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EXHIBIT 1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") made and entered into
this 18th day of January 2000, by and between BIKERS DREAM, INC. ("Seller"), and
V-TWIN HOLDINGS, INC., a District of Columbia corporation ("Purchaser").
WHEREAS, Seller's retail stores division: (i) is engaged in the sale and
servicing of motorcycles to the general public at five Company-owned Bikers
Dream Superstores in Santa Xxx, Sacramento and San Diego, California, Dallas,
Texas, and Conover, North Carolina (collectively, the "Company Superstores");
(ii) licenses the Seller's Intellectual Property (as defined below) and use of
its business model and operating manuals to its independently owned Bikers Dream
Superstores pursuant to the license agreements described in Schedule 1.1.9
hereto (collectively, the "License Agreements"); and (iii) operates an
e-commerce site under the domain name "xxxxxx-xxxxx.xxx" (the "Domain Name") for
the sale to the public of motorcycle parts, accessories and apparel (the
businesses referred to in clauses (i), (ii) and (iii) above are hereafter
collectively referred to as the "Retail Business"); and
WHEREAS, pursuant to the terms and subject to the conditions set forth
herein, Seller desires to sell to Purchaser, and Purchaser hereby desires to
acquire from Seller, certain assets relating to the operation of the Retail
Business, and Purchaser desires to assume certain liabilities in connection
therewith (including, without limitation, the assignment by Seller to Purchaser
of Seller's rights under the License Agreements and Seller's leases for the
Company Superstores, and the assumption by Purchaser of Seller's obligations
under said agreements); and
WHEREAS, pursuant to the terms and conditions set forth herein, after
the Settlement Date, Purchaser desires to continue to operate the Company
Superstores at the five locations described above and in connection therewith,
to enter into a Master Dealer Agreement with Seller relating to the distribution
of Seller's Ultra Brand of motorcyles.
NOW, THEREFORE, in consideration of the terms, covenants and conditions
contained herein, the parties agree as follows:
1. GENERAL TERMS OF SALE
1.1 Contract to Sell. Subject to the terms and conditions set
forth herein, Seller hereby agrees to sell, assign, transfer and deliver to
Purchaser, and Purchaser hereby agrees to purchase from Seller, the following
assets and properties (collectively, the "Assets"):
1.1.1 All goods, supplies, equipment and fixtures
(including trade fixtures, office machinery and equipment), used primarily in
the operation of the Company Superstores
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which are present at the Company Superstores as of the close of business on the
day before the Settlement Date (the "Fixed Assets");
1.1.2 All inventory of the Company Superstores as of the
Settlement Date consisting of new and used motorcycles, motorcycle parts,
clothing and accessories, up to the Fixed Value (as defined in Section 2.2
hereof) thereof as of the Settlement Date (the "Inventory");
1.1.3 The motor vehicles used in the operation of the
Company Superstores as described in Schedule 1.1.3 hereof;
1.1.4 All of Seller's right, title and interest in
contracts held by Seller with any of its suppliers or vendors to the Company
Superstores, to the extent that such agreements may be assignable or assumable;
1.1.5 All the intellectual property assets of Seller set
forth in Schedule 1.1.5, including the trade name "Bikers Dream" together with
the current logo and/or service xxxx and other right as the licensor (the
"Intellectual Property");
1.1.6 The right to the use of the assumed name "Bikers
Dream" and the existing telephone numbers of the Company Superstores, to the
extent such telephone numbers can be assigned to Purchaser;
1.1.7 All of Seller's right, title and interest in and to
the Domain Name and related Intellectual Property;
1.1.8 All of Seller's right, title and interest in and to
the domain name "xxxxxxxxxxx.xxx" (the "Disputed Domain Name") and related
Intellectual Property as set forth in and pursuant to Section 5.17.1 of this
Agreement;
1.1.9 All of Seller's right, title and interest under the
License Agreements, with the exception of any License Agreements under dispute
of any kind as of the date of this Agreement and disclosed in Schedule 1.1.9
(the "Disputed License Agreements");
1.1.10 All of Seller's right, title and interest as lessee
in and to the real property leases for each of the Company Superstores,
including the leases identified on Schedule 1.1.10 hereto;
1.1.11 All of Seller's right, title and interest in and to
the equipment leases for all equipment located on the premised of the Company
Superstores as of the Settlement Date,
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including without limitation the equipment leases identified on Schedule 1.1.11
hereto, to the extent that such agreements may be assignable or assumable.
1.1.12 All prepaid deposits as set forth in Schedule
1.1.12 hereto.
1.2 Assumption of Liabilities and Obligations. On the Settlement
Date, Purchaser shall assume and agree to pay, perform and discharge: (i) all
liabilities and obligations whatsoever arising out of or in any way related to
the operation of the Retail Business after the Settlement Date; (ii) Seller's
liabilities under the License Agreements, the real property leases described in
Section 1.1.10 hereto, the equipment leases described in Section 1.1.11 hereto
(to the extent that such agreements are assignable), liabilities of Seller under
any other contract assumed by Purchaser hereunder, and all obligations under
Seller's credit line with Cycle Capital Corporation; and (iii) such other
obligations and liabilities of Seller listed on Schedule 1.2 hereof
(collectively, the "Assumed Liabilities").
1.3 Excluded Obligations. Except as set forth in Section 1.2
above, Purchaser shall not assume or be responsible for, any liability,
obligation, debt or commitment of Seller.
1.4 Further Assurances. From time to time after the Settlement
Date, Seller will execute and deliver to Purchaser, or assist Purchaser in
obtaining, such further instruments of sale, transfer, conveyance, assignment
and delivery, consents and assurances as may be reasonably requested by
Purchaser in order to convey to Purchaser all right, title and interest of
Seller in and to the Assets or as otherwise may be expressly required by this
Agreement.
2. CONSIDERATION AND METHOD OF PAYMENT
2.1 Purchase Price. On the Settlement Date, as consideration for
the transfer of the Assets, Purchaser shall assume the Assumed Liabilities
pursuant to Section 1.2 and deliver to Seller the securities and promissory note
described in Sections 2.1.1 and 2.1.2 below (collectively, the "Purchase
Price"). The Purchase Price may be subject to adjustment after the Settlement
Date as set forth in Section 2.2.
2.1.1 Securities. The delivery to the Seller 166,667 restricted
common voting shares of the Purchaser (the "Purchaser Shares").
2.1.1.1 The Purchaser Shares shall be subject to call and
repurchase by Purchaser after the Settlement Date pursuant to the terms of
Section 5.10 hereof.
2.1.1.2 Subject to Purchaser's right to call and
repurchase set forth in Section 5.11 and Purchaser's right of first refusal set
forth in Section 5.12, Seller shall be entitled at any time to sell any or all
of its Purchaser Shares in a private offering made in
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accordance with applicable federal and state securities laws, or in the public
market if permitted by applicable federal and state securities laws.
2.1.2 Promissory Note. The delivery by Purchaser of a five (5)
year promissory note in the amount of One Million Dollars ($1,000,000) to Seller
in form and substance satisfactory to Purchaser and its counsel.
2.1.2.1 The promissory note shall bear a simple interest
rate of 5%, and such interest shall not begin to accrue until after twelve (12)
months following the Settlement Date. Commencing on the date which is fifteen
(15) months after the Settlement Date, Purchaser shall make quarterly payments
of principal in the amount of $62,500 plus accrued interest, quarterly in
arrears, with the outstanding balance of all outstanding principal and interest
due on that date which is five (5) years from the Settlement Date.
2.1.2.2 In order to secure Purchaser's obligations under
the Note, Purchaser will grant to Seller effective as of the Settlement Date a
perfected security interest in all personal property of the Purchaser, including
without limitation the Assets and all after-acquired inventory (including,
without limitation, all new and used motorcycle inventory and all parts
inventory), subject only to the security interests, if any, granted by Purchaser
on new motorcycles to Cycle Capital Corporation and any other provider of floor
plan financing.
2.2 Adjustment of Purchase Price. The Purchase Price shall be
subject to adjustment as necessary after the Settlement Date, in the manner
prescribed by Section 2.2.3 hereof, in the event the Fixed Value of the Assets
as determined in accordance with Section 2.2.1 hereof does not equal $3,500,000.
2.2.1 Fixed Value of Assets. It is contemplated by the
parties that effective as of the Settlement Date, subject to the other terms and
conditions of this Agreement, Seller will sell, assign, transfer and deliver to
Purchaser, and Purchaser hereby agrees to purchase from Seller, Inventory having
a total value based on original purchase cost (as determined in accordance with
Section 2.2.2) as of the Settlement Date of $3,500,000. Said total of $3,500,000
is hereafter referred to as the "Fixed Value."
2.2.2 Determination of Original Purchase Cost. The parties
will determine the original purchase cost of the Inventory as follows:
2.2.2.1 Original Purchase Cost of New and Used
Motorcycles. An itemized physical inventory of the new motorcycles and the used
motorcycles being transferred pursuant to this Agreement will be completed as of
the Settlement Date and on the Settlement Date Seller will deliver to Purchaser
an itemized listing of all such new and used motorcycles and the original
purchase cost thereof to the Company Superstores.
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2.2.2.2 Original Purchase Cost of Motorcycle Parts,
Clothing and Accessories. An itemized physical inventory of the motorcycle
parts, clothing and accessories will be conducted as of December 31, 1999. This
physical inventory will be updated as of the Settlement Date based solely on
Seller's books and records through such date. Based on the results of the
itemized physical inventory and the books and records maintained by the Company
after the physical inventory, all as referred to above, the Seller will furnish
to Purchaser, within 30 days after the Settlement Date, the original purchase
cost to the Seller of the motorcycle parts, clothing and accessories as of the
Settlement Date. At Purchaser's option and upon reasonable notice to Seller
prior to the Settlement Date, Purchaser or Purchaser's agent (any such third
party appointed by Purchaser shall be at Purchaser's sole cost and expense) may
be present during the itemized physical inventory referred to above to verify
the accuracy thereof.
2.2.3 Procedure for Adjustment of Purchase Price. After
the Settlement Date, the Purchase Price shall be adjusted as follows, based on
the summaries of original purchase cost furnished by Seller to Purchaser
pursuant to Sections 2.2.2.1 and 0.0.0.0:
2.2.3.1 Total Original Purchase Cost Exceeds Fixed Value.
(a) If the summaries of original purchase cost furnished by Seller to Purchaser
pursuant to Sections 2.2.2.1 and 2.2.2.2 indicate that the total original
purchase cost of all new and used motorcycles, motorcycle parts and clothing and
accessories transferred to Purchaser on the Settlement Date exceeds the Fixed
Value, then Purchaser shall have the option either (i) to return new motorcycles
to Seller such that the original purchase cost of the remaining new and used
motorcycles, motorcycle parts and clothing and accessories equals the Fixed
Value or (ii) pay Seller in cash the difference between the total original
purchase cost of such new and used motorcycles, motorcycle parts and clothing
and accessories and the Fixed Value.
2.2.3.2 Total Original Purchase Cost is Less than Fixed
Value. If the summaries of original purchase cost furnished by Seller to
Purchaser pursuant to Sections 2.2.2.1 and 2.2.2.2 indicate that the total
original purchase cost of all new and used motorcycles, motorcycle parts and
clothing and accessories transferred to Purchaser on the Settlement Date is less
than the Fixed Value, then Purchaser shall have the right to a reduction in the
Purchase Price based on the difference between the two amounts. Such reduction
in the Purchase Price shall be accomplished by a reduction in the number of
Purchaser Shares (for purposes of this adjustment, at a valuation of $6.00 per
share). Purchaser shall issue and deliver to Seller a new stock certificate
evidencing the new number of Purchaser Shares, whereupon Seller will promptly
deliver to Purchaser for cancellation the original stock certificate evidencing
the Purchaser Shares delivered to it on the Settlement Date.
2.2.4 Adjustment Due to Credits for Customer Deposits.
Prior to the Settlement Date, the Company Superstores will have accepted from
customers, deposits for credit against motorcycles and parts on order and
deposits for credit against the cost of repair work to
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be performed by such Company Superstores (collectively, the "Customer Credits").
It is understood that certain orders for motorcycles and parts and certain
repair work will have begun prior to the Settlement Date and such transactions
will not be completed until after the Settlement Date. If the aggregate of the
Customer Credits claimed by customers within the first three months after the
Settlement Date exceeds $25,000, then the Seller will make a cash payment to
Purchaser in the amount of such excess upon receipt of confirming documentation
from Purchaser reasonably satisfactory to Seller. If the aggregate of the
Customer Credit claimed by customers within the first three months after the
Settlement Date is less than $25,000, then Purchaser will make a cash payment to
Seller in the amount of such excess and, if requested by Seller, provide
confirming documentation reasonably satisfactory to Seller.
2.2.5 Adjustment Due to Proration of Rent, Utilities, Etc.
The rent for the Company Superstores under the real property leases identified
in Section 1.1.10 hereto, as well as any utilities and payments on any service
contracts, shall be prorated as of the Settlement Date. Any difference owing by
one party to the other in respect of such proration shall be paid in cash within
thirty (30) days after the Settlement Date.
2.3 Allocation of Purchase Price.
2.3.1 The allocation of the Purchase Price shall be as
follows:
Inventory $3,245,000
Leasehold improvements $ 200,000
Garage equipment $ 30,000
Deposits $ 25,000
Each of the parties must report this transaction for
federal tax purposes in accordance with this allocation of the Purchase Price.
If the Purchase Price is adjusted after the Settlement Date pursuant to Section
2.2.3, then the parties agree to adjust the inventory figure up or down
accordingly.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
3.1 Authority. Seller has the full power and authority to enter
into this Agreement and to consummate the transactions described herein, and no
contract or agreement to which Seller is a party prevents it from consummating
the transaction described herein, nor is the consent of any third party
required, except as provided herein.
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3.2 Good Standing. Seller is a corporation duly organized,
validly existing and in good standing under the laws of California, and has the
corporate power to own or lease the Assets now owned or leased by it and conduct
the Retail Business in the manner in which the Retail Business is now being
conducted. Seller is qualified to do business and is in good standing in the
states of Texas and North Carolina. Proof of good standing as of a reasonably
recent date will be provided on the Settlement Date.
3.3 Corporate Proceedings. All corporate proceedings required by
law or by the provisions of this Agreement to be taken by Seller on or before
the Settlement Date in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated thereby have
been or will be duly and validly taken. Seller is not required to obtain the
consent of its shareholders in order to execute this Agreement and consummate
the transactions contemplated hereby.
3.4 Title. Seller represents and warrants to Purchaser that the
Seller has and on the Settlement Date will deliver to Purchaser, subject to the
conditions of this Agreement, title to the Assets free and clear of all
mortgages, pledges, liens, security interests, state taxes, federal taxes,
charges, conditional sales contracts and encumbrances whatsoever, with the
exception of security interests granted to Cana Capital Corporation, FINOVA
Mezzanine Capital (f/k/a Tandem Capital) and Cycle Capital Corporation, security
interests held by lessors of equipment, and with the exception of those items
listed in Schedule 3.4. Seller represents that it is not aware of any claims,
administrative actions, suits, litigation or anticipated claims, suits or
litigation which in the aggregate would have a material adverse effect on the
business or financial condition of the Retail Business.
3.5 Condition of Assets. In light of Purchaser's opportunity to
inspect and review the condition and status thereof, the Assets are being
purchased on an "as-is" basis AND SELLER HEREBY DISCLAIMS ALL WARRANTIES WITH
RESPECT TO THE ASSETS, INCLUDING WITHOUT LIMITATION WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE, other than new
motorcycles covered by Seller's standard warranty and those warranties made by
parts manufacturers for the benefit of Seller, which warranties shall be
assigned by Seller to Purchaser.
3.6 Property Insurance. Schedule 3.6 sets forth a list of all
insurance policies and binders held by Seller related to the Retail Business.
Seller has made available correct and true copies of all such policies and
binders to Purchaser. Seller (i) is not in default of any material provision
contained in any such policy or binder and (ii) has not received notice of
cancellation or non-renewal of any such policy or binder. All of such insurance
is and will be on the Settlement Date, in full force and effect and all premiums
due and payable thereon have been or will be paid.
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3.7 Sale of Assets Creates No Conflict. The execution, delivery
and performance of this Agreement and the consummation of the transactions
herein contemplated do not and will not conflict with, or result in a breach of
any term or provisions of, or constitute a default under, or result in the
creation of any lien or encumbrance upon the Assets pursuant to the articles of
incorporation, or bylaws of the Seller, or other organizational and governing
documents, or any contract, indenture, mortgage, deed of trust or other
instrument to which the Seller is a party or by which it is bound or to which
the Assets are subject, or any law, rule, regulation, judgment, order or decree,
except Seller's agreements with Cana Capital Corporation, FINOVA Mezzanine
Capital (f/k/a Tandem Capital), Cycle Capital Corporation, the real property
leases referred to in Section 1.1.10, the equipment leases referred to in
Section 1.1.11, the Disputed License Agreements, and as otherwise disclosed in
Schedule 3.7. All consents by third parties that are required to prevent or
eliminate every such conflict, breach, default, and encumbrance shall have been
validly obtained before the Settlement Date (other than the consent of Cana
Capital Corporation) and as of the Settlement Date shall be in full force and
effect and valid and sufficient for such purpose, or have otherwise been
provided for in Schedule 3.7.
3.8 License Compliance. To the best of the Seller's knowledge and
belief, the Company Superstores have all governmental licenses and permits
(federal, state and local) necessary to conduct their business as currently
conducted and have complied in all material respects with all laws, rules and
regulations and orders applicable to the conduct of their business as currently
conducted. Such licenses and permits are in full force and effect and there is
not pending or threatened any proceeding seeking to revoke or materially
limiting the scope of any such license or permit. Such licenses and permits are
described in Schedule 3.8.
3.9 Tax Warranty. To the best of Seller's knowledge and belief,
Seller has filed all federal, state (including sales and use taxes and
withholding, unemployment and payroll related taxes) and local tax returns
relating to the Retail Business as required by law and has paid, through the
applicable reporting period, all taxes, assessments, and penalties due and
payable.
3.10 Environmental Hazards. Sellers warrants that, to the best of
Seller's knowledge and belief, there is no violation by Seller at any Company
Superstore location of any hazardous waste law under federal, state or local
law. Except in compliance with the requisite laws, Seller has not generated,
stored or disposed of any hazardous waste at any such location. Seller has not
received any notice from any federal, state, county, municipal or other
governmental department, agency or authority concerning the existence at any
Company Superstore location of any petroleum product or other hazardous waste
discharge or seepage which have caused noncompliance with applicable laws and
regulation. The term "hazardous waste" shall mean any substance, material or
waste which is regulated by any federal, state or local governmental or
quasi-governmental authority, including, without being limited to, any
substance, material or waste defined, used or listed as a "hazardous waste,"
"extremely hazardous waste," "restricted hazardous waste," "hazardous
substance," "hazardous material," "toxic
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substances" or other similar or related terms as defined, used or listed in the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended (42 U.S.C. Section 9601, et. seq.), the Clear Air Act, as amended (42
U.S.C. Sections 7401, et. seq.), the Clean Water Act, as amended (42 U.S.C.
Sections 1251, et. seq.) and the regulations adopted and publications
promulgated pursuant thereto or any other similar applicable federal, state or
local law, rule, regulations or ordinance.
3.11 Zoning. To the best of Seller's knowledge and belief, the
zoning of each parcel of real property where a Company Superstore is located
permits the operation of the Retail Business at each such location as such
Retail Business is currently conducted by Seller. Seller has not received notice
of any proceeding which would affect the present zoning classification of any of
its Company Superstore locations.
3.12 Accuracy of Certain Records. Seller represents that, to the
best of Seller's knowledge and belief, the physical inventory reports of the
Company Superstores on the Xxxxxxxxxx system as of December 31, 1999 and the
year-to-date actual reports of the Company Superstore operations as of September
30, 1999 previously furnished to Purchaser are accurate in all material
respects.
3.13 Brokerage Fee. Seller has not retained the services of a
real estate or business broker and no brokerage fee is due on this sale.
3.14 Employee Benefit Plans. Schedule 3.14 is a list of all of
Seller's pension, bonus, profit sharing, stock option, or other agreements
providing for employee benefits. To the best of Seller's knowledge, Seller is
not in default under any of these agreements or arrangements. All such
agreements and arrangements have been established and administered in accordance
with the applicable provisions of ERISA and the Internal Revenue Code.
3.15 Untrue Statement. None of the warranties made by Seller
hereunder contains or will contain any untrue statement of a material fact, or
omits to state a material fact necessary to prevent such warranties from being
misleading.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND AFFILIATE
4.1 Authority. Purchaser has the full power and authority to
enter into this Agreement and to consummate the transactions described herein,
and no contract or agreement to which Purchaser is a party prevents it from
consummating the transaction described herein, nor is the consent of any third
party required, except as provided herein. Any such consent shall be obtained
prior to the Settlement Date.
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4.2 Good Standing; Ownership of Affiliate. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the District of Columbia, and has the corporate power to enter into this
Agreement and the agreements and instruments contemplated thereby, acquire the
Assets pursuant to the terms of this Agreement, to own or lease the Assets and
to conduct the Retail Business in the manner in which the Retail Business is now
being conducted. Proof of good standing as of a reasonably recent date for each
corporation in all jurisdictions where Purchaser is incorporated and qualified
to do business will be provided on the Settlement Date. V-Twin Acquisitions,
Inc., a Virginia corporation ("Affiliate") is a privately held corporation owned
solely by Xxx Schwartzenbeck and Xxx Xxxxxxxxxx on behalf of Purchaser.
4.3 Corporate Proceedings. All corporate proceedings required by
law or by the provisions of this Agreement to be taken by Purchaser on or before
the Settlement Date in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated thereby have
been or will be duly and validly taken. Purchaser is not required to obtain the
consent of its shareholders in order to execute this Agreement and consummate
the transactions contemplated hereby.
4.4 Reservation of Purchaser Shares. Purchaser has duly
authorized and reserved for issuance the Purchaser Shares issuable in accordance
with the terms of Section 2.1 hereof and such Purchaser Shares will be duly and
validly issued, fully paid and nonassessable. Such Purchaser Shares shall be
free from security interests, liens, claims, other encumbrances and preemptive
rights in favor of the holders of other shares of capital stock or other
securities of Purchaser.
4.5 Reservation of Additional Shares. Any Additional Shares
issued pursuant to Section 5.10 hereof will be duly authorized and reserved for
issuance. Such Additional Shares, when issued, will be duly and validly issued,
fully paid and nonassessable and shall be free from security interests, liens,
claims, other encumbrances and preemptive rights in favor of the holders of
other shares of capital stock or other securities of Purchaser.
4.6 Reporting Company. Purchaser is a publicly-held company whose
common stock is (and has been for the past 90 days) registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934, as amended (the "1934
Act"). Purchaser's common stock is listed for trading on the OTC Bulletin Board.
Purchaser has not received any notice that its common stock will be delisted
from the OTC Bulletin Board or that Purchaser does not meet all requirements for
the continuation of such listing. Pursuant to the provisions of the 1934 Act,
Purchaser has timely filed all reports and other materials required to be filed
thereunder with the Securities and Exchange Commission during the preceding
twelve months.
4.7 Sale of Assets Creates No Conflict. The execution, delivery
and performance of this Agreement by Purchaser and the consummation of the
transactions herein
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contemplated (including without limitation the issuance of the Purchaser Shares
and the issuance of the Additional Shares as defined in Section 5.10.1 hereof)
do not and will not conflict with, or result in a breach of any term or
provisions of, or constitute a default under, or result in the creation of any
lien or encumbrance upon the Assets, pursuant to the articles of incorporation,
or bylaws of the Purchaser, or other organizational or governing documents of
Purchaser, or any contract, indenture, mortgage, deed of trust or other
instrument to which Purchaser is a party or by which it is bound or to which
Purchaser or Purchaser's assets are subject, or any law, rule, regulation,
judgment, order or decree applicable to Purchaser, except for the security
interest created in favor of Seller pursuant to the terms of this Agreement and
except as otherwise disclosed in Schedule 4.7. All consents by third parties
that are required to prevent or eliminate every such conflict, breach, default,
and encumbrance shall have been validly obtained before the Settlement Date and
as of the Settlement Date shall be in full force and effect and valid and
sufficient for such purpose, or have otherwise been provided for in Schedule
4.7.
4.8 License Compliance. To the best of the Purchaser's knowledge
and belief, except as set forth in Schedule 4.8, the Purchaser has acquired all
governmental licenses, permits and approvals (federal, state and local)
necessary to conduct the Retail Business as currently conducted by Seller and as
proposed to be conducted by Purchaser (collectively, the "Licenses"; any such
Licenses which have not been obtained by Purchaser as disclosed in Schedule 4.8
are hereafter referred to as the "Pending Licenses") and has complied in all
material respects with all laws, rules and regulations and orders applicable to
the conduct of the Retail Business as proposed to be conducted by Purchaser
after the Settlement Date. The Licenses are in full force and effect and there
is not pending or threatened any proceeding seeking to revoke or materially
limiting the scope of any such Licenses. The Pending Licenses are described in
Schedule 4.8.
4.9 Consents and Approvals. Without limiting the generality of
the provisions of Section 4.8, no consent, approval, authorization or order of
any court, governmental agency or body or arbitrator having jurisdiction over
Purchaser or Affiliate, or any of its affiliates or NASDAQ or Purchaser's or
Affiliate's shareholders is required for execution of this Agreement, and all
other agreements entered into by Purchaser and Affiliate relating thereto,
including, without limitation issuance and sale of the promissory note referred
to in Section 2.1.2, the Purchaser Shares and the Additional Shares, and the
performance of Purchaser's and Affiliate's obligations hereunder.
4.10 Compliance with Securities Laws. The Purchaser Shares, the
Additional Shares and the promissory note issued pursuant to Section 2.1 hereof
will either be registered under applicable federal and state securities laws or
such issuance will be exempt from registration pursuant to an appropriate
exemption under such laws. The issuance and exchange of Purchaser's Common Stock
contemplated by this Agreement, to the extent required, shall be qualified with
the California Commissioner of Corporations in accordance with the California
Corporate Securities Law and the Commissioner's rules and regulations.
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4.11 Brokerage Fee. Neither Purchaser nor Affiliate has retained
the services of any real estate or business broker and no brokerage fee is due
on the purchase of the Assets.
4.12 Untrue Statement. None of the warranties made by Purchaser
or Affiliate hereunder contains or will contain any untrue statement of a
material fact, or omits to state a material fact necessary to prevent such
warranties from being misleading.
5. COVENANTS AND FURTHER AGREEMENTS OF SELLER AND PURCHASER
5.1 Reliance Upon and Survival of Representations and Warranties.
Each of the parties hereto shall be entitled to rely upon the representations
and warranties of the other parties set forth herein or in any schedule,
exhibit, or other document delivered pursuant hereto. The representations,
warranties, covenants, and agreements of the parties shall be true and accurate
as of the Settlement Date and shall survive the Settlement Date, except that the
representations and warranties of Seller in Section 3 hereof and the
representations and warranties of Purchaser in Section 4 hereof shall, in each
case, survive for a period of twelve months from the Settlement Date.
5.2 Further Assurances. The parties hereto agree to execute and
deliver or cause to be executed and delivered at the settlement or at other
reasonable times and places such additional instruments as the other party
hereto may reasonably request for the purpose of carrying out this Agreement.
5.3 Bulk Sales Law. Purchaser waives compliance with the
provisions of the Uniform Commercial Code of California, Texas and North
Carolina relating to bulk transfers in connection with the sale of the Assets.
Nothing in this paragraph will stop or prevent either Seller or Purchaser from
asserting as a bar or defense to any action or proceeding brought under that law
that it does not apply to the sale contemplated under this Agreement.
5.4 Indemnification.
5.4.1 For Purchaser. Seller covenants and agrees to
indemnify and hold harmless the Purchaser from and against any loss, claim,
liability, obligation or expense (including reasonable attorneys' fees): (i)
incurred or sustained by Purchaser on account of any misrepresentation or breach
of any warranty, covenant, or agreement of Seller contained in this Agreement,
or made in connection with this Agreement, or at Settlement; or (ii) incurred or
sustained by Purchaser arising from Seller's failure to pay any Excluded
Obligation. Purchaser shall promptly notify Seller in writing of any claim
indemnified under this section within 90 days of the time Purchaser discovers or
should have discovered the existence of such claim and thereafter shall permit
Seller at its expense to participate in the negotiation and settlement of any
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such claim and to join in the defense of any legal action arising therefrom.
Notwithstanding any term herein to the contrary, the indemnities relating to the
representations and warranties of Seller set forth in Section 3 hereof shall
terminate twelve months from the Settlement Date.
Notwithstanding the foregoing (subject, however, to the
last sentence of the preceding paragraph), in the event a third party asserts a
claim against Purchaser which is indemnified under this section, Purchaser may
elect, at Purchaser's sole option, to pay the obligation provided Purchaser
gives Seller at least five (5) days written notice of its intention to do so. At
the expiration of such period, Seller shall have the option to: (i) pay the
claim; (ii) authorize Purchaser to pay the claim, in which case Seller shall
promptly repay Purchaser upon demand by Purchaser, together with interest
thereon at the rate of ten percent (10%) per annum from the date of Purchaser's
payment until repaid by Seller, or (iii) notify Purchaser that the claim is
subject to a bona fide contest, in which case Seller shall diligently pursue
resolution of such claim and Purchaser shall make no payment for 60 days from
the date of Seller's notice to Purchaser, or such additional reasonable time
(not to exceed 30 days) as may be requested by Seller to resolve the matter.
5.4.2 For Seller. Purchaser covenants and agrees to
indemnify and hold harmless Seller from and against any loss, claim, liability,
obligation or expense (including reasonable attorneys' fees) (i) incurred or
sustained on account of any misrepresentation or breach of any warranty,
covenant or agreement of Purchaser contained in this Agreement or made in
connection herewith, or (ii) any non-fulfillment, non-performance, failure to
timely or fully perform or breach of any agreement or other obligation to be
performed by Purchaser relating to the Assumed Liabilities. Without limiting the
generality of the foregoing, Purchaser hereby indemnifies Seller from and
against any loss, claim, liability, obligation or expense (including reasonable
attorneys' fees) arising out of Purchaser's failure to obtain any of
governmental approvals or licenses required to operate the Retail Business.
Seller shall promptly notify Purchaser in writing of any claim indemnified under
this Section within 90 days of the xxxx Xxxxxx discovers, or should have
discovered, the existence of such claim and thereafter shall permit Purchaser at
its expense to participate in the negotiation and settlement of any such claim
and to join in the defense of any legal action arising therefrom.
Notwithstanding any term herein to the contrary, the indemnities relating to the
representations and warranties of Purchaser set forth in Section 4 hereof shall
terminate twelve (12) months from the Settlement Date.
Notwithstanding the foregoing (subject, however, to the
last sentence of the preceding paragraph), in the event a third party asserts a
claim against Seller which is indemnified under this section, Seller may elect,
at Seller's sole option, to pay the obligation provided Seller gives Purchaser
at least five (5) days written notice of its intention to do so. At the
expiration of such period, Purchaser shall have the option to: (i) pay the
claim; (ii) authorize Seller to pay the claim, in which case Purchaser shall
promptly repay Seller upon demand by Seller, together with interest thereon at
the rate of ten percent (10%) per annum from the date of
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Seller's payment until repaid by Purchaser, or (iii) notify Seller that the
claim is subject to a bona fide contest, in which case Purchaser shall
diligently pursues resolution of such claim and Seller shall make no payment for
60 days from the date of Purchaser's notice to Seller, or such additional
reasonable time (not to exceed 30 days) as may be requested by Purchaser to
resolve the matter.
5.5 Expenses. Each party shall pay its own expenses and costs,
including, without limitation, counsel fees and transfer taxes incurred in
connection with the consummation of this Agreement and the transactions
contemplated hereby, except as otherwise provided in this Agreement.
5.6 Risk of Loss. In the event of any loss or damage to the
Assets at any time prior to Settlement, the risk of loss shall be borne by
Seller. Immediately after the Settlement Date, all risk of loss or damage shall
be borne by Purchaser.
5.7 Operation of Business Prior to Settlement. Seller hereby
agrees, from the date of execution of this Agreement until the Settlement Date,
that the Seller will use its best efforts (without making any commitments on
behalf of the Purchaser) to carry on the activities and operations of the
Company Superstores in substantially the same manner as has been customary in
the past and to preserve for the Purchaser the present relationships of each
Company Superstore with its employees, customers, and others having business
relations with such Company Superstores.
5.8 Insurance. To the extent possible without extra cost or
liability to Seller, Purchaser may elect to assume Seller's insurance as
described in Section 3.6. To that effect, Seller will use its best efforts to
make such assumption arrangements as are possible prior to the Settlement Date,
or use its best efforts to assist Purchaser in obtaining replacement coverage as
necessary, in order to protect the security interest of Seller pursuant to
Section 2.1.2.2 hereof and providers of floor plan financing to Purchaser.
5.9 Purchaser's Rights to Review Communications. After the
Settlement Date, the Purchaser shall have the right to open and read any letters
or mail addressed to the Seller if received at one of the Company Superstore
locations and to reply to any such letters that pertain to the conduct of the
business of the Company Superstores or the administration of the License
Agreements assigned pursuant to the terms of this Agreement in the same manner
that the Seller could have done had the sale not been made. Any such mail not
relating to the conduct of the business of the Company Superstores or the
administration of the License Agreements shall be promptly forwarded to the
Seller by the Purchaser. After the Settlement Date, Seller shall promptly
forward to Purchaser any mail received by it relating to the operation of the
Company Superstores.
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5.10 Guarantee of Purchase Price.
5.10.1 If, on the Valuation Date, the Aggregate Value of
the Purchaser Shares is less than $1 million, then Purchaser shall at its
option, either: (i) duly authorize, issue and deliver to Seller that number of
additional shares of Purchaser's Common Stock ("Additional Shares") equal to (a)
the excess of $1 million over the Aggregate Value (the "Shortfall") (b) divided
by the Current Market Price, rounded down to the nearest whole number; or (ii)
deliver to Seller, by wire transfer, an amount up to the Shortfall in
immediately available funds ("Cash Payment") and duly authorize, issue and
deliver to Seller that number of Additional Shares which is calculated in the
manner described in Section 5.10.1(i) after subtracting the amount of the Cash
Payment from the $1 million amount appearing therein.
Any Additional Shares to be issued pursuant to Section 5.10.1
shall be issued in the manner prescribed by Section 5.10.3. If, on the Valuation
Date, the Aggregate Value was calculated in accordance with Section
5.10.2.1(ii), then on the first business day after the Additional Shares are
issued, Purchaser shall file a pre-effective amendment adding the Additional
Shares to the registration statement filed by Purchaser pursuant to Section 5.13
hereof and request that the registration statement be made effective at the
earliest possible date.
If, on the Valuation Date, the Aggregate Value was calculated in
accordance with Section 5.10.2.1(i), and Seller's counsel determines that the
Additional Shares issued pursuant to the first paragraph of this Section 5.10.1
cannot be sold by Seller under Rule 144(k) immediately after issuance, then such
Additional Shares shall become subject to the registration rights provisions of
Section 5.13 hereof. In the event that, on the date that the Securities and
Exchange Commission notifies Purchaser that the Commission Staff will not review
any registration statement required to be filed by Purchaser pursuant to Section
5.13 hereof, or after having reviewed the registration statement, the Staff has
no further comments (the "Second Valuation Date"), the product of the Current
Market Price multiplied by the number of Additional Shares is less than the
original Shortfall, then Purchaser shall either make up the difference in a Cash
Payment or issue such extra number of Additional Shares such that the product of
the Current Market Price on the Second Valuation Date multiplied by all
Additional Shares being issued is equal to the original Shortfall. Any such
extra Additional Shares to be issued pursuant to this paragraph shall be issued
in the manner prescribed by Section 5.10.3. On the first business day after such
extra Additional Shares are issued, Purchaser shall file a pre-effective
amendment adding such extra Additional Shares to the registration statement
filed by Purchaser pursuant to Section 5.13 hereof and request that the
registration statement be made effective at the earliest possible date.
5.10.2 Definitions. For purposes of this Section 5.10, the
following terms shall have the meanings set forth below:
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5.10.2.1 "Valuation Date" shall be the first to occur
of the following of (i) if Rule 144 under the Act is available to Seller for
sales of the Purchaser Shares, the date on which Seller could sell the Purchaser
Shares under Rule 144(k); or (ii) the date that the Securities and Exchange
Commission notifies Purchaser that the Commission Staff will not review any
registration statement required to be filed by Purchaser pursuant to Section
5.13 hereof, or after having reviewed the registration statement, the Staff has
no further comments.
5.10.2.2 "Aggregate Value" shall mean (i) if the
Valuation Date is determined in accordance with Section 5.10.2.1(i), the sum of
(a) the gross proceeds from Seller's sales of the Purchaser Shares prior to the
date Rule 144(k) becomes available and (b) the number of Purchaser Shares held
by Seller on the date Rule 144(k) becomes available multiplied by the Current
Market Price and (ii) if the Valuation Date is determined in accordance with
Section 5.10.2.1(ii), the product of the Current Market Price multiplied by the
number of Purchaser Shares.
5.10.2.3 "Current Market Price" shall mean, as of any
date of determination, the average of the daily market prices over a period of
20 consecutive trading days before such date. The market price for each such
business day shall be the last sale price on such day on the principal
securities exchange on which the Common Stock is then listed or admitted to
trading, or, if no sale takes place on such day on any such exchange, the
average of the closing bid and asked prices on such day as officially quoted on
any such exchange, or if the Common Stock is not then listed or admitted on any
stock exchange, the market price for each such business day shall be the last
sale price on such day, or, if no sale takes place on such day, the average of
the closing bid and asked prices on such day in the over-the-counter market, in
either case as reported through NASDAQ, or, if such prices are not at the time
so reported, as furnished by any member of the National Association of
Securities Dealers, Inc. selected by Purchaser. If and so long as there shall be
no exchange or over-the-counter market for the Common Stock during the 20
business day period prior to the date on which Current Market Price is to be
determined, the Current Market Price shall be deemed to be the Fair Value of the
Common Stock.
5.10.2.4 For purposes of this Section, "Fair Value"
shall mean with respect to any security or other property, the fair value
thereof as of a date that is within fifteen (15) days of the date as of which
the determination is to be made, determined by an investment banking firm, firm
of certified public accountants or appraisal firm (which investment banking
firm, firm of certified public accountants or appraisal firm shall own no
securities of, and shall not be an affiliate, subsidiary or related person of,
either the Seller or Purchaser) of recognized national standing retained by
Purchaser and reasonably acceptable to Seller, and which determination is made
(a) under the assumption that all rights, warrants and options existing with
respect to any such securities have been exercised and (b) without regard to the
absence of a liquid or ready market for any such securities.
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5.10.3 Issuance of Additional Shares. If Purchaser shall
be required by the terms of Section 5.10.1 hereof to deliver to the Seller
Additional Shares and/or available funds, as the case may be, Purchaser shall
deliver to Seller, within two (2) days after the Valuation Date, written notice
specifying the number of shares of Additional Shares and/or the amount of
available funds, as the case may be, to be delivered to Seller and the
calculations thereof made by Purchaser. The Additional Shares and/or available
funds, as the case may be, shall be delivered at a closing to be held not later
than five (5) business days after the Valuation Date or other date and time as
shall be agreed upon by the Seller and Purchaser (such date and time being
hereinafter called the "Additional Closing Date"). On the Additional Closing
Date, Purchaser will deliver to Seller one or more duly executed certificates
evidencing the aggregate number of Additional Shares specified by the
above-referenced written notice, dated the Additional Closing Date, registered
in the name of Seller or in the name of Seller's nominee and/or the amount of
immediately available funds specified by the above-referenced notice.
5.10.4 Reservation of Shares. Purchaser shall duly
authorize and reserve for issuance the Additional Shares issuable in accordance
with the terms of Section 5.10.1 hereof and such Additional Shares shall be free
from preemptive rights in favor of the holders of other shares of capital stock
or other securities of Purchaser. Notwithstanding anything herein to the
contrary, if on the Valuation Date, Purchaser has not duly authorized and
reserved for issuance the Additional Shares pursuant to this Section 5.10.4,
Purchaser shall immediately take all further action necessary to duly authorize
and reserve for issuance such Additional Shares.
5.11 Right to Call and Repurchase Purchaser Shares. Subject to
the provisions of this Section 5.11, the Purchaser will have the right, at any
time and from time to time, to call and repurchase the Purchaser Shares in whole
or in part as follows, provided such Purchaser Shares have not previously been
sold by Seller in accordance with the provisions of this Agreement: (i) if
Purchaser gives written notice to Seller of its intent to repurchase said shares
within the first two (2) years after the Settlement Date, Purchaser shall be
entitled to purchase said shares at a price of $6.00 per share, (ii) if
Purchaser gives written notice to Seller of its intent to repurchase said shares
within the third year after the Settlement Date, Purchaser shall be entitled to
purchase said shares at a price of $7.00 per share, (iii) if Purchaser gives
written notice to Seller of its intent to repurchase said shares within the
fourth year after the Settlement Date, Purchaser shall be entitled to purchase
said shares at a price of $8.00 per share. Purchaser shall not be entitled to
call and repurchase any Purchaser Shares after the fourth anniversary of the
Settlement Date. Purchaser's notice shall state the number of Purchaser Shares
subject to the call, the applicable purchase price, and a date and time (the
"Call Closing Date") for consummation of the purchase no more than thirty (30)
days after Purchaser gives such notice. Upon the receipt of such notice, the
Seller shall thereupon have the obligation to sell the Purchaser Shares subject
to such notice, provided that the Call Closing Date and payment for said shares
occurs within thirty (30) days after such notice. In the event the Call Closing
does not occur within such thirty day period, Seller shall have the option (i)
to grant Purchaser such
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additional time as may be requested by Purchaser to pay the purchase price or
(ii) to cancel the sale, in which case the Purchaser Shares which were the
subject of Seller's notice will not be subject to further call and repurchase
under this Section.
5.12 Right of First Refusal
5.12.1 Before any of the Purchaser Shares may be sold or
transferred by Seller, Seller shall first give written notice thereof to
Purchaser stating the proposed transferee, the number of Purchaser Shares
proposed to be transferred, the purchase price, if any (if such shares are to be
sold in the open market, the purchase price shall be deemed to be the closing
sale price of such Purchaser Shares on the date immediately preceding the date
of Purchaser's notice), and the terms of the proposed transaction. The Purchaser
shall thereupon have the option, but not the obligation, to acquire any or all
of the Purchaser Shares proposed to be transferred for the purchase price stated
in such notice. Within two (2) business days after the giving of such notice by
the Seller, the Purchaser shall give written notice to the Seller stating
whether or not it elects to exercise the option to purchase, the number of
Purchaser Shares, if any, it elects to purchase and a date and time (the
"Closing Date") for consummation of the purchase not more than ten (10) business
days after Purchaser gives its notice. Failure by the Purchaser to give such
notice within the two business day time period referred to above shall be deemed
an election by the Purchaser not to exercise its option to purchase with respect
to the Purchaser Shares described in the Seller's notice.
5.12.2 If the Purchaser elects not to exercise its option
to purchase the Purchaser Shares within the two business day time period
referred to above, or if Purchaser elects to purchase the Purchaser Shares but
such sale is not consummated by the Closing Date described in Purchaser's
notice, then the Seller may sell such Purchaser Shares on the same terms and
conditions as set forth in Seller's original notice (except that if such notice
provided that such shares were to be sold in the open market, Seller shall not
be bound to the purchase price set forth in Seller's original notice, as long as
such shares are sold in the open market), at any time after the expiration of
the two business day time period referred to above (in the case of a
non-exercise by Purchaser) or after the passing of the Closing Date described in
Purchaser's notice (in the case where Purchaser has notified Seller of its
intention to purchase the Shares but such sale is not consummated by said
Closing Date). If such shares are not sold by Seller within sixty (60) days,
then they shall become subject again to Purchaser's right of first refusal as
set forth in Section 5.12.1 above.
5.13 Registration Rights.
5.13.1 Piggyback Registration Rights. If at any time
during the Piggyback Registration Period (as defined in subsection 5.13.3
below), the Purchaser shall decide to register any of its Common Stock either
for its own account or the account of a shareholder or
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shareholders, under a registration statement filed with the Securities and
Exchange Commission under the Securities Act of 1933 (the "Act") on a form which
permits the inclusion of the Registrable Securities (as hereafter defined),
other than a registration on Form S-8 in respect of shares of common stock of
Purchaser issued pursuant to an employee stock option plan and other than a
registration in respect of shares of common stock issued by Purchaser in
connection with an acquisition (but then only to the extent the terms of such
acquisition prohibit inclusion of the Registrable Securities on any such
registration statement), the Purchaser shall: (i) give Seller twenty (20) days
prior written notice thereof (which shall include a list of the jurisdictions in
which the Purchaser intends to attempt to qualify such common shares under the
applicable blue sky or other state securities laws) (the "Registration Notice");
and (ii) include in such registration (and any related qualification under blue
sky laws or other compliance), all the Registrable Securities which the Seller
elects to have included therein and which are eligible to be included therein,
subject to the provisions herein. The Seller's election to have the Registrable
Securities included in any such registration shall be made in writing and
delivered to the Purchaser within twenty (20) days after receipt of the
Registration Notice (the "Registration Election").
5.13.2 Underwriting. If any registration under Section
5.13.1 shall be underwritten in whole or in part, the Purchaser may require that
any Registrable Securities as to which the Seller exercises registration rights
be included in the underwriting on the same terms and conditions as the
securities otherwise being sold through the underwriters. The registration
rights granted to the Seller pursuant to this Section shall be conditioned upon
the Seller's participation in the underwriting and the inclusion of the
Registrable Securities in the underwritten offering to the extent provided
herein. All persons proposing to distribute their common shares through such
underwriting shall (together with the Purchaser) enter into an underwriting
agreement, which shall be in a customary form, with the underwriter or
underwriters which shall be selected by the Purchaser (the "Underwriter").
Notwithstanding any other provision of this Section to the contrary, if the
Underwriter determines that marketing factors require a limitation of the number
of common shares to be underwritten, the Underwriter may limit the number of
Registrable Securities to be included in the registration and underwriting;
provided that the Seller shall be entitled to include a pro rata portion of the
Registrable Securities in the registration and underwriting compared to the
total number of common shares to be included by other shareholders exercising
similar rights. The Purchaser shall advise the Seller as to the number of
Registrable Securities which shall be registered and underwritten pursuant
hereto as soon as reasonably possible after the Purchaser receives the
Registration Election. If the Seller disapproves of the terms of any such
underwriting, it may elect to withdraw therefrom by delivering a written notice
to the Purchaser and the Underwriter. Any Registrable Securities excluded
(whether voluntarily or involuntarily) or withdrawn from such registration and
underwriting shall be eligible to be included in any subsequent registration and
underwriting by the Purchaser as provided in Sections 5.13.1 and 5.13.2, and the
Seller shall have the same rights, duties and obligations in any subsequent
registration; provided that the registration statement to be filed in connection
therewith is to be filed during the Piggyback Registration Period.
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5.13.3 Piggyback Registration Period. The Piggyback
Registration Period shall commence on the Settlement Date and shall expire on
that date which is four hundred fifty (450) days after the Settlement Date.
5.13.4 Demand Registration Rights. If, on the date which
is four hundred fifty (450) days after the Settlement Date, the Seller has not
sold all of the Registrable Securities and is not then able to sell all of the
Registrable Securities pursuant to an effective registration statement or an
exemption from registration under the Act (and any required qualification or
compliance or exemption therefrom under applicable blue sky laws), the Seller
shall have the right to require the Purchaser to file one registration statement
under the Act which registers all of the Registrable Securities (the "Demand
Right"). The Seller may exercise the Demand Right by delivering written notice
to the Purchaser not later than the date which is four hundred eighty (480) days
after the Settlement Date. After receiving such notice from the Seller, the
Purchaser shall file the required registration statement with the Securities and
Exchange Commission not later than the date which is six hundred thirty (630)
days after the Settlement Date and shall use its best efforts to have the
registration statement declared effective not later than the date which is eight
hundred ten (810) days after the Settlement Date. The Purchaser shall keep the
registration statement continuously effective and keep the related prospectus
continuously current and able to be used for sales of the Registrable Securities
for a period of two (2) years, or until such earlier time that the Seller has
sold all of the Registrable Securities.
5.13.5 Registration Information. In the case of each
registration, qualification, or compliance effected by the Purchaser pursuant to
the terms of this Agreement, the Purchaser shall keep the Seller advised in
writing as to the initiation, status and completion of each registration,
qualification and compliance.
5.13.6 Expenses of Registration. All costs, expenses and
fees incurred in connection with any registration, qualification or compliance
pursuant to this Agreement, including without limitation, all registration,
filing and qualification fees, printing costs and expenses, fees and
disbursements of counsel for the Purchaser, and expenses of any special audits
incidental to or required to be performed in connection with such registration,
shall be borne solely by the Purchaser; provided however, that the Purchaser
shall not be required to pay any of the Seller's legal fees, underwriting fees,
discounts, or commissions relating to the shares registered.
5.13.7 Definition of Registrable Securities. The term
"Registrable Securities" shall mean the Purchaser Shares, the Additional Shares
and/or any securities issued by Purchaser in exchange therefor, or as a result
of a stock dividend, stock split or reverse stock split in connection therewith.
Notwithstanding anything herein to the contrary, the Purchaser shall not be
required to have any Registrable Securities registered if (i) such securities
are already the subject of an effective registration statement or (ii) in the
opinion of either counsel for the
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Purchaser, knowledgeable and experienced in Federal securities matters (said
counsel to be acceptable to the holder of the Registrable Securities in the
reasonable judgement of the holder), or counsel for the holder, knowledgeable
and experienced in Federal securities matters (said counsel to be acceptable to
the Purchaser in the Purchaser's reasonable judgement), the holder may lawfully
sell publicly, at the time and in the manner the holder proposes to sell the
Registrable Securities, all of the Registrable Securities proposed to be sold
without registering the sale under the Act, whether pursuant to an exemption
from registration available under Section 4(1) of the Act, Rule 144 or Rule
144(k) under the Act, or otherwise.
5.13.8 Information by Seller. The Seller shall furnish to
the Purchaser, at the Seller's own expense and in writing, such information
regarding the Seller and the distribution proposed to be made by the Seller as
the Purchaser may request in connection with any registration, qualification or
compliance referred to in this Agreement. Furthermore, the Seller agrees to
cooperate fully with the Purchaser in the preparation and filing of any
registration statement which includes any Purchaser Shares or Additional Shares
owned by the Seller.
5.13.9 Cooperation and Indemnification. The Seller agrees
to indemnify and hold harmless the Purchaser, each of its directors, and each of
its officers who has signed any registration statement filed by Purchaser
pursuant to this Agreement (or any amendment thereof) and each person, if any,
who controls the Purchaser, within the meaning of the Act, against any losses,
damages or liabilities to which the Purchaser, or any such director, officer or
controlling person of the Purchaser may become subject under such Act or
otherwise, insofar as said losses, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in such registration statement (or any
amendment thereof) or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; that such indemnity
shall apply only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with information furnished by the Seller for use in the preparation
thereof. The Seller agrees to reimburse the Purchaser and any such director,
officer or controlling person for any legal or other expenses reasonably
incurred in connection with any such loss, damage or liability. The Purchaser
agrees to indemnify and hold harmless the Seller, each of its directors, each of
its officers, and each person, if any, who controls Seller, within the meaning
of the Act, against any losses, damages or liabilities to which the Seller, or
any such director, officer or controlling person of the Seller may become
subject under the Act or otherwise insofar as said losses, damages or
liabilities (or actions in respect thereof), arise out of or are based upon any
untrue statement or alleged untrue statement of material fact contained in such
registration statement (or any amendment thereof) or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; but such indemnity shall apply only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in
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reliance upon and in conformity with information furnished by any person or
entity other than the Seller for use in the preparation thereof.
5.13.10 Right of Seller to Put Shares. If, on the date
which is eight hundred ten (810) days after Settlement Date, the Seller has not
sold all of the Registrable Securities and is not then able to sell all of the
Registrable Securities pursuant to an effective registration statement or an
exemption from registration under the Act (and any required qualification or
compliance or exemption therefrom under applicable blue sky laws), then the
Seller shall have the option, by written notice to Purchaser to be given on or
before the date which is eight hundred forty (840) days after the Settlement
Date, to require Purchaser to purchase from Seller any remaining Registrable
Securities held by Seller at a purchase price of $6 per share. The closing date
for such sale shall occur no later than 30 days after Seller gives such notice
to Purchaser. Without limiting the generality of the foregoing, in the event
Purchaser shall fail to maintain the listing of any Purchaser Shares or
Additional Shares upon the OTC Bulletin Board or the NASDAQ Small Cap Market for
so long as Seller shall continue to hold any Purchaser Shares or Additional
Shares, then Seller shall have the option, by written notice to Purchaser to be
given within sixty (60) days after the later of Seller's receipt of Purchaser's
notice of such delisting given pursuant to Section 5.14 or Seller's acquiring
actual knowledge of such delisting, to require Purchaser to purchase from Seller
any remaining Additional Shares or Purchaser Shares held by Seller at a purchase
price of $6 per share. The closing date for such sale shall occur no later than
thirty (30) days after Seller gives such notice to Purchaser.
5.13.11 Prohibition on Short Sales; Manner of Sale. Seller
agrees that while Seller holds any Purchaser Shares, Seller will not, directly
or through an affiliate, establish or hold, in any manner or by any means, a
short position in Purchaser's Common Stock. Seller agrees that any sales of the
Purchaser Shares in the market will be done in consultation with Purchaser and
in an orderly fashion to minimize, to the extent practicable, downward pressure
on the price of Purchaser's Common Stock.
5.14 Maintenance of OTC Bulletin Board Listing. Purchaser shall
use its best efforts to continue to maintain, in the case of the Purchaser
Shares, and shall promptly secure, in the case of any Additional Shares issued
pursuant to this Agreement, the listing of such shares upon the OTC Bulletin
Board or the NASDAQ SmallCap market and shall maintain such listing so long as
Seller shall continue to hold any Purchaser Shares or any Additional Shares.
Purchaser will comply in all respects with the Purchaser's reporting, filing and
other obligations under the bylaws or rules of the OTC Bulletin Board and the
National Association of Securities Dealers ("NASD"), as applicable. Purchaser
will provide Seller copies of all notices it receives notifying Purchaser of the
delisting of its common stock from the OTC Bulleting Board or any exchange or
quotation system on which its common stock is listed.
5.15 Continuation of Registration Under Exchange Act. After the
Settlement Date, Purchaser will (i) cause its common stock to continue to be
registered under Sections 12(b)
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or 12(g) of the Exchange Act, (ii) comply in all respects with its reporting and
filing obligations under the Exchange Act, and (iii) comply with all
requirements related to any registration statement filed pursuant to this
Agreement.
5.16 License Agreements Under Dispute. Seller shall have no
obligation on the Settlement Date to transfer to Purchaser any of Seller's
rights under the Disputed License Agreements. Nothing herein shall restrict
Seller's ability to take any action it deems appropriate in connection with the
settlement of any dispute relating to any of said Disputed License Agreements,
including, without limitation, terminating any such agreements. In the event
that the dispute relating to any such License Agreement is fully and finally
resolved, Seller will transfer to Purchaser all of Seller's right, title and
interest under such Disputed License Agreement to Purchaser, provided that:(i)
in connection with such resolution, the Disputed License Agreement has not
otherwise been terminated and (ii) such assignment is permitted by the terms of
the Disputed License Agreement; and (iii) such assignment would not violate or
otherwise create a conflict under any settlement agreement or arrangement
entered into in connection with the resolution of such dispute. Seller shall
have no affirmative obligation to obtain the consent of any dealer who is a
party to such Disputed License Agreement to the assignment of such agreement to
Purchaser. Purchaser shall have no right to any proceeds of any award or
settlement received by Seller in connection with the resolution or disposition
of any dispute relating to a Disputed License Agreement.
5.17 Disputed Domain Name; Use of E-Mail Address.
5.17.1 As of the date hereof, Seller does not have, and as
of the Settlement Date, will not have, any rights to the Disputed Domain Name.
On the Settlement Date, Seller will assign to Purchaser any claim it may have to
the Disputed Domain Name and Purchaser shall be entitled after the Settlement
Date to pursue any such claim.
5.17.2 Notwithstanding the transfer of the Domain Name
hereunder pursuant to the terms and conditions of this Agreement, Purchaser
hereby agrees that Seller shall be allowed for a period of ninety (90) days
after the Settlement Date, to use the email address "@xxxxxx-xxxxx.xxx" for
Seller's employees. Seller shall make arrangements after the Settlement Date to
change Seller's email address on or prior to the expiration of such ninety (90)
day period.
5.18 Master Dealership Agreement. Pursuant to a Master Dealership
Agreement ("Master Dealership Agreement") in form and substance satisfactory to
Seller and its counsel, Purchaser shall become a dealer of Seller's brand of
Ultra motorcycles and parts at the five Company Superstore locations, and
Affiliate shall become a dealer of Seller's brand of Ultra motorcycles and parts
locations at Affiliate's location in Xxxxxxx and Springfield, Virginia. The
execution of the Master Dealership Agreement is a condition precedent to closing
pursuant to
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Section 6 hereof. Additional stores opened by Purchaser and Affiliate after the
Settlement Date shall be subject to the Master Dealer Agreement on such terms
and conditions as shall be acceptable to both parties.
5.19 Non-Interference with Existing Ultra Dealers. The parties
hereby acknowledge that the dealers who are parties to the License Agreements
may also be party to a separate Ultra Cycles dealer agreement between the Seller
and each such dealer. Purchaser agrees that after the Settlement Date, Purchaser
will not, and shall not permit Affiliate or any other affiliate or subsidiary of
Purchaser to, directly or indirectly, attempt to interfere in any manner with
Seller's Ultra Cycle dealer agreements in effect as of the Settlement Date,
including, without limitation, inducing or attempting to influence any party to
such agreement to terminate such Agreement or to violate the provisions of such
agreement.
5.20 Notification of New Store Openings. After the Settlement
Date, Purchaser hereby agrees, and agrees to cause Affiliate or any other
affiliate or subsidiary of Purchaser, to give prompt written notice to Seller of
its intent to enter into license agreements with new dealers for the use of the
"Bikers Dream" name and/or related Intellectual Property, whereupon Seller shall
be afforded a reasonable opportunity to solicit any such new dealers for the
purpose of entering into an Ultra Cycles dealer agreement. In the event Seller
enters into an Ultra Cycles dealer agreement with any such dealer, Purchaser
agrees that it shall not, and shall not permit Affiliate or any affiliate or
subsidiary of Purchaser to, directly or indirectly, attempt to interfere in any
manner with such Ultra Cycle dealer agreement, including, without limitation,
inducing or attempting to influence any party to such agreement to terminate
such Agreement or to violate the provisions of such agreement.
5.21 Confidentiality. Purchaser shall not, nor shall Purchaser
permit Affiliate or any other affiliate or subsidiary of Purchaser to, at any
time use for Purchaser's, Affiliate's or any such other affiliate's or
subsidiary's benefit, or disclose, communicate or divulge to, or use for the
direct or indirect benefit of any person or entity, any confidential information
of Seller acquired by Purchaser, Affiliate or any such other affiliate or
subsidiary, including, without limitation, Seller's business methods, business
policies, procedures, techniques, research or development projects or results;
historical or projected financial information, budgets, trade secrets or other
knowledge or processes of or developed by Seller; any names and addresses of
customers or clients or any data on or relating to past, present or prospective
Seller customers or clients; or any other confidential information relating to
or dealing with the business, operations or activities of Seller, excepting in
each case information otherwise lawfully known generally by, or readily
accessible to, the trade or the general public.
5.22 Merchant Accounts. Purchaser shall apply for merchant credit
card accounts in its own name promptly after the Settlement Date. For a period
not to exceed ninety (90) days after the Settlement Date, Seller shall, to the
extent permitted under agreements
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governing its existing merchant accounts, allow Purchaser to use such merchant
accounts to process transactions at the Company Superstores, and Seller shall
promptly remit to Purchaser all amounts received in respect of such
transactions.
5.23 Governmental Approvals and Licenses. Purchaser shall
promptly and diligently apply for and obtain, not later than one hundred eighty
three (183) days after the Settlement Date, all Pending Licenses necessary for
the operation of the Retail Business. Seller shall give Purchaser such
assistance in obtaining the Pending Licenses as reasonably requested by
Purchaser. Purchaser shall keep Seller informed of all material developments
during the application process and shall promptly notify Seller as each such
Pending License is obtained.
5.24 Publicity. All notices to third parties and all other
publicity concerning the transactions contemplated in this Agreement will be
jointly planned and coordinated by and between Seller and Purchaser. Neither
party will act unilaterally in this regard without the prior written approval of
the other; however, this approval will not be unreasonably withheld.
5.25 Financial Information. Seller agrees to provide to Purchaser
such financial and other information as Purchaser shall reasonably request in
connection with Purchaser's preparation of a report on Form 8-K with respect to
its acquisition of the Retail Business.
6. SETTLEMENT
6.1 Settlement Date. The transfer of possession of the Assets by
Seller to Purchaser (the "Settlement") will take place at the offices of
Seller's counsel, Xxxxxx & Xxxxxxx, at 0000 Xxxxxxx Xxxx Xxxx, Xxx Xxxxxxx,
Xxxxxxxxxx, at 10:00 a.m. local time, on January 29, 2000, or such other time
and place as Seller and Purchaser may agree to in writing. That date, or if the
Settlement is advanced or postponed under this paragraph, then the date to which
it is advanced or postponed, is called the Settlement Date. If on the Settlement
Date (1) any condition to Settlement set forth in this Section 6 is not
satisfied or (2) without limiting the generality of (1) above, Seller has been
unable to obtain all other waivers and consents of private parties and
governmental agencies required by this agreement, then either Purchaser or
Seller, on written notice, may postpone the Settlement to a time not later than
10:00 a.m. local time, on February 29, 2000 and the other party shall be
obligated to proceed with the Settlement on such date. If the Settlement does
not occur by February 29, 2000, this Agreement will automatically terminate
unless both parties agree in writing to an extension. Upon such termination of
this Agreement, each party shall return all records and documents received from
the other, and each party shall be released from all other duties, obligation
and liability to the other, with the exception of the confidentiality provisions
of Section 5.19 hereof.
6.2 Delivery. On the Settlement Date, Seller shall deliver or
cause to be delivered to such escrow agent as shall be reasonably acceptable to
Seller and Purchaser
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("Escrow Agent") such assignments, third party consents, instruments and
documents required to be delivered by Seller under this Agreement or which
counsel for Purchaser or Escrow Agent may reasonably request for the purpose of
settling this Agreement. At Settlement, Purchaser shall deliver to Escrow Agent
the Purchaser Shares and the promissory note referred to in Section 2.1.2 and
shall deliver all other assignments, third party consents, instruments and
documents required to be delivered by Purchaser under this Agreement or which
counsel for Seller or Escrow Agent may reasonably request for the purpose of
settling this Agreement.
6.3 Method of Payment. If a cash payment is made, Purchaser shall
make payment by certified check, cashier's check or wire transfer.
6.4 Xxxx of Sale. Seller shall deliver to Escrow Agent on the
Settlement Date a Xxxx of Sale for the Assets in the form and substance
reasonably satisfactory to Purchaser and its counsel.
6.5 Recording Fees. The recording fees shall be paid by
Purchaser.
6.6 Conditions Precedent to Settlement by Purchaser. The
obligations of Purchaser contemplated herein are subject to the satisfaction, at
or before the Settlement Date, of all of the conditions set out herein below.
6.6.1 Accuracy of and Certificate as to Representations
and Warranties. The representations and warranties of Seller contained herein
and in all documents to be delivered pursuant hereto shall be true and correct
in all material respect as of the Settlement Date, as if made at such time, and
Purchaser shall have received from Seller a certificate, dated as of the
Settlement Date and signed by an executive officer of Seller, certifying that
all such representations and warranties of Seller remain true and correct as of
the Settlement Date.
6.6.2 Compliance with Covenants. Seller shall have
performed and complied with all covenants, agreements and conditions required by
this Agreement to be performed by Seller.
6.6.3 Action/Proceeding. No court shall have issued an
order effective against a party to restrain or prohibit the transactions herein
contemplated.
6.6.4 Corporate Authorization. Seller shall deliver to
Escrow Agent certified copies of all appropriate resolutions of Seller's Board
of Directors authorizing the transaction contemplated by this Agreement.
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6.6.5 Consents. Seller shall have obtained from all third
parties all consents required to be obtained by it prior to the Settlement Date
pursuant to Section 3.7 and delivered such consents to Escrow Agent.
6.6.6 Lease Assignment. Seller shall have obtained and
delivered to Escrow Agent assignments of all of its interest under the leases
for the Company Superstore locations which are described in Section 1.1.10 and
Seller shall be released from liability thereunder. Seller is negotiating a new
lease for the existing Dallas location and a possible alternative location. The
terms of the new Dallas lease shall be reasonably acceptable to Purchaser. The
landlord shall consent to the assignment, and such consent will be delivered to
Escrow Agent on the Settlement Date.
6.6.7 Assignment of License Agreements. Seller shall
execute and deliver to Escrow Agent an assignment to Purchaser of all of its
interest in the License Agreements, which are in force on the date of this
Agreement and identified in Schedule 1.1.9, with the exception of the Disputed
License Agreements.
6.6.8 Xxxx of Sale. Seller shall deliver to Escrow Agent
the Xxxx of Sale referred to in Section 6.4.
6.6.9 Master Dealer Agreement. Seller, Purchaser and
Affiliate shall enter into a dealer agreement for the sale of Ultra motorcycles
at the five Company Superstore locations and at Affiliate's two Virginia
dealerships, in form and substance satisfactory to Purchaser and its counsel.
6.6.10 Additional Instruments of Transfer. Seller shall
execute and deliver to Escrow Agent such further instruments of sale, transfer,
conveyance, assignment and delivery, consents and assurances as may be
reasonably requested by Purchaser in order to convey to Purchaser all right,
title and interest of Seller in and to the Assets.
6.6.11 Operating Agreement and Escrow Agreement. Seller
and Purchaser shall execute an Operating Agreement and Escrow Agreement in each
case, in form and substance satisfactory to Purchaser and its counsel.
6.7 Conditions Precedent to Settlement by Seller. The obligations
of Seller contemplated herein are subject to the satisfaction, at or before the
Settlement, of all of the conditions set out herein below.
6.7.1 Accuracy of and Certificate as to Representations
and Warranties. The representations and warranties of Purchaser contained herein
and in all documents to be delivered pursuant hereto shall be true and correct
in all material respects as of the Settlement
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Date, as if made at such time, and Seller shall have received from Purchaser a
certificate, dated as of the Settlement Date and signed by an executive officer
of Purchaser, certifying that all such representations and warranties of
Purchaser remain true and correct as of the Settlement Date. Without limiting
the generality of the foregoing, Seller hereby acknowledges that, as of the
Settlement Date, Purchaser will not have the Pending Licenses and, subject to
the satisfaction of all other conditions to Settlement set forth in this Section
6.7.1, Seller hereby waives compliance by Purchaser with the provisions of
Section 4.8 insofar as such waiver relates solely to the failure of Purchaser to
obtain the Pending Licenses.
6.7.2 Compliance with Covenants. Purchaser shall have
performed and complied with all covenants, agreements and conditions required by
this Agreement to be performed by Purchaser.
6.7.3 Action/Proceeding. No court shall have issued an
order effective against a party to restrain or prohibit the transactions herein
contemplated.
6.7.4 Corporate Authorization. Purchaser and Affiliate
shall deliver to Escrow Agent certified copies of all appropriate resolutions of
Purchaser's and Affiliate's Board of Directors authorizing the transactions
contemplated by this Agreement and the Master Dealership Agreement.
6.7.5 Consents. Purchaser and Affiliate shall have
obtained from all third parties all consents required to be obtained by it prior
to the Settlement Date pursuant to Section 4.7.
6.7.6 Note. Purchaser shall have executed the Note in form
and substance satisfactory to Seller and its counsel and delivered the Note to
Escrow Agent.
6.7.7 Security Agreement. Purchaser shall have executed
and delivered to Escrow Agent the Security Agreement in form and substance
satisfactory to Seller and its counsel.
6.7.8 Assumption of Liabilities. Purchaser shall have
executed and delivered to Seller an assumption of liabilities in form and
substance satisfactory to Seller and its counsel.
6.7.9 Floor Plan Financing. Without limiting the
generality of Section 6.7.8, Purchaser shall have assumed the existing floor
plan debt held by Cycle Capital Corp. pursuant to an assumption in form and
substance satisfactory to Seller and its counsel, and shall have delivered such
assumption to Escrow Agent.
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6.7.10 Master Dealer Agreement. Seller, Purchaser and
Affiliate shall enter into a dealer agreement for the sale of Ultra motorcycles
at the five Company Superstore locations and at Affiliate's two Virginia
dealerships, in form and substance satisfactory to Seller and its counsel.
6.7.11 Resale Certificate. Purchaser shall deliver to
Seller a Resale Certificate (relating to sales taxes) in form and substance
satisfactory to Seller and its counsel.
6.7.12 Operating Agreement; Escrow Agreement. Seller and
Purchaser shall execute an Operating Agreement and an Escrow Agreement, in each
case in form and substance satisfactory to Seller and its counsel (including,
without limitation, satisfactory indemnification provisions). Without limiting
the generality of the foregoing, Seller and its counsel shall be satisfied that
the execution and performance of such Operating Agreement by Seller and
Purchaser shall not cause Seller to be in violation of any rule or regulation of
any governmental agency or licensing authority with jurisdiction over the
operations of the Retail Business, including, without limitation, any motor
vehicle licensing authority.
6.8 Mutual Covenant to Restructure Transaction. In the event
Seller's counsel believes, pursuant to Section 6.7.12, that the transactions
contemplated by the Operating Agreement, may cause Seller to violate a rule or
regulation of any governmental agency or licensing authority, Purchaser and
Seller covenant to use best efforts to restructure the transaction in such a way
so as to bring it into compliance with applicable law and to use best efforts to
close the transaction by the Settlement Date.
6.9 Transfer of Title; Release of Settlement Documents from
Escrow. On the earlier of (i) the date on which Purchaser obtains the Pending
Licenses or (ii) one hundred eighty three (183) days from the Settlement Date,
the Operating Agreement shall terminate and the parties shall jointly instruct
Escrow Agent to release (A) to Seller, the Purchaser Shares and the promissory
note referred to in Section 2.1.2 and (B) to Purchaser, the xxxx of sale,
assignments, consents and releases of third parties, and any other instruments
of transfer delivered by Seller to Escrow Agent pursuant to Section 6.6.
7. DEFAULT BY PURCHASER OR SELLER
7.1 Instances of Purchaser Default. Purchaser Default shall occur
in any of the following instances:
7.1.1 Failure to Perform. Purchaser fails to perform any
obligation imposed by this Agreement or any Ancillary Document, and does not
correct or commence and diligently pursue correction of such failure within
fifteen (15) days after written notice from Seller specifying the manner in
which Purchaser is in default.
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7.1.2 Insolvency. Purchaser becomes insolvent, a receiver
is appointed to take possession of all or a substantial part of Purchaser's
properties, Purchaser makes an assignment for the benefit of creditors or files
a voluntary petition in bankruptcy, or Purchaser is the subject of an
involuntary petition in bankruptcy, which is not dismissed within sixty (60)
calendar days.
7.1.3 Default on Underlying Agreements and Assumed
Obligations. Any default by Purchaser under the Assumed Liabilities or any other
agreement made pursuant to this Agreement not cured within any grace period
provided herein.
7.2 Instances of Seller Default. Seller Default shall occur in
the following instances:
7.2.1 Failure to Perform. Seller fails to perform any
obligation imposed by this Agreement, or any of the Ancillary Documents,
including, without limitation, the Master Dealership Agreement.
7.3 Seller's and Purchaser's Remedies Upon Default. In the event
of Seller's or Purchaser's default, Seller and Purchaser shall have all the
rights and remedies granted to them by agreement and by the laws of the State of
New York.
7.4 Remedies Cumulative. The remedies accorded Seller hereunder
are cumulative and concurrent and shall be in addition to any other rights or
remedies by law or equity. Seller shall have the right to enforce one or more
remedies hereunder, successively or concurrently, and such action shall not
operate or estop or prevent Seller from pursuing any further or other remedy
hereunder or which is permitted by law or equity.
8. MISCELLANEOUS
8.1 Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, their respective successors,
heirs, assigns and devisees.
8.2 Integration. This Agreement and the other agreements and
instruments entered into by the parties in connection with the transactions
contemplated by this Agreement (collectively the "Ancillary Documents")
constitute the entire agreement between the parties relating to the subject
matter hereof. This Agreement and the Ancillary Documents supersede prior
memoranda and all other prior documents made by the parties in connection with
the transaction described herein. Oral agreements and understandings of the
parties, if any, regarding the subject matter of this Agreement have been
integrated herein. Neither this Agreement nor the Ancillary Documents may not be
modified or altered except by written agreement signed by all parties.
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8.3 Notice. Any notice or other communication required or
permitted hereunder shall be sufficiently given if sent (i) by mail, first-class
postage prepaid, certified return receipt requested, (ii) overnight courier or
(iii) fax (with a copy first-class postage prepaid, certified return receipt
requested), in each case addressed as follows:
8.3.1 If to Purchaser, addressed to:
V-Twin Holdings, Inc.
c/o AIME
000 Xxxxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
8.3.2 If to Seller, addressed to:
Bikers Dream, Inc.
0000 Xxxxxx Xxxxx
Xxxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
In the case of (i), notices shall be deemed received on the second business day
after deposit of the same in the United States mail, properly addressed and
postage prepaid, in the case of (ii), notices shall be deemed received on the
second business day after delivery to the courier, properly addressed and
shipping prepaid and in the case of (iii), notices shall be deemed given upon
receipt by the sending party of the fax "answer back" or confirmation sheet.
8.4 Time is of Essence. Time is of the essence in this Agreement.
8.5 Choice of Law, Jurisdiction and Attorneys' Fees. This
Agreement shall be governed by and construed under the laws of the State New
York.
8.6 Severability. If any clause, provision or section of this
Agreement shall be held illegal or invalid by any court, the illegality or
invalidity of such clause, provision or section shall not affect the remainder
of this Agreement which shall be construed and enforced as if such illegal or
invalid clause, provision or section had not been contained in this Agreement.
If any agreement or obligation contained in this Agreement is held to be in
violation of law, then such
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agreement or obligation shall be deemed to be the agreement or obligation of the
respective party hereto only to the extent permitted by law.
8.7 Assignment. Purchaser shall not sell, assign or transfer an
interest in this Agreement or in any instrument executed in connection herewith,
without prior consent of Seller. Seller shall not unreasonably withhold consent.
8.8 Waiver. Failure of either party, at any time, to require
performance hereunder of any provision herein contained shall in no way affect
the right of a party to enforce the same, nor shall any waiver by either party
of any breach of any provision hereof be held to be a waiver of a succeeding
breach of any provision, or as a waiver of the provision itself.
8.9 Counterparts. This agreement may be executed simultaneously
in one or more counterparts, each of which will be considered an original, but
all of which together will constitute one and the same instrument. Such
counterparts may be signed by facsimile signatures.
8.10 Number, Gender and Captions. As used herein, the singular
shall include the plural and the Plural the singular. The masculine and the
neuter shall include the masculine, feminine and neuter as the context requires.
All captions used herein are intended solely for convenience of reference, and
shall in no way limit any of the provisions of this Agreement.
8.11 Section Headings. The various Section headings are inserted
for convenience of reference only, and shall not affect the meaning or
interpretation of this Agreement or any section thereof.
8.12 Board Director. For so long as the promissory note referred
to in Section 2.1.2, or not less than a total of 20,000 Purchaser Shares and
Additional Shares are held by Seller, Seller may appoint a member to the
Purchaser's board, and that person must be approved by the Purchaser's existing
board members, which consent shall not be unreasonably withheld. It is hereby
agreed that Xxxx Xxxxxxxx, President and Chief Executive Officer of Seller, is
acceptable to the board of directors of Purchaser.
8.13 Opportunity to Consult with Counsel. BY ITS EXECUTION
HEREOF, EACH PARTY REPRESENTS THAT IT HAS CONSULTED WITH ITS LEGAL COUNSEL
REGARDING THE TERMS OF THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY
AND SUCH COUNSEL HAS HAD AN OPPORTUNITY TO MAKE SUCH COMMENTS OR REVISIONS AS HE
OR SHE DEEMS APPROPRIATE OR ADVISABLE.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their representative duly authorized officers.
SELLER
BIKERS DREAM, INC.,
a California Corporation
By: /s/ Xxxx Xxxxxxxx
------------------------------------
Xxxx Xxxxxxxx, Chairman and CEO
PURCHASER
V-TWIN HOLDINGS, INC.,
a District of Columbia Corporation
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Xxxxxxx X. Xxxxx, President
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TABLE OF CONTENTS
1. GENERAL TERMS OF SALE................................................................1
1.1 Contract to Sell..............................................................1
1.2 Assumption of Liabilities and Obligations.....................................3
1.3 Excluded Obligations..........................................................3
1.4 Further Assurances............................................................3
2. CONSIDERATION AND METHOD OF PAYMENT..................................................3
2.1 Purchase Price................................................................3
2.1.1 Securities.............................................................3
2.1.2 Promissory Note........................................................4
2.2 Adjustment of Purchase Price..................................................4
2.2.1 Fixed Value of Assets..................................................4
2.2.2 Determination of Original Purchase Cost................................4
2.2.2.1 Original Purchase Cost of New and Used Motorcycles.............4
2.2.2.2 Original Purchase Cost of Motorcycle Parts, Clothing and
Accessories.....................................................5
2.2.3 Procedure for Adjustment of Purchase Price.............................5
2.2.3.1 Total Original Purchase Cost Exceeds Fixed Value...............5
2.2.3.2 Total Original Purchase Cost is Less than Fixed Value..........5
2.2.4 Adjustment Due to Credits for Customer Deposits........................5
2.2.5 Adjustment Due to Proration of Rent, Utilities, Etc....................6
2.3 Allocation of Purchase Price..................................................6
3. REPRESENTATIONS AND WARRANTIES OF SELLER.............................................6
3.1 Authority.....................................................................6
3.2 Good Standing.................................................................7
3.3 Corporate Proceedings.........................................................7
3.4 Title.........................................................................7
3.5 Condition of Assets...........................................................7
3.6 Property Insurance............................................................7
3.7 Sale of Assets Creates No Conflict............................................8
3.8 License Compliance............................................................8
3.9 Tax Warranty..................................................................8
3.10 Environmental Hazards.........................................................8
3.11 Zoning........................................................................9
3.12 Accuracy of Certain Records...................................................9
3.13 Brokerage Fee.................................................................9
3.14 Employee Benefit Plans........................................................9
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3.15 Untrue Statement..............................................................9
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND AFFILIATE............................9
4.1 Authority.....................................................................9
4.2 Good Standing; Ownership of Affiliate........................................10
4.3 Corporate Proceedings........................................................10
4.4 Reservation of Purchaser Shares..............................................10
4.5 Reservation of Additional Shares.............................................10
4.6 Reporting Company............................................................10
4.7 Sale of Assets Creates No Conflict...........................................10
4.8 License Compliance...........................................................11
4.9 Consents and Approvals.......................................................11
4.10 Compliance with Securities Laws..............................................11
4.11 Brokerage Fee................................................................12
4.12 Untrue Statement.............................................................12
5. COVENANTS AND FURTHER AGREEMENTS OF SELLER AND PURCHASER............................12
5.1 Reliance Upon and Survival of Representations and Warranties.................12
5.2 Further Assurances...........................................................12
5.3 Bulk Sales Law...............................................................12
5.4 Indemnification..............................................................12
5.4.1 For Purchaser.........................................................12
5.4.2 For Seller............................................................13
5.5 Expenses.....................................................................14
5.6 Risk of Loss.................................................................14
5.7 Operation of Business Prior to Settlement....................................14
5.8 Insurance....................................................................14
5.9 Purchaser's Rights to Review Communications..................................14
5.10 Guarantee of Purchase Price..................................................15
5.10.4 Reservation of Shares................................................17
5.11 Right to Call and Repurchase Purchaser Shares................................17
5.12 Right of First Refusal.......................................................18
5.13 Registration Rights..........................................................18
5.13.1 Piggyback Registration Rights........................................18
5.13.2 Underwriting.........................................................19
5.13.3 Piggyback Registration Period........................................20
5.13.4 Demand Registration Rights...........................................20
5.13.5 Registration Information.............................................20
5.13.6 Expenses of Registration.............................................20
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5.13.7 Definition of Registrable Securities..................................20
5.13.8 Information by Seller................................................21
5.13.9 Cooperation and Indemnification......................................21
5.13.10 Right of Seller to Put Shares.......................................22
5.13.11 Prohibition on Short Sales; Manner of Sale...........................22
5.14 Maintenance of OTC Bulletin Board Listing.............................22
5.15 Continuation of Registration Under Exchange Act..............................22
5.16 License Agreements Under Dispute.............................................23
5.17 Disputed Domain Name; Use of E-Mail Address..................................23
5.18 Master Dealership Agreement..................................................23
5.19 Non-Interference with Existing Ultra Dealers.................................24
5.20 Notification of New Store Openings...........................................24
5.21 Confidentiality..............................................................24
5.22 Merchant Accounts............................................................24
5.23 Governmental Approvals and Licenses..........................................25
5.24 Publicity....................................................................25
5.25 Financial Information........................................................25
6. SETTLEMENT..........................................................................25
6.1 Settlement Date..............................................................25
6.2 Delivery.....................................................................25
6.3 Method of Payment............................................................26
6.4 Xxxx of Sale.................................................................26
6.5 Recording Fees...............................................................26
6.6 Conditions Precedent to Settlement by Purchaser..............................26
6.6.1 Accuracy of and Certificate as to Representations and Warranties......26
6.6.2 Compliance with Covenants.............................................26
6.6.3 Action/Proceeding.....................................................26
6.6.4 Corporate Authorization...............................................26
6.6.5 Consents..............................................................27
6.6.6 Lease Assignment......................................................27
6.6.7 Assignment of License Agreements......................................27
6.6.8 Xxxx of Sale..........................................................27
6.6.9 Master Dealer Agreement...............................................27
6.6.10 Additional Instruments of Transfer....................................27
6.6.11 Operating Agreement and Escrow Agreement..............................27
6.7 Conditions Precedent to Settlement by Seller.................................27
6.7.1 Accuracy of and Certificate as to Representations and Warranties......27
6.7.2 Compliance with Covenants.............................................28
37
6.7.3 Action/Proceeding.....................................................28
6.7.4 Corporate Authorization...............................................28
6.7.5 Consents..............................................................28
6.7.6 Note. ................................................................28
6.7.7 Security Agreement....................................................28
6.7.8 Assumption of Liabilities.............................................28
6.7.9 Floor Plan Financing..................................................28
6.7.10 Master Dealer Agreement...............................................29
6.7.11 Resale Certificate....................................................29
6.7.12 Operating Agreement; Escrow Agreement.................................29
6.8 Mutual Covenant to Restructure Transaction...................................29
6.9 Transfer of Title; Release of Settlement Documents from Escrow...............29
7. DEFAULT BY PURCHASER OR SELLER......................................................29
7.1 Instances of Purchaser Default...............................................29
7.1.1 Failure to Perform....................................................29
7.1.2 Insolvency............................................................30
7.1.3 Default on Underlying Agreements and Assumed Obligations..............30
7.2 Instances of Seller Default..................................................30
7.2.1 Failure to Perform....................................................30
7.3 Seller's and Purchaser's Remedies Upon Default...............................30
7.4 Remedies Cumulative..........................................................30
8. MISCELLANEOUS.......................................................................30
8.1 Binding Effect...............................................................30
8.2 Integration..................................................................30
8.3 Notice.......................................................................31
8.4 Time is of Essence...........................................................31
8.5 Choice of Law, Jurisdiction and Attorneys' Fees..............................31
8.6 Severability.................................................................31
8.7 Assignment...................................................................32
8.8 Waiver.......................................................................32
8.9 Counterparts.................................................................32
8.11 Section Headings.............................................................32
8.12 Board Director...............................................................32
8.13 Opportunity to Consult with Counsel..........................................32
