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Exhibit 2.5
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
CROWN GROUP, INC.
AND
SMART CHOICE AUTOMOTIVE GROUP, INC.
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TABLE OF CONTENTS
1. Sale and Purchase of the Shares..........................................................................1
2. Purchase and Payment.....................................................................................2
(a) Purchase Price. ................................................................................2
(b) Further Assurances. ............................................................................2
3. Representations and Warranties of the Company............................................................2
(a) Organization and Standing of the Company........................................................2
(b) Subsidiaries....................................................................................2
(c) Capital Stock...................................................................................3
(d) Corporate Proceedings of the Company............................................................4
(e) Financial Statements............................................................................4
(f) Absence of Certain Changes or Events............................................................5
(g) Tax Matters.....................................................................................8
(h) Title to Properties and Related Matters.........................................................9
(i) Consents and Approvals..........................................................................9
(j) Receivables....................................................................................10
(k) Litigation and Proceedings.....................................................................10
(l) Insurance Coverage.............................................................................11
(m) Employee Benefits..............................................................................12
(n) Employee Relations.............................................................................13
(o) Patents, Trademarks and Licenses...............................................................14
(p) Approvals, Authorizations and Regulations......................................................14
(q) Inventory......................................................................................15
(r) Guarantees, Etc................................................................................15
(s) OSHA...........................................................................................15
(t) No Defaults....................................................................................15
(u) No Conflicts...................................................................................16
(v) Brokers........................................................................................16
(w) Environmental Matters..........................................................................16
(x) Permits, Licenses, Etc.........................................................................19
(y) Software.......................................................................................19
(z) Disclosure.....................................................................................20
4. Representations and Warranties of the Purchaser.........................................................20
(a) Organization, Standing and Authority of the Purchaser..........................................20
(b) No Violation...................................................................................20
(c) Corporate Proceedings of the Purchaser.........................................................20
(d) Financial Statements...........................................................................21
(e) Brokers........................................................................................21
(f) Accredited Investor/Investment.................................................................22
(g) Due Diligence..................................................................................22
(h) No Knowledge of Breach.........................................................................23
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5. Closing Actions.........................................................................................23
(a) Resignations...................................................................................23
(b) Opinion of the Company's Counsel...............................................................23
(c) Opinion of Purchaser's Counsel.................................................................24
(d) Ready Finance Debt.............................................................................25
(e) Conversion of Other Company Debt...............................................................25
(f) High Capital Funding, LLC......................................................................25
(g) Conversion of Company Preferred Stock..........................................................26
(h) Merger of Paaco Automotive Group, Inc..........................................................26
(i) Grant to the Purchaser of Options, Warrants, Etc...............................................27
(j) Finova Capital Corporation.....................................................................27
(k) No Material Adverse Changes....................................................................27
(l) Consents.......................................................................................27
(m) Certified Resolutions of the Company...........................................................28
(n) Certified Resolutions of the Purchaser.........................................................28
(o) Xxxx-Xxxxx-Xxxxxx Filing and Approval..........................................................28
(p) Employment/Consulting Agreements...............................................................28
(q) Settlement of Existing Litigation..............................................................29
(r) Bankers Insurance Company Investment...........................................................29
6. The Closing.............................................................................................29
7. Nature and Survival of Representations and Warranties...................................................29
(a) Nature of Statements...........................................................................29
(b) Survival of Representations and Warranties.....................................................30
8. Indemnification by Company and Related Matters..........................................................30
9. Indemnification by the Purchaser and Related Matters....................................................31
10. Expenses................................................................................................32
11. Notices.................................................................................................32
12. Miscellaneous...........................................................................................34
(a) Assignment.....................................................................................34
(b) Section and Paragraph Headings.................................................................34
(c) Amendment......................................................................................34
(d) Entire Agreement...............................................................................34
(e) Knowledge......................................................................................34
(f) Public Announcements...........................................................................34
(g) Counterparts...................................................................................34
(h) Governing Law..................................................................................35
(i) Material Adverse Effect........................................................................35
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated on or as of December 1, 1999, by
and between CROWN GROUP, INC., a Texas corporation (the "Purchaser" or "Crown
Group"), and SMART CHOICE AUTOMOTIVE GROUP, INC., a Florida corporation (the
"Company" or "Smart Choice").
W I T N E S S E T H:
WHEREAS, the Purchaser desires to purchase 150,000 shares of the Series
E Convertible Preferred Stock, $.01 par value per share, of the Company (herein
referred to as the "Shares"), and the Company desires to sell the Shares to the
Purchaser, all upon the terms and conditions set forth herein; and
WHEREAS, this Agreement sets forth the terms and conditions to which
the parties have agreed and further contemplates the execution and delivery of
certain collateral agreements and the consummation of certain related
transactions hereinafter described;
NOW, THEREFORE, in consideration of the mutual promises and covenants
of the parties, the parties agree as follows:
1. Sale and Purchase of the Shares. The Company hereby sells, assigns
and conveys to the Purchaser on the Closing Date (as hereinafter defined), free
and clear of all security interests, pledges, liens, charges and encumbrances,
the Shares and transfers and delivers to the Purchaser the certificates
evidencing the Shares. The Purchaser hereby purchases and accepts the Shares for
the consideration set forth in Section 2(a) hereof.
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2. Purchase and Payment.
(a) Purchase Price. The total purchase price (the "Purchase
Price") for the Shares is Three Million ($3,000,000) Dollars, payable
by the Purchaser to the Company at Closing (as hereinafter defined), by
wire transfer funds.
(b) Further Assurances. The Company hereby agrees to execute
and deliver from time to time at the request of the Purchaser and
without further consideration, such additional instruments of
conveyance and transfer and to take such other action as the Purchaser
may reasonably require to more effectively convey, assign, transfer and
deliver the Shares to the Purchaser.
3. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with the Purchaser that:
(a) Organization and Standing of the Company. The Company and
each of the Company Subsidiaries (as hereinafter defined) is a
corporation duly organized, validly existing and in good standing under
the laws of the state of its incorporation. The Company and the Company
Subsidiaries have all requisite corporate power and authority to
conduct their respective businesses as they are now being conducted.
The Company has delivered to the Purchaser complete and correct copies
of the Articles of Incorporation (duly certified by the Secretary of
State of the respective states of incorporation) and By-Laws (certified
by the Secretary of the Company or the Company Subsidiaries, as the
case may be) of the Company and the Company Subsidiaries as in effect
on the date hereof.
(b) Subsidiaries. All direct and indirect subsidiaries of the
Company (individually, a "Company Subsidiary," and collectively, the
"Company Subsidiaries") are listed on Schedule 3(b) attached hereto.
Except for the Company
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Subsidiaries, the Company does not (i) own, directly or indirectly, any
of the outstanding capital stock or securities convertible into capital
stock of any other corporation, or (ii) own, directly or indirectly,
any participating interest in any partnership, joint venture or other
business enterprise.
(c) Capital Stock. The total authorized capital stock of the
Company consists of 50,000,000 shares of Common Stock, $.01 par value
per share (the "Company Common Stock"), of which as of August 16, 1999,
7,782,277 shares have been issued and are outstanding, and 5,000,000
shares of Preferred Stock, $.01 par value per share, (the "Company
Preferred Stock"), of which (i) 440 shares of Series A Convertible
Preferred Stock (the "Company Series A Preferred Stock"), have been
issued and no shares are outstanding, (ii) 220 shares of Series B
Convertible Preferred Stock (the "Company Series B Preferred Stock"),
have been issued and are outstanding, (iii) 24.98 shares of Series C
Convertible Preferred Stock (the "Company Series C Preferred Stock"),
have been issued and are outstanding, (iv) 350 shares of Series D
Convertible Preferred Stock (the "Company Series D Preferred Stock"),
have been issued and are outstanding, and (v) no shares of Series E
Convertible Preferred Stock (the "Company Series E Preferred Stock"),
have been issued and are outstanding. A true and correct copy of the
Sixth Articles of Amendment to the Articles of Incorporation of the
Company authorizing the designation of the Company Series E Preferred
Stock is attached hereto as Exhibit "A." Except as set forth in
Schedule 3(c) attached hereto, there are no existing options, warrants,
calls, commitments or other rights of any character (including
conversion or preemptive rights) relating to the acquisition of any
issued or unissued
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capital stock or other securities of the Company (collectively, the
"Existing Options").
(d) Corporate Proceedings of the Company. The execution,
delivery and performance of this Agreement has been authorized by the
Board of Directors of the Company and this Agreement constitutes the
valid and legally binding obligation of the Company, enforceable in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and the availability of
equitable remedies may be limited by equitable principles of general
applicability.
(e) Financial Statements. The Company has delivered to the
Purchaser correct and complete copies of the Company's and the Company
Subsidiaries' consolidated unaudited monthly financial statements
consisting of consolidated balance sheets of the Company and the
Company Subsidiaries as of the end of each month from January 1999
through September 1999 and the related statements of income for the
periods then ended. The Company has also delivered to the Purchaser
correct and complete copies of financial statements consisting of the
consolidated balance sheets of the Company and the Company Subsidiaries
as of December 31, 1998 and the related consolidated statements of
income, stockholders' equity and cash flows for the period then ended,
all of which have been audited by the firm of BDO Xxxxxxx, LLP (the
"Audited Financial Statements"). All such unaudited financial
statements and the Audited Financial Statements are referred to herein
collectively as the "Financial Statements." The Financial Statements
are in accordance with the books and records of the Company and the
Company Subsidiaries in all material respects, and there have not been
any material
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transactions that have not been recorded in the accounting records
underlying such Financial Statements. In addition, The Financial
Statements have been prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied and present
accurately, in all material respects, the financial position of the
Company and the Company Subsidiaries as of the dates thereof, and the
results of their operations for the periods then ended, provided,
however, that the unaudited financial statements may be subject to
year-end adjustments and such unaudited financial statements lack
footnotes and other presentation items. The balance sheet of the
Company and the Company Subsidiaries as of September 30, 1999 is
referred to herein as the "Company Balance Sheet," and the date thereof
is referred to as the "Company Balance Sheet Date."
(f) Absence of Certain Changes or Events. Except as set forth
in Schedule 3(f) or except as contemplated by this Agreement, since the
Company Balance Sheet Date, none of the Company and the Company
Subsidiaries has:
(i) issued, delivered or agreed to issue or deliver
any stock, bonds or other corporate securities (whether
authorized and unissued or held in the treasury) or granted or
agreed to grant any options, warrants or other rights calling
for the issuance thereof;
(ii) except as otherwise permitted herein, borrowed
or agreed to borrow any funds or incurred, or become subject
to, any obligation or liability (absolute or contingent)
except in the ordinary course of business in customary
amounts;
(iii) paid any obligation or liability (absolute or
contingent) except in the ordinary course of business in
customary amounts;
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(iv) paid any obligation or liability (absolute or
contingent) other than current liabilities reflected in or
shown on the Financial Statements (or the notes thereto) and
obligations or liabilities incurred since the date thereof and
permitted to be so incurred by the foregoing clause (ii) of
this Section 3(f);
(v) declared or made, or agreed to declare or make,
any payment of dividends or distribution of any assets of any
kind whatsoever to the Company or affiliates of the Company,
or purchased or redeemed any shares of its capital stock;
(vi) sold or transferred, or agreed to sell or
transfer, any of its assets, properties or rights (except
sales in the ordinary course of business) or cancelled or
agreed to cancel, any debts or claims;
(vii) entered or agreed to enter into any agreement
or arrangement granting any preferential rights to purchase
substantially all of the assets, properties or rights of the
Company or the Company Subsidiaries (including management and
control thereof), or requiring the consent of any party to the
transfer and assignment of such assets, properties or rights
(or changes in management or control thereof), or providing
for the merger or consolidation of the Company or the Company
Subsidiaries with or into another corporation, other than as
described in this Agreement and the documents contemplated
hereby;
(viii) waived any rights of material value;
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(ix) except in the ordinary course of business, made
or permitted any amendment or termination of any material
contract, agreement or license to which it is a party;
(x) made any accrual or arrangement for the payment
of bonuses or special compensation of any kind or any
severance or termination pay to any present or former officer
or employee;
(xi) increased the rate of compensation payable or to
become payable by it to any of its officers or key employees
compensated at a rate in excess of $50,000 per annum; or made
any increase in any profit sharing, bonus, incentive, deferred
compensation, insurance, pension, retirement or other employee
benefit plan, payment or arrangement made to, for or with any
such officers or key employees;
(xii) committed to purchase inventories, parts,
supplies or other items in excess of its normal, ordinary and
usual requirements or at excessive prices, all computed based
on historical practices of the Company and the Company
Subsidiaries;
(xiii) experienced any significant labor trouble; or
(xiv) suffered any material losses or any damage,
destruction or loss, whether or not covered by insurance,
which materially and adversely affects its assets or business,
or had any material adverse change in the business, of the
Company or the Company Subsidiaries, in each case, which would
reasonably be expected to have a Material Adverse Effect on
the Company or the Company Subsidiaries.
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(g) Tax Matters. All United States, state, county and local
and other taxes, including without limitation, income taxes, payroll
taxes, corporate franchise taxes, sales, excise and use taxes and ad
valorem taxes, due and payable by the Company and the Company
Subsidiaries for the periods ended prior to the date hereof, have been
paid or accrued and there is no further liability (whether or not
disclosed on their respective tax returns) for any taxes relating to
such periods, and no interest or penalties have accrued or are accruing
with respect thereto, except for taxes that are being contested in good
faith by appropriate proceedings and as to which adequate reserves have
been reflected on the Financial Statements and established (and through
and including the Closing Date will establish) reserves that are
adequate for the payment of all taxes not yet due and payable with
respect to the results of operations through the Closing Date. The
Company and the Company Subsidiaries have timely filed in materially
correct form all tax returns and reports required to be filed by them
on or before the date of this Agreement with all such taxing
authorities, except as otherwise set forth on Schedule 3(g). The
liability for Federal, state and local taxes reflected on the most
recent Company's Financial Statements, if any, represents at the date
thereof, reasonable and adequate provision for the payment of all
accrued and unpaid Federal, state and local taxes of the Company and
the Company Subsidiaries. No assessments of deficiencies have been made
against the Company or the Company Subsidiaries, and no extensions of
time are in effect for the filing of any returns or the assessment of
deficiencies. To the Company's knowledge, no examinations by the
Internal Revenue Service of the Federal income tax returns of the
Company or the Company Subsidiaries for any taxable year are presently
pending. The Company has delivered to the Purchaser true
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and complete copies of all of the Company's and the Company
Subsidiaries' Federal and state Income Tax Returns and payroll tax
returns for each of their fiscal years from 1995 through 1998.
(h) Title to Properties and Related Matters. The assets
reflected in the Financial Statements were at the date thereof, and,
except for assets consumed or disposed of in the ordinary course of
business since the date thereof, are now owned by the Company or the
Company Subsidiaries by good title, free and clear from all security
interests, mortgages, liens, claims, defects and encumbrances except
liens, charges or encumbrances discussed or referred to in the
Financial Statements, the related notes or schedules thereto or in
Schedule 3(h) delivered to the Purchaser pursuant to this Section 3.
Except as disclosed in Schedule 3(h), all such assets are in good
operating condition and repair, subject to ordinary wear and tear. All
of such assets have been properly maintained, with no extraordinary
maintenance planned or anticipated, and are adequate and sufficient for
the operation of the Company's and the Company Subsidiaries' business
as historically operated by the Company and the Company Subsidiaries.
There are no material capital expenditures currently contemplated or
necessary to maintain the current operation of the Company's and the
Company Subsidiaries' business. The Nissan and Volvo new car
dealerships owned by the Company have been sold and all indebtedness
related thereto or secured by the assets thereof, has been released, or
will be released promptly after Closing.
(i) Consents and Approvals. No notification, authorization,
permit, consent or approval of, or notice to, or filing with, any
governmental or regulatory authority or other third party is required
to be obtained, given or made, or waiting
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period required to expire as a condition to the lawful execution and
delivery of this Agreement, the consummation by the Company of the
transaction contemplated herein, or the fulfillment of the terms and
compliance with the provisions hereof, except for such permits,
consents, licenses, approvals or authorizations or declarations,
exemptions, filings or registrations (a) disclosed in Schedule 3(i) or
(b) the failure of which to obtain or make do not and will not (A)
affect the validity and enforceability of this Agreement or (B) either
individually or in the aggregate reasonably be expected to have a
Material Adverse Effect.
(j) Receivables. All notes receivable, contracts receivable
and accounts receivable (collectively, the "Receivables") are properly
reflected on the Company's and the Company Subsidiaries' books and
records are valid and have arisen in the ordinary course of business.
None of such Receivables has been the subject of any factoring by the
Company or the Company Subsidiaries.
(k) Litigation and Proceedings. Except as described in
Schedule 3(k), there are no actions, suits or proceedings pending or,
to the knowledge of the Company or the Company Subsidiaries, threatened
against or affecting the Company or the Company Subsidiaries, at law or
in equity, or before or by any governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, or
before any arbitrator of any kind, which would be reasonably expected
to result in any judgment or liability not fully covered by casualty or
liability insurance (less applicable deductible or retention, if any)
and have a Material Adverse Effect. Neither the Company nor the Company
Subsidiaries are in default with respect to any judgment, order, writ,
injunction, decree, award, or, to the Company's knowledge, in default
with respect to any rule or regulation of any court, arbitrator
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or governmental department, commission, board, bureau, agency or
instrumentality which default would reasonably be expected to have a
Material Adverse Effect.
(l) Insurance Coverage. With respect to each such insurance
policy owned by the Company and the Company Subsidiaries: (A) the
policy is legal, valid, binding, enforceable, except as the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally
and the availability of equitable remedies may be limited by equitable
principles of general applicability, and in full force and effect with
respect to the periods and risks which such policy purports to insure;
(B) the policy will continue to be legal, valid, binding, enforceable
and in full force and effect in accordance with its terms on the same
terms immediately following the consummation of the transactions
contemplated hereby; (C) neither the Company nor the Company
Subsidiaries are in breach or default (including with respect to the
payment of premiums or the giving of notices) of any material term
thereto, and to the Company's knowledge, no event has occurred which,
with notice or the lapse of time, would reasonably be expected to
constitute such a breach or default, or permit termination,
modification or acceleration under the policy; and (D) to the Company's
knowledge, no party to the policy has repudiated any provision thereof.
To the knowledge of the Company, the Company and the Company
Subsidiaries have been covered during the past five years by insurance
in scope and amount customary and reasonable for the businesses in
which it has engaged during such period. The Company and the Company
Subsidiaries do not have any self-insurance arrangements affecting the
Company and the Company Subsidiaries. "Self insurance arrangements"
means any arrangement by which the Company and the Company Subsidiaries
have
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assumed risks in scope and amount customarily insured by businesses in
the Company's and the Company Subsidiaries' industry and geographic
region.
(m) Employee Benefits.
(i) The Company and the Company Subsidiaries have
complied and currently are in compliance, both as to form and
operation, in all material respects with the applicable
provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and the Internal Revenue Code of
1986, as amended (the "Code"), respectively, with respect to
each "employee benefit plan" as defined under Section 3(3) of
ERISA, except where the failure to comply would not reasonably
be expected to have a Material Adverse Effect.
(ii) Neither the Company nor the Company Subsidiaries
have ever maintained, adopted or established, contributed or
been required to contribute to, or otherwise participated or
been required to participate in, a "multiemployer plan" (as
defined in Section 3(37) of ERISA). No amount is due or owing
from the Company or any Company Subsidiary on account of any
withdrawal therefrom.
(iii) Neither the Company nor the Company
Subsidiaries have incurred any liability with respect to a
Plan, including, without limitation, under ERISA, (including,
without limitation, Title I or Title IV of ERISA, other than
liability for premiums due to the Pension Benefit Guaranty
Corporation ("PBGC")), the Code or other applicable law, which
has not been satisfied in full and, to the
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knowledge of the Company, no event has occurred, and there
exists no known condition or set of circumstances, which would
reasonably be expected to result in the imposition of any
liability with respect to a Plan, including, without
limitation, under ERISA (including, without limitation, Title
I or Title IV of ERISA), the Code or other applicable law with
respect to the Plan, wherein any such liability, individually
or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.
(iv) Except as set forth in Schedule 3(m) attached
hereto, neither the Company nor the Company Subsidiaries have
any outstanding commitments to provide or to cause to be
provided any severance or other post-employment benefit,
salary continuation, termination, disability, death,
retirement, health or medical benefit or similar benefit to
any person (including, without limitation, any former or
current employee) that has not been reflected in the Company's
Financial Statements.
(n) Employee Relations. The Company and the Company
Subsidiaries are in compliance in all material respects with all
applicable laws respecting employment and employment practices, terms
and conditions of employment and wages and hours of employees, and
there is no labor strike, dispute, slowdown or representation campaign
or work-stoppage pending or, to the Company's knowledge, threatened
with respect to employees of the Company or the Company Subsidiaries.
Except as disclosed in Schedule 3(n), there is not, pending or, to the
Company's knowledge, threatened, any unfair labor practice complaint
against the Company or
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the Company Subsidiaries pending before any relevant authority or union
representation petition respecting the employees of the Company or the
Company Subsidiaries.
(o) Patents, Trademarks and Licenses. Neither the Company nor
the Company Subsidiaries have any patents or patent applications
pending. Schedule 3(o) contains an accurate and complete list of all
trademarks, trade names, service marks and copyrights of the Company.
None of the foregoing is registered nor have any applications for such
registration been made. Neither the Company nor the Company
Subsidiaries have received any notice of any claim of infringement or
other complaint that its operations conflict with or infringe upon the
patents, trade names, trademarks, trade secrets, copyrights or product
formulas of others.
(p) Approvals, Authorizations and Regulations. Except as
disclosed in Schedule 3(p), the Company's and the Company Subsidiaries'
business is being conducted in compliance with all applicable laws,
ordinances, rules and regulations of all governmental authorities, and
neither the Company, the Company Subsidiaries, nor any officer,
director, stockholder, agent or employee has violated any law,
ordinance, rule or regulation in connection with the Company's and the
Company Subsidiaries' business, except for such violations as would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Further, other than as disclosed on Schedule
3(p), neither the Company nor the Company Subsidiaries have received
any notice (written or otherwise) from any governmental authority
asserting or investigating any alleged failure to comply with any
applicable law, ordinance or regulation, except for such failure as
would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
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(q) Inventory. None of the used vehicle inventories of the
Company and the Company Subsidiaries are obsolete, defective or
otherwise not saleable or usable in the ordinary course of business in
any material respects, except to the extent of the inventory reserve
reflected in the unaudited financial statements for the month ended
September 30, 1999.
(r) Guarantees, Etc. Except as disclosed in Schedule 3(r),
neither the Company nor the Company Subsidiaries have given any
guarantee, indemnity, warranty or bond, or incurred any other similar
obligation or created any security for or in respect of, liabilities,
actual or contingent, of any other person that remains outstanding. All
guaranties of the Company and the Company Subsidiaries on behalf of any
person other than another Company Subsidiary (excluding the Company
Subsidiaries that owned the Nissan and Volvo dealerships) have been
terminated.
(s) OSHA. Neither the Company nor the Company Subsidiaries
have received notice of any violation by the Company or the Company
Subsidiaries, and to the Company's knowledge, neither the Company nor
any Company Subsidiary is in violation of and has not been in violation
of, the Occupational Safety and Health Act of 1970, including rules and
regulations thereunder, or any other federal, state, local or foreign
laws, including rules and regulations thereunder, regulating or
otherwise affecting employee health and safety which would reasonably
be expected to have a Material Adverse Effect.
(t) No Defaults. Except as set forth on Schedule 3(t) attached
hereto, neither the Company nor the Company Subsidiaries are in default
under, nor has any event occurred which with notice or lapse of time or
both, would reasonably be expected to result in a waiver (except caused
by the statute of limitations) of any
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material right or default under, any outstanding indenture, mortgage,
lease, contract or agreement to which the Company or any of the Company
Subsidiaries is a party or by which the Company, the Company
Subsidiaries or their assets may be bound, or under any provision of
the Company's or the Company Subsidiaries' Articles of Incorporation or
By-Laws, which would reasonably be expected to have a Material Adverse
Effect.
(u) No Conflicts. The execution and performance of this
Agreement by the Company and the Company Subsidiaries in accordance
with its terms and the transactions contemplated hereby will not
violate any provision of or result in a breach of or constitute a
default under the Articles of Incorporation or By-Laws of the Company
and the Company Subsidiaries, or under any order, writ, injunction or
decree of any court, governmental agency or arbitration tribunal, or
under any contract, agreement or instrument to which the Company or any
Company Subsidiary is a party or by which its properties may be bound,
or under any law, statute or regulation, except where the violation,
conflict, breach or default would not reasonably be expected to have a
Material Adverse Effect.
(v) Brokers. The Company is not a party to nor in any way
obligated under a contract or other agreement, and there are no
outstanding claims against any of them, for the payment of any broker's
or finder's fees in connection with the origin, negotiation, execution
or performance of this Agreement.
(w) Environmental Matters.
(i) For the purposes of this Agreement, the following
definitions shall apply:
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Environment: Ambient air, surface water, groundwater, soil,
sediment and land.
Environmental Conditions: Any environmental contamination of
any kind or nature resulting from the presence of Hazardous
Materials in the surface soils, subsurface soils, surface
waters or groundwater.
Environmental Laws: All existing federal, state or local laws
or ordinances and any regulations, rules, or administrative or
judicial rulings issued or promulgated thereunder and common
law relating to (a) Releases or threatened Releases of
Hazardous Materials or materials containing Hazardous
Materials; (b) the manufacture, handling, transport, use,
treatment, storage or disposal of Hazardous Materials or
materials containing Hazardous Materials; or (c) otherwise
relating to the protection of human health or the Environment,
including, without limitation, the Comprehensive Environmental
Response Compensation and Liability Act, 42 U.S.C. Section
9601 et seq., ("CERCLA"), the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq., ("RCRA"), the
Clean Water Act, 33-U.S.C. Section 1251 et seq., the Clean Air
Act, 42 U.S.C. Section 7401 et seq., the Toxic Substances
Control Act, 15 U.S.C. Section 2601 et seq., ("TSCA"), and all
state analogues and counterparts to any of the foregoing.
Facilities: The real property and improvements located at the
locations owned or leased by the Company or the Company
Subsidiaries.
Hazardous Materials: Any substance defined as "Hazardous
Waste", "Hazardous Substance", "Hazardous Material", pollutant
or contaminant under any existing Environmental Laws.
Hazardous Materials include, without limitation, asbestos,
polychlorinated biphenyls and petroleum products.
Release: Any spilling, leaking, pumping, pouring, leaching,
emitting, emptying, discharging, injecting, escaping, dumping
or disposing of Hazardous Materials or materials containing
Hazardous Materials into the Environment.
(ii) Except as would not reasonably be expected to
have a Material Adverse Effect or as disclosed in Schedule
3(w), there are
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no Environmental Conditions on, at, under or emanating from
the Facilities.
(iii) Except as would not reasonably be expected to
have a Material Adverse Effect or as disclosed in Schedule
3(w), neither the Company nor any Company Subsidiary has
received any notice claiming or alleging that the Company or
any Company Subsidiary (1) has violated any applicable
Environmental Laws; or (2) is responsible or potentially
responsible for any remedial or removal action under any
applicable Environmental Laws, and to the Company's knowledge,
no such claim is threatened.
(iv) Except as would not reasonably be expected to
have a Material Adverse Effect or as disclosed in Schedule
3(w):
(1) the Company and the Company Subsidiaries have all
Permits required under applicable Environmental Laws
that are necessary to conduct the business of the
Company and the Company Subsidiaries as presently
conducted, the absence of which would have a material
adverse effect on the Company or the Company
Subsidiaries (the "Material Environmental Permits"),
and has provided copies of all the Material
Environmental Permits to the Purchaser;
(2) all the Material Environmental Permits are in
full force and effect and neither the Company nor any
Company Subsidiary is in material default of any
thereof;
(3) there is no threatened suspension, cancellation
or non-renewal of any of the Material Environmental
Permits or any basis for such suspension,
cancellation or non-renewal; and
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(4) the Company and the Company Subsidiaries shall
renew all the Material Environmental Permits that
shall expire on or before Closing.
(v) PCB Items. Except as would not reasonably be
expected to have a Material Adverse Effect or as disclosed in
Schedule 3(w), none of the assets of the Company or the
Company Subsidiaries is a PCB Item (as defined in 40 C.F.R.
Section 761.3).
(x) Permits, Licenses, Etc. The Company and the Company
Subsidiaries have all Permits (except for Environmental Permits, which
are the subject of specific representations and warranties in Section
3(x) hereof), that are required in order to carry on the Company's and
the Company Subsidiaries' business as presently conducted, the absence
of which would reasonably be expected to result in a Material Adverse
Effect on the Company or the Company Subsidiaries (the "Material
Permits"). All Material Permits are in full force and effect, and, to
the knowledge of the Company, no suspension, cancellation or
non-renewal of any Material Permit is threatened, nor, to the best of
the Company's knowledge, does there exist any basis for such
suspension, cancellation or non-renewal.
(y) Software. To the Company's knowledge, all operating and
applications computer programs and data bases (the "Software") which
the Company and the Company Subsidiaries use is owned outright by the
Company and the Company Subsidiaries or if any Software is not owned by
the Company or the Company Subsidiaries, the Company and the Company
Subsidiaries have the right to use the same pursuant to existing leases
or licenses therefor. To the knowledge of the Company, none of the
Software presently used by the Company and the Company
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Subsidiaries, and no present use thereof, infringes upon or violates
any patent, copyright, trade secret or other proprietary right of
anyone else and no claim with respect to any such infringement or
violation is known to be threatened.
(z) Disclosure. No representation or warranty by the Company
or the Company Subsidiaries contained in this Agreement, including the
Schedules attached hereto, taken as a whole, contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements contained herein and therein not
misleading.
4 Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Company that:
(a) Organization, Standing and Authority of the Purchaser. The
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas, and has full corporate
power and authority to conduct its business as it is now being
conducted, to enter into and carry out the provisions of this
Agreement.
(b) No Violation. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby, will (i) violate any provision of the Articles of Incorporation
or By-Laws of the Purchaser, (ii) violate any provision of any
agreement or other obligation to which the Purchaser is a party or by
which the Purchaser is bound or to which its assets are subject, or
(iii) violate or result in a breach of, constitute a default under, any
judgment, order, decree, rule or regulation of any court or
governmental agency to which the Purchaser is subject.
(c) Corporate Proceedings of the Purchaser. The execution,
delivery and performance of this Agreement has been authorized by the
Board of Directors of the
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Purchaser and this Agreement constitutes the valid and legally binding
obligation of the Purchaser, enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors'
rights generally and the availability of equitable remedies may be
limited by equitable principles of general applicability.
(d) Financial Statements. The Purchaser has delivered to the
Company (i) the audited consolidated balance sheet of the Purchaser at
April 30, 1999 and the related consolidated statements of operations,
cash flows and changes in stockholder's equity for the Purchaser, all
for the year then ended, together with the related notes thereto, as
certified by PricewaterhouseCoopers, LLP, Certified Public Accountants,
and (ii) the unaudited consolidated balance sheet of the Purchaser at
July 31, 1999 (the "Crown Financial Statement Date") and the related
unaudited consolidated statements of operations and cash flows for the
Purchaser, all for the three (3) months then ended, as certified by the
Chief Financial Officer of the Purchaser (hereinafter collectively
called the "Crown Financial Statements"). The Crown Financial
Statements (x) are in accordance with the books of account and records
of the Purchaser and fairly present the consolidated financial position
of the Purchaser at the dates indicated, (y) contain and reflect
reserves for all material liabilities and (z) were prepared in
accordance with GAAP on a basis consistent with prior accounting
periods.
(e) Brokers. The Purchaser is not a party to or in any way
obligated under a contract or other agreement, and there are no
outstanding claims against it, for the payment of any broker's or
finder's fees in connection with the origin, negotiation, execution or
performance of this Agreement.
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(f) Accredited Investor/Investment. The Purchaser is an
"accredited investor" as that term is defined under Regulation D
promulgated by the Securities and Exchange Commission under the
Securities Act of 1933, as amended. The Shares will be acquired for
investment and not with a view to distribution thereof, nor with any
intention of distributing or selling or otherwise disposing of the
Shares.
(g) Due Diligence. The Purchaser is an informed and
sophisticated person and is experienced in the evaluation and purchase
of companies such as the Company and the Company Subsidiaries. In
making the decision to enter into this Agreement and consummate the
transactions contemplated hereby, and the documents related thereto,
the Purchaser has relied on its own independent investigation of the
Company and the Company Subsidiaries as of this date and upon the
representations and warranties and covenants in this Agreement and has
relied on the investigations conducted by the Purchaser's agents. The
Purchaser acknowledges that the Company and the Company Subsidiaries
have made no representation or warranty as to the prospects, financial
or otherwise, of the Company and the Company Subsidiaries. The
Purchaser has conducted its own inspection and examination of the
Company and the Company Subsidiaries conducted by the Purchaser's
agents and is not relying on representations or warranties of any
nature made by or on behalf of or imputed to the Company and the
Company Subsidiaries except as expressly set forth in this Agreement.
Notwithstanding the foregoing, no investigation by the Purchaser
heretofore or hereafter made shall affect the representations and
warranties of the Company, and each such representation and warranty
shall survive any such investigation.
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(h) No Knowledge of Breach. Neither the Purchaser nor the
Purchaser's agents know of any breach of warranty or any
misrepresentation by the Company or the Company Subsidiaries hereunder.
5 Closing Actions. The following actions have taken place prior to the
Closing Date or are taking place on the Closing Date contemporaneously with the
Closing:
(a) Resignations. The Company hereby delivers to the Purchaser
the resignations of those officers and directors of the Company and the
Company Subsidiaries (effective on the Closing Date) as may be
requested by the Purchaser, and the remaining directors of the Company
have elected the persons designated by the Purchaser to the Board of
Directors of the Company. The By-Laws of the Company are also being
amended in a manner satisfactory to the Purchaser.
(b) Opinion of the Company's Counsel. The Purchaser is
receiving the opinion of Xxxxxx X. Xxxxxxx, Chief Legal Officer for the
Company and the Company Subsidiaries, dated the Closing Date, to the
effect that:
(i) each of the Company and the Company Subsidiaries
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida and has
corporate power to carry on its business as it is now being
conducted;
(ii) to such counsel's knowledge, the authorized
capital stock and the outstanding shares of the Company and
the Company Subsidiaries are as set forth herein, and the
Shares are duly and validly issued, fully paid, non-assessable
and outstanding;
(iii) the consummation of the transactions
contemplated by this Agreement will not result in the breach
of or constitute a default
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under the Articles of Incorporation or By-Laws of the Company
and the Company Subsidiaries, or, to such counsel's knowledge,
any loan, credit or similar agreement or any court decree to
which the Company or the Company Subsidiaries are a party or
by which the Company or the Company Subsidiaries, or their
respective properties may be bound; and
(iv) this Agreement has been duly executed and
delivered by the Company and constitutes the valid and binding
obligation of the Company enforceable in accordance with its
terms (except as otherwise limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting
creditors' rights and except that such counsel need not
express an opinion as to whether any covenant contained herein
is specifically enforceable).
(c) Opinion of Purchaser's Counsel. The Company is receiving
the opinion of X. X. Xxxxxxx, III, General Counsel for the Purchaser,
dated the Closing Date, to the effect that:
(i) the Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Texas and has corporate power to carry on its
business as it is now being conducted.
(ii) this Agreement has been duly authorized,
executed and delivered by the Purchaser, and (assuming valid
execution and delivery by the other parties hereto) is, or
will be upon such execution, the valid and binding obligation
of the Purchaser in
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accordance with its terms (except as otherwise limited by
bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors' rights, and except that such counsel
need not express an opinion as to whether any covenant
contained herein or therein is specifically enforceable); and
(iii) to such counsel's knowledge, the consummation
of the transactions contemplated by this Agreement will not
result in the breach of or constitute a default under the
Articles of Incorporation or By-Laws of the Purchaser, or any
loan, credit or similar agreement or any court decree to which
the Purchaser is a party or by which the Purchaser or its
properties may be bound.
(d) Ready Finance Debt. The Purchaser has acquired from Ready
Finance, Inc. ("Ready Finance") two promissory notes issued by the
Company having a principal amount of approximately $4,300,000 plus
accrued and unpaid interest (the "Ready Finance Debt"). The Ready
Finance Debt is being converted into shares of Company Series E
Preferred Stock at a conversion price of $39.00 for each dollar of such
Ready Finance Debt.
(e) Conversion of Other Company Debt. The indebtedness of the
Company to the creditors listed on Schedule 5(e) attached hereto is
being converted into shares of Company Common Stock at the conversion
prices set forth on Schedule 5(e) for each dollar of such debt, and
there shall be no more than $2,601,760.31 of such indebtedness
outstanding at Closing.
(f) High Capital Funding, LLC. The indebtedness of the Company
to High Capital Funding, LLC ("High Capital") in the aggregate
principal amount of
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$2,000,000 plus accrued interest (the "High Capital Debt") has been
modified and amended such that $1,000,000 of the High Capital Debt is
being paid at Closing, with $275,000 of the balance being due and
payable six (6) months after the Closing Date and $725,000 of the
balance being due and payable two (2) years after the Closing Date. The
deferred amount shall bear interest at the rate of ten (10%) percent
per annum, payable monthly.
(g) Conversion of Company Preferred Stock. All of the
outstanding Preferred Stock of the Company and all accumulated
dividends with respect thereto is being converted into shares of
Company Common Stock at the conversion price set forth on Schedule 5(g)
for each dollar of Company Preferred Stock (including accumulated
dividends) outstanding.
(h) Merger of Paaco Automotive Group, Inc. A subsidiary of the
Company is merging (the "Merger") with Paaco Automotive Group, Inc., a
Texas corporation ("Paaco") in exchange for the number of shares of
Company Series E Preferred Stock such that at Closing, as a result of
the Merger, the Purchaser shall own, in conjunction with the shares of
Company Series E Preferred Stock issued to the Purchaser hereunder and
pursuant to Section 5(d) hereof, not less than seventy (70%) percent of
the issued and outstanding capital stock of the Company (the
"Purchaser's Percentage Ownership"). The number of shares of Company
Series E Preferred Stock to be issued to the Purchaser as a result of
the Merger is 1,105,046.44, subject to adjustment at Closing, as set
forth in the immediately preceding sentence, so that the Purchaser will
own the Purchaser's Ownership Percentage. The Merger is being
consummated in accordance with the terms and provisions of the Merger
Agreement between Paaco and the Company (or a
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subsidiary thereof), in substantially the form of the Merger Agreement
attached hereto as Exhibit "B."
(i) Grant to the Purchaser of Options, Warrants, Etc. The
Purchaser is being granted options or warrants (the "Purchaser's
Warrants") to purchase shares of Common Stock of the Company on the
same terms and conditions that any options or warrants are issued by
the Company on or prior to the Closing Date, such that the Purchaser
shall have the right to maintain the Purchaser's Percentage Ownership
by exercising the Purchaser's Warrants. The Purchaser's Warrants grant
to the Purchaser the right to purchase 1,950,000 shares of Common Stock
of the Company at the purchase price of $.20 per share.
(j) Finova Capital Corporation. The senior debt facilities of
the Company and Paaco with Finova Capital Corporation have been
modified in a manner acceptable to the Purchaser, and an amendment to
the respective loan agreements of the Company and Paaco with Finova
Capital Corporation evidencing such modifications has been entered into
on or before the Closing Date.
(k) No Material Adverse Changes. Prior to the Closing Date,
there has been no material adverse change in the business, operations,
financial condition or properties of the Company and the Company
Subsidiaries, taken in the aggregate, since the Company Balance Sheet
Date, and the Purchaser has received a certificate dated the Closing
Date, signed by the President or a Vice President of the Company to the
effect that such is the case.
(l) Consents. The Company has obtained all approvals and
consents which must be obtained in order to effectuate the transaction
contemplated hereby and to satisfy the terms and conditions of this
Agreement, other than those approvals
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and consents, the failure of which to obtain would not reasonably be
expected to have a Material Adverse Effect.
(m) Certified Resolutions of the Company. The Purchaser has
received resolutions of the Board of Directors of the Company,
certified by the Secretary or an Assistant Secretary of the Company,
authorizing the execution, delivery and performance of this Agreement
and the issuance to the Purchaser of shares of Company Series E
Preferred Stock as set forth herein.
(n) Certified Resolutions of the Purchaser. The Company has
received resolutions of the Board of Directors of the Purchaser,
certified by the Secretary or an Assistant Secretary of the Purchaser,
authorizing the execution, delivery and performance of this Agreement.
(o) Xxxx-Xxxxx-Xxxxxx Filing and Approval. The Purchaser and
the Company (and any other required parties) have made all necessary
filings with the Federal Trade Commission required by the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, the required
waiting periods thereunder have expired or early termination thereof
has been granted, and the parties have not received any objection to
the consummation of the transactions contemplated by this Agreement.
(p) Employment/Consulting Agreements. Each of the employment
or consulting agreements listed on Schedule 5(p) attached hereto (which
Schedule shall include all agreements requiring the payment by the
Company of more than $50,000) have been terminated (except as stated in
Schedule 5(p)) without liability to the Company, and the Company has
entered into (i) new employment agreements with Xxxx X. Xxxxx and
Xxxxxx X. Xxxxxxxx, (ii) an agreement for the continuation of
employment with Xxxxxx X. Xxxxxxx, and (iii) an agreement for the
continuation of
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consulting with Xxxxxx Xxxxxxxx, all of which shall be on terms
acceptable to the Purchaser.
(q) Settlement of Existing Litigation. The Company has
settled, or reached agreements to settle, the lawsuits listed on
Schedule 5(q) attached hereto for the respective amounts set forth on
Schedule 5(q).
(r) Bankers Insurance Company Investment. Bankers Insurance
Company has purchased shares of Company Common Stock for the aggregate
purchase price of $1,000,000.
6 The Closing. The execution and delivery of this Agreement and the
instruments, certificates and other documents required hereunder (the "Closing")
is taking place at the offices of Crown Group, Inc., 0000 Xxxxx XxxXxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, at 10:00 a.m. local time on December
1, 1999. The date and time of such execution and delivery is herein called the
"Closing Date", and the effective date of the Closing shall be 12:01 a.m.,
Dallas, Texas time on the Closing Date. On the Closing Date, certificates
representing the Shares are being delivered by the Company against delivery of
the Purchase Price pursuant to Section 2 hereof, and Closing shall be deemed to
have occurred when such deliveries have been made by the Purchaser and the
Company in accordance with the terms hereof.
7 Nature and Survival of Representations and Warranties.
(a) Nature of Statements. All statements contained in any
schedule or any certificate or other instrument delivered by or on
behalf of the Company or the Purchaser pursuant to this Agreement or in
connection with the transactions contemplated hereby shall be deemed
representations and warranties made by the Company or the Purchaser, as
the case may be.
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(b) Survival of Representations and Warranties. All
representations, warranties, covenants, agreements and undertakings
contained herein or in any Schedule, certificate or other document
shall remain operative and in full force and effect, and shall survive
the Closing Date and the delivery of all consideration and documents
pursuant to this Agreement, and shall continue in effect for a period
of two (2) years after the Closing Date and, as to representations made
by the Company concerning or affecting any tax liability of the Company
or the Company Subsidiaries, until a date which is six (6) months after
the statute of limitations has run against the Federal, state and local
government; provided, however, that any such representation, warranty,
covenant, agreement or undertaking as to which a bona fide claim shall
have been asserted during such survival period shall continue in effect
until such time as such claim shall have been resolved in accordance
with the terms of this Agreement.
8 Indemnification by Company and Related Matters.
(a) Indemnification by Company. The Company agrees to defend,
indemnify and hold harmless the Purchaser and its successors and
assigns, from, against and in respect of any and all loss or damage
resulting from:
(i) the breach by the Company of any of its
warranties, representations, covenants, agreements or
undertakings contained herein; and
(ii) any liability arising out of any and all
actions, suits, proceedings, claims, demands, judgments, costs
and expenses (including reasonable legal and accounting fees)
incident to any of the foregoing (collectively, the "Losses"),
provided that the Purchaser
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34
makes a written claim for indemnification against the Company
within the applicable survival period and further provided
that neither the Company nor the Company Subsidiaries will
have any obligation to indemnify the Purchaser from and
against any Losses until the Purchaser has suffered Losses by
reason of all such breaches in excess of a $50,000 aggregate
deductible (the "Indemnification Threshold") (and after the
Indemnification Threshold is reached, the Company will be
obligated to only indemnify the Purchaser from and against
further such Losses, that is, for amounts greater than
$50,000) or thereafter to the extent of the Losses the
Purchaser has suffered by reason of all such breaches exceeds
a $5,000,000 aggregate ceiling (after which point neither the
Company nor the Company Subsidiaries will have any obligation
to indemnify the Purchaser from and against further such
Losses.
9 Indemnification by the Purchaser and Related Matters.
(a) Indemnification by the Purchaser. The Purchaser agrees to
defend, indemnify and hold harmless the Company, its successors and
assigns from, against and in respect of any and all loss or damage
resulting from:
(i) the breach by the Purchaser of any of its
warranties, representations, covenants, agreements or
undertakings contained herein; and
(ii) any liability arising out of any and all
actions, suits, proceedings, claims, demands, judgments, costs
and expenses (including reasonable legal and accounting fees)
incident to any of the
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foregoing (collectively, the "Losses"), provided that the
Company or the Company Subsidiaries make(s) a written claim
for indemnification against the Purchaser within the
applicable survival period and further provided that the
Purchaser will not have to indemnify the Company and the
Company Subsidiaries from and against any Losses until the
Company and the Company Subsidiaries have suffered Losses by
reason of all such breaches in excess of a $50,000 aggregate
deductible (the "Indemnification Threshold") (and after the
Indemnification Threshold is reached, the Purchaser will be
obligated to only indemnify the Company and the Company
Subsidiaries from and against further such Losses, that is,
for amounts greater than $50,000) or thereafter to the extent
of the Losses the Company and the Company Subsidiaries have
suffered by reason of all such breaches exceeds a $500,000
aggregate ceiling (after which point the Purchaser will have
not any obligation to indemnify the Company and the Company
Subsidiaries against further such Losses.
10 Expenses. The Company and the Purchaser shall pay their or its own
expenses (including without limitation counsel and accounting fees and expenses)
incident to the preparation and carrying out of this Agreement and the
consummation of the transactions contemplated hereby. The Purchaser and the
Company shall each pay one half (1/2) of the filing fee related to the
Xxxx-Xxxxx-Xxxxxx notification and report.
11 Notices. All notices, demands and requests which may be given or
which are required to be given by either party to the other, and any exercise of
a right of termination provided by this Agreement, shall be in writing and shall
be deemed effective when either: (1) personally
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delivered to the intended recipient; (2) sent by certified or registered mail,
return receipt requested, addressed to the intended recipient at the address
specified below; (3) delivered in person to the address set forth below for the
party to which the notice was given; (4) deposited into the custody of a
nationally recognized overnight delivery service such as Federal Express
Corporation, Xxxxx or Purolator, addressed to such party at the address
specified below; or (5) sent by facsimile, telegram or telex, provided that
receipt for such facsimile, telegram or telex is verified by the sender and
followed by a notice sent in accordance with one of the other provisions set
forth above. Notices shall be effective on the date of delivery or receipt, of,
if delivery is not accepted, on the earlier of the date that delivery is refused
or four (4) days after the date the notice is mailed. For purposes of this
Section, the addresses of the parties for all notices are as follows (unless
changes by similar notice in writing are given by the particular person whose
address is to be changed):
(a) if to the Company, to Smart Choice Automotive Group, Inc.,
0000 Xxxxx Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000; Attention:
Xxxx X. Xxxxx, President and Chief Executive Officer; Fax 000-000-0000;
With a copy to Xxxxxx X. Xxxxxxx, Chief Legal Officer, Smart
Choice Automotive Group, Inc., 0000 Xxxxx Xxxxxxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxx 00000; Fax 000-000-0000;
(b) or if to the Purchaser, to Crown Croup, Inc., 0000 Xxxxx
XxxXxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000; Attention: Xxxxxx
X. XxXxxxxx, President; Fax 000-000-0000;
With a copy to X. X. Xxxxxxx, III, Executive Vice President
and General Counsel, Crown Croup, Inc., 0000 Xxxxx XxxXxxxxx Xxxxxxxxx,
Xxxxx 000, Xxxxxx, Xxxxx 00000; Fax 000-000-0000.
Any party hereto may designate a different address by written notice given to
the other parties.
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12 Miscellaneous.
(a) Assignment. This Agreement may not be assigned by any
party hereto without the prior written consent of the other parties.
(b) Section and Paragraph Headings. The Section and Paragraph
headings of this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
(c) Amendment. This Agreement may be amended only by an
instrument in writing executed by the parties hereto.
(d) Entire Agreement. This Agreement and the Exhibits,
Schedules, certificates and documents referred to herein constitute the
entire agreement of the parties, and supersede all understandings with
respect to the subject matter hereof.
(e) Knowledge. "Knowledge" of a natural person means actual
knowledge of such natural person, and "knowledge" of a corporate person
means actual knowledge of the directors and executive officers of such
corporate person, in each case (unless otherwise specifically set forth
to the contrary) after reasonable inquiry and investigation.
(f) Public Announcements. No publication and/or press release
of any nature shall be issued pertaining to this Agreement or the
transaction contemplated hereby without the prior written approval of
the Purchaser and the Company, except as may be required by law.
(g) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
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(h) Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS, AND
VENUE FOR ANY DISPUTE ARISING HEREUNDER SHALL BE IN DALLAS COUNTY,
TEXAS, AND THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE JURISDICTION OF
THE COURTS OF THE STATE OF TEXAS.
(i) Material Adverse Effect. "Material Adverse Effect" means a
material adverse effect on the business of the Company and the Company
Subsidiaries, taken as a whole.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties on or as of the date and year first above written.
PURCHASER:
CROWN GROUP, INC.
By:
-------------------------------------
Xxxxxx X. XxXxxxxx, President
COMPANY:
SMART CHOICE AUTOMOTIVE GROUP, INC.
By:
-------------------------------------
Xxxx X. Xxxxx, President
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SCHEDULES AND EXHIBITS
SCHEDULE DESCRIPTION
3(b) Subsidiaries
3(c) Warrants, Options, Etc.
3(f) Certain Changes or Events
3(g) Tax Matters
3(h) Title to Properties and Related Matters
3(i) Consents and Approvals
3(k) Litigation and Proceedings
3(m) Certain Employee Benefits in Case of Termination, Death,
Disability, Severance, Etc.
3(n) Employee Relations
3(o) Patents, Trademarks and Licenses
3(p) Approvals, Authorizations and Regulations
3(r) Guaranties
3(t) Company Defaults
3(w) Environmental Matters
5(e) Other Company Creditors
5(g) Conversion of Company Preferred Stock
5(p) Employment/Consulting Agreements to be Terminated
5(q) Existing Litigation to be Settled
EXHIBIT DESCRIPTION
"A" Sixth Articles of Amendment to the Articles of Incorporation
of the Company
"B" Merger Agreement
36
