STOCK PURCHASE AGREEMENT
AGREEMENT dated as of December 23, 1996, by and between Pioneer
Commercial Funding Corp. ("Pioneer"), a New York corporation having an office at
0000 Xxxxxx Xxxxxxxxx, Xxxxxx, Xxxxxxxxxx 00000 and Trans Lending Corporation,
(the "Corporation"), a Delaware corporation having an office at 0000 Xxxxx Xxxxx
Xxxxxxx, Xxxx Xxxxx, Xxxxxxx 00000.
WHEREAS, Pioneer desires to purchase from the Corporation, pursuant to
the terms, and subject to the conditions hereinafter set forth, 500 shares of
the Corporation's Common Stock, par value $1.00 per share (the "Common Stock")
and 200 shares of the Corporation's non-voting, non-dividend paying preferred
stock, par value $1,000 per share (the "Preferred Stock"); and
WHEREAS, Pioneer and the Corporation desire to set forth agreements
concerning the manner in which the business of the Corporation will be managed
after Pioneer acquires such securities from the Corporation,
NOW, THEREFORE, in consideration of the premises and the mutual terms,
covenants and conditions hereinafter set forth, it is hereby agreed as follows:
ARTICLE 1
PURCHASE OF THE SECURITIES BY PIONEER
Section 1.1 Purchase of Securities. At the Closing to be held on the
Closing Date, Pioneer shall purchase from the Corporation 500 shares of Common
Stock (the "Common Shares") and 200 shares of Preferrred Stock (the "Preferred
Shares") in consideration for the payment to the Corporation of the sum of
$300,000 to be made by wire transfer to an account designated by the
Corporation, or by good, unendorsed certified check payable to the order of the
Corporation.
ARTICLE 2
REPRESENTATIONS OF THE PARTIES
Section 2.1 The Corporation's Representations.
(a) The Corporation (i) has been duly organized and is validly
existing as a corporation in good standing under the laws of the state of
Delaware, (ii) is duly qualified and licensed and in good standing as a foreign
corporation in each jurisdiction in which its ownership or leasing of any
properties or the character
of its operations requires such qualification or licensing, and (iii) has all
requisite corporate power and authority and has obtained any and all necessary
authorizations, approvals, orders, licenses, certificates, franchises and
permits of and from all governmental or regulatory officials and bodies
(including, without limitation, those having jurisdiction over environmental
or similar matters) to own or lease its properties and conduct its business.
(b) The Corporation is not a party to or bound by any instrument,
agreement or other arrangement (other than this Agreement) providing for it to
issue any capital stock, rights, warrants, options or other securities.
Immediately prior to the Closing there shall be issued and outstanding 500
shares of Common Stockand none of the shares of Preferred Stock.
(c) Schedule A annexed hereto contains monthly cash flow
projections prepared by the Corporation with respect to its proposed operations
during the period from December 1996 - December 1997 (the "Projections"). The
Projections were prepared by the Corporation's management with all due diligence
based upon such management's experience and knowledge of the business of
assembling, packaging and selling automotive financing contracts to
institutional purchasers thereof. In accordance with the Projections, it is
anticipated that the Corporation will generate a cumulative loss from operations
of approximately $68,400 during the period December 1996 - February 1997, and
will thereafter generate positive cash flows from its operations.
(d) Xxxxxxx Xxxxxxx ("Germain"), the President of the Corporation, has
in excess of 15 years of experience in the automotive financing business.
(e) The Corporation has entered into agreements with the companies
identified on Schedule B annexed hereto, pursuant to which the Corporation has
been appointed to represent such companies in their respective capacities as
purchasers of automobile financing paper.
(f) At or prior to the Closing, the Corporation shall enter into an
employment agreement with Germain containing such terms and conditions as shall
be acceptable to the Chief Executive Officer of Pioneer.
Section 2.2 Pioneer's Representations.
(a) Pioneer is acquiring the Common Shares and the Preferred Shares
solely for its own account.
(b) Pioneer is an "accredited investor" (as that term is defined in
rule 501 of Regulation D under the Securities Act of 1933, as amended (the
"Act")).
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Pioneer acknowledges that it has been given the opportunity to ask questions and
receive satisfactory answers concerning this Agreement, the operations and
financial condition of the Corporation, and the accuracy of the information
provided by the Corporation to Pioneer.
(c) Pioneer has no intention of distributing or reselling the Common
Shares, the Preferred Shares or any part thereof, or interest therein, in any
transaction which would be in violation of the securities laws of the United
States of America or any state securities laws.
(d) Upon original issuance thereof, and until such time as the same is
no longer required under the applicable requirements of the Act, the
certificates evidencing Pioneer's ownership of the Common Shares and the
Preferred Shares (and all securities issued in exchange therefor or substitution
thereof) shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. SUCH
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR
SUCH LAWS."
ARTICLE 3
CLOSING
Section 3.1 Date, Time and Place of Closing. The closing of the sale
of the Common Shares and Preferred Shares by the Corporation to Pioneer (the
"Closing") shall take place on December , 1996 (the "Closing Date") at 10:30
A.M. New York time, at the offices of the Corporation, or on such other date,
and at such other time and place as the parties may mutually agree upon.
Section 3.2 Conditions Precedent to Closing. At or prior to the
Closing, as conditions precedent to each party's obligation to consummate the
transactions contemplated hereby:
(a) Pioneer shall deliver to the Corporation a Secretary's
Certificate attesting to the passage and continuing effect of resolutions by the
Board of Directors of Pioneer authorizing Pioneer to execute this Agreement and
consummate the
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transactions contemplated hereby.
(b) The Corporation shall deliver to Pioneer:
(i) a good standing certificate issued by the Delaware
Department of State not earlier than 30 days prior to the Closing; and
(ii) a Secretary's Certificate attesting to the passage and
continuing effect of resolutions by the Board of Directors of the Corporation
authorizing the Corporation to execute this Agreement and consummate the
transactions contemplated hereby.
(c) The Corporation and Germain shall execute the employment
agreement described in Section 4.2 hereof.
(d) Germain and Pioneer shall execute that certain Non-Compete
Agreement of even date herewith.
(e) Xxxx Xxxx ("Xxxx") shall deliver to Germain an irrevocable
proxy authorizing Germain to vote all 250 shares of the Corporation's Common
Stock owned by Xxxx on any question coming before the Corporation's stockholders
at any meeting of stockholders or pursuant to any written consent of the
stockholders exeuted in lieu of a meeting. Such irrevocable proxy shall remain
in full force and effect on December 17, 1999 or on the date when Germain shall
sell, transfer (other than to immediate members of his family), assign, pledge,
hypotheccate or otherwise dispose of any of the shares of the Corporation's
Common Stock owned by him, whichever shall first occur.
Section 3.3 Deliveries to be Made at the Closing. At the Closing:
(a) Pioneer shall deliver to the Corporation payment of the funds
specified in Section 1.1 hereof in the manner provided therein.
(b) The Corporation shall deliver to Pioneer:
(i) a share certificate evidencing Pioneer's ownership of 500
fully paid and nonassessable shares of Common Stock; and
(ii) a share certificate evidencing Pioneer's ownership of
200 fully paid and nonassessable shares of Preferred Stock.
ARTICLE 4
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CONTROL; MANAGEMENT; OFFICER COMPENSATION
Section 4.1 Control. As long as Pioneer shall be a holder of Common
Stock:
(a) The Board of Directors of the Corporation shall consist of
three members.
(b) The Corporation shall cause all of the shareholders of the
Corporation other than Pioneer to vote all of their respective shares of Common
Stock in favor of the election of Xxxxxx X. Xxxxxxxx ("Xxxxxxxx"), Xxxx Xxxxxxx
("Xxxxxxx") and Xxxxxxx as directors of the Corporation.
(c) Pioneer shall vote all of its respective shares of Common
Stock in favor of the election of Xxxxxxxx, Xxxxxxx and Xxxxxxx as directors of
the Corporation.
(d) Pioneer shall cause Xxxxxxxx and Xxxxxxx to vote in favor of
the appointment of Germain to serve as President of the Corporation.
Section 4.2 Compensation to be Paid to Germain. Commencing on the day
immediately following the Closing, and continuing until such time as the
Corporation's Board of Directors may decide otherwise, Germain shall receive an
annual base salary, in his capacity as President of the Corporation, in the
amount of $96,000, payable at the rate of $8,000 per month. Germain's total
compensation including his annual base salary, bonuses, dividends and other
distributions with respect to profits and all other compensatory payments of
every nature and description shall be in such amounts, and shall be paid as such
times as the Board shall determine. The rights, duties and obligations of
Germain and the Corporation in r espect of Germain's employment are set forth in
a written employment agreement between such parties of even date herewith.
Section 4.3 Control of Corporation's Operating Bank Account. The
Corporation shall maintain an operating bank account in such bank as the Board
of Directors shall determine. No checks drawn on such account, and no
withdrawals from said account, in excess of $1,500.00, shall be valid and
binding upon the Corporation unless effected by authority of Germain and either
Xxxxxxxx or Xxxxxxx, in their respective capacities as officers of the
Corporation.
ARTICLE 5
REDEMPTION OF PREFERRED SHARES
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Section 6.1 Pioneer's Option. In the event that the cumulative loss from
operations generated by the Corporation at any time after the Closing equals or
exceeds the sum of $100,000, Pioneer shall thereupon have the option to sell all
of the Preferred Shares to the Corporation for the sum of $200,000 (the
"Option"). Such Option shall be exercisable at any time during the six month
period following Pioneer's receipt of financial statements from the Corporation
or its independent accountants evidencing the Corporation's cumulative loss from
operations in an amount equal to or in excess of $100,000. Pioneer's exercise of
such Option must be evidenced by a written notice thereof sent to the
Corporation. The Corporation shall purchase all of the Preferred Shares at a
closing to be held not more than 30 days after its receipt of such notice. At
such Option closing, upon receipt of the certificates evidencing Pioneer's
ownership of all of the Preferred Shares accompanied by a stock power executed
in blank, payment of said purchase price shall be made by wire transfer to an
account designated by Pioneer, or by delivery of a good, unendorsed certified or
bank check payable to Pioneer's order.
ARTICLE 6
MISCELLANEOUS PROVISIONS
Section 6.1 Endorsement on Share Certificate. The certificate or
certificates evidencing the shares of Common Stock and Preferred Stock issued by
the Corporation to any of the parties hereto shall, in addition to any other
legend required by law , have endorsed upon the face thereof the following
legend:
"THIS SHARE CERTIFICATE IS HELD SUBJECT TO THE TERMS OF
AN AGREEMENT DATED AS OF DECEMBER 18, 1996 MADE BY TRANS
LENDING CORPORATION AND PIONEER COMMERCIAL FUNDING CORP., A
COPY OF WHICH IS ON FILE AT THE OFFICE OF THIS CORPORATION."
Section 6.2 Term of Agreement. This Agreement shall remain in force
until terminated in writing by all of the shareholders then holding shares in
the Corporation, or upon the occurrence of any of the following events:
(a) the bankruptcy, receivership or dissolution of the
Corporation; or
(b) the effectuation of an assignment for the benefit of the
Corporation's creditors.
Section 6.3 Notices. All notices, offers, acceptances, waivers and other
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communications to any party under this Agreement shall be in writing and shall
be deemed to have been sufficiently given on the date of delivery thereof if
sent by hand, guaranteed overnight courier or facsimile transmission, or if
mailed, first class postage prepaid certified mail with return receipt
requested, to such addressee at its or his respective address first above
written, or to such other address as such addressee, by notice to all other
parties given in accordance with this section, may designate from time to time.
Section 6.4 Number and Gender. Wherever and whenever the context of any
provision of this Agreement so requires, the employment of a particular gender
term shall be deemed to include such other gender term as may be required, and
the use of a singular term shall be deemed to include the plural of same and
vice-versa, as the case may be.
Section 6.5 Benefit. This Agreement shall be binding upon and, subject
to the terms hereof, shall operate for the benefit of the parties and their
respective, successors and assigns.
Section 6.6 Modification and Amendment. This Agreement shall not be
modified or amended unless such modification or Amendment is evidenced by a
writing executed by all of the shareholders then holding shares in the
Corporation. This Agreement supersedes all other agreements and understandings
heretofore or now existing between the parties hereto.
Section 6.7 Counterparts. This Agreement may be executed in several
counterparts, each of which when so executed and delivered, shall be considered
an original Agreement, but all of which together shall constitute but one
instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
Pioneer Commercial Funding Corp.
By:______________________________________
Xxxxxx X. Xxxxxxxx, Chief Executive
Officer
Trans Lending Corporation
By:______________________________________
Xxxxxxx Xxxxxxx, President
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