EXHIBIT 2.3
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into
this 28th day of February, 1997, by and among CROSS-CONTINENT AUTO RETAILERS,
INC., a Delaware corporation ("Purchaser"), XXXX XXXXXXX, XXXX XXXXXXX, and
SAHARA DATSUN, INC., a Nevada corporation, dba XXXX XXXXXXX NISSAN (the
"Company").
RECITALS
A. Xxxx Xxxxxxx and Xxxx Xxxxxxx are the owners of all of the issued and
outstanding shares of capital stock of the Company (the "Shares").
B. Xxxx Xxxxxxx and Xxxx Xxxxxxx shall hereinafter be collectively referred
to as the "Sellers" and individually as a "Seller".
C. Purchaser desires to purchase all of the Shares, and Sellers desire to
sell the Shares to Purchaser, for the consideration, upon the terms and subject
to the conditions set forth in this Agreement.
AGREEMENT
For and in consideration of the mutual covenants, agreements,
representations, and warranties set forth in this Agreement, Purchaser, Sellers,
and the Company agree as follows:
1. PURCHASE AND SALE OF THE SHARES. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing (hereinafter defined)
each Seller shall sell, transfer, convey, assign, and deliver to the Purchaser,
and Purchaser shall purchase, acquire and accept from each Seller, all of the
Shares owned by such Seller, free and clear of all security interests, liens,
pledges, options, rights of first refusal, or other claims, encumbrances,
agreements, arrangements or commitments of any kind or character, whether
written or oral.
2. PURCHASE PRICE. The purchase price to be paid by Purchaser to Sellers
for the Shares shall be $11,600,000 (the "Purchase Price"), subject to the
adjustment set forth in Paragraph 3 of this Agreement.
3. ADJUSTMENTS TO THE PURCHASE PRICE. The Purchase Price shall be
adjusted as follows:
In the event the 1996 Earnings (hereinafter defined) are less than
$3,100,000, the Purchase Price shall be reduced by an amount equal to 3.74
times the difference between $3,100,000 and the 1996 Earnings. As used in
this Agreement, the term "1996 Earnings" shall mean the amount of the
Company's 1996 net profit before income taxes as shown on the Company's
income statement for 1996 in the Audited Financial Statements (hereinafter
defined), plus (a) salaries in the aggregate amount of $368,752.00 paid to
Xxxx Xxxxxxx and Xxxx Xxxxxxx during 1996, and (b) a LIFO adjustment in the
amount of $111,000.00.
4. PAYMENT OF PURCHASE PRICE. At Closing Purchaser shall pay the Purchase
Price, as adjusted, as follows:
a. Cash in the amount of $9,000,000, less the adjustments set forth in
Paragraph 3 of this Agreement, to Sellers.
b. Purchaser shall issue to Sellers the number of shares of restricted
common stock of Purchaser that, when multiplied by the closing price
for the stock of Purchaser quoted in the Wall Street Journal for the
last business day immediately preceding the date that the
transactions contemplated by this Agreement is announced to the
public by Purchaser (the "Pricing Date"), will equal $2,000,000.
Purchaser shall not issue any fractional shares and shall pay Sellers
cash in lieu of any fractional shares based on the closing price for
the stock of Purchaser quoted in the Wall Street Journal for the
Pricing Date.
c. Purchaser shall execute and deliver a promissory note (the "Note") to
Sellers in the original principal amount of $600,000, payable in
sixty (60) equal monthly installments, bearing interest at the
allowed lowest rate under the Internal Revenue Code for installment
sales, in substantially the form attached hereto as Exhibit "A". The
Note shall provide that Purchaser may offset (for a period of two (2)
years after the Closing Date), any accounts receivable or notes
receivable listed on Exhibit "O" that are not collected when due, any
contracts in transit listed on Exhibit "R" that are not collected
when due, any parts and accessories listed on Exhibit "E" that are in
the current Nissan Motor Corporation price list and that are returned
by the Company and are not accepted by the manufacturer, and any
Claims (hereinafter defined) that are recovered against the Company;
against any amounts due to Sellers under the Note.
Each component of the Purchase Price shall be allocated between the Sellers as
follows:
Xxxx Xxxxxxx 60%
Xxxx Xxxxxxx 40%
5. CLOSING. Subject to the terms and conditions set forth in this
Agreement, the closing ("Closing") of the purchase and sale of the Shares shall
take place at the offices of Singer, Xxxxx & Xxxxxxxxx, 000 X. Xxxxxx Xxxxxx,
Xxx Xxxxx Xxxxxx 00000, or at such other place as may be mutually agreed upon by
Purchaser and Sellers, as soon as practicable following the date on which all
conditions to the obligations of the parties hereunder (other than those
requiring the taking of action at the Closing) have been satisfied or waived but
no later than May 10, 1997 (effective as of April 30, 1997). The date on which
the Closing is to occur is hereinafter referred to as the "Closing Date." Any
other provision of this Agreement to the contrary notwithstanding, if Sellers
have not obtained the consent of Nissan Motor Corporation, U.S.A. prior to April
30, 1997, either Purchaser or Sellers shall have the right to extend the Closing
Date thirty (30) days by giving written notice to the other parties.
6. CLOSING OBLIGATIONS.
a. At Closing the Purchaser shall deliver to the Sellers (i) the cash
described in subparagraph 4(a), (ii) the restricted common stock of
Purchaser described in subparagraph 4(b), (iii) the Note executed by
the Purchaser, and (iv) the Registration Rights Agreement
(hereinafter defined) executed by the Purchaser. At Closing,
Purchaser shall deliver to Sellers such additional information,
certificates, and other documents as Sellers shall have reasonably
requested.
b. At Closing the Sellers shall deliver to the Purchaser (i) stock
certificates representing the Shares in duly transferable form, (ii)
such other documents and
2
instruments as Purchaser may reasonably request in order to vest in
Purchaser good, absolute, and marketable title to the Shares and to
any and all other right, title, interest, claim, or demand of any
kind that Sellers may have in the properties, assets, or business of
the Company, (iii) the Amendment executed by the Company, (iv) the
opinions of counsel described in subparagraph 10(n) of this
Agreement, (v) an Investment Letter (hereinafter defined) executed by
each Seller, (vi) the Registration Rights Agreement executed by the
Sellers, (vii) that certain promissory note dated September 16, 1996,
executed by the Company, payable to the order of The Xxxx Xxxxxxx
Revocable Living Trust, marked "Paid," (viii) that certain promissory
note dated September 16, 1996, executed by the Company, payable to
the order of The Xxxx X. Xxxxxx Revocable Family Trust, marked
"Paid," and (ix) the Amendment (hereinafter defined). Sellers shall
use their best efforts to obtain and deliver to the Purchaser at
Closing employment contracts executed by Xxxx Xxxxxxxxx, Xxxx Xxxxx,
Xx Xxx, Xxxxxxx Xxxxx, Xxx Xxxxxx, Xxxxx Xxxxx, Xxxx Xxxxx, Xxxx
Xxxx, Xxxxxx Xxxxxxxxx and Xxx Xxxxxxxx. At Closing each Seller and
the Company shall deliver to Purchaser such additional information,
certificates, and documents as Purchaser shall have reasonably
requested.
7. REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE COMPANY. The
Sellers and the Company jointly and severally represent and warrant to Purchaser
as follows:
A. AUTHORITY; BINDING AGREEMENT. Each Seller has the legal power and
capacity to enter into this Agreement and to perform his obligations
hereunder. This Agreement is a valid and binding obligation of each
Seller, enforceable against each Seller in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to the enforcement of creditors' rights generally and by general
principles of equity. Each Seller has (i) good, absolute, and
marketable title to the portion of the Shares owned by that Seller,
free and clear of any liens, claims, agreements, encumbrances, or
restrictions of any kind, and (ii) the complete and unrestricted
right, power, and authority to sell, transfer, and assign the Shares
in accordance with this Agreement.
B. INCORPORATION AND GOOD STANDING. The Company is duly incorporated, is
validly existing, and is in good standing under the laws of the State
of Nevada and has all necessary power and authority to own, lease,
and operate its properties and assets and to conduct its business as
its business is now being conducted. Sellers have delivered to
Purchaser complete and accurate copies of the Company's articles of
incorporation and bylaws, including all amendments thereto and have
made available to Purchaser its minute book and stock records.
Exhibit "B" will set forth a complete and accurate list of all
officers and directors of the Company as of the date of this
Agreement. The Company is qualified to do business and is in good
standing in each state in which it transacts business. The Company
does not have any subsidiaries nor any direct or indirect equity
interest in any corporation, partnership, or other entity. The
Company is a "small business corporation" and has maintained a valid
election to be an "S" corporation under Subchapter S of the Internal
Revenue Code of 1986, as amended.
C. CAPITALIZATION. The authorized capital stock of the Company consists
of 2,500 shares of common stock, having no par value. The Shares (i)
constitute all of the issued and outstanding shares of capital stock
of the Company, (ii) have been validly authorized and issued, (iii)
are fully paid and nonassessable, (iv) have not been issued in
violation of any preemptive rights or of any federal or state
3
securities laws, and (v) are not subject to any agreement that
relates to the voting or control of any of the Shares. On the date
hereof, the Shares are (I) comprised of 700 shares of common stock of
the Company, and (ii) owned beneficially and of record by Xxxx
Xxxxxxx (450 shares) and Xxxx Xxxxxxx (300 shares), the Sellers.
There are and will be on the Closing Date no outstanding
subscriptions, options, rights, warrants, convertible securities, or
any other agreements or commitments obligating the Company to issue,
deliver, or sell any additional shares of its capital stock of any
class or any other securities of any kind. There are no bonds,
debentures, notes, or other indebtedness or securities of the Company
having the right to vote on any matters on which the shareholders of
the Company may vote. There are no outstanding rights, agreements, or
arrangements of any kind obligating the Company to repurchase,
redeem, or otherwise acquire any shares of capital stock or other
voting securities of the Company.
D. NO CONFLICTS. Neither the execution and delivery of this Agreement
nor the fulfillment of or compliance with the terms and provisions
hereof will violate, conflict with, or result in a breach of the
terms, conditions or provisions of, or constitute a default or an
event which, with notice or lapse of time or both, would constitute a
default under, (i) the articles of incorporation or bylaws of the
Company, (ii) any contract, agreement, mortgage, deed of trust, or
other instrument or obligation to which the Sellers or the Company is
a party or by which any of them is bound, except for agreements
between the Company and Nissan Motor Corporation, USA, which require
the consent of Nissan Motor Corporation, USA, (iii) violate any
provision of any applicable law or regulation or of any order,
decree, writ or injunction of any court or governmental body, or (iv)
result in the creation or imposition of any lien, charge,
restriction, security interest or encumbrance of any kind whatsoever
on any property or asset of the Company or on the Shares.
E. CONSENTS. No consent or approval by, or any notification of or filing
with, any governmental entity or agency or any other person or entity
is required in connection with the execution, delivery or performance
of this Agreement by Sellers or the Company, other than consent from
(i) the Department of Motor Vehicles of the State of Nevada, and (ii)
Nissan Motor Corporation, U.S.A.
F. REAL PROPERTY. Exhibit "C" will set forth a complete and accurate (i)
legal description of all real property owned by the Company, and (ii)
description of each lease under which the Company holds a leasehold
interest. Each of the leases is in full force and effect and
constitutes a legal, valid and binding obligation of the parties
thereto. The Company has performed the covenants required to be
performed by it under each of the leases to which it is a party and
is not in default under any of the leases to which it is a party. The
zoning of each tract of real property permits the presently existing
improvements and the continuation of the business presently being
conducted on such real property. To the best of each Seller's and the
Company's knowledge, neither Seller nor the Company is aware of any
pending or proposed changes to such zoning.
G. TANGIBLE PERSONAL PROPERTY. Exhibit "D" will set forth a complete and
accurate description of (i) all equipment, furniture, fixtures, and
other tangible personal property (other than inventory) owned by, in
possession of, or leased or used by the Company in connection with
its business, and (ii) each lease under which the Company holds a
leasehold interest. Each of the leases is in full force and effect
and constitutes a legal, valid, and binding obligation of the parties
thereto. The Company has performed the covenants required to be
performed by it under each
4
of the leases to which it is a party and is not in default under any
of the leases to which it is a party. To the best of each Seller's
and the Company's knowledge, the tangible personal property of the
Company is in good repair and operating condition, has been regularly
and properly maintained and fully serviced, and is suitable for the
purposes for which it is presently being used.
H. INVENTORIES. Exhibit "E" will set forth a complete and accurate
description of the inventory (new vehicles, used vehicles, and parts
and accessories) of the Company. To the best of each Seller's and the
Company's knowledge, the inventory of the Company consists of goods
of a quality and in quantities that are saleable in the ordinary
course of the Company's business with normal xxxx-up at prevailing
market prices. To the best of each Seller's and the Company's
knowledge, all parts and accessories in the inventory of the Company
that were purchased from Nissan are returnable and undamaged parts
and accessories that are listed for sale in the current dealer parts
and accessories price schedule for Nissan, except as set forth on
Exhibit "E." Parts and accessories in the inventory of the Company
that were not purchased from Nissan (batteries and anti-freeze) do
not, and at Closing will not, exceed $10,000 in the aggregate. On the
Closing Date, the Company will have the following unencumbered
assets: (i) a used vehicle inventory with a fair market value of at
least $1,700,000, (ii) a new vehicle inventory with a fair market
value of at least $600,000, and (iii) a parts and accessories
inventory with a fair market value of at least $480,000; or
unencumbered cash, accounts receivable, or contracts in transit, in
such amounts. Fair market value shall be determined in accordance
with subparagraph 14(f) of this Agreement.
I. LICENSES AND PERMITS. Exhibit "F" will set forth a complete and
accurate description of all permits, licenses, franchises,
certificates, and similar items and rights, owned or held by the
Company (hereinafter collectively referred to as the "Licenses and
Permits"). The Licenses and Permits (i) are adequate for the
operation of the Company's business, (ii) are valid and in full force
and effect, except as set forth on Exhibit "F," and (iii) will be
transferred to the Purchaser at the Closing, unless such transfer is
prohibited by law or by the terms of the item or right to be
transferred. No additional permit, license, franchise, certificate,
or similar item or right is required by the Company for the operation
of its business.
J. INTELLECTUAL PROPERTY. Exhibit "G" will set forth a complete and
accurate description of all intellectual property presently in use by
the Company, which intellectual property includes (without
limitation) software patents, trademarks, tradenames, service marks,
copyrights, trade secrets, customer lists, inventions, formulas,
methods, processes, advertising materials, Internet sites, and any
other proprietary information or property. There are no outstanding
licenses or consents to third parties granting the right to use any
intellectual property owned by the Company. To the best
5
of each Seller's and the Company's knowledge, no intellectual
property used by the Company infringes on any rights owned or held by
any other person or entity, and no person is infringing on the rights
of the Company in any intellectual property used by the Company. Any
royalties or fees payable by the Company to any third party by reason
of the use of any intellectual property by the Company is set forth
on Exhibit "G." No additional intellectual property is required by
the Company for the operation of its business.
K. TITLE TO PROPERTIES; ENCUMBRANCES. The Company has good, absolute,
and marketable title to (or, in the case of leased property, valid
and subsisting leasehold interests in) all of its properties and
assets, including (without limitation) the properties and assets that
will be listed on Exhibits "C," "D," "E," "F," and "G." The
properties and assets of the Company are subject to no liens, deeds
of trust, mortgages, encumbrances, conditional sales agreements,
security interests, claims, or restrictions of any kind or character,
except for (i) the encumbrances that will be listed on Exhibit "H,"
and (ii) liens for current taxes not yet due and payable.
L. FINANCIAL STATEMENTS. The Company has delivered to the Purchaser
copies of a balance sheet for the Company dated January 31, 1997 the
"Balance Sheet Date"), and statements of income and retained earnings
for the periods ending December 31, 1996 and January 31, 1997
(hereinafter collectively referred to as the "Financial Statements").
The Financial Statements were prepared by Xxxxxx Xxxxxx & Xxxxxxxxx
and are unaudited. The Financial Statements fairly present the
financial condition of the Company at the dates mentioned and the
results of its operations for the periods specified and were prepared
in accordance with its normal and customary accounting procedures.
The balance sheet in the Financial Statements discloses all of the
debts, liabilities, and obligations of any nature (whether absolute,
accrued, contingent, or otherwise, and whether due or to become due)
of the Company as of the Balance Sheet Date and includes appropriate
reserves for all taxes and other liabilities accrued or due at such
dates but not yet paid.
M. INDEBTEDNESS FOR BORROWED MONEY; GUARANTIES. Exhibit "I" will set
forth a complete and accurate description of the Company's
indebtedness for borrowed money. Sellers will deliver to the
Purchaser complete and accurate copies of all instruments evidencing
or relating to the Company's indebtedness for borrowed money. To the
best of each Seller's and the Company's knowledge, the Company is not
in default or violation of any provision of any agreement evidencing
or relating to its indebtedness for borrowed money. Exhibit "I" will
also set forth a complete and accurate description of all guaranties
by the Company of any obligation or liability of any person or
entity, including (without limitation) any guaranties of installment
sales contracts or leases.
N. TAX MATTERS. To the best of each Seller's knowledge, the Company has
filed or will file all federal, state, local and foreign tax returns
and tax reports required to be filed by it for periods ending on or
prior to the Closing Date. All such returns and reports are and will
be correct and complete in all material respects. All federal, state,
local, and foreign income, profits, franchise, property, excise,
sales, use, occupation, payroll, employment, and other taxes and
assessments that are due and payable by either Seller, the Company,
or by either Seller on behalf of the Company have been properly
computed, duly reported, fully paid, and discharged to the best of
each Seller's knowledge. Neither Seller is aware of any unpaid taxes
that require payment by the Company, except for current taxes not yet
due and
6
payable. To the best of each Seller's and the Company's knowledge,
(i) all current taxes not yet due and payable by the Company have
been properly accrued and are accurately reflected in the Company's
balance sheet in the Financial Statements, (ii) the Company has not
been delinquent in the payment of any tax, assessment, or
governmental charge, (iii) no issues have been raised in writing with
the Company by the Internal Revenue Service or any other taxing
authority in connection with any tax return or tax report filed by
the Company, and (iv) the Company has not executed any waiver of the
statute of limitations on the assessment or collection of any tax.
Each Seller agrees to indemnify and hold harmless the Purchaser with
respect to any income or other tax liabilities, penalties and
interest which arise from the operation of the Company prior to
Closing or arise as a result of the transactions contemplated by this
Agreement.
O. TRANSACTIONS Since the Balance Sheet Date. Since the Balance Sheet
Date, (i) the Company has not incurred any debts, liabilities, or
obligations, except current liabilities in the ordinary course of
business; discharged or satisfied any liens or encumbrances, or paid
any debts, liabilities, or obligations, except in the ordinary course
of business; mortgaged, pledged, or otherwise subjected to any lien
or other encumbrance any of its properties or assets; canceled any
debt or claim; sold or transferred any properties or assets, except
sales from inventory in the ordinary course of business; nor entered
into any transaction other than in the ordinary course of business;
(ii) there has not been any material adverse change in the business,
operations, properties, assets, revenues, earnings, liabilities, or
condition (financial or otherwise) of the Company; (iii) there has
not been any declaration, setting aside or payment of any dividend or
other distribution in respect of, or any direct or indirect
redemption, purchase or other acquisition of, any of the capital
stock of the Company; (iv) the Company has not issued or sold or
contracted to issue or sell any stock, securities or options, of any
nature whatsoever; (v) the Company has not increased the
compensation, commissions, bonuses, or other remuneration payable to
any officer, director, employee, or to any other person or entity,
whether now or hereafter payable, including any increase pursuant to
any pension, profit-sharing or other plan or commitment, except for
Xxxxx Xxxxx, Xxxx Xxxxx, and Xxxxxxx Xxxxxx; (vi) there has not been
any damage, destruction or loss (whether or not covered by insurance)
affecting any asset or property of the Company; (vii) the Company has
not made any capital expenditure or commitment, individually or in
the aggregate, in excess of $10,000.00; (viii) the Company has not
made any loan or advance to any person or entity; guaranteed any
obligation or liability of any person or entity, including (without
limitation) any guaranties of any installment sales contracts or
leases, other than as will be set forth on Exhibit "I;" (ix) the
Company has not given any indemnifications to any person or entity;
(x) the Company has not made any sale, assignment or transfer of,
additions to or transactions involving any of its tangible assets
other than in the ordinary course of business; (xi) the Company has
not made any change in its method of accounting or accounting
practices, including (without limitation) any change in depreciation
or amortization policies or rates; (xii) the Company has not granted
any waiver or release of any claim or right held by it; (xiii) the
Company has not amended or terminated any material contract,
agreement, or license to which it is a party; (xiv) the Company has
not made any material write-down of the value of any asset of the
Company or any material write-off as uncollectible of any account
receivable or note receivable; and (xv) the Company has not agreed,
in writing or otherwise, to do or permit any of the foregoing;
P. LITIGATION. Exhibit "J" will set forth a complete and accurate
description of all actions, suits, claims, investigations or legal,
administrative or arbitration proceedings, pending or threatened,
whether at law or in equity, involving the
7
Company or any of its properties, assets, or business, and all
judgments, orders, decrees, writs or injunctions of any court or
governmental department, commission, agency, instrumentality or
arbitrator applicable to either Seller or to the Company. Neither of
the Sellers nor the Company is aware of any facts that might result
in any other action, suit, claim, investigation, or legal,
administrative or arbitration proceeding.
Q. COMPLIANCE WITH LAWS. To the best of each Seller's and the Company's
knowledge, the Company has complied and is in compliance in all
material respects with all federal, state, local and foreign laws,
ordinances, rules, codes, regulations, and orders (including those
related to environmental protection and occupational safety and
health) applicable to the Company. To the best of each Seller's and
the Company's knowledge, the Company is not subject to any
restriction, judgment, order, writ, injunction, decree, or award,
which has a material adverse affect or is likely to have a material
adverse affect on the business, operations, properties, assets,
revenues, earnings, liabilities, or condition (financial or
otherwise) of the Company.
R. CONTRACTS AND AGREEMENTS. Exhibit "K" will set forth a complete and
accurate description of all material written or oral contracts and
agreements to which the Company is a party or by which it or any of
its property is bound. All such contracts and agreements are in full
force and effect and are binding upon the parties thereto, and none
of the parties thereto is in breach of any of the provisions thereof.
Except as set forth on Exhibit "K," the Company is not a party to any
contract or agreement which has a material adverse affect or is
likely to have a material adverse affect on the business, operations,
properties, assets, revenues, earnings, liabilities, or condition
(financial or otherwise) of the Company.
S. EMPLOYEE BENEFIT PLANS. Exhibit "L" will set forth a complete and
accurate description of all pension, retirement, savings, deferred
compensation, profit sharing, stock option, bonus, incentive,
severance, retirement, health, insurance and other employee benefit
plans that are binding upon the Company. The Company has complied
with the provisions of and has performed the obligations required of
it under such plans, and the Company is not in default under any
provision thereof. To the best of each Seller's and the Company's
knowledge, there have been no material defaults, breaches, or
omissions by the Company or any fiduciary under any of such plans.
The Company has not incurred any liability of any nature whatsoever
under any employee benefit plan.
T. INSURANCE. Exhibit "M" will set forth a complete and accurate
description of all insurance, including (without limitation) worker's
compensation, maintained by the Company and will summarize the
substantive terms of each of the insurance policies, including
(without limitation) whether the insurance policies are "claims made"
or "occurrence" policies. The Company is carrying insurance that is
reasonable in light of the risks attendant to the business and
activities in which the Company is engaged. All of the insurance is
in full force and effect and will not be affected by, or terminated
or lapse by reason of, the transactions contemplated by this
Agreement. The Sellers will cause the Company to keep such insurance
in full force and effect until the Closing Date.
U. PERSONNEL. Exhibit "N" will set forth a complete and accurate list of
all current employees of the Company and all independent contractors
regularly performing services on behalf of the Company and their
respective rates of compensation, including any salary, bonus or
other payment arrangement made with any of them.
8
The Company does not have any employment agreements or contracts
between the Company and any person or entity. No employee of the
Company is represented by any union or collective bargaining agent.
The Company is not a party to or bound by any collective bargaining
agreement, nor has the Company experienced any strikes, grievances,
claims of unfair labor practices, or other collective bargaining
disputes. The Company has not, to either Seller's knowledge,
committed any unfair labor practice. Neither Seller has any knowledge
of any organizational effort being made or threatened by or on behalf
of any labor union with respect to employees of the Company within
the past five (5) years. To the best of each Seller's and the
Company's knowledge, the Company has (i) paid or has made provision
for the payment of all compensation due any person or entity, (ii)
complied in all material respects with all applicable laws, rules,
and regulations relating to the employment of labor, including those
related to wages, hours, collective bargaining and the payment and
withholding of taxes, and (iii) withheld and paid to the appropriate
governmental authority, or is holding for payment not yet due to such
authority, all amounts required by law or agreement to be withheld
from the compensation of its employees.
V. ACCOUNTS RECEIVABLE. Exhibit "O" will set forth a complete and
accurate list of all accounts receivable and notes receivable of the
Company and an aging analysis of the accounts receivable. To the best
of each Seller's and the Company's knowledge, all accounts receivable
and notes receivable of the Company are valid and enforceable claims,
arose in the ordinary course of business, require no further
performance by the Company, and are collectable without resort to
litigation. To the best of each Seller's and the Company's knowledge,
no material objection, claim, or offset has been made regarding any
of the accounts receivable or notes receivable. Except as will be set
forth on Exhibit "O," all of the accounts receivable and notes
receivable are current. There are and at Closing there will be no
intercompany payables or intercompany receivables due or owing
between either Seller and the Company.
W. BROKERS. Other than Xxxx Xxxxxx (the "Broker"), neither Seller has
employed, directly or indirectly, any broker or finder, or incurred
any liability for any brokerage fees, commissions, or finders fees,
and other than the Broker, no broker or finder has acted directly or
indirectly for either Seller in connection with this Agreement or the
transactions contemplated by this Agreement.
X. DELIVERY OF DOCUMENTS. Complete and accurate copies of all written
instruments listed or described on the exhibits attached hereto have
been or will be furnished to Purchaser. The Company will make
available to Purchaser, to the extent requested by Purchaser, all
books, records, and facilities of the Company.
Y. BANK ACCOUNTS; POWERS OF ATTORNEY. Exhibit "P" will set forth a
complete and accurate list of (i) the names and addresses of all
persons holding a power of attorney on behalf of the Company, and
(ii) the account numbers and names of all banks or other financial
institutions in which the Company currently has an account, deposit,
or safe deposit box, with the names of all persons authorized to draw
on the accounts or deposits or to have access to the boxes.
Z. DISCLOSURE. To the best of each Seller's and the Company's knowledge,
there have been no events, transactions or information relating to
the Company which, singly or in the aggregate could reasonably be
expected to have a material adverse affect on the business,
operations, properties, assets, revenues, earnings, liabilities, or
condition (financial or otherwise) of the Company. No representation
or
9
warranty by either Seller or the Company in this Agreement or in any
of the exhibits attached hereto, or other statement in any other
writing furnished or to be furnished to Purchaser by or on behalf of
either Seller or the Company in connection with the transactions
contemplated by this Agreement, contains or will contain any untrue
statement of a material fact, or omits or will omit to state a
material fact necessary to make the statements contained herein not
misleading.
AA. ENVIRONMENTAL.
(i) To the best of each Seller's and the Company's knowledge, there
are no past or present events, conditions, circumstances,
activities, practices, incidents, plans or actions, based on or
resulting from the conduct of the business of the Company,
including the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling, or the
emission, discharge, release, or threatened release into the
environment, of any pollutant, contaminant, chemical, or
industrial toxic or hazardous material, substance or waste,
which violates any laws currently in effect relating to
pollution or protection of the environment (the "Environmental
Laws"), including (without limitation) the Comprehensive
Environmental Response, Compensation, and Liability Act
("CERCLA"), or any plan, order, decree, judgment, injunction,
notice or demand letter from a governmental department,
commission, agency or instrumentality applicable to the
Company, or which could give rise to any common law or other
legal liability. To the best of each Seller's and the Company's
knowledge, all real property currently or formerly owned,
leased or otherwise utilized by the Company contains no spill,
deposit, or discharge of any hazardous substance (as that term
is currently defined under CERCLA or any applicable state law),
for which the Company could be liable.
(ii) Exhibit "Q" will set forth a complete and accurate description
of each underground storage tank of any kind or nature that is
located or that was located on any real property currently or
formerly owned, leased or otherwise utilized by the Company.
Exhibit "Q" will also set forth a complete history of each
underground storage tank, including the dates and types of all
tests.
(iii) The Company will deliver to Purchaser copies of all existing
environmental site audits on any real property currently or
formerly owned, leased, or otherwise utilized by the Company.
BB. CONTINUATION OF BUSINESS. Neither Seller knows of any reason why the
Company cannot continue its business in the same manner following the
execution of this Agreement and the Closing as it has been operated
prior thereto, except to the extent that Purchaser causes the
business of the Company to change following the Closing. Neither
Seller has any reason to believe that at any time in the foreseeable
future the business of the Company shall be materially adversely
affected by any event, except to the extent that the Purchaser causes
the business of the Company to change following the Closing.
CC. CONTRACTS IN TRANSIT. Exhibit "R" will set forth a complete and
accurate list of all of the Company's contracts in transit.
10
DD. WARRANTIES. Exhibit "S" will set forth a complete and accurate list
of (i) all warranties on vehicles that have been sold by the Company
for the last three (3) years for which there is any contingency of
liability for the Company, and (ii) the companies that sold the
warranties.
8. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to each Seller as follows:
A. INCORPORATION. Purchaser is duly incorporated, is validly existing,
and is in good standing under the laws of the State of Delaware.
Purchaser is qualified to do business and is in good standing in the
State of Nevada.
B. AUTHORITY; BINDING AGREEMENT. Purchaser has the corporate power and
authority to enter into this Agreement and to perform its obligations
hereunder. This Agreement is a valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its
terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to the enforcement of creditors' rights generally and
by general principles of equity.
C. NO CONFLICTS. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated by this
Agreement will result in any breach or violation of or default under
any agreement or other instrument to which Purchaser is a party or by
which it is bound.
D. BROKERS. Other than the Broker, the Purchaser has not employed,
directly or indirectly, any broker or finder, or incurred any
liability for any brokerage fees, commissions or finders' fees, and
other than the Broker no broker or finder has acted directly or
indirectly for the Purchaser in connection with this Agreement or the
transactions contemplated by this Agreement.
9. PRE-CLOSING COVENANTS. Each Seller and the Company agrees to do the
following prior to the Closing Date:
A. NOTICES AND CONSENTS. Each Seller shall use his best efforts to
obtain any required approvals or consents to this Agreement and to
the transactions contemplated by this Agreement from any person or
entity from which such approval or consent is required, including
(without limitation) consent or approval from (i) the manufacturer
represented by the Company, and (ii) the Federal Trade Commission
(the "FTC") and the Department of Justice of the United States of
America (the "Justice Department") under the Xxxx-Xxxxx-Xxxxxx Act
("HSR Act") and all regulations promulgated thereunder.
B. CONDUCT OF BUSINESS BY THE COMPANY PRIOR TO THE CLOSING DATE. Each
Seller shall cause the Company to conduct its operations according to
the ordinary and usual course of business reasonably consistent with
past and current practices, to maintain and preserve its assets,
properties, insurance policies, business organization, and
advantageous business relationships, and to retain the services of
its officers, employees, agents, and independent contractors, and
shall not allow the Company to engage in any practice, take any
action, or enter into any transaction outside of the ordinary course
of business. Without limiting the generality of the foregoing, each
Seller shall prohibit the Company, without the prior written consent
of Purchaser, from directly or indirectly taking any of the actions
described in subparagraph 7(o).
11
C. PURCHASER'S EXAMINATION. Each Seller shall cause the Company to
permit Purchaser and representatives of the Purchaser to have full
access to and to examine, at all reasonable times and places, and in
a manner so as not to interfere with the normal business operations
of the Company; the books, records, properties, assets and operations
of the Company. Such examination shall include access to the
officers, directors, employees, agents and representatives of the
Company. Each Seller shall cause the Company to furnish to Purchaser
and representatives of Purchaser with such financial, operating and
other data and information, and copies of documents with respect to
the Company as Purchaser shall from time to time request. Such access
and information shall not in any way affect or diminish any of the
representations or warranties made in this Agreement.
D. AUDIT. Each Seller shall cause the Company to permit an audit (the
"Audit") to be conducted under generally accepted auditing standards,
of the books, records, and financial statements of the Company for
1994, 1995, 1996, and any additional years if required by applicable
law, and shall cause Audited Financial Statements (hereinafter
defined) to be prepared in accordance with generally accepted
accounting principles, which shall include reserves for any deferred
warranties, charge-backs, inventory write downs, repossessions,
contracts in transit, and any other appropriate reserves. As used in
this Agreement, "Audited Financial Statements" shall mean an audited
(i) balance sheet dated December 31, 1996, for the Company, and (ii)
income statement for the year ending December 31, 1996 for the
Company. The Audit will be conducted by Purchaser's accountants,
Price Waterhouse, assisted by the Company's accountants, Xxxxxx,
Xxxxxx & Xxxxxxxx. Each Seller agrees to cause the full cooperation
of the officers, directors and employees of the Company in the Audit
as requested by Purchaser. The start date of the Audit will be no
later than March 20, 1997. The Company's accounting staff will assist
in gathering information and providing schedules and analyses in
order to have the Audit completed by April 20, 1997. In addition, as
near as possible prior to the Closing Date, Price Waterhouse shall
review the activities of the Company for the period after December
31, 1996, and shall prepare a letter (the "Post 1996 Adjustment
Letter"0 setting forth the adjustments (the "Post 1996 Adjustments")
that should be made to the unaudited earnings for the period from
January 1, 1997, to the Closing Date.
E. NOTICE OF CHANGES. Each Seller shall give prompt written notice to
Purchaser of any material adverse change in the business, operations,
properties, assets, revenues, earnings, liabilities, or condition
(financial or otherwise) of the Company.
F. STANDSTILL. Except for the transactions contemplated by this
Agreement, from the date hereof to the Closing Date, neither Seller
shall, directly or indirectly, through any officer, director,
employee, or otherwise, (i) solicit or initiate the submission of any
proposal or offer from any person or entity (including any officers
or employees of the Company) relating to any liquidation,
dissolution, recapitalization, merger, consolidation, acquisition, or
purchase of all or a material portion of the assets and properties of
the Company, or the acquisition or purchase of any equity interest in
the Company, or (ii) participate in any negotiations regarding, or
furnish to any other person or entity any information with respect
to, or otherwise cooperate in any manner with, or assist or
participate in, facilitate or encourage, any effort or attempt by any
other person or entity to do or seek any of the foregoing.
12
G. FURTHER ASSURANCES. Each Seller shall from time to time, upon the
request of Purchaser, execute and deliver to Purchaser such further
instruments and take such other action as Purchaser may reasonably
request, in order to consummate the transactions contemplated by this
Agreement as expeditiously as possible and to place Purchaser in
possession and control of, the Shares and the assets and properties
of the Company, or to enable Purchaser to exercise and enjoy all
rights and benefits with respect thereto.
H. INVESTMENT LETTER. Each Seller agrees to execute and deliver to
Purchaser an investment letter (the "Investment Letters") in form and
substance reasonably satisfactory to Purchaser and Purchaser's
counsel.
I. ENVIRONMENTAL SITE AUDITS. On or before April 10, 1997, the Company
shall obtain an environmental site audit on all real property owned,
leased, or otherwise utilized by the Company in order to determine
whether there exists any environmental condition which could
reasonably be expected to result in any liability, cost, or expense
to the owner, occupier, or operator of such real property arising
under any Environmental Law.
J. AMENDMENT TO REAL PROPERTY LEASE. Each Seller shall cause the Company
to amend the real property lease held by the Company to provide that
the lease shall have a term of ten (10) years from the Closing Date,
rent during the first five (5) years of $42,000.00 per month, and two
(2) options to extend the term of the lease for five (5) years each,
with rent during the extended terms to be mutually agreed upon. The
amendment of the real property lease held by the Company shall be
referred to in this Agreement as the "Amendment."
10. CONDITIONS PRECEDENT TO OBLIGATION OF PURCHASER. The obligation of
Purchaser to consummate the transactions contemplated by this Agreement
is subject to the satisfaction on or prior to the Closing Date of the
following conditions, each of which may be waived by the Purchaser:
A. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All representations and
warranties of Sellers and the Company contained in this Agreement
shall be true and correct in all material respects as of the Closing
Date with the same effect as though such representations and
warranties were made on the Closing Date, except to the extent that
such representations and warranties expressly relate to any earlier
date, and Sellers and the Company shall have performed and complied
with all the covenants and agreements and satisfied all the
conditions required by this Agreement to be performed, complied with
or satisfied by Sellers and the Company on or prior to the Closing
Date. Each Seller must have delivered to the Purchaser a certificate
dated as of the Closing Date certifying that this condition has been
fulfilled.
B. NO ADVERSE CHANGE. Purchaser shall have determined, to its
satisfaction, that as of the Closing Date, there has been no material
adverse change in the business, operations, properties, assets,
revenues, earnings, liabilities or condition (financial or otherwise)
of the Company.
C. EXHIBITS. Purchaser shall have timely received all exhibits to this
Agreement.
D. TRANSFER OF SHARES. The certificates representing the Shares shall
have been transferred and conveyed by Sellers to Purchaser in a
manner and by instruments acceptable to Purchaser and its counsel,
free and clear of all liens, claims, encumbrances, or restrictions of
any kind. Contemporaneously with the
13
consummation of the transfer of the Shares, Sellers shall put
Purchaser in full possession and enjoyment of all properties and
assets of the Company. In addition, Purchaser shall have received the
complete stock ledgers, minute books and other corporate records of
the Company.
E. ENVIRONMENTAL SITE AUDITS. Purchaser shall have timely received
environmental site audits on each tract of real property owned,
leased, or otherwise utilized by the Company. If any of the
environmental site audits discloses an environmental condition which
could reasonably be expected to result in any liability, cost, or
expense to the owner, occupier, or operator of the property arising
under any Environmental Law, then the Company shall have cured such
environmental condition and received a "no further action" letter
from the Environmental Protection Agency the applicable state agency.
F. THIRD PARTY APPROVALS. This Agreement and the transactions
contemplated by this Agreement shall have received all required
approvals and consents from all persons and entities from which such
approvals or consents is required, including (without limitation) (i)
the manufacturer represented by the Company, (ii) the FTC and the
Justice Department under the HSR Act and the regulations promulgated
thereunder, (iii) the New York Stock Exchange, and (iv) Xxxxxx
Xxxxxxx & Co. Incorporated. Purchaser shall have been approved as the
dealer by the manufacturer represented by the Company.
G. COMPLIANCE WITH SECURITIES LAWS. Purchaser shall have (i) received
the Investment Letters, (ii) received the Registration Rights
Agreement, and (iii) determined that all state and federal securities
laws have been fully satisfied relating to the purchase of the Shares
by Purchaser and the issuance of restricted stock of Purchaser to
Sellers.
H. AMENDMENT. The Amendment shall have been executed and delivered to
Purchaser.
I. PHYSICAL INVENTORIES. Purchaser shall have conducted the Physical
Inventories (hereinafter defined).
J. DUE DILIGENCE. Based on such examinations and inquiries as Purchaser
shall have made or shall have caused to be made, the business,
operations, properties, assets, revenues, earnings, liabilities, and
condition (financial or otherwise) shall be satisfactory to
Purchaser, in Purchaser's sole judgment and discretion.
K. APPROVAL OF DOCUMENTATION. The form and substance of all opinions,
certificates, instruments and other documents delivered to Purchaser
in connection with this Agreement shall be satisfactory in all
reasonable respects to Purchaser and Purchaser's counsel.
L. CORPORATE DIRECTORS AND OFFICERS. The composition of the directors
and officers of the Company shall be as requested by Purchaser,
effective as of the Closing Date.
M. OPINIONS OF COUNSEL. Each Seller shall have delivered to Purchaser an
opinion of counsel reasonably satisfactory to Purchaser, dated as of
the Closing Date, that contains such opinions that are reasonably
requested by Purchaser, including (without limitation) an opinion
that the Shares held by the Seller in the Company were issued in
compliance with all state and federal securities laws. The Company
14
shall have delivered to Purchaser an opinion of counsel reasonably
satisfactory to Purchaser, dated as of the Closing Date, that
contains such opinions that are reasonably requested by Purchaser.
X. XXXX-XXXXX-XXXXXX WAITING PERIOD. The applicable waiting period under
the HSR Act, and the regulations promulgated thereunder, shall have
expired.
O. 1996 EARNINGS. The 1996 Earnings shall not be less than $3,100,000.
P. AUDIT. Price Waterhouse shall have timely performed the Audit and the
review of earnings for the period from January 1, 1997 to the Closing
Date, prepared the Audited Financial Statements, and the Post 1996
Adjustment Letter, and delivered a copy of the Audited Financial
Statement and the Post 1996 Adjustment Letter to Purchaser.
Q. AUTHORIZATION. All actions necessary to authorize the execution,
delivery and performance of this Agreement and the other agreements
and documents to which either Seller is a party as contemplated by
this Agreement and the consummation of the transactions contemplated
hereby and thereby shall have been duly and validly taken by Sellers,
and Sellers shall have full power and authority to enter into and
deliver such agreements and to consummate the transactions
contemplated hereby and thereby.
R. ADDITIONAL INFORMATION. Each Seller and the Company shall have
furnished to Purchaser and Purchaser's counsel such additional
information, certificates, and other documents as Purchaser shall
have reasonably requested.
11. CONDITIONS PRECEDENT TO OBLIGATION OF SELLERS. The obligation of each
Seller to consummate the transactions contemplated by this Agreement is
subject to the satisfaction on or prior to the Closing Date of the
following conditions, each of which may be waived by the Seller:
A. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All representations and
warranties of Purchaser contained in this Agreement shall be true and
correct in all material respects as of the Closing Date with the same
effect as though such representations and warranties were made on the
Closing Date, except to the extent that such representations and
warranties expressly relate to an earlier date, and Purchaser shall
have performed and complied with all of the covenants and agreements
and satisfied all the conditions required by this Agreement to be
performed, complied with or satisfied by Purchaser on or prior to the
Closing Date. The Purchaser must have delivered to the Sellers a
certificate dated as of the Closing Date certifying that this
condition has been fulfilled.
B. DELIVERY OF PURCHASE PRICE. The Purchaser shall have delivered (i)
the cash provided for in subparagraph 3(a) of this Agreement, (ii)
the shares of restricted common stock of Purchaser provided for in
subparagraph 3(b) of this Agreement, and (iii) the Note.
C. APPROVAL OF DOCUMENTATION. The form and substance of all certificates
and other documents required to be delivered to Sellers in connection
with this Agreement shall be satisfactory in all reasonable respects
to Sellers and Sellers' counsel.
15
D. REGISTRATION RIGHTS AGREEMENT. Purchaser shall have executed and
delivered to Sellers the Registration Rights Agreement.
E. ADDITIONAL INFORMATION. Purchaser shall have furnished to Sellers and
Sellers' counsel such additional information, certificates, and other
documents as Sellers shall have reasonably requested.
12. INDEMNIFICATION.
A. INDEMNIFICATION. Sellers severally, in proportion to the portion of
the Purchase Price paid or to be paid to him, indemnify and agree to
defend and hold harmless the Purchaser and its successors and assigns
(the "Purchaser Indemnified Parties") from and against any Claims
(hereinafter defined). "Claims", as used in this Agreement, include
any and all liabilities, judgments, claims, settlements, losses,
damages, fees, liens, taxes, penalties, obligations and expenses,
including reasonable attorneys' fees and expenses of investigation,
incurred or suffered by any Purchaser Indemnified Party arising from,
by reason of, or in connection with (i) any breach of any
representation, warranty, covenant or agreement made by either Seller
in this Agreement, or in any certificate or other document delivered
on behalf of either Seller, (ii) any debts, liabilities, or
obligations of any nature (whether absolute, accrued, contingent, or
otherwise and whether due or to become due) of the Company at the
Balance Sheet Date that are not reflected in the Financial
Statements, (iii) the conduct of the business or other operations of
the Company prior to the Closing Date or any condition, activity, or
event relating to product or environmental liability existing or
occurring prior to the Closing Date, (iv) the failure of either
Seller or the Company to comply with any federal, state, or local tax
laws for any matter occurring prior to the Closing Date or applicable
to the transactions contemplated by this Agreement, and (v) any and
all actions, suits, proceedings, demands and judgments, arising from
or related to any of the matters set forth in this subparagraph
12(a). Any provision of this Agreement to the contrary
notwithstanding, Sellers' obligation to indemnify Purchaser under
this subparagraph 12(a) shall be limited to any Claims that are made
or occur prior to the second anniversary date of the Closing.
B. PROCEDURE FOR INDEMNIFICATION CLAIMS. In the event that any Purchaser
Indemnified Party desires to make a claim against either Seller under
subparagraph 12(a). in connection with any Claim at any time
instituted against, or made upon, the Purchaser Indemnified Party by
any third party for which the Purchaser Indemnified Party may seek
indemnification hereunder (a "Third Party Claim"), the Purchaser
Indemnified Party shall promptly notify each Seller of such Third
Party Claim and of the Purchaser Indemnified Party's claim of
indemnification with respect thereto; provided, however, that no
reasonable delay on the part of the Purchaser Indemnified Party in
notifying either Seller shall relieve the Seller from any obligation
hereunder. Each Seller shall have thirty (30) days after receipt of
such notice to notify the Purchaser Indemnified Party if it has
elected to assume the defense of such Third Party Claim. If either
Seller timely elects to assume the defense of such Third Party Claim,
the Seller shall be entitled at its own expense to conduct and
control the defense and settlement of such Third Party Claim through
counsel of its own choosing, provided that the Purchaser Indemnified
Party may participate in the defense of such Third Party Claim with
its or their own counsel at its or their own expense, and provided
further that the Seller must conduct the defense of
16
the Third Party Claim actively and diligently in order to preserve
its rights in this regard. If both Sellers timely elect to assume the
defense of such Third Party Claim, the Sellers shall be entitled at
their own expense to jointly conduct and control the defense and
settlement of such Third Party Claim through counsel of their own
choosing, provided that the Purchaser Indemnified Party may
participate in the defense of such Third Party Claim with its or
their own counsel at its or their own expense, and provided further
that the Sellers must conduct the defense of the Third Party Claim
actively and diligently in order to preserve their rights in this
regard. If neither Seller notifies the Purchaser Indemnified Party
within thirty (30) days after receipt of notice of a Third Party
Claim, the Purchaser Indemnified Party shall be entitled to assume
the defense of such Third Party Claim (and the Purchaser Indemnified
Party need not consult with, or obtain the consent of the Sellers)
and in the Purchaser Indemnified Party's sole discretion prosecute,
litigate, settle and perform such other actions as the Purchaser
Indemnified Party may deem necessary in order to fully protect the
Purchaser Indemnified Party's interests, and each Seller shall remain
responsible for indemnification of the Purchaser Indemnified Party.
C. OTHER INDEMNIFICATION PROVISIONS. The foregoing indemnification
provision is in addition to, and not in derogation of, any other
indemnification provisions in this Agreement, or any contractual,
statutory, equitable or common law remedy Purchaser may have for the
breach of any representation, warranty or covenant by either Seller
or the Company.
13. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION; NON-COMPETITION.
A. SELLERS' NON-DISCLOSURE OF CONFIDENTIAL INFORMATION REGARDING THE
COMPANY. Each Seller acknowledges that the Seller has in the past,
currently has, and in the future may possibly have access to certain
confidential information of the Company, including, but not limited
to, list of accounts, operational policies, and pricing and cost
policies that are valuable, special and unique assets of the Company
(the "Confidential Information"). Each Seller agrees that the Seller
will not disclose such Confidential Information to any person or
entity for any purpose or reason whatsoever except to authorized
representatives of the Purchaser, or as required by law, unless the
Confidential Information becomes known to the public generally
through no fault of the Seller. In the event of a breach or
threatened breach by either of the Sellers of this subparagraph, the
Purchaser shall be entitled to an injunction restraining the Seller
from disclosing, in whole or in part, such Confidential Information.
Nothing herein shall be construed as prohibiting the Purchaser from
pursuing any other available remedy for such breach or threatened
breach, including the recovery of damages.
B. PURCHASER'S NON-DISCLOSURE OF CONFIDENTIAL INFORMATION REGARDING THE
COMPANY. Purchaser acknowledges that it has in the past, currently
has, and in the future may possibly have access to Confidential
Information. The Purchaser agrees that it will not disclose such
Confidential Information to any person or entity for any purpose or
reason whatsoever, except to authorized representatives of the
Purchaser, or as required by law, unless such Confidential
Information becomes known to the public generally through no fault of
the Purchaser. In the event of a breach or threatened breach by
Purchaser of the provisions of this subparagraph, the Sellers shall
be entitled to an injunction
17
restraining the Purchaser from disclosing, in whole or in part, such
Confidential Information. Nothing herein shall be construed as
prohibiting the Sellers from pursuing any other available remedy for
such breach or threatened breach, including the recovery of damages.
Any other provision of this Agreement to the contrary
notwithstanding, Purchaser's obligations not to disclose the
Confidential Information shall terminate at Closing.
C. INSIDER LIABILITY. Each Seller acknowledges that trading in the
Purchaser's securities by persons possessing material non-public
information may result in private lawsuits for damages or to civil or
criminal proceedings by the Securities and Exchange Commission. Each
Seller also acknowledges that liability may be imposed on insiders
who privately disclose otherwise non-public material information
where such disclosure coincide with trading Purchaser's securities by
such insiders or by the recipients of such information.
X. XXXXXXX' NON-DISCLOSURE OF CONFIDENTIAL INFORMATION REGARDING THE
PURCHASER. Each Seller acknowledges that the Seller may possibly have
access to certain confidential information of the Purchaser. Each
Seller agrees that the Seller will not disclose such confidential
information to any person or entity for any purpose or reason
whatsoever except as requested by law, unless the confidential
information becomes known to the public generally through no fault of
the Seller. In the event of a breach or threatened breach by either
of the Sellers of this subparagraph, the Purchaser shall be entitled
to an injunction restraining the Seller from disclosing, in whole or
in part, such confidential information. Nothing herein shall be
construed as prohibiting the Purchaser from pursuing any other
available remedy for such breach or threatened breach, including the
recovery damages.
14. ADDITIONAL AGREEMENTS OF PURCHASER AND SELLERS.
A. INSURANCE. In the event the transactions contemplated by this
Agreement causes any of the insurance policies of the Company to
lapse and the insurance policy is a "claims made" policy, Sellers
agree to purchase a "tail" policy that will cover any condition,
activity, or event that would have been covered under the "claims
made" policy had the claim been made prior to the Closing Date. All
such "tail" policies shall be purchased at the Sellers' cost and
expense.
B. STOCK OF THE PURCHASER. The certificates representing the restricted
common stock of Purchaser that is issued to the Sellers shall bear a
restrictive legend that the stock has not been registered under
applicable federal and state securities laws. It is understood and
agreed that Purchaser has not agreed to register the restricted
common stock of Purchaser that is to be issued to either Seller.
C. TERMINATION.
I) MUTUAL CONSENT. This Agreement may be terminated by the
written consent of the parties.
II) BY THE PURCHASER. This Agreement may be terminated by written
notice of termination given by the Purchaser to each Seller if a
material default should be made by either Seller in the
observance of or in the due and timely performance by either
Seller of any of the agreements and covenants herein contained,
or if there shall have been
18
a material breach by either Seller of any of the warranties and
representations herein contained, or if the conditions of this
Agreement to be complied with or performed by Sellers at or
before Closing shall not have been complied with or performed
at the time required for such compliance or performance and
such noncompliance or nonperformance shall not have been waived
by the Purchaser.
(III) BY THE SELLERS. This Agreement may be terminated by written
notice of termination given by the Sellers to the Purchaser if
a material default should be made by the Purchaser in the
observance of or in the due and timely performance by the
Purchaser of any agreements and covenants of the Purchaser
herein contained, or if there shall have been a material breach
by the Purchaser of any of the warranties and representations
of the Purchaser, of if the conditions of this Agreement to be
complied with or performed by the Purchaser at or before
Closing shall not have been complied with or performed at the
time required for such compliance or performance and such
noncompliance or nonperformance shall not have been waived by
the Sellers.
D. REGISTRATION RIGHTS AGREEMENT. Sellers and Purchaser agree to execute
and deliver a Registration Rights Agreement (the "Registration Rights
Agreement") covering the restricted common stock of the Purchaser
that will be acquired by Sellers at Closing.
X. XXXX-XXXXX-XXXXXX NOTIFICATION. By March 20, 1997, the parties shall,
if and to the extent required by law, file all reports or other
documents required or requested by the FTC or the Justice Department
under the HSR Act, and all regulations promulgated thereunder,
concerning the transactions contemplated by this Agreement, and
comply promptly with any request by the FTC or the Justice Department
for additional information concerning such transaction, so that the
waiting period specified in the HSR Act will expire as soon as
reasonably possible after the execution and delivery of this
Agreement. The parties agree to furnish to one another such
information concerning the Purchaser, the Sellers, and the Company as
the parties need to perform their obligations hereunder. The
Purchaser agrees to pay all filing fees and costs due governmental
agencies with regard to the HSR Act notification and compliance.
F. PHYSICAL INVENTORIES. Prior to Closing, Purchaser and Sellers shall
conduct a physical inventory of all parts, accessories, new vehicles,
and used vehicles owned by the Company and shall determine the fair
market value of the used vehicle, new vehicle and parts and
accessories inventories. The physical inventories shall be
collectively referred to in this Agreement as the "Physical
Inventories." The fair market value of the used vehicle inventory,
new vehicle inventory, and parts and accessories inventory shall be
determined as follows:
i) Sellers and Purchaser shall examine the used vehicle inventory
and agree to the fair market value of the used vehicle inventory. If
Purchaser and Sellers fail to agree on the fair market value of any
used vehicle, Sellers shall purchase the used vehicle and such used
vehicle shall be removed from the used vehicle inventory
ii) Sellers and Purchaser shall calculate the fair market value of
the new vehicle inventory. The fair market value of each new vehicle
shall be an
19
amount equal to the Company's book value for the new vehicle. The
fair market value for each 1995 or 1996 demonstrator shall be an
amount equal to the Company's book value for the demonstrator, less
$.15 per mile over 5,000 miles on the odometer as depreciation for
demo service. The fair market value of any new vehicle shall be
decreased by an amount equal to the Company's actually incurred
internal cost of repair for any physically damaged vehicle. The
Sellers agree that all factory rebates and other credits on any new
vehicles shall be retained by the Company.
iii) Sellers and Purchaser shall examine the parts and accessories
inventory and agree to the fair market value of the parts and
accessories inventory. If Purchaser and Sellers fail to agree on the
fair market value of any parts or accessories, Sellers shall purchase
the parts or accessories and such parts or accessories shall be
removed from the parts and accessories inventory. The Sellers agree
that all rebates and credits on any parts or accessories shall be
retained by the Company.
G. SECTION 338(H)(10) ELECTIONS.
(i) Each Seller agrees to make elections under Section 338(h)(10)
of the Internal Revenue Code and all comparable elections under
state and local tax law with respect to the Company.
(ii) Purchaser and Sellers shall jointly file Form 8023-A with the
Internal Revenue Service in accordance with Section 338 of the
Internal Revenue Code and the regulations thereunder no later
than the 15th day of the ninth month beginning after the month
that includes the Closing Date in accordance with Internal
Revenue Code Section 338(g) and Treasury Regulation Section
1.338(h)(10)-1(d)(2).
(iii) Purchaser and Sellers shall allocate the Purchase Price to the
assets conveyed pursuant to this Agreement using a reasonable
asset valuation which will be agreed to by Purchaser and
Sellers no later than ninety (90) days after the Closing Date.
In all events, however, Purchaser and Sellers agree to
conformity of the treatment of all asset allocations with
respect to the Section 338(h)(10) elections.
H. PAYMENT OF THE BROKER'S FEE. Purchaser and Sellers agree to pay the
Broker's fee in the following proportions:
a) Sellers 50%
b) Purchaser 50%
I. LOANS FROM THE SELLERS. Sellers agree that they will prohibit the
Company from borrowing amounts on the loans from The Xxxx Xxxxxxx
Revocable Living Trust and The Xxxx X. Xxxxxxx Revocable Family Trust
that cause the aggregate outstanding balances of the loans to exceed
$3,625,000.00. At Closing the Company will (i) execute and deliver to
the Sellers a promissory note in the original principal amount of
$400,000.00, payable in sixty (60) equal monthly installments,
bearing interest at the lowest rate of interest per annum that is
allowable under the Internal Revenue Code for installment sales, and
containing the same offset provisions as the Note, (ii) pay the
outstanding balance (up to $2,225,000) on the note payable by the
Company to The Xxxx Xxxxxxx Revocable Living Trust, and (iii) pay the
outstanding balance (up to $1,000,000) on the note payable by the
Company to The Xxxx X. Xxxxxxx Revocable Family Trust; in full
satisfaction of the note
20
payable by the Company to The Xxxx Xxxxxxx Revocable Living Trust and
the note payable by the Company to The Xxxx X. Xxxxxxx Revocable
Family Trust.
15. GENERAL PROVISIONS.
A. ENTIRE AGREEMENT. This Agreement contains and constitutes the entire
agreement between the parties regarding the subject matter hereof and
supersedes all prior agreements and understandings between the
parties relating to the subject matter of this Agreement. There are
no agreements, understandings, restrictions, warranties or
representations between the parties relating to the subject matter
hereof other than those set forth in this Agreement. This Agreement
is not intended to have any legal effect whatsoever, or to be a
legally binding agreement, or any evidence thereof, until it has been
signed by each Seller, the Company, and the Purchaser.
B. EXHIBITS. Preliminary drafts of the following exhibits shall be
prepared by Sellers and the Company by April 10, 1997 and delivered
to Purchaser for Purchaser's review. Final exhibits shall be prepared
by Sellers and the Company, initialed by the parties, and attached to
this Agreement at Closing. When attached to this Agreement, the
exhibits shall be made a part of this Agreement by reference.
Exhibit "A" - Promissory Note
Exhibit "B" - Officers and Directors
Exhibit "C" - Real Property and Leases
Exhibit "D" - Tangible Personal Property
Exhibit "E" - Inventories
Exhibit "F" - Permits and Licenses
Exhibit "G" - Intellectual Property
Exhibit "H" - Encumbrances
Exhibit "I" - Guaranties
Exhibit "J" - Legal Actions
Exhibit "K" - Contracts and Agreements
Exhibit "L" - Employee Benefit Plans
Exhibit "M" - Insurance
Exhibit "N" - Personnel
Exhibit "O" - Accounts and Notes Receivable
Exhibit "P" - Bank Accounts and Powers of Attorney
Exhibit "Q" - Underground Storage Tanks
Exhibit "R" - Contracts in Transit
Exhibit "S" - Warranties
C. THIRD PARTY CONSENTS. The Sellers and the Purchaser mutually agree to
cooperate and use reasonable, good faith efforts to prepare all
documentation, to effect all filings and to obtain all permits,
consents, approvals, and authorizations of all third parties and
governmental bodies as may be necessary to consummate the
transactions contemplated by this Agreement.
D. FURTHER ACTIONS. From time to time, as and when requested by any
parties hereto, the other parties shall execute and deliver, or cause
to be executed and delivered, all such documents and instruments and
shall take, or cause to be taken, all such further or other actions
as such other parties may reasonably deem necessary or desirable to
consummate the transactions contemplated by this Agreement.
21
E. PUBLICITY. The parties hereto agree that no public release or
announcement concerning the terms of the transactions contemplated by
this Agreement shall be issued by any party without the prior written
consent of the other parties (which consent shall not be unreasonably
withheld), except as such release or announcement may be required by
law, in which case the party required to make the release or
announcement shall allow the other parties reasonable time to comment
on such release or announcement in advance of such issuance.
F. AMENDMENT. This Agreement may not be amended, modified, or terminated
except by an instrument in writing signed by all parties to this
Agreement.
G. CONSTRUCTION. All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine or neuter gender thereof or to
the plurals of each, as the identity of the person or persons or the
context may require. The descriptive headings contained in this
Agreement are for reference purposes only and are not intended to
describe, interpret, define or limit the scope, extent or intent of
this Agreement or any provision contained in this Agreement.
H. INVALIDITY. If any provision contained in this Agreement shall for
any reason be held to be invalid, illegal, void or unenforceable in
any respect, such provision shall be deemed modified so as to
constitute a provision conforming as nearly as possible to such
invalid, illegal, void or unenforceable provision while still
remaining valid and enforceable; and the remaining terms or
provisions contained herein shall not be affected thereby.
I. PAYMENT OF EXPENSES. Whether or not the transactions contemplated by
this Agreement is consummated, each of the parties to this Agreement
shall be responsible for its own costs and expenses incurred in
connection with the preparation and negotiation of this Agreement and
with the transactions contemplated hereby.
J. BINDING EFFECT AND ASSIGNMENT. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective legal representatives, successors and permitted assigns.
Only with the prior written consent of the Sellers, which consent
shall not be unreasonably withheld, the Purchaser may assign its
rights under this Agreement to a related entity, and the Purchaser
and its assignee shall be fully obligated, responsible and liable for
the performance of the Purchaser's obligations hereunder regardless
of any such assignment. Neither Seller may assign any of his rights
or delegate any of his obligations hereunder. Any assignment in
violation hereof shall be void.
K. ATTORNEYS' FEES. In the event any party instigates litigation to
enforce or protect its rights under this Agreement, the party
prevailing in any such litigation shall be entitled, in addition to
all other relief, to reasonable attorneys' fees, out-of-pocket costs
and disbursements relating to such litigation.
L. NOTICES. All notices and other communications hereunder shall be (i)
in writing, dated with the current date of such notice, and signed by
the party giving such notice, and (ii) mailed, postpaid, registered
or
22
certified, return receipt requested, addressed to the party to be
notified, or delivered by personal delivery or by overnight courier.
Notice shall be deemed given when received by the party to be
notified or when the party to be notified refuses to accept delivery
of the notice. The initial addresses of the parties shall be as
follows:
IF TO PURCHASER:
Cross-Continent Auto Retailers, Inc.
0000 X. Xxxxxx
X.X. Xxx 000
Xxxxxxxx, Xxxxx 00000-0000
ATTENTION: XXXXXX X. XXXX
IF TO SELLERS:
Xxxx Xxxxxxx
00 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
and
Xxxx Xxxxxxx
0000 Xxxxx Xxx
Xxx Xxxxx, Xxxxxx 00000
The parties hereto shall have the right from time to time to change
their respective addresses by not less than ten (10) days prior
written notice to the other parties.
M. DEFINITION OF KNOWLEDGE. As used in this Agreement, a Seller's or the
Company's "knowledge" shall include the knowledge of the Seller and
the employees and agents of the Company. Each representation and
warranty that is limited to a Seller's or the Company's "knowledge"
is made with the understanding that the Seller or the Company has
examined whatever sources of information as are in the possession or
control of the Seller or the Company in order to verify the truth and
accuracy of such representation and warranty.
N. TIME IS OF THE ESSENCE. Time shall be of the essence with respect to
this Agreement and the consummation of the transactions contemplated
hereby.
O. REMEDIES. None of the remedies provided for in this Agreement shall
be the exclusive remedy of any party for a breach of this Agreement.
The parties hereto shall have the right to seek any other remedy at
law or in equity in lieu of or in addition to any remedies provided
for in this Agreement.
P. SURVIVAL OF OBLIGATIONS. To the extent necessary to carry out the
terms and provisions of this Agreement, the obligations and rights
arising from or related to this Agreement shall survive the Closing
and shall not be merged into the various documents executed and
delivered at the time of the Closing.
Q. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made in this Agreement or in any certificate, schedule,
document, or instrument furnished in connection with this Agreement
shall survive the Closing. Notwithstanding any investigation or
examination conducted before
23
or after the Closing or the decision of any party to consummate the
transactions contemplated by this Agreement, each party shall be
entitled to rely upon the representations and warranties set forth in
this Agreement.
R. WAIVER. No waiver of any breach or default hereunder shall be
considered valid unless in writing and signed by the party giving
such waiver, and no such waiver shall be deemed a waiver of any
subsequent breach or default of the same or similar nature.
S. GOVERNING LAW. This Agreement shall be construed, enforced, and
governed in accordance with the laws of the State of Nevada, except
for matters related to any real property owned, leased or otherwise
utilized by the Company, which shall be construed, enforced, and
governed in accordance with the laws of the state in which such real
property is located.
T. VENUE. The obligations of the parties to this Agreement are
performable, and venue for any legal action arising out of this
Agreement shall lie in Potter County, Texas.
U. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
PURCHASER: CROSS-CONTINENT AUTO RETAILERS, INC.,
a Delaware corporation
By:_____________________________________________
Xxxx Xxxxxxxxx,
Chairman and Chief Executive Officer
SELLERS: ____________________________________________
XXXX XXXXXXX
____________________________________________
XXXX XXXXXXX
24
COMPANY: SAHARA DATSUN, INC.,
a Nevada corporation, dba
XXXX XXXXXXX NISSAN
By:________________________________
Xxxx Xxxxxxx, President
25
AMENDMENT TO STOCK PURCHASE AGREEMENT
This Amendment to Stock Purchase Agreement (the "Amendment") is made and
entered into this _____ day of March, 1997, by and between CROSS-CONTINENT AUTO
RETAILERS, INC., a Delaware corporation ("C-CAR"), XXXX XXXXXXX, XXXX XXXXXXX,
and SAHARA NISSAN, INC., a Nevada corporation, d/b/a XXXX XXXXXXX NISSAN (the
"Company").
RECITALS
A. By that certain Stock Purchase Agreement (the "Agreement") dated
February 28, 1997, Xxxx Xxxxxxx and Xxxx Xxxxxxx agreed to sell all of the
issued and outstanding shares of capital stock of the Company to C-CAR.
B. C-CAR, the Company, Xxxx Xxxxxxx and Xxxx Xxxxxxx desire to amend the
Agreement.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, C-CAR, the Company, Xxxx Xxxxxxx and Xxxx Xxxxxxx agree
as follows:
1. The word "Company," as used in the Agreement, shall mean Sahara Nissan,
Inc., a Nevada corporation, d/b/a Xxxx Xxxxxxx Nissan.
2. As modified by this Amendment, the Agreement shall remain in full force
and effect, enforceable in accordance with its terms.
3. This Amendment shall be governed by and construed and enforced in
accordance with the laws of the State of Nevada.
4. This Amendment shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, administrators, executors,
successors and assigns.
CROSS-CONTINENT AUTO RETAILERS, INC.,
a Delaware corporation
By:___________________________
Xxxx Xxxxxxxxx,
Chairman and Chief Executive Officer
SAHARA NISSAN, INC., a Nevada corporation,
___________________________ d/b/a XXXX XXXXXXX NISSAN
XXXX XXXXXXX
___________________________ By:________________________
XXXX XXXXXXX Xxxx Xxxxxxx, President
