assets are in good repair and
operating condition.
(xiv) CONTINUATION OF BUSINESS. The Seller knows of no
reason why the Dealership will not continue on in the same
manner following the execution of this Agreement and the
Closing as it has been operated prior thereto, except to the
extent that the Buyer causes the operation of the Dealership
to change following the Closing. The Seller has no reason to
believe that at any time in the foreseeable future the
Dealership shall be materially or adversely affected by any
event, including (without limitation) the loss of customers
of the Dealership, except to the extent that the Buyer
causes the operation of the Dealership to change following
the Closing. The Seller will use its best efforts to cause
the employees, agents, and independent contractors who have
performed services for the Dealership in the past to
continue to do so following the Closing, to the extent the
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Buyer so requests.
(xv) COPIES COMPLETE. The copies of all documents which have
been delivered or otherwise been made available to the Buyer
in connection with the transactions contemplated hereby are
complete and accurate and are true and correct copies of the
originals thereof, to the best of Seller's knowledge.
(xvi) BORROWED MONIES. The Seller is not in default in any
respect under, and is not otherwise in violation or
contravention of, any of the terms and provisions of any
agreement for the repayment of borrowed monies. All notes
and other documents and instruments evidencing or relating
to indebtedness for borrowed monies by the Seller and which
relate to any of the Assets will be identified in Schedule
9(a)(xvi).
(xvii) COMPLIANCE WITH LAWS. Other than as set forth in
Schedule 9(a)(ix), the Seller has no knowledge of (i) any
governmental proceeding or investigation involving the
Seller, nor has any reason to believe that any such
proceeding or investigation is pending or threatened or that
there exists any basis for any such proceeding or
investigation, (ii) any facts which might reasonably be
believed to be a basis for any other action, suit,
proceeding, arbitration, claim, or counterclaim against the
Seller, (iii) any violations of federal, state or local
laws, ordinances, rules, codes, regulations or orders by the
Seller, or (iv) any illegal kick backs, bribes, or political
contributions made by the Seller.
(xviii) NO CHANGES. Except as will be disclosed in Schedule
9(a)(xviii), the Seller has not since December 31, 1996, (i)
operated the Dealership, except in the ordinary course of
business, (ii) incurred any debts, liabilities or
obligations, except in the ordinary course of business,
(iii) mortgaged, pledged or subjected to lien or other
encumbrance any of the Assets, except in the ordinary course
of business, or (iv) sold or transferred any of its tangible
assets, except in the ordinary course of business.
(xix) FULL DISCLOSURE. No representation or warranty of the
Seller in this paragraph 9 (including any information in the
Schedules attached or to be attached to this Agreement)
contains or will contain any untrue statement of a material
fact or omits or will omit to state any material fact
necessary in order to make the statements herein or therein,
in light of the circumstances in which they are made, not
misleading.
(xx) CONDITION OF BUILDINGS. To the best of Seller's knowledge,
the buildings on the Premises are in good working condition
and repair.
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(xxi) NO DEFAULTS. To the best of Seller's knowledge, Seller
is not in material default under any of the Contracts.
(xxii) SERVICES PERFORMED. To the best of Seller's knowledge,
Seller has not received any payment from Honda for services
to be performed by Seller on New Vehicles which services
were not in fact performed by Seller prior to Closing.
(b) REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The
Shareholder represents, warrants, and covenants to the Buyer,
effective as of the date of this Agreement and again at Closing,
each of the following:
(i) AUTHORITY. This Agreement constitutes the valid and binding
obligation of the Shareholder relating to the agreements of
the Shareholder contained in this Agreement, enforceable
against him in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to the enforcement of creditors' rights generally
and by general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity
or at law). The Shareholder has all requisite right, power
and authority to execute and deliver this Agreement and to
perform all of his obligations under this Agreement.
(ii) CONSENTS TO CONSUMMATION. Except as will be disclosed in
Schedule 9(a)(xii), no consent, approval or other action of
any third party is required to be obtained by the
Shareholder in connection with transactions contemplated by
this Agreement.
(iii) FULL DISCLOSURE. No representation or warranty of the
Shareholder in this paragraph 9 (including any information
in the Schedules attached or to be attached to this
Agreement) contains or will contain any untrue statement of
a material fact or omits or will omit to state any material
fact necessary in order to make the statements herein or
therein, in light of the circumstances in which they are
made, not misleading.
(c) REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE SHAREHOLDER.
The Seller and the Shareholder jointly and severally represent, warrant, and
covenant to the Buyer, effective as of the date of this Agreement and again at
Closing, each of the following:
(i) The Seller and the Shareholder have obtained all permits,
licenses and other authorizations, which are required under
applicable laws
13
currently in effect relating to pollution or protection
of the environment, including laws relating to emissions,
discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic materials
or wastes into ambient air, surface water, ground water,
or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants,
contaminants, or hazardous or toxic materials or wastes
or the manufacture of substances subject to the Toxic
Substances Control Act (hereinafter collectively referred
to as the "Environmental Laws").
(ii) The Seller and the Shareholder are in compliance with all
terms and conditions of such permits, licenses and
authorizations, and with all other limitations,
restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables
contained in such Environmental Laws or contained in any
regulation, code, plan, order, decree, judgment or notice or
demand letter from a governmental entity issued, entered,
promulgated or approved thereunder as they apply to the
Seller or the Shareholder.
(iii) Neither the Seller nor the Shareholder has received any
notification from any governmental authority or any other
person nor does the Seller or the Shareholder have
knowledge, that any of the current or former properties,
assets or operations of the Seller or the Shareholder is in
violation of any applicable Environmental Laws.
(iv) There is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, investigation,
proceeding, notice or demand letter from a governmental
entity pending or threatened against the Seller or the
Shareholder.
(v) There are no past or present events, conditions,
circumstances, activities, practices, incidents, actions or
plans, which will interfere with or prevent compliance or
continued compliance with the Environmental Laws or with any
regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter from a governmental entity issued,
entered, promulgated or approved thereunder, or which will
give rise to any common law or other legal liability,
including, without limitation, liability under the
Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA") or similar state or local laws in
effect as of the date hereof, or otherwise form the basis of
any claim, action, demand, suit, proceeding, hearing, notice
of violation or investigation which would be materially
adverse to the Seller or
14
the Shareholder, based on or resulting from the operation
of the Dealership by the Seller, including the
manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling, or the
emission, discharge, release or threatened release into
the environment, of any pollutant, contaminant, chemical,
or industrial toxic or hazardous material, substance or
waste. Without in any way limiting the foregoing, no
release, emission or discharge into the environment of
any hazardous substance (as that term is currently
defined under CERCLA or any applicable analogous state
law) has occurred or is currently occurring in connection
with the operation of the Dealership by the Seller and
which would be materially adverse to the Seller or the
Shareholder. No real property currently owned, leased or
otherwise utilized by the Seller or the Shareholder
contains any spill, deposit, or discharge of any
hazardous substance (as that term is currently defined
under CERCLA or any applicable analogous state law), as a
result of which there would be a materially adverse
effect on the Seller or the Shareholder.
10. REPRESENTATIONS AND WARRANTIES OF BUYER. The Buyer represents and
warrants to the Seller and the Shareholder effective as of the date of this
Agreement and again at Closing, as follows:
(a) ORGANIZATION AND STANDING OF BUYER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Nevada, is duly qualified to do business as a
foreign corporation and is in good standing in the states of the
United States and foreign jurisdictions where its ownership or
leasing of property or conduct of its business requires it to be
so qualified.
(b) AUTHORIZATION. The Buyer has all requisite right, power and
authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery
of this Agreement and the performance of all of Buyer's
obligations under this Agreement have been duly and validly
authorized by all necessary corporate action on the part of the
Buyer. This Agreement constitutes the valid and binding
obligation of the Buyer, enforceable against the Buyer in
accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to the enforcement of
creditors' rights generally and by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding at law or in equity).
(c) NO CONFLICT. Other than with respect to the Act, neither the
execution and delivery of this Agreement by the Buyer, nor the
consummation by the Buyer
15
of the transactions contemplated hereby, will (i)
violate, conflict with, or result in a breach of any
provisions of, or constitute a default or an event which,
with notice or lapse of time or both, would constitute a
default under, or result in the termination of, or
accelerate the performance required by, any of the terms,
conditions or provisions of the Buyer's Articles of
Incorporation, Bylaws, or any contract, mortgage,
indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which the Buyer is a
party or by which it may be bound, or to which the
Buyer's properties or assets may be subject, or result in
the creation of any material lien, security interest,
charge or encumbrance upon any of the properties or
assets of the Buyer, or (ii) violate any judgment,
ruling, order, writ, injunction, decree, constitution,
statute, rule or regulation applicable to the Buyer or
any of its properties or assets, which in the case of
either subparagraph (i) or (ii) above would have a
materially adverse effect on the Buyer or its financial
condition.
(d) LITIGATION OR OTHER PROCEEDINGS. Buyer is not a party to any
pending or, to the best of its knowledge, any threatened claim,
action, suit, investigation or proceeding, or subject to any
order, judgment or decree, except for matters which in the
aggregate, will not have, or cannot reasonably be expected to
have, a materially adverse effect on the financial condition of
the Buyer, and none that would affect the Buyer's ability to
consummate the transactions and perform its obligations
contemplated by this Agreement.
(e) RESTRICTED STOCK. The Restricted Stock is authorized stock of
C-CAR and when issued to the Seller will be valid and
nonassessable.
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by the parties in this Agreement or in any certificate,
schedule, statement, document or instrument furnished hereunder or in connection
with the negotiation, execution and performance of this Agreement shall survive
the Closing for a period of three (3) years, and any claim or cause of action
for indemnification for breaches of representations or warranties set forth in
this Agreement or in any exhibit or document furnished hereto shall be made in
respect of such matters within three (3) years after the Closing Date.
Notwithstanding any investigation or audit conducted before or after the Closing
or the decision of any party to complete the Closing, each party shall be
entitled to rely upon the representations and warranties set forth herein for
the time period set forth above.
12. SELLER'S OBLIGATIONS PRIOR TO CLOSING.
(a) NOTICES AND CONSENTS. The Seller will give any notices to third
parties, and will use its best efforts to assist Buyer in
obtaining any third party consents, that the Buyer may request in
connection with consummating the transactions contemplated by
this Agreement.
16
(b) CONDUCT OF BUSINESS BY THE SELLER PRIOR TO THE CLOSING DATE.
From the date of this Agreement to the earlier of the Closing
Date or the termination of this Agreement, the Seller shall
conduct its operations according to their ordinary and usual
course of business reasonably consistent with past and current
practices in light of the Seller's current financial position and
use its best efforts to maintain and preserve its business
organization, properties and vendor and supplier relationships,
and retain the services of its officers and employees and the
Seller will not engage in any practice, take any action, or enter
into any transaction outside the ordinary course of business.
Without limiting the generality of the foregoing, the Seller will
(i) not hold any kind of liquidation or going out of business
sale, (ii) not sell, transfer, mortgage, encumber or otherwise
dispose of any of the Assets, except in the ordinary course of
business or pursuant to contracts or agreements in force at the
date of this Agreement, (iii) except for transactions in the
ordinary course of the Seller's business, not enter into or
terminate any contract or agreement, or make any change in any of
its leases or contracts, other than renewals of contracts and
leases without adverse changes of terms, (iv) not agree to, or
make any commitment to, take any of the actions prohibited by
this subparagraph 12(b), (v) not change its past practices in the
acquisition or sale of the used vehicle inventory of the
Dealership; (vi) not change its past practices in the acquisition
or sale of the new vehicle inventory of the Dealership; or (vii)
not change its past practices in the acquisition or sale of Parts
inventory of the Dealership.
(c) FULL ACCESS. Seller will permit Buyer and representatives of
the Buyer to have full access, at all reasonable times, and in a
manner so as not to materially interfere with the normal business
operations of the Seller, to the books, records, properties,
assets and operations of the Seller. The Seller shall furnish to
Buyer and representatives of Buyer such financial, operating and
other data and information, and copies of documents with respect
to the Seller as Buyer shall from time to time reasonably
request. Such access and information shall not in any way affect
or diminish any of the representations or warranties made by
Seller in this Agreement.
(d) NOTICE OF ADVERSE CHANGES. The Seller will give prompt written
notice to the Buyer of any material adverse change in the
business, operations, properties, assets, revenues, earnings,
liabilities, or condition (financial or otherwise) of the
Dealership.
(e) STANDSTILL. From the date of this Agreement to the earlier of
the Closing Date or the termination of this Agreement, the Seller
shall not, directly or indirectly, through any officer, director,
agent or otherwise, solicit, or initiate submission of any
proposal or offer from any person or entity (including any of
their officers or employees) relating to any liquidation,
17
dissolution, recapitalization, merger, consolidation or
acquisition or purchase of all or a material portion of the
Assets of the Seller, or any equity interest in the Seller, or
participate in any negotiations regarding, or furnish to any
other person any information with respect to, or otherwise
cooperate in any manner with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other
person or entity to do or seek any of the foregoing.
(f) RISK OF LOSS. Seller shall have the risk of loss or damage by
fire or other casualty to the Assets before Closing. In the event
of a material loss or damage to the Assets prior to Closing,
Buyer shall have the option to terminate this Agreement.
(g) WASTE DISPOSAL. Seller agrees, at its sole cost, to properly
dispose of all pollutants, contaminants, or hazardous or toxic
materials or wastes accumulated by Seller prior to Closing and
located on any of the properties of the Dealership.
(h) RETURN RESERVE. Seller agrees to assign and transfer its parts
and accessories return reserve to the Buyer, if assignable, and
allow Buyer to participate in such return reserve accumulated
prior to Closing.
(i) AUDIT. Seller will allow an audit (the "Audit") to be conducted
under generally accepted auditing standards of the books,
records, and financial statements of the Seller for 1996 and 1997
and any additional years if required by applicable law, and shall
allow Audited Financial Statements (hereinafter defined) to be
prepared in accordance with generally accepted accounting
principles, which shall include reserves for any deferred
warranties, charge backs, inventory write-downs, repossessions,
contracts in transit, and any other appropriate reserves. As used
in this Agreement, "Audited Financial Statements" shall mean an
audited (i) balance sheet dated December 31,1997 for the Seller,
and (ii) income statement for the year ending December 31, 1997
for the Seller. The Audit will be conducted by Buyer's
accountants, Price Waterhouse, LP. Seller agrees to cause the
full cooperation of the officers, directors, employees, and
independent accountants of the Seller in the Audit as requested
by Buyer. The start date of the Audit will be no later than
January 15, 1998. The Seller's accounting staff will assist in
gathering information and providing schedules and analyses in
order to have the Audit completed by January 31, 1998. In
addition, as near as possible prior to the Closing Date, Price
Waterhouse shall review the activities of the Seller for the
period after December 31, 1997, and shall prepare a letter (the
"Post 1997 Letter") setting forth any material adverse changes in
the revenues, earnings, assets, liabilities, or financial
condition of the Dealership.
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(j) FURTHER ASSURANCES. Seller shall from time to time, upon the
request of Buyer, execute and deliver to Buyer such further
instruments and take such further action as Buyer may reasonably
request, in order to consummate the transactions contemplated by
this Agreement as expeditiously as possible and to place Buyer in
possession and control of the Assets and to enable Buyer to
exercise and enjoy all rights and benefits with respect thereto.
(k) INSURANCE. Until the Closing, Seller shall maintain the
insurance it is carrying in connection with the operation of the
Dealership and the Assets, including (without limitation)
property damage insurance, general public liability insurance,
and group health insurance. Schedule 12(k) will contain a
complete list and description of all insurance carried by Seller.
Seller shall cooperate with Buyer's insurance representative
prior to the Closing. Seller shall obtain discontinued
operations insurance in amounts and with a company that is
reasonably satisfactory to Buyer and shall furnish Buyer with
evidence of such insurance.
(l) UTILITY AND TELEPHONE SERVICE. Seller agrees to sign over all
utility and telephone services, including telephone numbers, to
Buyer. Seller agrees to allow Buyer to assume all utility and
telephone deposits, provided that Buyer shall pay to Seller the
amount of any such assumed deposits. Seller agrees to use its
best efforts to assure that there will be no breaks or
discontinuances of any utility or telephone services upon
Closing.
13. BUYER'S OBLIGATIONS PRIOR TO CLOSING.
(a) DUE DILIGENCE. Buyer shall conduct all investigations, reviews
and inspections of the business, operations, properties, assets,
revenues, earnings, liabilities, and condition (financial or
otherwise) of Seller which Buyer and Buyer's representatives deem
necessary or desirable to make an informed and reasonable
decision to complete the transactions contemplated by this
Agreement. Buyer hereby expressly acknowledges and agrees that
in purchasing the Assets from the Seller, it is relying solely
upon the results of its own due diligence and is not relying upon
any representations or warranties, express or implied, written or
oral, of the Seller, Shareholder, or any of their respective
employees, agents or representatives, except as expressly set
forth in this Agreement.
(b) FURTHER ASSURANCES. Buyer shall from time to time, upon the
request of Seller, execute and deliver to Seller such further
instruments and take such further action as Seller may reasonably
request, in order to consummate the transactions contemplated by
this Agreement as expeditiously as possible.
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14. BUYER'S AND SELLER'S OBLIGATIONS PRIOR TO CLOSING.
(a) ASSISTANCE. Both Buyer and Seller each agree to use their best
efforts to create a workable, smooth and orderly transition
between Seller's and Buyer's operation of the Dealership.
(b) XXXX-XXXXX-XXXXXX NOTIFICATION. Promptly after the execution
and delivery of this Agreement, the parties shall, if and to the
extent required by law, file all reports or other documents
required or requested by the Federal Trade Commission ("FTC") or
the United States Department of Justice ("Justice Department")
under the Act, and all regulations promulgated thereunder,
concerning the transactions contemplated hereby, and comply
promptly with any requests by the FTC or Justice Department for
additional information concerning such transactions, so that the
waiting period specified in the Act will expire as soon as
reasonably possible after the execution and delivery of this
Agreement. The parties agree to furnish to one another such
information concerning the Buyer, the Seller, the Shareholder and
the Dealership as the parties need to perform their obligations
hereunder. The Buyer agrees to pay all filing fees and costs due
governmental agencies with regard to the notification under and
compliance with the Act and all regulations promulgated
thereunder.
(c) INVENTORIES. Prior to Closing, Buyer and Seller shall conduct a
physical inventory of the Used Vehicles, New Vehicles, Parts, and
Fixed Assets owned by the Seller and shall determine the values
thereof in the following manner:
(i) Seller and Buyer shall agree to the value of the Used
Vehicle inventory of the Dealership. If Buyer and Seller
fail to agree on the value of any Used Vehicle, Seller shall
retain it and remove it from the Dealership.
(ii) Buyer and Seller shall calculate the value of the New
Vehicle inventory of the Dealership. The value of each new
vehicle shall be the cash sum equal to the distributor's
original invoice price (excluding any Seller internal
profit) to the Dealership, less any factory hold back
rebate, any other factory rebate or incentive which the
Dealership may have received, or to which the Dealership is
or may become entitled to receive, advertising credits and
interest credits, plus performed PDI at Seller's cost
(excluding any internal profit), options added at Seller's
costs (excluding any internal profit), and any freight and
handling charges. All demonstrators shall be valued for a
cash sum equal to an amount as calculated above, less
20
$.25 per mile on the odometer for depreciation for
demonstration service, provided that demonstrators having
more than 2,000 miles on the odometer be treated as a
Used Vehicle. The value of any New Vehicle shall be
decreased by an amount equal to Seller's cost (excluding
any internal profit) of repair for any physically damaged
vehicle and by the cost of any accessories, equipment or
parts that are missing.
(iii) Seller and Buyer shall calculate the value of the Parts
inventory, based on the cost of the parts and accessories
set forth in the then-current dealer parts and accessories
price schedule for Honda.
(iv) Seller and Buyer shall agree to the value of the Fixed
Assets of the Dealership. If Buyer and Seller fail to agree
on the value of any Fixed Asset, Seller shall retain it and
remove it from the Dealership.
(d) WARRANTY MAINTENANCE. Buyer and Seller acknowledge that Seller
both provides and has imposed on it by operation of law limited
warranties with respect to certain vehicles sold by it and
certain services functions performed by it (the "Limited
Warranties") in addition to any factory warranties provided by
Honda, and agree that Buyer shall not assume any obligations
under the Limited Warranties which pertain to vehicles sold and
service functions performed by Seller prior to the Closing Date;
provided, however, that Buyer agrees that it will cause the
performance of any and all maintenance and repair work necessary
to comply with the terms of the Limited Warranties and factory
warranties (at Buyer's normal retail rates) following receipt of
approval of the applicable warranty insurer. In the event such
approval is not received, Buyer shall seek such approval from
Seller. All costs, losses and expenses incurred by the Buyer in
executing such maintenance and repair work, including (without
limitation) parts and labor, shall be the responsibility of the
warranty insurer or Seller. In the event Seller approves such
work, Seller shall have fifteen (15) days after receipt of
Buyer's invoice to pay such costs and expenses.
(e) PURCHASE OF PARTS AND USED VEHICLES. In the event Buyer and
Seller enter into a management agreement that provides for Buyer
to manage the Dealership prior to the Closing Date (the
"Management Agreement"), on the effective date of the Management
Agreement Buyer shall purchase from Seller the Parts and the Used
Vehicles for the values determined in accordance with
subparagraph 14(c). Notwithstanding anything contained in this
Agreement to the contrary, in the event this Agreement expires or
terminates, Seller shall repurchase (for cash and free of all
liens, claims and other encumbrances, and for the values of the
Parts and Used Vehicles as determined in accordance with
subparagraph 14(c)) any of the Used Vehicles
21
or Parts purchased by Buyer that are still owned by Buyer.
15. CONDITIONS PRECEDENT TO OBLIGATION OF THE BUYER. The obligation of
the Buyer to effect the transactions contemplated hereby shall be subject, at
its option, to the fulfillment prior to the Closing Date of the following
conditions, each of which can be waived by the Buyer:
(a) REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. All
representations and warranties made by the Seller and the
Shareholder in or pursuant to this Agreement shall be true and
correct on the date hereof and on the Closing Date with the same
affect as though such representations and warranties were made on
the Closing Date, except to the extent that such representations
and warranties expressly relate to any earlier date.
(b) COMPLIANCE WITH AGREEMENT. The Seller and the Shareholder shall
have fully performed and strictly complied with all of their
covenants, agreements, conditions and obligations under this
Agreement to be performed or complied with by Seller or
Shareholder on or prior to the Closing Date.
(c) THIRD PARTY CONSENTS. This Agreement and the transactions
contemplated hereby shall have received all approvals, consents,
authorizations, and waivers from governmental and other
regulatory agencies and other third parties, including lenders,
lessors, and Honda, required to consummate the transactions
contemplated by this Agreement. Without limiting the generality
of the foregoing, Honda must approve Buyer, without conditions,
as the dealer for Las Vegas Honda in Las Vegas, Nevada prior to
Closing.
(d) ABSENCE OF LITIGATION. No action, suit or proceeding before any
court or any governmental body or authority pertaining to the
transactions contemplated by this Agreement, or to their
consummation, shall have been instituted or threatened on or
before the Closing Date.
(e) AUDIT. Price Waterhouse shall have timely performed the Audit,
prepared the Audited Financial Statements, and delivered a copy
of the Audited Financial Statements to Buyer.
(f) PHYSICAL INVENTORY. Buyer and Seller shall have jointly
conducted a physical inventory of the Fixed Assets, Parts, New
Vehicles, and Used Vehicles, the results of which are
satisfactory to Buyer.
(g) APPROVAL OF DOCUMENTATION. The form and substance of all
Schedules, certificates, instruments and other documents required
to be delivered to the Buyer under this Agreement shall be
satisfactory in all reasonable respects to Buyer and its counsel.
22
(h) XXXX-XXXXX-XXXXXX ACT. The applicable waiting period under the
Act, and regulations promulgated thereunder, shall have expired.
(i) NO ADVERSE CHANGE. Buyer shall have determined, to its
satisfaction, that as of the Closing Date, there have been no
material adverse changes in the business, operations, properties,
assets, revenues, earnings, liabilities, or condition (financial
or otherwise), of Seller or the Dealership.
(j) DUE DILIGENCE. Based on such examinations and inquiries as
Buyer shall have made or shall have caused to be made, the
business, operations, properties, assets, revenues, earnings,
liabilities, and condition (financial or otherwise) of Seller and
the Dealership shall be satisfactory to Buyer, in Buyer's sole
judgment and discretion.
(k) ENVIRONMENTAL SITE AUDIT. Buyer shall have received an
environmental site audit on the Premises. If the environmental
site audit discloses an environmental condition which could
reasonably be expected to result in any liability, cost, or
expense to the owner, occupier, or operator of the Premises
arising under any Environmental Laws, then the Seller shall cure
such environmental condition and obtain a "No Further Action"
letter from the Environmental Protection Agency and any
applicable state agency.
(l) ADDITIONAL INFORMATION. Seller and Shareholder shall furnish to
Buyer and Buyer's counsel such additional information,
certificates, and other documents as Buyer shall have reasonably
requested.
(m) POST 1997 LETTER. Price Waterhouse shall have prepared the Post
1997 Letter and delivered it to Buyer.
(n) PRICE WATERHOUSE CERTIFICATE. Seller and Shareholder shall have
executed a certificate in such form as Price Waterhouse shall
reasonably request.
(o) INVESTMENT LETTER. Seller shall have executed an Investment
Letter, in the form of Exhibit "J" hereto.
(p) REGISTRATION RIGHTS AGREEMENT. Seller shall have executed a
Registration Rights Agreement (the "Registration Rights
Agreement"), in the form of Exhibit "K" hereto.
(q) CLOSING. Upon closing of the transactions contemplated by this
Agreement, the conditions precedent to Buyer's obligation to
close shall be deemed to have been satisfied or waived, provided
that Buyer shall not be deemed to have waived the Buyer's rights
under paragraph 11 or 17 of this Agreement.
23
16. CONDITIONS PRECEDENT TO OBLIGATION OF THE SELLER. The obligation of
the Seller to effect the transactions contemplated by this Agreement shall be
subject, at its option, to the fulfillment prior to the Closing Date of the
following conditions, each of which can be waived by the Seller:
(a) REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. All
representations and warranties made by the Buyer in or pursuant
to this Agreement shall be true and correct on the date hereof
and on the Closing Date with the same affect as though such
representations and warranties were made on the Closing Date,
except to the extent that such representations and warranties
expressly relate to any earlier date.
(b) COMPLIANCE WITH AGREEMENT. The Buyer shall have performed and
complied with all of its obligations under this Agreement that
are to be performed or complied with by it on or prior to the
Closing Date.
(c) DELIVERY OF PURCHASE PRICE. The Seller shall have received the
Purchase Price.
(d) APPROVAL OF DOCUMENTATION. The form and substance of all
certificates, instruments and other documents required to be
delivered to Seller under this Agreement shall be satisfactory in
all reasonable respects to Seller and its counsel.
(e) REGISTRATION RIGHTS AGREEMENT. Buyer shall have executed the
Registration Rights Agreement.
(f) ADDITIONAL INFORMATION. Buyer shall furnish to Seller and
Seller's counsel such additional information, certificates, and
other documents as Seller shall have reasonably requested.
(g) CLOSING. Upon closing of the transactions contemplated by this
Agreement, the conditions precedent to Seller's obligation to
close shall be deemed to have been satisfied or waived, provided
that Seller shall not be deemed to have waived Seller's rights
under paragraph 11 or 18 of this Agreement.
(h) THIRD PARTY CONSENTS. This Agreement and the transactions
contemplated hereby shall have received all approvals, consents,
authorizations, and waivers from governmental and other
regulatory agencies and other third parties, including lenders,
lessors, and Honda, required to consummate the transactions
contemplated by this Agreement. Without limiting the generality
of the foregoing, Honda must approve Buyer, without conditions,
as the dealer for Las Vegas Honda in Las Vegas, Nevada prior to
Closing.
17. SELLER'S AND SHAREHOLDER'S OBLIGATIONS AFTER CLOSING.
24
(a) INDEMNITY BY SELLER AND SHAREHOLDER. Seller and Shareholder
(jointly and severally) shall indemnify, defend and hold Buyer
harmless from and against any and all liabilities, damages,
losses, claims, costs and expenses, including (without
limitation) reasonable attorneys' fees (i) arising out of or
resulting from any breach of any warranty or representation made
by Seller or Shareholder in this Agreement or the non-performance
of any covenant or obligation of Seller or Shareholder under this
Agreement, (ii) arising out of or resulting from Seller's
operation of the Dealership prior to the Closing Date, and (iii)
any condition, activity or event occurring prior to the Closing
Date, including (without limitation) any condition, activity, or
event that violates any Environmental Laws.
Shareholder's liability under this indemnity shall be limited in
an aggregate amount equal to (i) the final purchase price paid by
Buyer to Seller, less (ii) any actual amounts recovered by Buyer
from Seller. Buyer shall be obligated to exhaust all recourse
and remedy under the law and in equity against Seller before any
recourse may be had against Shareholder under this indemnity.
(b) SELLER'S AND SHAREHOLDER'S NONDISCLOSURE OF CONFIDENTIAL
INFORMATION. Both the Seller and the Shareholder recognize and
acknowledge that they have in the past, they currently have, and
in the future may possibly have access to certain confidential
information of the Dealership, including, but not limited to,
lists of accounts, operational policies, and pricing and cost
policies that are valuable, special and unique assets of the
Dealership (the "Confidential Information). The Seller and the
Shareholder agree that they will not disclose such Confidential
Information to any person or entity for any purpose or reason
whatsoever, except to authorized representatives of the Buyer or
Seller, or as required by law, unless such Confidential
Information becomes known to the public generally through no
fault of the Seller or Shareholder, or the parties mutually agree
to such disclosure. In the event of a breach or threatened breach
by the Seller or Shareholder of the provisions of this
subparagraph, the Buyer shall be entitled to an injunction
restraining the Seller or Shareholder from disclosing, in whole
or in part, such Confidential Information. Nothing herein shall
be construed as prohibiting the Buyer from pursuing any other
available remedy for such breach or threatened breach, including
the recovery of damages.
(c) HOLDBACKS AND INCENTIVES. All holdbacks and incentives
applicable to vehicles accepted by Seller prior to the Closing
Date or applicable to vehicles accepted by Buyer after the
Closing Date, which are received by Seller after Closing, will be
paid to the Buyer by Seller within ten (10) days after receipt
of such holdback or incentive by Seller.
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(d) SHAREHOLDER'S AND SELLER'S COVENANT NOT TO SOLICIT EMPLOYEES OF
BUYER. Neither the Shareholder nor the Seller will individually,
collectively or in conjunction with others, directly or
indirectly, for a term of three (3) years from the Closing Date
(the "Restricted Period"), within the Las Vegas or Henderson,
Nevada metropolitan areas (the "Restricted Area"), directly or
indirectly solicit or hire any employee of the Buyer or encourage
any such employee to leave such employment unless such employee
has already terminated such employment with the Buyer or the
Buyer and the Seller have mutually agreed in advance to the
solicitation or employment. The Seller and the Shareholder also
agree that in the event of breach of these covenants, the Buyer
may protect its property rights by injunction or otherwise.
18. BUYER'S OBLIGATIONS AFTER CLOSING.
(a) INDEMNITY BY BUYER. Buyer shall indemnify, defend and hold
Seller harmless from and against any and all liabilities,
damages, losses, claims, costs and expenses, including (without
limitation) reasonable attorneys' fees (i) arising out of or
resulting from any breach of warranty or representation made by
Buyer in this Agreement or the non-performance of any covenant or
obligation of Buyer under this Agreement, or (ii) arising out of
or resulting from Buyer's operation of a Honda dealership at the
Premises on or after the Closing Date.
(b) BUYER'S NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Buyer
recognizes and acknowledges that it has in the past, it currently
has, and in the future may possibly have access to the
Confidential Information. Prior to Closing and thereafter if the
transactions contemplated by this Agreement do not close, the
Buyer agrees that it will not disclose such Confidential
Information to any person or entity for any purpose or reason
whatsoever, except to affiliated entities and authorized
representatives of the Buyer, or as required by law, unless such
Confidential Information becomes known to the public generally
through no fault of the Buyer. In the event of a breach or
threatened breach by the Buyer of the provisions of this
subparagraph, the Seller shall be entitled to an injunction
restraining the Buyer from disclosing, in whole or in part, such
Confidential Information. Nothing herein shall be construed as
prohibiting the Seller from pursuing any other available remedy
for such breach or threatened breach, including the recovery of
damages.
19. EMPLOYEES.
(a) Seller will terminate Seller's employees as of the Closing
Date. Buyer shall have no obligation to employ any of Seller's
employees from and after the Closing Date, but may employ such
persons on such terms and conditions as may be mutually
agreeable with each employee and Buyer. At Buyer's
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request, Seller shall introduce Buyer to each of its
employees. Within ten (10) days after the date of this
Agreement, Seller shall deliver to Buyer a copy of all of
its employee manuals, policies and procedures. Except as
set forth on Schedule 9(a)(x), Seller has no employment
agreement, service contract, collective bargaining
agreement or other similar arrangement with any
employees, agents or independent contractors which is not
subject to termination without penalty upon not more than
thirty (30) days prior written notice. Seller shall pay
all of Seller's obligations to its employees arising
prior to the Closing Date, including (without limitation)
wages and related payroll expenses, vacation pay, sick
pay, medical and dental benefits, if any, and any other
benefits. If any of such liabilities and obligations
remain unpaid after the Closing Date, Seller shall
promptly pay them with their own funds and Buyer shall
have no liability therefor.
(b) EMPLOYEE LIST. To the extent not set forth in Schedule 9(a)(x),
Seller agrees to provide, at least ten (10) days prior to
Closing, a list of all employees of the Seller. Such list shall
contain the employee's name, employment description,
compensation or formula for computing such compensation, accrued
vacation pay and tentative vacation plans.
20. BROKER'S COMMISSION. Buyer and Seller agree to pay the Broker's
commission of $450,000 in the following proportions:
(a) Seller - $300,000
(b) Buyer - $150,000
21. TAXES.
(a) TAX RETURNS AND AUDITS. Seller represents and warrants that it
has paid all taxes, assessments and penalties due and payable by
it in connection with the Assets and the operation of Dealership.
Seller shall be responsible for any and all federal, state,
county and local taxes for any period prior to the Closing Date,
whether or not disputed. To the best of Seller's knowledge,
there are no present disputes as to taxes of any nature payable
in connection with the operation of the Dealership.
(b) SALES AND TRANSFER TAXES. All sales and transfer taxes, if any,
incurred in connection with the transfer of the Assets
contemplated hereby shall be borne by the Buyer.
(c) PROPERTY TAXES. All state and local real and personal property
taxes, if any, applicable to the Assets or due pursuant to the
Lease shall be prorated between Buyer and Seller as of the
Closing Date.
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(d) TAX CLEARANCES. Seller shall provide Buyer with certificates of
clearance or releases from any applicable governmental authority
showing that all sales and employment taxes owed by Seller have
been paid as of Closing.
22. USE OF THE NAME "LAS VEGAS HONDA". The Seller and the Shareholder
consent for all purposes to the Buyer's continued use of the "Las Vegas Honda"
name ( the "Name"). Buyer shall not be obligated to use the Name. Neither
Seller nor Shareholder shall be prohibited from using the Name if Buyer ceases
using the Name within the Restricted Area. The parties acknowledge that the
Dealership's television, radio and print advertisements aimed at the Restricted
Area may also be broadcast or distributed outside the Restricted Area, and the
Seller and the Shareholder agree such advertisements shall not be a violation of
this Agreement; and
(a) No separate consideration, over and above the Purchase Price, is
owed by the Buyer to the Seller or the Shareholder for this
consent to use the Name as provided herein.
(b) As soon as practicable after the Closing, the Seller agrees to
file any instruments or documents with the Nevada Secretary of
State or the County Clerk of Xxxxx County , Nevada that are
necessary to allow Buyer to use the Name. The parties mutually
agree to take other reasonable steps as from time to time may be
appropriate to avoid confusion and mistake by third parties as to
their respective corporate identities.
(c) The Buyer's right to use the Name in the Restricted Area shall be
binding on the Seller as well as the Shareholder and on all of
their heirs, administrators, executors, assignees, licensees,
transferees and successors in interest, and every such sale,
assignment, license or transfer entered into by either the Seller
or the Shareholder shall be expressly subject to the Buyer's
continued right to use the Name in the Restricted Area as
provided in this Agreement.
(d) Any other provisions hereof to the contrary notwithstanding,
Buyer's right to continued use of the Name shall absolutely
terminate on the first to occur of (i) the termination of this
Agreement, (ii) the mutual agreement of the Seller and the Buyer
after Closing, or (iii) the Buyer's cessation of use thereof in
the Restricted Area.
23. TERMINATION. This Agreement may be terminated as follows:
(a) MUTUAL CONSENT. This Agreement may be terminated by the written
consent of the parties.
(b) BY THE BUYER. This Agreement may be terminated by written notice
of
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termination given by the Buyer to the Seller and Shareholder
if (i) all of the conditions set forth in paragraph fifteen (15)
are not satisfied or waived by Buyer prior to the Closing Date,
or (ii) there shall occur any material default or failure on the
part of the Seller or the Shareholder to perform any obligations
of Seller or Shareholder set forth herein, and such default or
failure has not been waived by Buyer.
(c) BY THE SELLER AND THE SHAREHOLDER. This Agreement may be
terminated by written notice of termination given by the Seller
and the Shareholder to the Buyer if (i) all of the conditions
set forth in paragraph sixteen (16) are not satisfied or waived
by Seller and Shareholder, prior to the Closing Date, or (ii)
there shall occur any material default or failure on the part of
the Buyer to perform any of its obligations set forth herein, and
such default or failure has not been waived by Seller and
Shareholder.
24. GENERAL PROVISIONS
(a) ENTIRE AGREEMENT. This Agreement contains and constitutes the
entire agreement between the parties regarding the subject matter
hereof and supersedes all prior agreements and understandings
between the parties relating to the subject matter of this
Agreement. There are no agreements, understandings, restrictions,
warranties or representations between the parties relating to the
subject matter hereof other than those set forth in this
Agreement. This instrument is not intended to have any legal
effect whatsoever, or to be a legally binding agreement, or any
evidence thereof, until it has been signed by the Seller, the
Shareholder and the Buyer.
(b) THIRD PARTY CONSENTS. The Seller and the Buyer mutually agree
to cooperate and use their respective best efforts to prepare all
documentation, to effect all filings and to obtain all permits,
consents, approvals and authorizations of all third parties and
governmental bodies as may be necessary to consummate the
transactions contemplated by this Agreement.
(c) EXHIBITS. Preliminary drafts of all Schedules (except Schedules
1(h) and 5) and Exhibits C,D,E, and F shall be prepared by the
Seller on or before January 15, 1998, and delivered to Buyer for
Buyer's review. Preliminary drafts of Schedules 1(h) and 5 and
Exhibits A, B, G, H and I shall be prepared by Buyer on or before
January 15, 1998, and delivered to Seller for Seller's review.
Final Schedules and Exhibits shall be prepared by the party that
prepared the preliminary drafts and approved by all of the
parties prior to Closing. When approved by the parties to this
Agreement, the schedules and exhibits shall be made a part of
this Agreement by reference.
SCHEDULES:
Schedule 1 (a) - Fixed Assets
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Schedule 1 (g) - Intellectual Property
Schedule 1 (h) - Contracts
Schedule 5 - Allocation of Purchase Price
Schedule 9 (a)(vi) - Licenses
Schedule 9 (a)(ix) - Litigation
Schedule 9 (a)(x) - Employment Contracts and Benefit Plans
Schedule 9 (a)(xii) - Consents to Consummation
Schedule 9 (a)(xvi) - Borrowed Monies
Schedule 9 (a)(xvii) - No Changes
Schedule 12(k) - Insurance
EXHIBITS:
Exhibit "A" - The Lease
Exhibit "B" - The Note
Exhibit "C" - Warranty Xxxx of Sale
Exhibit "D" - Assignment
Exhibit "E" - Seller's Certificate
Exhibit "F" - Seller's Counsel Opinion
Exhibit "G" - Guaranty of the Note
Exhibit "H" - Guaranty of the Lease
Exhibit "I" - Buyer's Counsel Opinion
Exhibit "J" - Investment Letter
Exhibit "K" - Registration Rights Agreement
(d) FURTHER ACTIONS. From time to time, as and when requested by any
party hereto, the other parties shall execute and deliver, or
cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all such
further or other actions as the requesting party may reasonably
deem necessary or desirable to consummate the transactions
contemplated by this Agreement.
(e) PUBLICITY. The parties hereto agree that no public release or
announcement concerning the terms of the transactions
contemplated by this Agreement shall be issued by any party
without the prior written consent of the other parties (which
consent shall not unreasonably be withheld), except as such
release or announcement may be required by law, in which case the
party required to make the release or announcement shall allow
the other parties reasonable time to comment on such release or
announcement in advance of such issuance.
(f) AMENDMENT. This Agreement may not be amended, modified or
terminated except by an instrument in writing signed by all the
parties to this Agreement.
(g) GOVERNING LAW. This Agreement shall be construed, enforced and
governed in accordance with the laws of the State of Nevada.
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(h) CONSTRUCTION. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine or neuter gender
thereof or to the plurals of each, as the identity of the person
or persons or the context may require. The descriptive headings
contained in this Agreement are for reference purposes only and
are not intended to describe, interpret, define or limit the
scope, extent or intent of this Agreement or any provision
contained in this Agreement.
(i) INVALIDITY. If any provision contained in this Agreement shall
for any reason be held to be invalid, illegal, void or
unenforceable in any respect, such provision shall be deemed
modified so as to constitute a provision conforming as nearly as
possible to such invalid, illegal, void or unenforceable
provision while still remaining valid and enforceable; and the
remaining terms or provisions contained herein shall not be
affected thereby.
(j) BINDING EFFECT AND ASSIGNMENT. This Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and
their respective heirs, executors, administrators, successors,
and permitted assigns. Buyer may assign its rights under this
Agreement to an affiliated entity, and the Buyer and its assignee
shall be fully obligated, responsible and liable for performance
of the Buyer's obligations hereunder regardless of any such
assignment. The Seller and the Shareholder may not assign any of
their rights or delegate any of their obligations hereunder. Any
assignment in violation hereof shall be void.
(k) SURVIVAL OF OBLIGATIONS. To the extent necessary to carry out
the terms and provisions of this Agreement, the obligations and
rights arising from or related to this Agreement shall survive
the Closing and shall not be merged into the various documents
executed and delivered at Closing. Seller and Shareholder shall
be jointly and severally liable for all of Seller's obligations
under this Agreement.
(l) ATTORNEYS' FEES. In the event any party institutes litigation to
enforce or protect its rights under this Agreement, the party
prevailing in any such litigation shall be entitled, in addition
to all other relief, to reasonable attorneys' fees, out-of-pocket
costs and disbursements relating to such litigation.
(m) NOTICES. All notices and other communications hereunder shall
be in writing, dated with the current date of such notice and
signed by the party giving such notice. Notices shall be deemed
to be duly received (i) on the date given or delivered personally
or by telecopy or telex, or (ii) on the earlier of the date
received or three business days after
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proven mailing, when mailed by registered or certified
mail (return receipt requested), to the parties at the
following addresses (or at such other address for a party
as shall be specified by like notice):
if to Buyer:
Sahara Imports, Inc.
0000 X. Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Attn: R. Xxxxx Xxxxx
if to Seller:
Vinci, Inc.
0000 X. Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxxxx X. Xxxxx
if to Shareholder:
Xxxxxx X. Xxxxx
000 Xxxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
(n) DEFINITION OF KNOWLEDGE. As used in this Agreement, the Seller's
or the Shareholder's "knowledge" shall include the knowledge of
the Shareholder and the employees and agents of the Seller. Each
representation and warranty that is limited to the Seller's or
the Shareholder's "knowledge" is made with the understanding that
the Seller or the Shareholder has examined whatever sources of
information as are in the possession or control of the Seller or
the Shareholder in order to verify the truth and accuracy of such
representation and warranty.
(o) EXPENSES. Whether or not the transactions contemplated hereby
are consummated, each of the parties to this Agreement shall be
responsible for his or its own costs and expenses incurred in
connection with the preparation and negotiation of this
Agreement.
(p) TIME IS OF THE ESSENCE. Time shall be of the essence with respect
to this Agreement and the consummation of the transactions
contemplated hereby.
(q) WAIVER. No waiver of any breach or default hereunder shall be
considered valid unless in writing and signed by the party giving
such waiver, and no such waiver shall be deemed a waiver of any
subsequent breach or default of
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the same or similar nature.
(r) MEDIATION. If a dispute arises out of or relates to this
Agreement, or the breach thereof, and if the dispute cannot be
settled through negotiation, the parties agree first to try in
good faith to settle the dispute by mediation administered by the
American Arbitration Association under its Commercial Mediation
Rules before restoring to arbitration, litigation, or some other
dispute resolution procedure.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
BUYER: SELLER
SAHARA IMPORTS, INC., VINCI
a Nevada corporation a Nevada corporation
By: By:
-------------------------- ---------------------------
Xxxx Xxxxxxxxx, President Xxxxxx X. Xxxxx, President
SHAREHOLDER:
------------------------------
Xxxxxx X. Xxxxx
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